The opinion of the Court was delivered by
Mr. Justice) Cothran.
This is an appeal from an order of his Honor, Judge Townsend, dated June 17, 1927, refusing a motion by the plaintiff to strike out the answer of the defendant Miller as sham and interposed for delay, and dismissing the complaint as to him.
Without considering the doubtful question whether an order refusing to strike out an answer as sham is appealable until after final judgment, or whether in fact the answer is sham, we will consider the appeal from the angle of the order dismissing the complaint as to the defendant Miller.
The action in which the order was signed was instituted by the plaintiff as receiver of the Bank of Cross Anchor, which was a depositor in the American Bank & Trust Company (hereinafter referred to as the Columbia Bank), on behalf of himself and all other depositors of the Columbia bank, against the stockholders of that bank for the purpose of enforcing their statutory liability to the depositors. The case was once before this Court, 138 S. C., 409; 136 S. E., 885, when it was decided that the plaintiff and not the Receiver of the Columbia Bank was the proper person to maintain the action.
The question of the liability of the defendant Miller, as a stockholder of the Columbia Bank, has become complicated by' certain other proceedings involving a merger of the Union Savings Bank of Bennettsville (hereinafter referred to as the Savings Bank), with the Columbia Bank. Miller, it appears, was one of the original stockholders in the Columbia Bank, owning
individually,
25 shares of stock, the certificate for which was issued December 5, 1924, at the time of the organization of the bank, and which has ■never been transferred by him. It also appears that at that time or subsequently (the date of his certificate not appearing in the record), Miller was a stockholder in the Savings Bank, owning
as trustee,
15 shares of stock.
It appears that in the latter part of the year 1925 and the early part of the year 1926, the Savings Bank and the Columbia Bank entered into a so-called merger agreement, pursuant to which the stockholders of the Savings Bank exchanged their stock for stock in the Columbia Bank, in the ratio of two- shares of the Savings Bank stock for one shares of the Columbia Bank stock, and all of the assets of the- Savings Bank were absorbed by the Columbia Bank. Thereafter on June 26, 1926, the Columbia Bank closed its doors and was taken over by the State Bank Examiner.
On July 1, 1926, an action was instituted in the Court of Common Pleas for Richland County by
Rice et al. against
City of Columbia et al.,
for the purpose of setting aside certain preferences, alleged to have been given by the Columbia Bank to certain deposit creditors, when it was insolvent.
On July 5, 1926, an action was instituted in the Court of Common Pleas for Marlboro County by Midgley et al. against the Savings Bank and the Columbia Bank et al., for the purpose of having the merger hereinbefore referred to annulled. About the same time (the exact date does not appear in the record), the City of Columbia, a defendant in the
Rice case,
filed a petition in that action, asking for the appointment of a Receiver of the Columbia Bank, and bn July 19, 1926, J. E. Peurifoy was appointed and cjuali’fied.
The action of Midgley against the banks et al. resulted in an order of his Honor, Judge Dennis, dated August — , 1926, annulling the merger and approving the plan adopted by the stockholders for a reorganization of the Savings Bank. It provided also that, the merger being annulled, those stockholders of the Savings Bank who had exchanged their stock for stock in the Columbia Bank never became stockholders of the Columbia Bank and had assumed no liability to depositors of the Columbia Bank under the constitution and statute creating the liability of stockholders.
On November 23, 1926, the present action was instituted in the Court of Common Pleas for Richland County by Harvey W. Johnson as Receiver of the Cross Anchor Bank, which as stated, was a depositor in the Columbia Bank, on behalf of himself and all other depositors of that bank, against the stockholders of that bank, alleging-its insolvency • and piraying judgment upon the constitutional and statutory liability. The key to this controversy now between the depositors and defendant Miller is found in the fact that the plaintiff’s action involved both the regular stockholders of the Columbia Bank and those who had become such pursuant to the merger agreement which had been annulled
by the decree of his Honor, Judge Dennis, dated August — , 1926.
