"A. I. Benyon, President.

Delano v. Butler.

J. M. Pettingill, Cashier. "PACIFIC NATIONAL BANK, 105 DEVONSHIRE STREET, Į BOSTON, September 13, 1881. S

"At a meeting of the directors of this bank, held this day, it was voted that the capital of this bank be increased to one million dollars, and that stockholders of this date have the right to take the new stock at par in equal amounts to that now held by them.'

"Subscription to the new stock will be payable October 1st. Parties desiring to anticipate payment will be allowed interest to that date at four per cent per annum.

"J. M. PETTINGILL, Cashier."

The whole amount of the increase of capital voted was not taken and paid in, nor was notice ever transmitted to the Comptroller of the Currency that all of such increase had been paid in; nor was that official's certificate of the increase to $1,000,000, with his approval thereof, ever issued. But $461,300 of the proposed increase to $500,000 was actually subscribed for and paid in as capital stock prior to November 18, 1881, and was used in the general business of the bank. On November 18, 1881, the bank became insolvent, suspended payment and closed its doors. On the same day Daniel Needham, an examiner of National banks, was placed by the Comptroller of the Currency in charge of the assets of the bank, for the purpose of ascertaining its condition, where he remained until March 18, 1882.

The directors of the bank met on December 13, 1881, during the period of suspension, and passed a vote that, as $38,700 of the increase of capital voted on September 13, 1881, had not been taken and paid in, that amount can be canceled and deducted from the capital stock of $1,000,000, and the paid-up capital stock fixed at $961,300; and that the Comptroller of the Currency be notified of the increase of $461,300, which had been paid in, and requested to issue a certificate of such increase according to law. Thereupon the Comptroller of the Currency, under date of December 16, 1881, made and issued the following certificate:

"TREASURY DEPARTMENT,

"OFFICE OF THE COMPTROLLER OF THE CURRENCY, 'WASHINGTON, December 16, 1881.

"Whereas satisfactory notice has been transmitted to the Comptroller of the Currency, that the capital stock of the 'Pacific National Bank of Boston, Mass.,' has been increased in the sum of four hundred and sixty-one thousand

Delano v. Butler.

three hundred dollars, in accordance with the provisions of its articles of association, and that the whole amount of such increase has been paid in : "Now, it is hereby certified that the capital stock of the Pacific National Bank of Boston, Mass.,' aforesaid, has been increased as aforesaid, in the sum of four hundred and sixty-one thousand three hundred dollars; that said increase of capital has been paid into said bank as a part of the capital stock thereof, and that the said increase of capital is approved by the Comptroller of the Currency.

"In witness whereof I hereunto affix my official signature.

[SEAL]

"JOHN J. KNOx, Comptroller."

No vote of the stockholders was taken relating to the increase or decrease of the capital stock of the bank.

Under date of December 16, 1881, the Comptroller of the Currency addressed the following letter to the bank:

"WASHINGTON, December 16, 1881. "The Pacific National Bank of Boston, Massachusetts: The entire capital stock of the Pacific National Bank of Boston, Massachusetts, amounting to nine hundred and sixty-one thousand three hundred ($961,300) dollars having been lost, notice is hereby given to said bank, under the provisions of section 5205 of the Revised Statutes of the United States, to pay the deficiency in its capital stock by an assessment of one hundred (100) per cent upon its shareholders pro rata for the amount of capital stock held by each, and that 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 may be appointed to close up the business of the association according to the provisions of section 5234 of the Revised Statutes of the United States.

"In testimony whereof I have hereto 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 sixteenth day of December, A. D. 1881.

[SEAL]

"JOHN J. KNOx, Comptroller of the Currency."

On January 10, 1882, during the suspension of the bank, the stockholders held their annual meeting (it being the first held since January 11, 1881), pursuant to the following notice duly published in the Boston Daily Advertiser:

"PACIFIC NATIONAL BANK.

"The annual meeting of the stockholders of this bank for choice of directors, and for any other business that may legally come before them, will be held at their banking-rooms, 105 Devonshire street, on Tuesday, January 10, 1882, at 11 o'clock, A. M. J. M. PETTINGILL, Cashier."

At this meeting, after discussing the general condition of the affairs of the bank, the foregoing call of the Comptroller of the

Delano v. Butler.

Currency for an assessment of one hundred per centum on the capital stock of the bank was read. Thereupon the following was offered.

"Voted, in accordance with the notice of the Comptroller of the Currency, dated December 16, 1881, there be, and hereby is, laid an assessment of one hundred per cent upon the shareholders of the Pacific National Bank, of Boston, Mass., pro rata for the amount of capital stock of said bank held by each shareholder.

46

Voted, that the board of directors notify each shareholder of said assessment, and collect the same forthwith."

