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202 U. S.

WHITE, MCKENNA and DAY, JJ., dissenting.

simply relative as to particular creditors existing at the time.

Besides to me it seems that the rule of limited liability now announced is self-destructive. What is the liability which the statute imposes? Is it a responsibility only to pay debts of the bank as they existed at the time a fraudulent transfer was made? Not so; for the only liability imposed by the statute on the stockholders is an obligation to respond to an equal and ratable assessment made by the Comptroller to pay the debts existing at the time of the failure. Rev. Stat. $85151, 5234. From this it results that if a person is not a stockholder at the time of the failure he is liable for nothing, and if he is such stockholder he is liable for the statutory sum and no other. This plain result of the statute to my mind demonstrates the error of the conclusion as to limited liability now announced. For, if Dewey was not a stockholder at the time of the failure there is an entire absence of statutory authority to make any assessment whatever upon him, and if he was such stockholder then the statute fixed the measure of liability, and there is no power to substitute by judicial discretion a liability which the statute does not impose, and which on the contrary is excluded by its express terms. In other words, the statute imposes a uniform and ratable liability upon all stockholders who are liable at all and affords no justification for assessing one stockholder at one amount and another stockholder in another sum, upon the theory that the date of the contracting of debts and not the date of the failure is the test of liability.

And that this departure from the long received and judicially sanctioned construction of the statute will tend to destroy the security of the national banking system by rendering the double liability impossible of enforcement results from a few obvious considerations. Thus, under the rule now announced, one who owns or controls a majority of the stock of a national bank, knowing it to be insolvent, can transfer his stock to wholly irresponsible persons in order to avoid the statutory liability,

WHITE, McKenna and Day, JJ., dissenting.

202 U.S.

and, by postponing the date of open failure until the existing debts of the bank have been extinguished by novation, leave the creditors existing at the time of the failure with substantially no stockholder to respond to the double liability. Indeed, this condition of things cannot be more cogently made manifest than by considering the facts in this case as found by the court. What are they? They are that Dewey was an officer of the bank and knew its hopelessly insolvent condition, and that he transferred his stock to avoid the liability, leaving the shares in the name of his agent or causing that agent to put the same in the names of irresponsible people. In effect controlling the affairs of the bank, Dewey delays the open failure until by a change of the situation, although the indebtedness of the bank may not have diminished, yet, by a mere substitution of creditors, the particular debts due at the time of his fraudulent transfers have largely been extinguished. And thus, when the open failure comes, it is now decided that, as to the shares fraudulently transferred by his agent, Dewey owes nothing towards payment of the debts of the bank, except as to debts still existing, which were contracted prior to the fraudulent transfers. In other words, it is held that although the bank was insolvent prior to and at the time of the commission of the fraudulent acts and continued so to the time of the failure, the fraudulent transferrer has accomplished the wrong which the statute was intended to prevent by holding back and preventing the open failure until he had discharged, at the expense of the subsequent creditors of the bank, the indebtedness existing at the time of the fraudulent transfers. Under the rule hitherto prevailing the duty of the administrative officer was plainly marked out in the statute, to realize the assets, and, if necessary to meet a deficiency of assets, to assess ratably the legal stockholders—a simple and effective rule. Now the duty of the administrative officer is wholly changed. He must analyze the situation at the bank, he must determine who were creditors at this time and that, in order to fix the liability of stockholders, and when this process is gone through

202 U. S.

WHITE, MCKENNA and DAY, JJ., dissenting.

with, instead of levying the equal and ratable statutory liability, he must call upon the shareholders for unequal and unratable contributions.

I can see no reason for now changing the construction of the National Banking Act as applied in forty years of administration, as embodied in the text and spirit of the statute and as sanctioned by a long line of decisions of this court, especially when the inevitable consequence of such change will, in my judgment, operate to the detriment of the public interest and the security and stability of national banks which it was the purpose of Congress by the statute to secure.

