Action by Madison Frame against Henry Ashley and others. Judgment for plaintiff, defendants bring error. Reversed.

G. E. Manchester and W. E. Hogueland (Waggener, Horton & Orr, of counsel), for plaintiffs in error. Kirkpatrick & Holmes (Redden & Schumacker, of counsel), for defendant in error.

COLE, J. Plaintiffs in error were the offcers of the Woodson County State Bank, and this action is brought against them as such officers, under paragraph 406, Gen. St. 1889, to recover the amount of a certain deposit made by Madison Frame in' said bank, at a time when it is claimed the bank was insolvent and in failing circumstances. Since the rendition of judgment in the court below, one of the plaintiffs in error had died, and a stipulation has been filed in this court by counsel discharging the judgment so far as said plaintiff in error is concerned, and waiving his absence or that of his representative in this court. It was further agreed in open court by counsel that the only question for the determination of this court was whether an action brought under paragraph 406 was one for the recovery of a penalty, within the meaning of the statute governing the limitations of actions, or whether such action is to recover upon a statutory liability. It is therefore our duty to construe the section of the statute in question.

Chancellor Kent has given us some excellent rules with regard to the manner of construing statutory enactments. Among others are the following: "It is an established rule in the exposition of the statutes that the intention of the lawgiver is to be deducted from a view of the whole and of every part of a statute, taken and compared together.

When the words are not explicit, the intention is to be collected from the context, from the occasion and necessity of the law, from the mischief felt, and the objects and the remedy in view; and the intention is to be taken or presumed, according to what is consonant to reason and good discretion." 1 Kent, Comm. (Sth Ed.) 510, 511. Following the rule laid down by this eminent law writer, we find, first, that the statute in question was enacted by the legislature of 1879, and appears as section 1, c. 47, of the Session Laws of that year. The occasion and necessity of the law arose from the fact that until that date there was no statute in this state making officers of banking institutions liable in any way for receiving deposits or creating debts when a bank was insolvent or in a failing condition. The legislature not only enacted the chapter to which reference has been made, but at the same date enacted a further statute, making the reception of deposits or the creation of debts by the officers of an insolvent bank a crime, and prescribed a punishment therefor. Laws 1879, c. 48. The logical deduction to be drawn from the action of

the legislature is that there was a necessity for a law compelling a more strict accountability of officers of banking institutions in this state. It is obvious that the legislature felt that those who had been placed in position of trust in institutions of that character, who manage the business affairs, and should be presumed to have knowledge of its financial standing, had been permitted to escape liability, even when their own tortious acts had caused the mischief which the legislature sought to control. These statutes were enacted with a knowledge upon the part of the legislature that the law already provided a liability so far as the stockholders of a corporation are concerned, and with the further knowledge that the officers of corporations are chosen from the stockholders. The intention, therefore, of the legislature must necessarily have been to provide either a further liability for stockholders, or a punishment for those persons chosen by stockholders as officers, and whose duties, if properly fulfilled, would give them a personal knowledge of the financial condition of the bank with which they were connected, but who, through negligence or intentionally, failed in the performance of their duties as such officers. Section 1, c. 47, Laws 1879, reads as follows: "It shall be unlawful for any president, director, manager, cashier, or other officer of any banking institution, to assent to the reception of deposits or the creation of debts by such banking institution, after he shall have had knowledge of the fact that it is insolvent or in failing circumstances; and it is hereby made the duty of every such officer, agent or manager of such banking institution to examine into the affairs of the same, and, if possible, know its condition. And upon failure of any such person to discharge such duty he shall, for the purpose of this act, be held to have had knowledge of the insolvency of such bank, or that it was in failing circumstances. Every person violating the provisions of this section shall be individually responsible for such deposits so received, and all such debts so contracted: provided, any director who may have paid more than his share of the liabilities mentioned in this section may have the proper remedy at law against such other persons as shall not have paid their full share of such liabilities." Our attention is first directed to the opening clause of this section, which recited that it shall be unlawful for the persons therein named to do the acts prohibited or fail to perform the duties enjoined by said section. Bouvier says: "Penal statutes are those which command or prohibit a thing under certain penalty." It is plain that this section commands and prohibits certain things. It prohibits the officers of any banking institution to assent to the reception of deposits or the creation of debts with knowledge of the fact that the bank is insolvent, and it commands such officers, as a part of their duty, to examine into the affairs of the bank, and know its condi

