Freeman, Etc. v. Rogal ( 1944 )

The Secretary of Banking took possession of Pittsburgh-American Bank and Trust Company on September 25, 1931. On November 18, 1931, he determined, as Receiver, to liquidate its business and property. On February 1, 1939, he decided to enforce the additional statutory liability of the stockholders for the debts of the bank and gave written notice of assessment and demand for payment on or before March 6, 1939. On October 1, 1941, he brought this suit in assumpsit against one of the stockholders who had failed to pay the assessment. The action was defended on the ground that the period from September 25, 1931, the date of the closing of the bank, to March 15, 1933, the date of the filing of the Receiver's first and partial account, constituted a sufficient time within which he should have made his assessment and demand and that therefore the Statute of Limitations began to run more than six years before the commencement of this action. Defendant set forth as "new matter" the various appraisements of assets and statements of liabilities filed from time to time, all of which showed such an excess of liabilities over appraised value of assets that, it is alleged, it should have been clear to the Receiver almost from the beginning that enforcement of the additional statutory liability of the stockholders would be necessary.

The court sustained plaintiff's motion to strike off the "new matter" and made absolute plaintiff's rule for judgment for want of a sufficient affidavit of defense.

In actions brought to enforce the liability of stockholders for debts of the corporation the question has frequently arisen as to the operation of the Statute of Limitations. When the suit was to recover the unpaid balances of stock subscriptions, it was originally determined, in a number of decisions by this court, that the Statute ran immediately from the date when the insolvency of the corporation appeared either by adjudication in bankruptcy, the making of an assignment for the benefit of creditors, or the appointment of a receiver, but, when the suit was to enforce the additional statutory liability of the stockholders, the Statute ran only from the time when it was determined to what extent such liability would have to be enforced and an assessment or demand was actually made. However, in Bell v.Brady, 346 Pa. 666, 669, 670, 31 A.2d 547, 549, it was pointed out, for the reasons there stated, that since the enactment of the Department of Banking Code of 1933, P. L. 565, there was no longer justification for a distinction in this respect between the two classes of cases and therefore in all such actions the Statute runs, in general, from the time of the making of an assessment or demand by the Receiver.

In Bell v. Cabalik, 346 Pa. 115, 29 A.2d 678, which was an action to enforce the statutory liability of a stockholder of the very bank involved in the present litigation, the question was raised for the first time as to whether the Secretary of Banking as Receiver of an insolvent banking institution could, either intentionally or negligently, unreasonably postpone the making of an assessment without running afoul of the Statute of Limitations. In that case the defendant set up as a defense the bar of the Statute because of the Receiver's failure to make demand within a reasonable time after he knew or should have known that the assets would be insufficient to pay the creditors in full and that an assessment against the stockholders would therefore be necessary. However, that defense, although urged in the brief of an amicus curiae, was not listed by the defendant as one of the questions on appeal, and what was decided was merely that the claim of the Receiver was not barred because of his failure to make the assessment within six years of the time when he entered into possession of the bank and determined to liquidate its affairs.

In Bell v. Brady, 346 Pa. 666, 31 A.2d 547, the proceedings were in equity against the stockholders of a trust company to recover for unpaid stock subscriptions. The question was there flatly raised — indeed it was the only question submitted on appeal — whether the action was barred by delay, eleven years having elapsed between the time when possession of the bank was taken by the Receiver and the time when he made demand for payment of the balance due on the stock. It was held that while, as previously stated, the rule in such cases was the same as in those to enforce the additional statutory liability, namely, that the Statute runs only from the time when an assessment or demand is made, a further principle was applicable which prescribed that where the time of making a demand is within the control of the plaintiff it must be made within a reasonable time, this being a rule applicable generally to contracts. Accordingly, the court below was directed to hear evidence and determine whether demand had been made within such time and, if not, when the running of the Statute properly began.

In the present case we are asked to extend the application of this principle to suits at law to enforce the statutory liability of the stockholders. We are of opinion, however, that it is a principle applicable only where the liability is contractual and that it has no place where the liability is one created by law and enforceable as a statutory obligation by the Secretary of Banking. Although we held in Harr, Secretary ofBanking, v. Mikalarias, 328 Pa. 49, 195 A. 86, that proceedings to recover the balances due on stock subscriptions and proceedings to enforce the statutory liability both require the making of a demand or assessment by the Receiver and are both within the compass of section 723 of the Department of Banking Code of 1933, P. L. 565, we cannot sanction the proposition that in the enforcement of the statutory liability the Secretary of Banking is governed, in imposing an assessment, by a principle, applicable solely to the law of contracts, which would require his doing so within a reasonable or otherwise prescribed time. We are further supported in this view by the consideration that while, in the Brady case, the proceedings were in equity before a chancellor, actions to recover on the statutory liability must be brought at law (Gordon, Secretary of Banking, v. Biesinger, 335 Pa. 1,6 A.2d 425), and it would be obviously impractical to have a multitude of different juries, in suits brought by the Receiver of a bank against its numerous stockholders, attempt to determine whether the Secretary of Banking acted with proper expedition in making the assessment, — a problem complicated, as it is, by the many difficult factors referred to in the opinion in the Brady case (p. 671, A. p. 550).

For the reasons stated, we are of opinion that the court below properly struck off the "new matter" and entered judgment against defendant for want of a sufficient affidavit of defense.

Judgment affirmed.