Richmond v. Irons. more than exhausted all his resources and brought him into a state of bankruptcy. The said Holmes, as president, and for himself personally, also avers in the answer "that, at the time said bank went into voluntary liquidation as aforesaid, he verily believed that said bank and himself were solvent, and would be able to pay their debts in full by making settlement with the creditors to their satisfaction, and they these defendants, so believed, while making said settlements; and he was advised by his attorneys, and so believed himself, that all settlements made with the creditors of said bank in the manner aforesaid, pursuant to said forty-second section of the National Banking Act, would be valid, and that both said bank and its creditors so settled with would be protected, and that said settlements could not be set aside, or in any manner interfered with; that acting upon this advice, and what he believed to be the unquestioned law in the premises, said bank and its creditors, believing that they were within the letter and spirit of said section of the Banking Act, effected settlements to the amount of about $900,000, aside from reducing its capital stock to $178,000, and these defendants now claim that said settlements are all valid, and cannot be inquired into." On October 5, 1876, leave was given the complainant to file an amended bill, making additional defendants; and it was filed on the same day. The amended bill alleges that the bank suspended payment on September 22, 1873; that it had been previously, and ever since has continued to be, insolvent; that the complainant was a creditor by judgment, as stated in the original bill, on which execution had been returned unsatisfied; that the bank, after suspending payment, went into voluntary liquidation under the management of the defendant Holmes, who settled a large amount of the indebtedness of the bank, so as to reduce it to about $40,000. The amended bill then sets out the names of the various stockholders of the bank, with the amount of shares owned by each, and alleges that while the bank was contemplating insolvency, and was in fact insolvent, and after the suspension of payment, certain of the persons named as stockholders, and who were also made defendants, combining and confederating with the defendant Holmes, surrendered and delivered up to Richmond v. Irons. him, the said Holmes, the certificates of shares of stock held by them respectively, on some pretended contract of purchase, the same having been purchased with the money and assets of the bank, and canceled at the request and by the direction of the said stockholders, for the avowed purpose of releasing them, and each of them, from any personal liability on account thereof to the creditors of the said bank; but that nevertheless the same were never in fact canceled or transferred on the books of the bank, but now stand on said books in the names of the said defendants; and it is charged that the said pretended purchase and attempt at cancellation of the said stock was a fraud upon the complainant. and the other creditors of the said bank, and should be set aside. The bill accordingly prays for a discovery from the defendants of the facts in relation to the said transactions, and that the same may be set aside and decreed to have been made in fraud of the rights of the complainant and the other creditors of the bank; and "that the said stockholders, and each of them, be subject to the liability created by the statute thereon in the same manner and to the same extent as though such sales, transfers or surrenders had never been made; and that the said stockholders, or such of them as have sold, transferred or surrendered, or pretended to sell, transfer or surrender," etc., "the shares of stock so as aforesaid held and owned by them at the time the said bank suspended payment, in the manner as aforesaid, may be decreed to hold the moneys, property and effects received by them for said stock, in the manner as aforesaid, in trust for the creditors of the said bank, and, upon the respective amounts being ascertained, that they be decreed to pay the same to creditors thereof, or to such person or persons as your honors shall order and direct." The bill also prays "that an account be taken of the amount due from each of the said defendants to your orator and the judgment and other creditors of the said bank as stockholders thereof, upon the basis of the number of shares of stock held by them at the time the said bank suspended payment in the manner as aforesaid, in pursuance of the provisions of the act under which the said bank was organized, and by which the liability of the stockholders thereof is fixed and determined; that a full and complete and accurate Richmond v. Irons. account be taken of all the sales, transfers or surrenders, or pretended sales, transfers," etc., "of stock made by the said stockholders of the said bank, or any of them, after the same suspended payment in the manner as aforesaid, and to the amounts received by them respectively for any such sales, transfers," etc., "and that they may be decreed to hold the same in trust for the creditors of said bank in the manner as hereinbefore prayed, and that upon such accounts being taken the said defendants, or such of them as shall be found liable to your orator and the judgment and other creditors of the said bank upon the said stock liability created by the said banking act, and such of them as shall be liable for the amounts received by them for the sales and transfers of stock so made by them in the manner as aforesaid, be decreed to pay whatever amount shall be due from them, and each of them respectively, into court, or to the receiver duly appointed by said court, and that out of the fund so created your orator's judgment be paid in full, and the balance thereof be distributed among the other creditors of said bank in such