tion. The section then prescribes that a violation of the provisions thereof shall bring a punishment to every officer who violates. Without the statute, neither officers nor stockholders would be liable in an action of this character, and paragraph 1206, Gen. St. 1889, fixes the liability of a stockholder as such in the following language: "No stockholder shall be liable to pay debts of the corporation beyond the amount due on his stock and an additional amount equal to the stock owned by him.”

Did the statute in question create a further liability upon the part of the officers of a banking corporation simply because they were officers? We think not. This statute makes all officers liable, not because they are officers, but because, being officers, they fail to perform the duties required of them by statute. If, then, the added liability is not created because one is a stockholder or an officer, but because of a failure in the performance of a duty, the conclusion must be that the liability created is in the nature of a penalty for the failure to perform such duty.

We are the more firmly convinced that the conclusion reached is the correct one from the further provisions of this statute. It is a well-settled principle of law that there is no contribution enforceable between wrongdoers unless the statute specially provides therefor. This statute specially provides for contribution among the officers who may have been guilty of the wrongs named in the statute. Again, section 4 of the act provides: "This act shall extend to and may be enforced by and against executors and administrators of such deceased officers, agents and managers." Had it been the intention of the legislature to create simply a statutory liability, there would have been no necessity for the section last quoted. A statutory liability outside of a penalty would survive as against the representatives of any deceased officer of the bank. The legislature must therefore have had in mind the enactment of section 4 that a penalty had been prescribed, an action for the recovery of which would not survive unless covered by some statute. Again, the liability of the officer is not determined in any sense by the actual loss of the creditor, for, under this statute, the officers of a bank are made liable for the full amount of the claim of any creditor who becomes such by reason of their failure to comply with the statute. The creditor need not await the winding up of the affairs of the insolvent bank to see what share of his loss its assets will pay, but may proceed at once against the officers for his full account.

We have discussed this question thus far upon the statute itself taken as a whole, and the separate parts compared together, and in connection with the evident occasion and necessity of the law, and the object and remedy in view. We will now call attention to Curther statutes declared by our supreme v.45P.no.13-59

court and those of other states to be statutes involving a penalty, and which in some respects are analogous to the one under discussion. It has been held by our own supreme court that the statute permitting a mortgagor to recover against the mortgagee for failure to enter satisfaction on the record when a mortgage has been paid prescribes an action for the recovery of a penalty, which is barred by the one-year statute of limitation. Wey v. Schofield, 53 Kan. 248, 36 Pac. 333. And the same doctrine has been announced by this court in Shultz v. Morgan, 1 Kan. App. 572, 42 Pac. 254. It has also been held by this court in the case of Reese v. Rice, 1 Kan. App. 311, 41 Pac. 218, that the provisions of the Code permitting the amercement of a sheriff for failure to return an execution within 60 days are of a penal character. Both of the statutes referred to proceed upon the theory of permitting a recovery for the failure of an officer or a person to perform a duty enjoined by statute, and the measure of damages is not governed by the amount of the loss incurred.

