CONNOR, J.
Defendants demurred to the complaint, and excepted to judgment of the court overruling their demurrer; thereafter they filed an answer, and, upon the trial of the issues before a jury, at the close of plaintiff’s evidence, moved for judgment as of nonsuit. Upon the overruling of this motion, defendants offered evidence, and at the close of all the evidence again moved for judgment as of nonsuit. This motion was denied, and defendants again excepted. C. S., 561.
The first and second assignments of error are based upon these exceptions, and defendants rely upon them chiefly upon their motion for a new trial.
The evidence introduced upon the trial supports the allegations. of the complaint; therefore these assignments of error, and the exceptions upon which they are based, may be considered together, for defendants thus present the question as to whether or not plaintiff can recover of the defendants in this action.
Plaintiff and' defendants were stockholders and directors of the People’s Bank, a corporation organized and doing a banking business at "Williamston, N. C., under the laws of North Carolina. The said bank was under the general control and supervision of the Corporation Commission of North Carolina. C. S., ch. 21, sec. 1035, subsec. 7; Laws 1921, ch. 4, sec. 63. The Corporation Commission is authorized by chapter 4, section Y2, Public Laws 1921 (ratified 18 February, 1921), to appoint a Chief State Bank Examiner, whose duties and powers are prescribed by law. The commission is expressly authorized by section 16 of said chapter to take possession forthwith of the business and property of any bank under its control and supervision, whenever it shall appear that said bank—
“2. Is conducting its business in an unauthorized or unsafe manner.
“3. Is in an unsafe or unsound condition to transact its business.
“4. Has an impairment of its capital stock.
“Such banks may, with the consent of ,the Corporation Commission, resume business upon such terms and conditions as may be approved by it.”
An audit made of the People’s Bank, under the supervision of the State Bank Examiner, completed about 1 April, 1921, disclosed that the capital stock of the bank was impaired and that the bank, while not
insolvent, was bordering on insolvency. At a meeting of tbe board of directors of tbe bank, beld on 2 April, at wbicb defendants were present, as members of tbe said board, tbe report of tbe auditor was discussed; tbe directors accepted tbis report as correct and thereupon, unanimously, agreed, “subject to tbe approval of tbe State Bank Examiner, to provide additional assets to tbe amount of $150,000 in lieu of similar amount of paper regarded as unsound or doubtful.”
A condition tbus existed, under wbicb tbe State Bank Examiner, acting under tbe authority of tbe Corporation Commission, was empowered by law to take possession of tbe business and property of tbe People’s Bank, and to determine upon what terms and conditions it might resume business.
By bis letter of 4 April, 1921, tbe State Bank Examiner advised tbe president and directors of tbe People’s Bank of tbe terms upon wbicb tbe bank would be permitted to continue business. Tbe statute expressly authorizes tbe Corporation Commission to permit a bank, whose business and property it has taken possession of, to resume business, upon compliance with terms and conditions approved by tbe commission. Where tbe condition of a bank, under its supervision and control, is such that tbe Corporation Commission is authorized to take possession of its business and property, and then upon terms and conditions approved by tbe commission, to permit it to resume business, tbe commission, or tbe bank examiner, acting under its authority, instead of first taking possession of tbe bank, and tbus closing it, may impose terms and conditions upon- wbicb tbe bank may continue business, and tbus avoid losses to depositors, creditors and stockholders necessarily incident to tbe closing of tbe bank.
Tbe condition prescribed by tbe State Bank Examiner in bis letter of 4 April, 1921, upon wbicb tbe People’s Bank would be permitted to remain open and continue its business, was that $160,000 “be put up to take care of tbe loss that may accrue from tbe above (tbe manipulations of tbe cashier and bad loans specified) and any other loss that may develop on account of tbe condition of tbe bank. Ten per cent of tbis amount will have to be paid in cash, within tbe next fifteen days and tbe balance properly secured with collateral, tbe security to be passed upon by tbis department.
Tbis condition was imposed solely for tbe purpose of strengthening tbe credit of tbe bank and in order that its solvency might not be questioned. Tbe directors, at a meeting beld on 5 April, at wbicb tbe defendants were present, accepted tbe condition and so notified tbe bank examiner. Upon tbe agreement of tbe directors to put up tbe $160,000, as required by tbe bank examiner, tbe bank was permitted to continue business for fifteen days.
