U.S. Supreme Court
Scott v. Deweese, 181 U.S. 202 (1901)
Scott v. Deweese
Argued January 21, 15, 1901
Decided April 16, 1901
181 U.S. 202
Section 6142 of the Revised Statutes of the United States, providing for the increase of the capital stock of a national bank and declaring that no increase of capital stock shall be valid until the whole amount of the increase is paid in, and until the Comptroller of the Currency shall certify that the amount of the proposed increase has been duly paid in as part of the capital of such association, does not make void a subscription or certificate of stock based upon capital stock actually paid in simply because the whole amount of any proposed or authorized increase has not in fact been paid into the bank; certainly the statute should not be so applied in behalf of a person sought to be made liable as shareholder when, as in the present case, he held at the time the bank suspended and was put into the hands of a receiver, a certificate of the shares subscribed for by him, enjoyed, by receiving and retaining dividends, the rights of a shareholder, and appeared as a shareholder upon the books of the bank, which were open to inspection, as of right, by creditors.
As between the bank and the defendant, the latter having paid the amount of his subscription for shares in the proposed increase of capital was entitled to all the rights of a shareholder, and therefore, as between himself and the creditors of the bank, became a shareholder to the extent of the stock subscribed and paid for by him.
That the bank, after obtaining authority to increase its capital, issued certificates of stock without the knowledge or approval of the Comptroller and proceeded to do business upon the basis of such increase before the chanroblesvirtualawlibrary
whole amount of the proposed increase of capital had been paid in was a matter between it and the government under whose laws it was organized, and did not render void subscriptions or certificates of stock based upon capital actually paid in, nor have the effect to relieve a shareholder, who became such by paying into the bank the amount subscribed by him, from the individual liability imposed by section 5151.
Upon the failure of a national bank the rights of creditors attach under section 5151, and a shareholder who was such when the failure occurred cannot escape the individual liability prescribed by that section upon the ground that the bank issued a certificate of stock before, strictly speaking, it had authority to do so.
If a subscriber to the stock of a national bank becomes a shareholder in consequence of frauds practiced upon him by others, whether they be officers of the bank or officers of the government, he must look to them for such redress as the law authorizes, and is estopped, as against creditors, to deny that he is a shareholder, within the meaning of section 5151, if, at the time the rights of creditors accrued, he occupied and was accorded the rights appertaining to that position.
The case is stated in the opinion of the Court.