At the time of .the commencement of this action the plaintiff obtained from his Honor, Judge Dennis, an order restraining all depositors of the Columbia Bank from bringing any further independent proceeding against the stockholders. This order was obtained without notice to Mr. Peurifoy, who had been appointed Receiver of such stockholders’ liability by an order of his Honor Judge Townsend, dated November 6, 1926. Accordingly, and very properly, Mr. Peurifoy filed a petition in the present action asking that the order of his Honor, Judge Dennis, of November 23, 1926, enjoining the prosecution of the claims of depositors against the stockholders except in that action and that further proceedings in it be restrained. This petition came on to be heard before his Honor, Judge Dennis, who on December 2, 1926, filed an order refusing it. The order was entitled in both the
Rice v. Columbia case
and the present case and went elaborately into the whole situation. Speaking of the
Midgley case,
he declared:
“In the same suit stockholders of the Union Savings Bank of Bennettsville, who had been induced to become stockholders of American Bank & Trust Company,
sought relief from their responsibility as such.
In connection with the severance of the two corporations it was also adjudged that these subscriptions to or relations of stockholders were null and void, and
these stockholders were released by my decree from stockholders’ liability or responsibility in American Bank & Trust Company proper.”
And, speaking of the present action, the
Johnson case,
he said:
“The proposed action in the second case above entitled, is directed against each and all of these stockholders at Bennettsville (that is, the stockholders of the Savings Bank who had exchanged ‘old lamps for new’), just as against
other stockholders, and entirely ignores the proceedings had and taken in reference thereto.”
He accordingly reaffirmed the orders passed in the
Midgley
case, and specifically held:
“That that complaint in the second cause (the
Johnson
case, this case), hereinabove entitled be and the same is hereby dismissed in so far as it affects or pertains to the stockholders and stockholders’ liability of the subscribers for stock of American Bank & Trust Company at Bennettsville, S.
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The opinion of the Court was delivered by
Mr. Justice) Cothran.
This is an appeal from an order of his Honor, Judge Townsend, dated June 17, 1927, refusing a motion by the plaintiff to strike out the answer of the defendant Miller as sham and interposed for delay, and dismissing the complaint as to him.
Without considering the doubtful question whether an order refusing to strike out an answer as sham is appealable until after final judgment, or whether in fact the answer is sham, we will consider the appeal from the angle of the order dismissing the complaint as to the defendant Miller.
The action in which the order was signed was instituted by the plaintiff as receiver of the Bank of Cross Anchor, which was a depositor in the American Bank & Trust Company (hereinafter referred to as the Columbia Bank), on behalf of himself and all other depositors of the Columbia bank, against the stockholders of that bank for the purpose of enforcing their statutory liability to the depositors. The case was once before this Court, 138 S. C., 409; 136 S. E., 885, when it was decided that the plaintiff and not the Receiver of the Columbia Bank was the proper person to maintain the action.
The question of the liability of the defendant Miller, as a stockholder of the Columbia Bank, has become complicated by' certain other proceedings involving a merger of the Union Savings Bank of Bennettsville (hereinafter referred to as the Savings Bank), with the Columbia Bank. Miller, it appears, was one of the original stockholders in the Columbia Bank, owning
individually,
25 shares of stock, the certificate for which was issued December 5, 1924, at the time of the organization of the bank, and which has ■never been transferred by him. It also appears that at that time or subsequently (the date of his certificate not appearing in the record), Miller was a stockholder in the Savings Bank, owning
as trustee,
15 shares of stock.
It appears that in the latter part of the year 1925 and the early part of the year 1926, the Savings Bank and the Columbia Bank entered into a so-called merger agreement, pursuant to which the stockholders of the Savings Bank exchanged their stock for stock in the Columbia Bank, in the ratio of two- shares of the Savings Bank stock for one shares of the Columbia Bank stock, and all of the assets of the- Savings Bank were absorbed by the Columbia Bank. Thereafter on June 26, 1926, the Columbia Bank closed its doors and was taken over by the State Bank Examiner.
On July 1, 1926, an action was instituted in the Court of Common Pleas for Richland County by
Rice et al. against
City of Columbia et al.,
for the purpose of setting aside certain preferences, alleged to have been given by the Columbia Bank to certain deposit creditors, when it was insolvent.
On July 5, 1926, an action was instituted in the Court of Common Pleas for Marlboro County by Midgley et al. against the Savings Bank and the Columbia Bank et al., for the purpose of having the merger hereinbefore referred to annulled. About the same time (the exact date does not appear in the record), the City of Columbia, a defendant in the
Rice case,
filed a petition in that action, asking for the appointment of a Receiver of the Columbia Bank, and bn July 19, 1926, J. E. Peurifoy was appointed and cjuali’fied.