By accepting the terms and conditions contained in the proposal of the bank examiner, the members of the board of directors agreed to pay into the bank, to strengthen its credit, and in order that it might continue business, the sum of $160,000, the said members thus becoming liable to the bank, as the beneficiary of the agreement, jointly and severally, for said sum. As a result of said agreement, the bank was allowed to remain open and to continue business.
On 21 April, 1921, the fifteen days having expired, it was ascertained by the directors and reported to the bank examiner that the whole amount had not been paid in; the deficit being due to the failure of these three defendants to pay in the sums which they had agreed with the other directors to pay. This deficit amounted to about $27,000. The directors who had complied with their agreement to pay in the sums apportioned to each of them, were called upon by the State Bank Examiner to pay in the amount of this deficit and were notified that unless they did so at once, the bank would not be permitted to open for business the following morning. The deficit was immediately made good by the directors other than defendants and the bank opened for business the next morning, with its capital stock restored and its solvency no longer questioned.
The amount for which the defendants had become liable to their codirectors, by virtue of the agreement entered into on 5 April, was paid by these directors, all of whom had paid in their pro rata shares, in accordance with the agreement. The plaintiff in this action paid $331.50 of the deficit and now sues the defendants to recover the sum.
Defendants’ first contention, as stated in their brief, is that upon the facts alleged in the complaint they should have been sued “severally because their liabilities appear on the face of the complaint to have been several instead of joint.”
This is not an action to recover of defendants because of their liability, as stockholders, for the contracts, debts and engágement of the bank, under C.
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CONNOR, J.
Defendants demurred to the complaint, and excepted to judgment of the court overruling their demurrer; thereafter they filed an answer, and, upon the trial of the issues before a jury, at the close of plaintiff’s evidence, moved for judgment as of nonsuit. Upon the overruling of this motion, defendants offered evidence, and at the close of all the evidence again moved for judgment as of nonsuit. This motion was denied, and defendants again excepted. C. S., 561.
The first and second assignments of error are based upon these exceptions, and defendants rely upon them chiefly upon their motion for a new trial.
The evidence introduced upon the trial supports the allegations. of the complaint; therefore these assignments of error, and the exceptions upon which they are based, may be considered together, for defendants thus present the question as to whether or not plaintiff can recover of the defendants in this action.
Plaintiff and' defendants were stockholders and directors of the People’s Bank, a corporation organized and doing a banking business at "Williamston, N. C., under the laws of North Carolina. The said bank was under the general control and supervision of the Corporation Commission of North Carolina. C. S., ch. 21, sec. 1035, subsec. 7; Laws 1921, ch. 4, sec. 63. The Corporation Commission is authorized by chapter 4, section Y2, Public Laws 1921 (ratified 18 February, 1921), to appoint a Chief State Bank Examiner, whose duties and powers are prescribed by law. The commission is expressly authorized by section 16 of said chapter to take possession forthwith of the business and property of any bank under its control and supervision, whenever it shall appear that said bank—
“2. Is conducting its business in an unauthorized or unsafe manner.
“3. Is in an unsafe or unsound condition to transact its business.
“4. Has an impairment of its capital stock.
“Such banks may, with the consent of ,the Corporation Commission, resume business upon such terms and conditions as may be approved by it.”
An audit made of the People’s Bank, under the supervision of the State Bank Examiner, completed about 1 April, 1921, disclosed that the capital stock of the bank was impaired and that the bank, while not
insolvent, was bordering on insolvency. At a meeting of tbe board of directors of tbe bank, beld on 2 April, at wbicb defendants were present, as members of tbe said board, tbe report of tbe auditor was discussed; tbe directors accepted tbis report as correct and thereupon, unanimously, agreed, “subject to tbe approval of tbe State Bank Examiner, to provide additional assets to tbe amount of $150,000 in lieu of similar amount of paper regarded as unsound or doubtful.”
A condition tbus existed, under wbicb tbe State Bank Examiner, acting under tbe authority of tbe Corporation Commission, was empowered by law to take possession of tbe business and property of tbe People’s Bank, and to determine upon what terms and conditions it might resume business.
