{ "id": 3344284, "name": "Armin F. Hillmer et al., Appellees, v. Chicago Bank of Commerce et al. Stevens A. Bennett et al., Appellants", "name_abbreviation": "Hillmer v. Chicago Bank of Commerce", "decision_date": "1939-12-22", "docket_number": "Gen. No. 40,575", "first_page": "43", "last_page": "55", "citations": [ { "type": "official", "cite": "303 Ill. App. 43" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "362 Ill. 357", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2593343 ], "opinion_index": 0, "case_paths": [ "/ill/362/0357-01" ] }, { "cite": "367 Ill. 113", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2577450 ], "opinion_index": 0, "case_paths": [ "/ill/367/0113-01" ] }, { "cite": "77 Ill. 296", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 821788 ], "opinion_index": 0, "case_paths": [ "/ill/77/0296-01" ] }, { "cite": "278 Ill. 409", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 4871646 ], "opinion_index": 0, "case_paths": [ "/ill/278/0409-01" ] }, { "cite": "195 Ill. 112", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5584714 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill/195/0112-01" ] }, { "cite": "359 Ill. 419", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5278530 ], "opinion_index": 0, "case_paths": [ "/ill/359/0419-01" ] }, { "cite": "349 Ill. 547", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2603896 ], "opinion_index": 0, "case_paths": [ "/ill/349/0547-01" ] }, { "cite": "296 Ill. App. 406", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3152557 ], "opinion_index": 0, "case_paths": [ "/ill-app/296/0406-01" ] }, { "cite": "292 Ill. App. 448", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3311449 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill-app/292/0448-01" ] }, { "cite": "291 Ill. App. 558", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 5621430 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill-app/291/0558-01" ] }, { "cite": "291 Ill. App, 460", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 5621297 ], "opinion_index": 0, "case_paths": [ "/ill-app/291/0460-01" ] }, { "cite": "366 Ill. 98", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2580209 ], "opinion_index": 0, "case_paths": [ "/ill/366/0098-01" ] }, { "cite": "278 Ill. 409", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 4871646 ], "opinion_index": 1, "case_paths": [ "/ill/278/0409-01" ] }, { "cite": "296 Ill. App. 406", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3152557 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/ill-app/296/0406-01" ] }, { "cite": "292 Ill. App. 448", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 3311449 ], "opinion_index": 1, "case_paths": [ "/ill-app/292/0448-01" ] }, { "cite": "291 Ill. App. 558", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 5621430 ], "weight": 2, "opinion_index": 1, "case_paths": [ "/ill-app/291/0558-01" ] }, { "cite": "366 Ill. 98", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2580209 ], "opinion_index": 1, "case_paths": [ "/ill/366/0098-01" ] } ], "analysis": { "cardinality": 822, "char_count": 20650, "ocr_confidence": 0.527, "pagerank": { "raw": 9.597050361065292e-08, "percentile": 0.5263384081465753 }, "sha256": "be28f47d1c31e500a5ab7dabb2e9f1842ef121bce1a8aa7f3ef74699166fedcf", "simhash": "1:954d0567bd005fe8", "word_count": 3547 }, "last_updated": "2023-07-14T18:08:42.788004+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Armin F. Hillmer et al., Appellees, v. Chicago Bank of Commerce et al. Stevens A. Bennett et al., Appellants." ], "opinions": [ { "text": "Mr. Justice O\u2019Connor\ndelivered the opinion of the court.\nPlaintiffs on behalf of themselves and other creditors of the Chicago Bank of Commerce, brought suit against former and final stockholders of the bank to enforce the superadded, constitutional liability of the stockholders. The cause was referred to a master in chancery who took the evidence, made up his report and recommended a decree adjudging defendants liable for certain specific amounts. The decree substantially followed the recommendation of the master, and certain of the stockholders prosecute this appeal.