The action of Midgley against the banks et al. resulted in an order of his Honor, Judge Dennis, dated August — , 1926, annulling the merger and approving the plan adopted by the stockholders for a reorganization of the Savings Bank. It provided also that, the merger being annulled, those stockholders of the Savings Bank who had exchanged their stock for stock in the Columbia Bank never became stockholders of the Columbia Bank and had assumed no liability to depositors of the Columbia Bank under the constitution and statute creating the liability of stockholders.
On November 23, 1926, the present action was instituted in the Court of Common Pleas for Richland County by Harvey W. Johnson as Receiver of the Cross Anchor Bank, which as stated, was a depositor in the Columbia Bank, on behalf of himself and all other depositors of that bank, against the stockholders of that bank, alleging-its insolvency • and piraying judgment upon the constitutional and statutory liability. The key to this controversy now between the depositors and defendant Miller is found in the fact that the plaintiff’s action involved both the regular stockholders of the Columbia Bank and those who had become such pursuant to the merger agreement which had been annulled
by the decree of his Honor, Judge Dennis, dated August — , 1926.
At the time of .the commencement of this action the plaintiff obtained from his Honor, Judge Dennis, an order restraining all depositors of the Columbia Bank from bringing any further independent proceeding against the stockholders. This order was obtained without notice to Mr. Peurifoy, who had been appointed Receiver of such stockholders’ liability by an order of his Honor Judge Townsend, dated November 6, 1926. Accordingly, and very properly, Mr. Peurifoy filed a petition in the present action asking that the order of his Honor, Judge Dennis, of November 23, 1926, enjoining the prosecution of the claims of depositors against the stockholders except in that action and that further proceedings in it be restrained. This petition came on to be heard before his Honor, Judge Dennis, who on December 2, 1926, filed an order refusing it. The order was entitled in both the
Rice v. Columbia case
and the present case and went elaborately into the whole situation. Speaking of the
Midgley case,
he declared:
“In the same suit stockholders of the Union Savings Bank of Bennettsville, who had been induced to become stockholders of American Bank & Trust Company,
sought relief from their responsibility as such.
In connection with the severance of the two corporations it was also adjudged that these subscriptions to or relations of stockholders were null and void, and
these stockholders were released by my decree from stockholders’ liability or responsibility in American Bank & Trust Company proper.”
And, speaking of the present action, the
Johnson case,
he said:
“The proposed action in the second case above entitled, is directed against each and all of these stockholders at Bennettsville (that is, the stockholders of the Savings Bank who had exchanged ‘old lamps for new’), just as against
other stockholders, and entirely ignores the proceedings had and taken in reference thereto.”
He accordingly reaffirmed the orders passed in the
Midgley
case, and specifically held:
“That that complaint in the second cause (the
Johnson
case, this case), hereinabove entitled be and the same is hereby dismissed in so far as it affects or pertains to the stockholders and stockholders’ liability of the subscribers for stock of American Bank & Trust Company at Bennettsville, S. C., * * *” (clearly referring ff> the stockholders of the Savings Bank who had exchanged their stock for stock in the American Bank & Trust Company), and enjoining the plaintiff in this action “from in any wise prosecuting any action against said stockholders at Bennetsville, S. C , * * * and the said parties, their agents, and attorneys are enjoined and restrained from in any wise interfering with or impairing the full force and validity of the orders and decrees made by the Court of Common Pleas for Marlboro County, * * * in reference to said branch banks at Bennettsville, * * * and in regard to the release and discharge of the liability of stockholders at said places in American Bank & Trust Company.” :
He then gave a list of stockholders headed thus:
“Those who subscribed for stock in and through Bern nettsville Branch of American Bank & Trust Company, and who have been released from liability, and as to whom the foregoing injunction applies.”
In this list appear the names of “E. P. Miller, Trustee,” and “E. P. Miller, individually.”
As a matter of fact, “E. P. Miller, Trustee,” was one of the stockholders of the Savings Bank who had exchanged stock of that bank for stock in the Columbia Bank; “E. P. Miller, individually,” owned no. stock in the Savings Bank, but owned 25 shares of the original issue of the Columbia Bank stock since December 5, 1924.
At the end of the order this appears:
“The Court is taking under consideration the remaining questions involved in the motion and petition and will file an order later.”
Accordingly, on December 10, 1926, his Honor, Judge Dennis, filed a supplementary order reiterating briefly his previous orders to the effect that the stockholders in the Savings Bank who had exchanged their stock could not be held liable as stockholders of the Columbia Bank, and refusing the petition of Mr. Peurifoy above referred to.