By bis letter of 4 April, 1921, tbe State Bank Examiner advised tbe president and directors of tbe People’s Bank of tbe terms upon wbicb tbe bank would be permitted to continue business. Tbe statute expressly authorizes tbe Corporation Commission to permit a bank, whose business and property it has taken possession of, to resume business, upon compliance with terms and conditions approved by tbe commission. Where tbe condition of a bank, under its supervision and control, is such that tbe Corporation Commission is authorized to take possession of its business and property, and then upon terms and conditions approved by tbe commission, to permit it to resume business, tbe commission, or tbe bank examiner, acting under its authority, instead of first taking possession of tbe bank, and tbus closing it, may impose terms and conditions upon- wbicb tbe bank may continue business, and tbus avoid losses to depositors, creditors and stockholders necessarily incident to tbe closing of tbe bank.
Tbe condition prescribed by tbe State Bank Examiner in bis letter of 4 April, 1921, upon wbicb tbe People’s Bank would be permitted to remain open and continue its business, was that $160,000 “be put up to take care of tbe loss that may accrue from tbe above (tbe manipulations of tbe cashier and bad loans specified) and any other loss that may develop on account of tbe condition of tbe bank. Ten per cent of tbis amount will have to be paid in cash, within tbe next fifteen days and tbe balance properly secured with collateral, tbe security to be passed upon by tbis department.
Tbis condition was imposed solely for tbe purpose of strengthening tbe credit of tbe bank and in order that its solvency might not be questioned. Tbe directors, at a meeting beld on 5 April, at wbicb tbe defendants were present, accepted tbe condition and so notified tbe bank examiner. Upon tbe agreement of tbe directors to put up tbe $160,000, as required by tbe bank examiner, tbe bank was permitted to continue business for fifteen days.
By accepting the terms and conditions contained in the proposal of the bank examiner, the members of the board of directors agreed to pay into the bank, to strengthen its credit, and in order that it might continue business, the sum of $160,000, the said members thus becoming liable to the bank, as the beneficiary of the agreement, jointly and severally, for said sum. As a result of said agreement, the bank was allowed to remain open and to continue business.
On 21 April, 1921, the fifteen days having expired, it was ascertained by the directors and reported to the bank examiner that the whole amount had not been paid in; the deficit being due to the failure of these three defendants to pay in the sums which they had agreed with the other directors to pay. This deficit amounted to about $27,000. The directors who had complied with their agreement to pay in the sums apportioned to each of them, were called upon by the State Bank Examiner to pay in the amount of this deficit and were notified that unless they did so at once, the bank would not be permitted to open for business the following morning. The deficit was immediately made good by the directors other than defendants and the bank opened for business the next morning, with its capital stock restored and its solvency no longer questioned.
The amount for which the defendants had become liable to their codirectors, by virtue of the agreement entered into on 5 April, was paid by these directors, all of whom had paid in their pro rata shares, in accordance with the agreement. The plaintiff in this action paid $331.50 of the deficit and now sues the defendants to recover the sum.
Defendants’ first contention, as stated in their brief, is that upon the facts alleged in the complaint they should have been sued “severally because their liabilities appear on the face of the complaint to have been several instead of joint.”
This is not an action to recover of defendants because of their liability, as stockholders, for the contracts, debts and engágement of the bank, under C. S., 237, such liability being limited “to the extent of the par value of the stock owned by them.” By their contract, made at the instance of the State Bank Examiner, for the benefit of the bank, all the members of the board of directors became liable, jointly and severally, for the payment into the bank of $160,000. Their liability was fixed by their contract, and is not limited by the statute. The bank examiner had no concern as to who put up' the $160,000. His requirement was that as a condition of the bank remaining open and continuing business this sum should be put up to take care of losses already sustained and that might develop by reason of the then condition of the bank. This requirement was met by the directors, who assumed the obligation as outlined
in the letter of tbe bank examiner, not as a board, but as individuals. They became and were jointly and severally liable for the whole amount which they assumed.
