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DEPOSITORS GROUP VISITS THREE BANKS Questionaires About Payments Left With Bankers Three more closed banks were visited Wednesday investithe Depositors League, headed by Frank Marynell Central Labor president league chairman Bittler. West Side Bank Bank Elmer Schroeder Edward Lamasco Bank liquidating each bank the committee left to be filled out by questionaire Uquidating agents and returned before Friday The questionaire asks information closed banks have not why made payments
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of Closed Banks Are Liable, Claim CONTINUED FROM PAGE ONE in any manner concern themselves value of their respective holdings of with the stockholders constitutional the stock. liability The fact is the bank or Ordinarily there is no common law bank commissioners have no more liability on individual stockholders right to collect the tockholders' confor corporate debts, and as the very stitutional liability than any other purpose of incorporation is to escape complete stranger individual and personal liability, it "Not single bank in Evansville follows that the effect of the constinow in process of liquidation or imtution imposing such liability nullimediately prior to such misfortune, fies the result of incorporation and caused an assessment to be made removes the law exemption, against its stockholders to restore to the extent of the liability named impaired capital, and the banking in the constitution. department of the state of Indiana "The fixed limited liability of bank has been equally in protectstockholders created by our constiing the rights of the creditors tution provides no remedy, so the Subject to Liability liability must be enforced by an appropriate action either at law or in "When one becomes stockholder in bank he does subject to the constitutional liability such When the constitution imposes stockholder however, with the unliability or creates right and fails derstanding that the individual liato prescribe remedy for its enforcebility will not be asserted until the ment, the judicial branch of the govcorporate assets have been found inernment charged, by implication, with applying the appropriate remedy, and this may be at law, or in "Creditors, whether depositors or equity according to the nature of the otherwise, should not be made to right. Where the liability is secon- wait the determination of stockholddary and not primary, equity is the ers' liability until the assets of the appropriate remedy It is manifest bank are exhausted An of the assets and ties of the to the court that the liability is secondary and not primary bank should be in an appropriate the stockholdDefense Contention ers' liability determined because it 'It is the contention of defendants' counsel that the exclusive remedy through the banking department of the state If that true there could be no such thing as "prematurely brought,' primary and secondary' liability for these matters were to be done by the banking department there could be no such thing as a creditor's suit to recover stockholder's liability at any time. nor an action at law by creditor "It is the court's opinion that counsel for defendants misconstrue and the acts of the legislature principle generally applicable to all liability of stockholders imposed by constitutions and statutes, that such liability is not to the corporation and cannot be forced by it in any form of action is not part of the bank's assets and the bank has not right or interest in the liability. The liability runs directly from the stockholders to the creditors "Not a single statute of Indiana provides remedy for the collection of the stockholders' constitutional fixed limited liability. and such statutes make no provision for either the bank or the bank commissioner to is the duty of stockholders to pay promptly and take upon themsel the burden of delay and risk. The stockholders cannot lose by paying because any would be turned back to them The interim of 'watchful waiting' could be tremendously disastrous the creditors. Many stockholders might remove from the jurisdiction of the court, thereby increasing expense of collection Many might dispose of their property utmost good faith whereby collections might or might not be greatly hampered Others by doubtful might transfer their property to avoid personal liability Others may die which would necessitate the filing of contingent claim against the the decedent because suit and summons cannot be maintained against such decedent's estate The present litigation is confronted with just such instances, viz: Fred W. Bockstege estate, Benjamin Bosse estate and Wilhelmina estate, which of course, cannot be maintained by the present action. Again borne by the stockholders proratably and not one for the other. "The proper remedy in the situation that confronts us, is an action in equity the purpose of its relief being to take account of the amount of debts determined, deduct therefrom the amount of assets determined would show the sum total to be raised and then apportion the same among the contributors in accordance with their sharehold- "In the case at bar the bank's insolvency has not been adjudicated and determined, therefore, creditor's bill in equity for an accounting is the proper action, and in such action the bank, its stockholders, its liquidating agent and bank are proper and necessary parties. No Interference "The present action does not in any sense interfere with the bank, the liquidating agent or the bank commissioner in the admnistration of the bank's affairs. The action is not an extraordinary remedy, but simple action in equity for an accounting by creditor for herself and all others similarly situated against the bank and its stockholders to ascertain and determine the amount of the latter's constitutional liability, if there be any. "Much was said on oral argument about the court's right to inquire into the affairs of the bank, and that creditors had legal remedy through the state bank commissioner. Every act of the legislature provides that visitorial powers to banks shall be limited to the banking department of the state, except as such are vested in the courts of the state The creditors of the West Side bank or any other state bank have no legal remedy of any kind or character for the enforcement of the stockholder's constitutional liability through the banking department of the state of Indiana. The plaintiff and others simi- larly situated under existing facts have no legal remedy whatever against the stockholders and the first paragraph of the complaint is an ac- tion at law. The second paragraph of the complaint is creditor's bill in equity for an accounting and is not prematurely brought. The plaintiff, or one similarly situated. are the only parties who could bring this kind of suit. The action presented by the first paragraph of complaint is prematurely brought."
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NEW ACT AFFECTS FIVE LIQUIDATING DEPOSITORIES HERE 0. P. Welborn, Indianapolis, and Three Aids Assume Charge in Evansville Monday REPLACE PRESENT AGENTS Appointee to Control Voluntary "Settling Up' of All Southwestern Indiana Banks INDIANAPOLIS July Welborn Indianapolis memberof the commission cial tonight was named by the commission to take charge all banks in and the Indiana district that are in voluntary liquiThe of Welborn was the first step to takel by the mission in of banks of the state have closed voluntarily power given by the bank law which went into effect on July THREE ASSISTANTS NAMED In Welborn the comalso three to aid the of the Evanaville They are George W Nichol Brown of English and Edward H. DeHority of Elwood McKinley said the three assistants will be m charge of the in ville are agents which serving Welborn will authorized assistants for the other two institutions The five banks affected are the American and Savings the the Lamasco West Side bank and the Howell The American the West the Central Union are the largest the STATE DIVISION PLANNED Although Welborn will charge be the Evansdistrict McKinley yet many ties will be in that He said It would. the entire Indiana area It the plan of the commission divide state into from four six districts with an agent in charge The boundaries various districts will be defined rapidly the the banks in the districts is completed McKinlye said an agent for the Gary Bend district probably will be the next to be He He said it not the of the bers for district but that the in Evansville is such that was believed advisable there MONDAY Welborn and his three will take over the affairs of the Evon Monday Wayne Governor Paul McNutt, explained the intention the that governor the system appointing district agents be adopted with to hastening payments to depositors and making depositors as the the liquidation He said that instances ports made to the depositors on the condition of the closed banks ACTING UNDER NEW LAW Under the new Indiana law the banking department given ity to take all banks in tary liquidation but the can not interfere with those in voluntary is quested by the judge in whose court the In the arranging of the districts was said that banks in Indianthe area probably will be handled direct the offices. for many an examiner the wts tioned the probable agent for those in this