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STOCKHOLDERS HIT IN BANK DECISION Sale of Shares Declared No Bar to Responsibility in Failure. By the Associated Press. HAGERSTOWN, Md., July 29.An opinion holding that "there is individual responsibility of the stockholder of a bank to the creditor and that such liability is not ended by the transfer of stock" has been handed down in Circuit Court here. Written by Chief Judge D. Lindley Sloan and Associate Judge Frank G. Wagaman, the opinion revokes the decree of June 19, 1933, requiring each stockholder of record to pay the receiver an amount equal to the par value of the stock held by him. Verdict in Suit. The decision was made in a suit brought by the stockholders of the closed People's Banking Co. of Smithsburg. From review of numerous court decisions, the judges said: "We think it clearly decided that the Constitution requires the Legislature to give to creditors of banks and impose upon stockholders the following rights and obligations: "First, to give to creditors and impose upon stockholders direct and immedite responsibility to be enforced between themselves. "Second, to give the creditor the right to pursue a stockholder and to place upon the stockholder a liability for the debts of the bank incurred while the stockholder was such. An Asset of Creditors. "Third, the right of the creditor and the responsibility of the stockholder to continue, notwithstanding the stockholder transfers his stock. "Fourth, the liability of the stockholder to be an asset of the creditor and not to the corporation." The opinion defined "liability" as "debts attaching at the time stockholders were such irrespective of any subsequent transfer of the stock. The debts to be benefited by the liability imposed under all the cases were not the debts which might be owing upon insolvency of the bank. As to each stockholder, they were the debts attaching during the time he was such." May Be Collected. "The liability of a stockholder of a bank is 'an asset of the corporation' only in the sense that it may be collected by the receiver for the benefit of those creditors who became such while the stockholders against whom the liability is enforced were such. "It follows as a necessary result that stockholders who are also creditors are equitably entitled to set-off the debt of the bank to them against the stockholders' liability."