The liability of defendants, by virtue of their contract, being joint and several may be enforced either by a joint action against them all, or by separate action against any one or more of them at the election of the creditor. Black’s Law Dictionary (2 ed.), p. 662; 33 C. J., 868;
Hanstein v. Johnson,
112 N. C., 254.
Defendants’ second contention is that the liability of defendants upon the facts alleged in the complaint is “to the other directors, including plaintiff, as a unit, and therefore the directors should sue jointly, or one for all.”
The beneficiary of the contract made by the directors, including the defendants, is the bank. The contract, however, has been fully performed, the $160,000 has been paid into the bank, and the bank now has no cause of action on the contract against these defendants or any of their codirectors. These defendants not only agreed with the bank examiner, acting for the benefit of the bank, to put up the $160,000, but they also agreed with their codirectors and each of them that they would, each, pay into the common fund, to be raised by all, a sum in proportion to the number of shares owned by each. This they failed to do, and by reason of such failure the plaintiff, acknowledging his liability upon his contract, together with the other directors, except the defendants, have paid in the amount of such default. The plaintiff’s share of this amount has been ascertained and fixed definitely. No accounting is necessary to determine it. He alone is interested in the recovery of this amount, to wit, $331.50, from the defendants, under their contract, made with the bank examiner for the benefit of the bank. Plaintiff and defendants, together with their codirectors, were liable for the deficit, due to the default of defendants. The plaintiff having already paid his pro rata share of the $160,000 as fixed by agreement of all the directors, assumed and paid his proportionate part of the deficit, such part being ascertained and fixed in accordance with the agreement entered into by the members of the board of directors. The other directors, although they may have claims against the defendants because of amounts which they have paid in because of default of defendants, have no interest in or liability for the amount wdiich plaintiff paid in as his pro rata part of the deficit.
This action may therefore be maintained by plaintiff against the defendants, without joining his codirectors, for the plaintiff is the only person who has an interest in this cause of action. C. S., 446.
The order and judgment of Kerr, J., overruling the demurrer, is affirmed.
Defendants except to the overruling by Lyon, J., of their motions to nonsuit, and assign same as error.
Defendants contend that the payment by “plaintiff and his associate directors of the amount which defendants had agreed to put up, on 21 April, 1921, was voluntary, without authorization and without necessity because the original agreement at the directors’ table was several and not joint.”
It is true that the original agreement, entered into on 5 April, 1921, was voluntary. The members of the board of directors were under no obligation, as directors or as stockholders, to put up $160,000 to strengthen the credit of the bank and to remove any question as to its solvency. If the bank was at the time, or should thereafter become, insolvent, the liability of the members of the board, as stockholders, was fixed and limited by statute; C. S., 237. However, the condition of the bank was admittedly such that the bank examiner, acting under authority of the Corporation Commission, had full authority to take possession of its business and property, and if an investigation showed that it would be to the interest of creditors, depositors and stockholders that a receiver be appointed, to apply to the court for appointment of a receiver for the People’s Bank. Public Laws 1921, sec. 17.
The members of the board of directors, however, having voluntarily agreed to put up the $160,000, and thus complied with the condition prescribed by the bank examiner for the continuance in business of the bank, they became, jointly and severally, liable for the sum which they had agreed to put up. Having thus induced the bank examiner to allow the bank to continue in business, and the bank having continued its business because of the agreement, they were each and all liable for the payment into the bank of the sum required by him.
The right of the bank to enforce in the courts liability of all the directors for the sum which they had agreed to pay is admitted, but, in view of the situation brought about on 21 April, 1921, by default of defendants, it cannot be said that there was no necessity for action by the other directors, including the plaintiff. There was an admitted default on the part of the directors. They had not put up $160,000, in cash and securities, within fifteen days, and the bank examiner was not only well within his rights, but was performing his duty when he notified these directors that unless the deficit was paid that night the bank would not be permitted to open the next morning. The directors had not paid in all the sum required, $160,000, although each, except the three defendants, had paid in his pro rata part; they were not only liable for the deficit of about $27,000, but were about to lose the benefit which induced them to enter into the agreement, and to pay in their respective shares; for if the bank should be closed, as stockholders they would assuredly
have suffered “inevitable, great and irreparable loss, in money, property, credit, and public confidence.” The plaintiff, although the number of shares of stock owned by him was not large, would have shared in this loss, and his share of the loss would not have been necessarily in proportion to the number of his shares. Men often pay their own debts
without necessity,
but they do not often pay the debts of others voluntarily.