It remains only to briefly notice the case of Peter v. Union Mfg.Co., 56 Ohio St. 181, heretofore referred to and cited by the court in its opinion. To understand that case a prior decision of the Supreme Court of Ohio, Brown v. Hitchcock, 36 Ohio St. 667, of which the opinion in the Peter case was but an evolution, must be taken into view. In Brown v. Hitchcock, interpreting the Ohio law, the Supreme Court of Ohio held that by the effect of the constitution and laws of that State a stockholder in an Ohio corporation who was subjected to a double liability was impotent to dispose of his stock, however bona fide might be the sale or disposition thereof, so as to escape liability to creditors who were such at the time of the transfer. In other words, the court held that the effect of that double liability imposed by the Ohio statutes was to prevent an efficacious transfer of the stock without the consent of the creditors, since such creditors, despite a bona fide sale, as long as debts contracted previously remained unsatisfied, had the power, if circumstances required, to proceed against the stockholders who were such at the time the debt was contracted, and this irrespective of whether the corporation was at the time of the transfer solvent or insolvent. Subsequently, in the Peter case, the Ohio court was called upon to determine how far a transfer of stock by a stockholder in an Ohio corporation operated to relieve him from future debts of the corporation. As to this question the court, in effect,

WHITE, MCKENNA and Day, JJ., dissenting.

202 U. S.

applied to the Ohio statutes the English “out and out” rule; in other words, that court, whilst reiterating its ruling as to existing creditors, decided that a stockholder who made an out and out sale, although the corporation was insolvent and the purpose was to escape the double liability, was discharged from any responsibility to future creditors, although remaining liable to existing creditors. The difference between the Ohio statutes, as thus expounded, and the National Banking Act, as expounded by this court, is at once demonstrated by the statement that under the National Banking Act the stockholder, as repeatedly decided by this court, has a right, when acting in good faith, to dispose of his stock and escape liability both as to existing and future creditors, and that the theory of out and out transfers as to future debts, applied by the Ohio court to the statute of that State, was expressly repudiated by this court as to the National Banking Act in the Case and subsequent decisions. To treat then the Ohio case as authoritative here is, in effect, but to expunge the National Banking Act from the statutes of the United States and to substitute in its stead the statutes of Ohio, when such statutes have a wholly different significance as interpreted by the highest court of that State.

I therefore dissent.

I am authorized to say that MR. JUSTICE MCKENNA and MR. JUSTICE DAY concur in this dissent.

202 U. S

Syllabus.

MCNEILL v. SOUTHERN RAILWAY COMPANY.

SOUTHERN RAILWAY COMPANY v. MCNEILL.

APPEAL AND CROSS APPEAL FROM THE CIRCUIT COURT OF THE

UNITED STATES FOR THE EASTERN DISTRICT OF NORTH CAR

OLINA.

Nos. 370, 594. Argued April 2, 3, 1906.-Decided May 28, 1906.

Although the dispute which was the origin of the controversy involved

less than $2,000, where the controversy presented by the bill involves the right of enforcement of statutory penalties against complianant of over $2,000, and also its right to carry on interstate business within the State, which is worth more than $2,000, the Circuit Court has juris

diction so far as the amount in controversy is concerned. A suit brought by a railway company against the members of a state rail

way commission to restrain them from interfering with complainant's property and interstate business under a state statute alleged in the bill to be unconstitutional as imposing burdens on interstate commerce is not a suit against the State within the meaning of the Eleventh Amend

ment. The interstate transportation of cars from another State which have not

been delivered to the consignee, but remain on the track of the railway company in the condition in which they were originally brought into the State, is not completed and they are still within the protection of the

commerce clause of the Constitution. While a State in the exercise of its police power may confer power on an

administrative agency to make reasonable regulations as to the place, time and manner of delivery of merchandise moving in channels of interstate commerce, any regulation which directly burdens interstate commerce is a regulation thereof and repugnant to the Federal Constitution, and so held that an order of the North Carolina Corporation Commission requiring a railway company to deliver cars from another State to the consignee on a private siding beyond its own right of way was

a burden on interstate commerce and void. Quere whether such an order applicable solely to state business would be

repugnant to the due process clause of the Constitution. An injunction granted by the final decree should not be broader than the

necessities of the case require and if broader than that it will be modified, as in this case, by this court.

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