U.S. Supreme Court
Stuart v. Hayden, 169 U.S. 1 (1898)
Stuart v. Hayden
Nos. 151, 160
Argued December 9-10, 1897
Decided January 10, 1898
169 U.S. 1
One who holds shares of national bank stock, the bank being at the time insolvent, cannot escape the individual liability imposed by the statute by transferring his stock with intent to avoid that liability, knowing or having reason to believe at the time of the transfer on the books of the bank, that it is insolvent or about to fail.
A transfer with such intent and under such circumstances is a fraud upon the creditors of the bank, and may be treated by the receiver as inoperative between the transferor and himself, and the former held liable as a shareholder without reference to the financial condition of the transferee.
The right of creditors of a national bank to look to the individual liability of shareholders, to the extent indicated by the statute, for its contracts, debts, and engagements attaches when the bank becomes insolvent, and the shareholder cannot, by transferring his stock, compel creditors to surrender this security as to him and force the receiver and creditors to look to the person to whom his stock has been transferred.
If the bank be solvent at the time of the transfer, that is, able to meet its existing contracts, debts and engagements, the motive with which the chanroblesvirtualawlibrary
transfer is made is immaterial, as a transfer under such circumstances does not impair the security given to creditors; but if the bank be insolvent, the receiver may, without suing the transferee and litigating the question of his liability, look to every shareholder who, knowing or having reason to know at the time, that the bank was insolvent, got rid of his stock in order to escape the individual liability to which the statute subjected him.
Whether, the bank being in fact insolvent, the transferor is liable to be treated as a shareholder in respect of its existing contracts, debts, and engagements if he believed in good faith, at the time of the transfer, that the bank was solvent -- not decided, although he may be so treated, even when acting in good faith, if the transfer is to one who is financially irresponsible.
Where the circuit court and the circuit court of appeals agree as to what facts are established by the evidence, this Court will not take a different view unless it clearly appears that the facts are otherwise.
The case is stated in the opinion.