The transaction out of which this action arose is not an ordinary subscription contract, which is defined in 25 E. C. L., p. 1407, as “where the undertaking is to pay the amount set opposite the respective signatures of the parties, the contract of each subscriber being generally regarded as separate from that of others, so as to sustain an action against each subscriber individually.” Here the Chief State Bank Examiner advises the “president and chairman of the board of directors of the People’s Bank” that “in order that the solvency of your bank may not be questioned, it is necessary that $160,000 be put up to take care of the loss that may accrue from the above and any other loss that may develop on account of the condition that your bank is now in. Ten per cent of this amount will have to be paid in cash within the next fifteen days, and the balance properly secured with collateral, the security to be passed upon by this department.
“You are directed to call your board together at once and take the matter up with them, advising me of their action, in order that I may be guided in my decision with reference to allowing this bank to remain open.”
This was the proposal. The acceptance was embodied in a motion passed by the board and recorded in their minutes, as follows :
“That the board of directors assume the obligation as outlined in the letter of the State Bank Examiner of 4 April, 1921, assuming $160,000 upon the basis of stock held by the directors, totaling 304% shares, $526 per share.”
The apportionment of the said sum to the several directors was thereupon made and recorded in the minutes. The State Bank .Examiner was informed of the action of the directors. He was not concerned with the apportionment of the sum among the individuals who jointly and severally undertook to pay in the whole amount required.
The plaintiff, having paid $331.50, for which, as between himself and the defendants, the defendants are liable, seeks in this action to recover the same from the defendants.
The People’s Bank, for whose benefit plaintiff and defendants, with their codirectors, agreed to raise and put up the $160,000, could have maintained an action against the said directors to recover the full
amount which they agreed to pay.
University v. Borden,
132 N. C., 476;
Rousseau v. Call,
169 N. C., 173;
Boushall v. Stronach,
172 N. C., 273.
The defendants were in default upon their agreement. The plaintiff, although he had paid his pro rata share of the common fund, was liable to the bank for the deficit. He and others, under like liability, paid the sum for which, as between defendants and their codirectors, defendants were primarily liable. Plaintiff and his codirectors, who paid the sum for which defendants were liable, are subrogated to the rights of the bank.
“Subrogation is the substitution of one who, under the compulsion of necessity for the protection of his own interest, has discharged a debt for which another is primarily liable, in the place of the creditor, with all the security, benefits and advantages held by the latter with respect to the debt.”
Fidelity Co. v. Jordan,
134 N. C., 236.
There being no necessity for an accounting in this case to determine the amount which plaintiff paid for defendants, the said amount having been ascertained by the method adopted by all the parties to the agreement for determining the amounts for which each was to be liable, the plaintiff may maintain this action without joining his codirectors.
“Where several sureties pay the debt, and there is no evidence of a partnership, or joint interest, or of payment from a joint fund, the presumption of law is that each paid his proportion, and a joint action cannot be maintained.” 6 R. C. L., p. 1061.
“At common law, the several persons who have discharged the common obligation cannot sue jointly one who has not paid his share. Each must sue separately for his portion.” 13 0. J., 834.
“In a suit for contribution in equity, or under The Code practice, brought by the obligor who has discharged the debt, all the other obligors should be made defendants.” 13 C. J., 834.
The evidence in this case fully sustains the allegation of the complaint. The demurrer was properly overruled. The exceptions to the refusal of the motion for judgment as of nonsuit are not sustained.
The exception to the issues submitted by the court is not sustained. There was no error in refusing to submit the issues tendered by defendants. All matters of defense set up in the answer and supported by evidence were submitted by the court to the jury upon the trial of the issues set out in the record. Nor was there error in the portion of the charge excepted to by defendants.
We have carefully considered all the grounds urged in defendants’ brief in support of their motion for a new trial, but are of the opinion that no error has been committed in the trial of this action, and that the judgment should not be disturbed.
No error.