On the question of the adoption of the above a stock vote was ordered; the total number of votes cast was five thousand five hundred and forty-fine, representing five thousand five hundred and forty-nine shares, of which five thousand four hundred and ninety-four were in the affirmative, and fifty-five in the negative. The amount paid in by the stockholders on this assessment was $741,800 prior to May 20, 1882.

The following notice to depositors was issued by the bank on March 16, 1882:

"To our Depositors: By vote of the directors, and the approval of the Comptroller of the Currency, the bank will reopen for business on Saturday, the 18th. Every effort has been made to put the bank again into a sound and solvent condition, and the stockholders have been called upon to pay an assessment of 100 per cent on their stock, thus making the depositors' balances secure and available. The bank will be run on strict business principles and in the interest of its customers and stockholders, and, while thanking you for past favors, we solicit your confidence and support for the future.

"LEWIS COLEMAN, President. "E. C. WHITNEY, Cashier."

Pursuant thereto the directors resumed active control of the bank and its assets on March 18, 1882, and again conducted a general banking business until May 20, 1882, when the bank ceased business, and the directors voted to go into liquidation. Thereupon Linus M. Price was appointed receiver by the Comptroller of the Currency under section 5234 of the Revised Statutes, and took charge of the assets and records of the bank.

During the period between March 18, 1882, and May 20, 1882, while the bank was carrying on business in its own name, the amount due depositors was reduced from $4,101,365.91 on the

Delano v. Butler.

former date, to $2,052,957.82 on the latter, $62,693.40 being due to new depositors. The amount of deposits made between the dates named was $2,338,617.21. New liabilities were contracted subsequent to March 18, 1882, amounting to $200,000, including the $62,693.40 due to new depositors.

The plaintiff in error owned thirty shares of stock in said bank prior to the vote of September 13, 1881, to increase the stock to $1,000,000. After that vote he received from the cashier of the bank a printed copy of the notice dated September 13, 1881, at the bottom of which he wrote a subscription for thirty shares of the increase of stock, and returned it to the bank. Three days after the passage of the vote he paid $3,000 for the thirty shares so subscribed, and received a receipt for $3,000 " on account of subscription to new stock," signed by the cashier of the bank. In October he returned the receipt to the bank, and received for it certificate No. 780 for thirty shares of the new stock, dated October 1, 1881. Plaintiff in error supposed at that time that the whole $500,000 increase of capital had been taken and paid in, and believed that the increase to $1,000,000 had been regularly and legally made. He did not attend the stockholders' meeting of January 10, 1882, and received no other notice thereof than seeing the call published in the Boston Advertiser. On January 12 or 13 he received notice of the assessment of one hundred per centum upon the stock of the bank, and after consultation, was assured by another shareholder and a director of the bank that if this was paid there could be no further assessment made on his stock; in consequence of which assurances he paid the assessment of $3,000 on January 20, and $3,000 on January 23, which were indorsed on the certificates under the dates of payment, being one hundred per centum on sixty shares of the stock.

Upon the trial the intervention of a jury was waived by consent of parties, and the cause submitted to the court, which found the foregoing facts, and rendered judgment September 8, 1885, in favor of the receiver for the amount claimed. On June 8, 1885, the appellant, Delano, filed a bill in equity in the Circuit Court of the United States for the District of Massachusetts, against Linus M. Price, receiver of the Pacific National Bank, the object and prayer of which were to enjoin the further pros

Delano v. Butler.

ecution of the pending action at law, brought by the said receiver against him for the purpose of enforcing the alleged liability of the appellant on account of the assessment upon his said stock, on the ground that upon the facts as heretofore stated the voluntary payment made by the appellant of the one hundred per centum assessed to restore the lost capital of $961,300, and which had been applied to the payment of the creditors of the bank, constituted in equity, if not at law, a complete defense to the claim of the receiver as an extinguishment of his liability upon the assessment sued on.

This cause was heard upon the facts as heretofore stated, and a decree rendered, dismissing the bill for want of equity, from which the present appeal was taken and is prosecuted.

Geo. F. Hoar, and Benj. N. Johnson, for plaintiffs in error and appellants.

A. A. Ranney, for defendants in error and appellees.

MATTHEWS, J. Section 5151 of the Revised Statutes provides that "the shareholders of every National banking association shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares."

The object of the action at law brought by the receiver of the Pacific National Bank of Boston, in which judgment was rendered against the defendant, the plaintiff in error, was to enforce his liability under that section of the statute. The object of the suit in equity, in which Delano was the complainant, was to restrain the prosecution of the action at law on the ground that, if his legal defenses failed, he had in equity performed and extinguished his obligation.

The questions arising upon the records of those cases in various forms, upon the facts already stated, may be reduced to three, which will be considered and disposed of in their order. The plaintiff in error in the action at law contends, as grounds for reversing the judgment against him, (1) that he was not, at the VOL. III-22.