Prom these orders of December 2, 1926, and December 10, 1926, but more particularly the latter, Mr. Peurifoy, Receiver, appealed and this Court in
Johnson et al. v. Adams et al.,
138 S. C., 409; 136 S. E., 885, agreed with his Honor, Judge Dennis, affirming the order of December 10, 1926.
On April 2, 1927, his Honor, Judge Townsend, passed an order reciting that under previous orders of his Honor, Judge Dennis, “all the stockholders of the Aiken and Bennettsville branches of American Bank & Trust Company (that is, those who had exchanged their stock under the annulled merger agreement) were absolved from any liability as stockholders in the American Bank & Trust Company,” and that the summons and complaint in this action should be amended “so that only the stockholders of American Bank & Trust Company appearing on the books at the date of the closing of said bank should be made parties to this proceeding,” ordered: “That the summons and complaint in this action be amended by omitting therefrom all the names of the stockholders of the Bennettsville and Aiken branches of American Bank & Trust Company, and that the names listed below be, and they are hereby, made defendants in- the' above-entitled action as the proper defendants to be made parties to this suit wherein the depositors claim the statutory stockholders’ liability.” There follows a list which includes the names of “E. P. Miller,” as one who
should respond to the plaintiff’s cause of action, upon his liability as a stockholder of the Columbia Bank.
The defendant Miller answered the amended complaint. The main defense interposed by him is that he has been discharged from all liability by reason of the orders of his Honor, Judge Dennis, hereinbefore referred to.
The matter involved in the present appeal came on to be heard before his Honor, Judge Townsend, we assume, in open Court. On June 17, 1927, he filed an order refusing the plaintiff’s motion to strike out the defendant’s answer as sham and dismissing the complaint upon the ground “this matter was before Judge Dennis, and is disposed of and adjudged in paragraphs 2 and 3 of the order of December 2, 1926, in which it is adjudged that Miller be released from such liability, which is reaffirmed in the order of December 10.”
From this order the plaintiff has appealed.
We regret that we are unable to agree with the conclusions of his Honor, Judge Townsend. It seems perfectly plain that in the orders of his Honor, Judge Dennis, of December 2, 1926, and December 10, he was considering solely the liability of those stockholders of the Savings Bank who had exchanged their stock. Over and over again he recurs to that issue and holds that they cannot, by reason of the annulment of the merger, be considered as stockholders of the Columbia Bank and liable as such. In his decree in the
Midgley case
he holds that this particular class of nominal stockholders of the Columbia Bank have assumed no statutory liability. In his decree of December 2, 1926, he reiterates his holding in the
Midgley case;
and in his decree of December 10, he provides:
“Therefore it is ordered that the plaintiffs (Johnson et al.) be and they are permitted to proceed in this action against the said stockholders of the American Bank & Trust Company, not affected by the orders already issued by me,
so that this action will proceed against the stockholders of the parent bank at Columbia, S. C., and not against those persons named as stockholders in Marlboro and Aiken counties in the orders heretofore signed by me in this case, and the motion of the receiver to restrain the further prosecution of this action is refused, in so far as it refers to the stockholders of the parent bank, the American Bank & Trust Company of Columbia, S. C.”
We cannot see how anything could be plainer than this. The defendant was a stockholder of the parent bank and had been since its organization. He comes squarely within the terms of the order. Evidently his name as an individual holder of stock in the Savings Bank was inserted in the list by inadvertence. He owned no such stock, and, as the order by its express terms affords immunity only to those who had exchanged their stock, he cannot bring himself within its protection simply upon an error of him who prepared the list. The order was not considering the rights of those who were and had been unquestioned owners of stock in the parent company at Columbia.
Let the orders of August — , 1926, at page 29, December 2,'1926, at page 39, of December 10, 1926, at page 10, and of June 17, 1927, at page 54 be reported. In the order of December 2, 1926, the list of stockholders in the Aiken Bank and all but “E. P. Miller, Trustee,” and “E. P. Miller, individually,” in the Bennettsville Bank, may be omitted.
The judgment of this Court is that the order of his Honor, Judge Townsend, dated June 17, 1927, be reversed.
Mr. Chiee Justice Watts and Messrs. Justices Stabler and Carter concur.
Mr. Justice Blease disqualified.