Heine v. Degen ( 1935 )

I cannot concur in the foregoing opinion because of its citation of and dependence on the rules announced in the cases of Sanders v. Merchants State Bank, 349 Ill. 547, and Golden v.Cerveitka, 278 A 409. In my opinion those cases should be overruled and should not be given the added weight accorded them by the result reached in this case. It is said that they are not controlling in this litigation, and the opinion goes to some length in pointing this out. The fact remains, however, that the trial court attempted to state an account in accordance with those rules, and in affirming that decree the effect is to re-affirm those principles which have been destructive of State banking in Illinois.

The constitutional provision is: "Every stockholder in a banking corporation * * * shall be individually * * * liable to its creditors, over and above the amount of stock by him or her held, to an amount equal to his or her respective shares so held, for all its liabilities accruing while he or she remains such stockholder." It is necessary to determine the exact meaning of this language and to define its limits. To do so one must consider the words used, the object to be attained and also the consequences to be avoided. I assume that the framers of the constitution used words they intended to use, avoided words they did not intend to use, intended each word to have a meaning, and that the meaning intended for each word was that ordinarily to be applied to legal instruments. Webster's and the Century Dictionary agree that the verb "accrue" means, in law, "to become a present and enforcible right or demand." The dictionaries also inform us that the verb "remain" means to continue. Assuming, then, that the constitutional provision was intended to be understood and interpreted by an application of the ordinary usage of the words employed I arrive at the following result: "Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors, over and above the amount of stock by him or her held, to an amount equal to his or her respective shares so held, for all its liabilities becoming present and enforcible rights or demands while he or she continues to be such stockholder."

The object sought to be attained by the constitutional provision cited was to impose the well known and fully understood double liability of stockholders. Provisions of this kind, in widely variant language, had been common in private bank charters prior to the constitution of 1870 and had also been applied to other private corporations. References to various private laws will disclose examples too numerous to be quoted in this dissent. The simple language used in the constitution indicates an intent to impose this double liability upon all who might own the stock of a bank at the time of the maturity of any of its engagements. Nothing more can be read into it.

It is equally apparent that those who wrote the constitution wished to avoid any unworkable plan which would hold out to creditors results chimerical rather than substantial. The determination of the persons who are stockholders in a bank at the moment of the maturity of any obligation is quickly and easily ascertainable and is readily within the reach of a court of equity, which can look behind or set aside any fraudulent or fictitious transfer of stock. The creditors can thus have a definite remedy easily ascertained, swiftly imposed and productive of immediate results in their behalf without protracted or expensive litigation. On the other hand, it has been demonstrated by actual experience that it is not practicable to construe the word "accruing" as synonymous with "incurred." Efforts to state accounts wherein deposits are charged against lists of stockholders as of various dates of stock ownership have resulted only in protracted and expensive litigation not fruitful of any practical results to stockholders but highly productive of sharply-contested and keenly-argued issues as to liabilities on the part of stockholders and as to the application of the proceeds of anticipated judgments on the part of creditors. It is apparent, and experience has proved, that as to banks with large deposits and an outstanding issue of stock which has been subject to considerable trading, an exact imposition of a stockholder's liability on such a theory is impossible. Neither is it possible to justly and equitably make distribution of a fund so collected if this doctrine is adhered to. I may safety assume that the framers of the constitution intended no such impracticable and unworkable plan, and that they did not intend that years should be spent in determining a liability which, if to be of any benefit to depositors, must be swift and certain and susceptible of imposition without unreasonable expense. I also assume that the framers of the constitution did not intend that a person once a stockholder in a bank should forever remain subject to the hazards of liability not matured or accrued during the period of his stock ownership. Had it been so intended, different or additional words would have been used to make such an unreasonable intention apparent and clear and the word "remains" would have been omitted or modified. This conclusion as to this matter is sustained by the case of Duke v. Johnson, 211 Pac. (Wash.) 710, and is in harmony with the case ofAndrews v. Commercial State Bank, 221 N.W. (Iowa,) 809.

ORR and HERRICK, JJ., also dissenting.