\nThe record discloses that the Chicago Bank of Commerce was organized April 5,1930, with a capital stock of $3,000,000 divided into 30,000 shares of $100 each. Afterward on February 7, 1931, the capital stock was reduced to $1,500,000 divided into 30,000 shares of the par value of $50 per share. In accomplishing the reduction $2,400,000 was distributed among the stockholders. The auditor of public accounts approved the reduction and each stockholder was given a new certificate of the par value of $50 in lieu of the old certificate of the par value of $100. The bank conducted its business in Chicago until June 25, 1932, when it closed and possession was taken by the auditor of public accounts. Afterward the auditor appointed a receiver and filed a suit in the circuit court of Cook county to liquidate the bank, which suit is still pending. The receiver in that case has paid dividends aggregating 35 per cent. On the day the bank closed, June 25,1932, a suit was filed by certain creditors of the bank and on July 1, 1932, a similar suit was filed by other creditors against the stockholders, which suits were consolidated and disposed of as one suit. The decree entered in the consolidated cases is the one that is before us on this appeal.\nThe master found that on the hearing before him, exhibits were introduced (which he returned with his report) \u201cshowing the names of all persons to whom\u201d the bank was indebted at the time it closed, the amounts of the respective liabilities of the bank unpaid, the dates of the accrual of each, and the aggregate amount of unpaid liabilities \u201cas adjusted and reduced by set-offs and counterclaims\u201d from the date the bank closed, June 25, 1932, to April 16, 1936, which aggregated $3,871,864.42. The decree which was entered September 17, 1938, found that on that day there was more than $3,000,000 still due and unpaid to the creditors of the bank; that the number of persons to whom the bank\u2019s indebtedness was due was large, more than 32,000, and the master found that claims were correct and proper.\nThe unpaid liabilities which accrued from the time the bank opened, April 5, 1930, to the time the capital stock was reduced, February 7, 1931, were $79,417.60 and the unpaid liabilities which accrued covering the period from the time of reduction to the time the bank closed, June 25, 1932, were $3,792,447.02.\nA number of stockholders have paid and settled their liabilities with the receiver. Defendants, about 31 stockholders of the total number of stockholders who appeal, contend that the unpaid liabilities which accrued during the $100 period were satisfied and discharged by payments made by other contemporaneous stockholders.\nThe law is well settled that \u201cIf a group of contemporaneous stockholders pay to the receiver in the creditors\u2019 suit a sum equal to all the liabilities incurred during the contemporaneous ownership, their liabilities are satisfied, and there is no warrant of law to compel that group to pay to the receiver, for the benefit of creditors, a sum greater than the aggregate of liabilities incurred by the bank while that group were the stockholders.\u201d Burket v. Reliance Bank & Trust Co., 366 Ill. 98; Schwarts v. Broadway Trust & Savings Bank, 291 Ill. App, 460; Cohen v. North Ave. State Bank, 291 Ill. App. 558; Flanagan v. Madison Square State Bank, 292 Ill. App. 448; Burket v. Reliance Trust & Savings Bank, 296 Ill. App. 406. And defendants say that of the unsatisfied debts which accrued during the $100 period, only $79,417,60 remained unpaid when the bank closed; that since that time the receiver in the liquidation suit has paid dividends to creditors whose claims accrued during the $100 period aggregating $23,825.28, leaving a net of unpaid liabilities which accrued during that period of $55,592.32, and that the evidence shows that more than the latter sum has been paid by other contemporaneous stockholders. That the payments made by such stockholders fall into two classes, (1) those who held stock only during the $100 period and who paid $17,303, and (2) those stockholders who held shares during both the $100 period and the $50 period, and who paid more to the receiver than they were required on account of holding stock during the $50 period; that such excess payment should be applied in reduction of the liabilities which accrued during the $100 period. In explanation counsel say: \u201cThis situation is illustrated by the case of William H. Emery, who held 50 shares of the par value of $100 each from April 5, 1930 to February 7, 1931. On this latter date the par value of his shares was reduced to $50 each. He then held the 50 shares of the par value of $50 each from February 7, 1931, to the close of the bank, June 25, 1932. Emery\u2019s maximum liability on the 5\u00d3 shares of $50 par stock held from February 7, 1931 to June 25, 1932, was obviously $2,500. But he paid the receiver in settlement of his super-added liability $5,000. His payment was $2,500 in excess of his maximum liability on $50 par shares held. That part of his payment in excess of his maximum liability on $50 par shares must have been made to satisfy his responsibility for liabilities which accrued during some other period while he held stock of the bank. Inasmuch as the only other period in which he held stock was the $100 par period, his excess payment of $2,500 must necessarily reduce liabilities of stockholders which accrued during the $100 par period.\u201d Counsel then analyze the payments and the liabilities and their conclusion is that the payments are \u201c$13,686.18 more than the unsatisfied liabilities of the bank which accrued during the $100 par period.\u201d If this method of computation were adopted the maximum liability of one who held a share of stock during the existence of the bank would be $150. We think Emery was clearly liable for not more than $100 per share for the 50 shares.\nAs stated above, the law is clear that if one held a share of stock of the par value of $100 in case of insolvency of the bank he would be liable for not more than $100. If he sold his share of stock and a new share of $50 par value was issued to the purchaser, the maximum liability of the purchaser would be $50, so that the liability of the two would be $150. Sanders v. Merchants State Bank, 349 Ill. 547, but that it is not the case here. The stock continued to be held by the same person after the reduction and his liability was not more than $100.\nA separate brief has been filed on behalf of David A. Noyes, et al., doing business as David A. Noyes & Co., who held stock during the $50 period only and who were held liable by the decree for $5,876.85. The contention made is that Noyes & Co. held 120 shares of stock as stock brokers for sale only and that the stock belonged to Francis E. Matthews.\nThe record discloses that July 2, 1931, Francis E. Matthews held a certificate of stock in the bank, 1747 for 170 shares of the par value of $50 each. Attached to the certificate, his counsel say, \u201cis a stock power signed by said Francis E. Matthews.\u201d There also appears on the back of this power, apparently by using a rubber stamp, the following: \u201cWe hereby certify that we have no ownership in-- shares of the stock above transferred, the transfer by the owner to us being merely for the purpose of sale. David A. Noyes & Company, 208 South LaSalle St., Chicago, 111. \u2019 \u2019 Apparently at the same time Matthews executed what is designated an \u201cIrrevocable Stock Power \u2014 Individual.\u201d It recites that for value received Matthews has sold 20 shares and 100 shares to David A. Noyes & Co. of the bank stock as represented by Matthews\u2019 certificate # 1747. Then follows the usual power of attorney to sell and transfer the stock. October 5, 1931, the bank issued a certificate for 20 shares to \u201cDavid A. Noyes & Company\u201d and on the same day a similar certificate for 100 shares to Noyes & Company, and the stub of the certificate book of the bank shows the shares were formerly owned by Francis E. Matthews as evidenced by certificate # 1747. There also appears in the record a certificate executed by a vice president and the cashier of the bank certifying that on October 5, 1931, Francis E. Matthews, who owned 170 shares of the bank stock evidenced by certificate # 1747, had transferred 120 of such shares evidenced by certificate # 1789 for 20 shares and certificate # 1790 for 100 shares to David A. Noyes & Co., 208 South LaSalle St., Chicago. This certificate was recorded in the Recorder\u2019s Office of Cook county October 30, 1931. At the time of the issuance of the two certificates for 20 and 100 shares to Noyes & Co., as above stated, counsel for Noyes & Co. say there was also issued a new certificate to Francis E. Matthews for the remaining 50 shares of the 170 shares. October 7, 1931, Noyes & Co. sold 10 of the 20 shares to Lennart Janson and on February 10, 1932, sold the 100 shares to George R. Joslyn, and the bank officials made out certificates of such sales, the first one dated October 15 and recorded October 30, and a second certificate dated February 15, 1932 and recorded February 29, 1932. Counsel say that plaintiffs\u2019 \u201cevidence shows that said David A. Noyes & Co., was not the owner of said stock and was not held out to the creditors of the Bank or to others, by the books and records of the Bank, or otherwise, to be the owner thereof\u201d and therefore Noyes & Co. are not liable as stockholders of the bank. In support of this it is said that it is the actual owner of the shares of stock who is liable for the statutory or constitutional liability, and Gahagan v. Whitney, 359 Ill. 419, and other authorities are cited.\nThe Gahagan case was a suit by creditors to enforce stockholders\u2019 liability against claimed stockholders of a state bank which was closed for liquidation March 18, 1932. The evidence showed that Fred A. Brewer, who owned 25 shares of stock, died intestate July 15, 1923. His widow was appointed administratrix. She acted as such until the estate was closed January 3, 1930. The inventory which she filed in November, 1923, listed the 25 shares of stock. There were no children and the widow took his entire personal estate. Her final report showed that all the claims against the estate had been paid, leaving a balance of more than $4,600, which she retained as sole heir of the estate. The stock was not mentioned in the report. It was never transferred on the books of the bank from the name of Brewer. It further appeared that during the administration of the estate a certificate for 10 shares of stock which had been made out to Brewer in his lifetime but had not been delivered, was received by the widow in her individual capacity and not as ad-ministratrix; that in 1928, while the estate was being administered, two dividends amounting to $250 were paid on the stock. Checks were made payable to the widow individually, which she cashed, and it was held that the widow was liable because she was the actual owner of the stock.\nSection 6, ch. 16\u00bd, Ill. Rev. Stat. 1939 [Jones Ill. Stats. Ann. 10.06], makes it the duty of bank officials to file with the recorder of deeds of the county in which the bank is located, a certified list of all stockholders but that no such transfer of stock shall operate as a release of the super added liability of the stockholder. We hold that as to creditors of the bank, Noyes & Co. are liable as stockholders. Sherwood v. Illinois Trust & Savings Bank, 195 Ill. 112; Golden v. Cervenka, 278 Ill. 409; Wheelock v. Kost, 77 Ill. 296; Bombal v. Peoples State Bank of Ramsey, 367 Ill. 113.\nIn the Golden case, the Supreme Court in passing on a question similar to the one before us said: \u201cShares of stock were issued to some of the appellants either as brokers, to be held for the benefit of their customers, or as pledgees, to secure advances of money, and on their appeals it is insisted that the persons to whom the shares were so transferred, though appearing on the books of the bank as stockholders, are not subject to liability as stockholders on that account. These questions have been decided adversely to the appellants in the cases of Sherwood v. Illinois Trust and Savings Bank, 195 Ill. 112, and Wheelock v. Kost, 77 id. 296. A creditor is entitled to hold him liable as a stockholder who appears on the books of the corporation to be the legal owner of the stock.\u201d\nAnother brief is filed on the part of some of the defendants who raise the point that \u201cThere is no proof in the record as to who are the creditors of the bank\u201d; that the burden is on plaintiffs to prove this fact and also to prove \u201cWhat are the net unsatisfied liabilities of the bank to each of its creditors\u201d and \u201cWhen each of said liabilities accrued.\u201d In support of this it is said that the testimony of the accountant who prepared the audit \u201cshows that he did not examine or take into account the asset accounts in the books of the bank; that it was the liability accounts only that he used in preparing the accrual audit\u201d; that he did not examine the \u201cLoan and Discount Register\u201d of the bank \u201cand did not take into account the accounts shown therein, in determining whether the various customers of the Bank who had deposit accounts (liability accounts) with it had borrowed money from it. . . . In other words, there has been no attempt to prove the net debtor-creditor relationship between the