First National Bank v. Riggins ( 1899 )

EaiRCLotji, C. J.

Tbe plaintiff, tbe First National Bank, is in liquidation, and a committee duly appointed has charge of its property, to collect tbe assets and pay its debts, and distribute the balance among tbe stockholders. Tbe defendant is a stockholder in plaintiff bank, and is indebted to it for his stock, wbicb was deposited as collateral security, and this action is brought to collect tbe amount due on said stock, and to sell tbe stock in payment, or part payment of the amount found to be due.

Tbe defendant alleges that upon a final settlement of tbe bank’s affairs, be will be entitled to $800, as bis distributive share of the assets, and demands a credit on bis debt for that amount. This allegation and this right are denied, and it does not appear what will be bis distributive share. In cases of insolvency, private or corporate, tbe general rule is that tbe net balance must be distributed pro rata among the beneficiaries.

Under the National Banking Act, when an assessment is made, each stockholder is required to pay his part in full, regardless of whether he is a debtor or creditor of the bank, and when the collections are made, and all debts and expenses axe discharged an equitable distribution of the assets is made. The same rule applies in the settlement of insolvent estates by executors and administrators. And so it is in winding up the business of insolvent Building and Loan Associations, as was held by this Court in Meares v. Duncan, 123 N. C., 203, and cases cited.

If the defendant’s contention was allowed, lie would get the full value of his stock, at least pro tanto, and thus the net amount for the other stockholders would be reduced, and the principle of an equitable settlement would be disturbed, as the liability of the stockholder would be diminished, and that of the other stockholders increased, which would be a result not contemplated in law or equity. As a stockholder, he is liable to an amount equal to his stock, or to a just proportion if all is not required; but as a creditor, he is entitled only to a dividend in proportion to other creditors. His liability as a contributor for the benefit of creditors must be distinguished from his character as a simple contract debtor to the bank upon ordinary business transactions. The money arising from unpaid shares is a trust fund for all the creditors, and can not be affected by any individual transactions of the stockholder, to the prejudice of the other stockholders. Hobart v. Gould, 8 Fed. Rep., 57; Morse on Banks and Banking, p. 500.

Besides, the distributive share of the defendant is unknown, and it seems it would be impracticable to ascertain it with any certainty.

The above authorities do not stand upon facts on all fours with the present case, but they all enunciate a principle plainly applicable to the present case; and that principle is so manifestly just that we have no hesitation in adopting it. We think therefore that the defendant can not set-off wliat he supposes to be his distributive share against his individual indebtedness to the bank.

Affirmed