way and manner as your honors shall direct." All of the defendants named in the amended bill within its jurisdiction were served with process and appeared. On behalf of certain of these defendants a motion was made to strike the amended bill from the files, and others filed demurrers, for the reason, in substance, that it made a new case, different from that set out in the original bill, and inconsistent with it, containing matters and asking relief that could only be properly obtained by an original bill. On the 9th of May, 1877, the complainant James Irons having died, a bill of revivor was filed in the name of his personal representatives. On October 1, 1878, the motion to strike from the files and the demurrers interposed to the amended bill were overruled, and the defendants required to answer. Subsequently, answers were filed at various times by the several defendants who appeared, the contents of which it is not necessary here particularly to notice, except to say that issue was joined by replication duly filed. On July 23, 1883, on the final hearing, the complainant had leave to amend, and did amend, the amended bill of complaint so as to allege expressly that it was filed on behalf of VOL. III-28. Richmond v. Irons. himself and all other creditors of the Manufacturers' National Bank of Chicago; the prayer being amended so as to require an account to be taken of the amount due the complainant and other creditors of the defendant, striking out those parts which asked that the complainant's judgment be decreed to be a first lien on the property of the bank, and paid first in full out of the fund for distribution, and adding a prayer that the fund so created might be distributed among all the creditors of said bank pro rata, in such a way and manner as should be directed. To this amended bill, as finally amended, various defendants filed several answers instanter, setting up by way of a bar to the relief prayed for against the defendants, as holders of the shares of stock in the banking association, the statute of limitations of five years of the State of Illinois, and also insisting that the bill as amended was multifarious and inconsistent, because it prayed for further and different relief from that authorized by the act of Congress approved June 30, 1876. On the same day a decree was entered in the cause, which finds, among other things, as follows: That the Manufacturers' National Bank of Chicago became insolvent and suspended payment September 22, 1873, and in pursuance of the act of Congress went into voluntary liquidation on September 26, 1873; that debts of the bank are still due and unpaid; that at the time of the bank's insolvency and suspension of payment the capital stock of the bank consisted of five thousand shares, of the par value of $100 each, setting out the names of the owners thereof, with the number of shares owned by each; that after the said bank had become insolvent and suspended payment, certain shareholders of said bank transferred the stock held by them, but that all and each of such transfers were and are in derogation of the rights of creditors, and were and are invalid; and that certain named defendants, shareholders of said bank, setting out their names, are individually responsible, equally and ratably, and not one for the other, for all contracts, debts and engagements of the bank to the extent of the amount of stock standing in their names, respectively, on the 23d of September, 1873, and before any transfers were made that day, at the par value thereof, in addition to the amount invested in such bank. The death of a defendant, William H. Adams, on the 5th of June, 1882, was sug Richmond v. Irons. gested, and Elizabeth Adams, his executrix, made a party defendant in his stead. By an order entered May, 7, 1879, the case was referred to Henry W. Bishop, Esq., a master in chancery, to take proof and report First, the amount of the debts of said bank still unpaid and the amount due each creditor thereof; second, the value of the assets, if any, of the bank; third, the amount of assessment necessary to be made on each share of the capital stock of said bank in order to fully pay the indebtedness of the bank and the amount due and payable from each shareholder upon such assess ment. On the 6th of January, 1875, the master reported his findings under the decree of July 23, 1883. He reported the amount of the debts of the bank unpaid as of the 1st of November, 1884, to be $368,971.50; the name of each creditor and the amount due. him being set out in a schedule. The claims of these creditors are also classified by the master as follows: (1) For clerical services to the bank, $183.31; (2) for past services of the receiver and his attorneys, $4,437.04; (3) claims arising before the failure of the bank, upon which no collaterals were taken, $179,231.81; (4) claims arising before the failure of the bank on account of which worthless collaterals had been subsequently received, $185,119.34. The master further reported that there were no assets of the bank outside of the stockholders' liability, and that the amount of assessment necessary to be made upon each share of the capital stock of the bank, in order to fully pay the indebtedness, was ninety per cent. A schedule attached to the report gives the name of each stockholder, and opposite his name the number of his shares of stock in the bank, the par value thereof, the per cent of assessment to be levied thereon, and the amount due and payable from him upon such assessment. These stockholders were also classified as embracing (1) stockholders who had been duly served with process or entered their appearance in the cause; (2) stockholders who had obtained a discharge in bankruptcy and were not liable to stock assessments on that account; and (3) stockholders who reside outside the jurisdiction of the court and have not been found within the district. |