Commercial National Bank of Portland v. Weinhare

These actions were brought in the circuit court of the state of Oregon for Multnomah county upon separate demands to recover the value of stock severally held by Weinhard and Williams in the Commercial National Bank of Portland, Oregon; Williams owning 60 shares of the par value of $6,000, and Weinhard 100 shares of the par value of $10,000. By stipulation the cases were heard together in the circuit court; a jury being waived and a trial had to the court. The cases were considered together as one appeal in the supreme court of Oregon, which affirmed the judgment of the lower court (41 Or. 359, 68 Pac. 806) assessing the value of the stock, and giving judgment in favor of the plaintiffs, now defendants in error. The same facts and questions are involved in the cases, and they will be considered together. The one question arises from a motion on the part of the bank for nonsuit, on the ground that the plaintiffs below had introduced no testimony, as a part of the case in chief, tending to show the value of the stock for which a recovery was sought. As appears in the record, much testimony was taken, and the Oregon supreme court regarding the stock as of some value; at least, it was held that if there was any error in overruling the motion for nonsuit, it was cured by the subsequent action in submitting testimony as to the value of the stock. In any event, this feature of the case does not present a Federal question, and upon writ of error from the judgment of a state court we are to consider in the first instance only the Federal questions involved. If those were correctly decided the judgment must be affirmed. Murdock v. Memphis, 20 Wall. 590, 22 L. ed. 429. The plaintiffs below recovered judgment for the value of the stock upon the theory that there had been a conversion thereof, because the board of directors and the stockholders directed the assessment resulting in the sale of the stock of the plaintiffs below in satisfaction thereof.

The Commercial National Bank of Portland was duly organized under the national banking act, and carried on business in the city of Portland, Oregon. It appeared that the capital of the bank had become impaired, and thereupon such proceedings were had that on December 5, 1896, the Comptroller issued the following notice to the bank:

Treasury Department,

Office of Comptroller of the Currency,

Washington, D. C., Dec. 5, 1896.

Whereas, it appears to the satisfaction of the Comptroller of the Currency that the capital stock of the Commercial National Bank, Portland, Oregon, has become impaired to an extent which makes necessary an assessment of two hundred and fifty thousand dollars ($250,000) upon the shareholders of said association to make good such deficiency:

Now, therefore, notice is hereby given to said association, under the provisions of § 5205 of the Revised Statutes of the United States (U.S.C.omp. Stat. 1901, p. 3495) to pay the said deficiency in its capital stock by assessment upon its shareholders, pro rata, for the amount of the capital stock held by each, and if such deficiency shall not be paid, and said bank shall refuse to go into liquidation, as provided by law, for three months after this notice shall have been received by it, a receiver will be appointed to close up the business of the association, according to the provisions of § 5234 of the Revised Statutes of the United States (U.S.C.omp. Stat. 1901, p. 3507).

In testimony whereof, I have hereunto subscribed my name, and caused my seal of office to be affixed to these presents, at the Treasury Department, in the city of Washington, and District of Columbia, this 5th day of December, A. D. 1896.

James H. Eckels,

Comptroller of the Currency.

To the Commercial National Bank, Portland, Oregon.

After receipt of this notice, upon December 12, 1896, the board of directors passed this resolution:

'Resolved, That in accordance with the notice served upon this association by the Comptroller of the Currency, under date of December 5, 1896, and received by this bank on the 11th day of December, 1896, an assessment is hereby levied upon the shareholders of this bank of 50 per cent or $50 per share, payable at this bank on or before March 11, 1897.

'And, resolved, That the cashier of this bank be, and he hereby is, authorized and instructed to serve upon each shareholder of the bank a legal notice of the above assessment by sending such notice to each shareholder's address by registered mail.'

Upon December 17, 1896, notice of this assessment was served upon each of the stockholders of the bank. The defendants in error having failed to pay this assessment, on March 18, 1897, the board of directors passed a resolution directing the sale of the delinquent's stock to be made at public auction on May 5, 1897. In pursuance of this order, and on the day named, the stock was sold for the amount of the assessment. The Federal question is whether the board of directors, in thus assessing and selling the stock of the defendants in error, exceeded their powers under the national banking act; it being claimed that a valid assessment could only be made by the action of the stockholders, and that the sale by the directors upon this assessment was unlawful, and amounted to a conversion of the stock.

Mr. E. S. Pillsbury and Messrs. Platt & Platt for plaintiff in error.

Messrs. Thomas O'Day, George H. Williams, and George H. Durham for defendants in error.

Statement by Mr. Justice Day:

Mr. Justice Day delivered the opinion of the court: