Union Savings Bank of San Jose v. Dunlap

CHIPMAN, C.

Judgment for plaintiff on a general demurrer to the complaint, from which defendant appeals. By appropriate proceedings, under the Banking Act of 1895 (Stats. 1895, p. 175), plaintiff was, on March 13, 1899, adjudged to be insolvent, and the court directed that the plaintiff corporation and all its assets be turned over by the bank com

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missioners, who then, held possession of them under said act, to the directors of the corporation, for the purpose of closing the affairs of plaintiff and liquidating its indebtedness, and it was alleged in the complaint that the said board of directors went into possession and control of plaintiff and its assets, and ever since have held such possession, for the purpose of winding up its affairs and liquidating its indebtedness. Pursuing strictly the provisions of the Civil Code in such cases provided, the directors levied an assessment upon the unpaid subscription of the capital stock of plaintiff for the alleged purpose of liquidating the debts of the corporation, fixed the time when the same would be delinquent, and, after the assessment had become delinquent, they duly waived further proceedings for the collection of the assessment, and elected to proceed by action to recover the amount of such assessment due from defendant.

It is alleged that many of the stockholders are insolvent and unable to respond to any call or assessment in any amount whatever, and “that the amounts which can be collected from all the solvent stockholders .of plaintiff corporation on this assessment, added to all the other assets of said plaintiff, will not be sufficient to pay the liabilities of said plaintiff or satisfy its debts in full, and that said assessment is necessary for the purpose of liquidation.”

Defendant concedes, in his brief, that “all of the proper and legal steps were taken preparing the way for action on the assessment; . . . and no point is made here that the provisions of the code were not followed explicitly; it is admitted that, had the corporation been a going concern, and in the ordinary course of business, the assessment was a proper one, and legally levied.” It is contended that neither the corporation nor the directors had any power to make the levy, and the assessment was void, because “the directors of the corporation could make the levy pursuant only to an order of the court after it had determined the necessity therefor, the amount thereof, and a direction thereto.”