Counsel for defendant in error insist that the statute under discussion is one permitting compensation only; but we cannot so view it, for the assets of an insolvent bank might pay 25, 50, or 75 per cent. of the deposits, but this would in no way release the officers from the penalty imposed on account of their failure to perform their official duties, nor is there any provision permitting the recovery from the bank itself by the officers in case they are compelled to reimburse a depositor under this statute. We cannot but think that, in case an action was brought by an officer of the bank to recover the amount paid by him to a depositor under this statute, it would be a valid defense that the payment was made, not for and on account of the bank, but because of his own wrong. See, also, Globe Pub. Co. v. State Bank, 41 Neb. 175, 59 N. W. 683, and cases there cited; Merchants' Nat. Bank v. North; western Manuf'g & Car Co., 48 Minn. 349, 51 N. W. 118. In this latter case the following language is used: "While this remedial purpose of the law is unquestionable, it is equally plain that the liability imposed is in the nature of a penalty. It is imposed by the statute as a consequence of a violation of the law, resulting in the insolvency of the corporation. While the liability is declared in favor of the creditors of the corporation, it does not rest upon contract, nor upon any principle of the law of contracts. * The creditors of the corporation may be able to recover from it, although it be insolvent, 90 per cent. of the amount of their debts. Nevertheless, the directors are made jointly and severally liable * ** for all debts contracted after such violation." Considerable stress is laid by counsel for defendant in error upon the decision of the supreme court of this state in State v. Pfefferle, 33 Kan. 718, 7 Pac. 597, where it was held that

*

a civil action brought by a county attorney to enforce a lien for fine and costs against the owner of premises who has knowingly suffered a person to sell liquor thereon in violation of law was one upon a liability created by statute, and not for a penalty or forfeiture, within the provisions of the statutes of limitations. In that case, however, the distinction is clearly drawn in the opinion that the fine and costs for the recovery of which such action is brought are not imposed upon the owner of the building, but upon the person who violates the law, and the owner of the premises is simply made a surety for their payment.

It follows from the above views that the district court erred in holding that the starute in question was one prescribing a statutory liability, and not a penalty. The judgment is reversed, and the cause remanded, with instructions to the district court of Woodson county to render judgment for plaintiffs in error (defendants below). All the judges concurring.

(8 N. M. 391)

STRAUSS v. SMITH. (Supreme Court of New Mexico. Aug. 7, 1896.) REPLETIN-DISMISSAL BY PLAINTIFF-RIGHTS OF DEFENDANT.

A plaintiff in replevin, having appealed from justice court, cannot, by a dismissal of his appeal, deprive the defendant of his right to a finding of the value of the property and damages, for which he is entitled to judgment on the appeal bond.

Error to district court, San Miguel county; James O'Brien, Judge.

Action by Adolph Strauss against Herbert H. Smith. From a judgment for defendant, plaintiff brings error. Affirmed.

John D. W. Veeder, for plaintiff in error. Bunker & Smith, for defendant in error.

BANTZ, J. In August, 1891, plaintiff, Strauss, brought an action in replevin before a justice of the peace to recover the possession of a horse from the defendant, Smith. At the trial before the justice the plaintiff was defeated, and appealed to the district court. In May, 1893, the case having been set for trial, Strauss asked to dismiss his appeal. The defendant objected, and demanded a trial as to the value of the property taken by the plaintiff under the writ of replevin, and for an assessment of damages for its detention. The court called a jury. The defendant produced his proofs, and, the court having instructed the jury to find in his favor for the value of the horse, and the value of the use of the horse up to the day of such trial as damages, a verdict was returned fixing the value of the property at $100 and the damages for the detention at $150, and judgment was rendered against the plaintiff and his sureties on the appeal bond accordingly. Afterwards the defendant remitted $50 of

the damages. The plaintiff moved to vacate this judgment, and then brought this cause here on writ of error.

It is objected that when the plaintiff in open court dismissed the appeal, then, under section 1858, Comp. Laws, the court had no discretion to exercise, but was bound to enter an order of dismissal, and was deprived of jurisdiction to hear and adjudge the value of the property or the damages suffered by the defendant by being deprived of the property seized under the writ. The statute under which the action was brought, among other things, provides (section 2369) that if the plaintiff in a replevin suit before a justice of the peace shall discontinue his suit, or suffer a nonsuit, or if he should otherwise fail to prosecute his suit to final judgment, a jury shall be summoned to assess the value of the goods replevied, and also adequate damages for the detention of the same, and judgment shall be entered therefor in favor of the defendant. There are also provisions allowing an appeal to the district court, and providing that the same rules shall govern in the district court in such case as are prescribed for the justice courts. It will be seen that replevin cases present a double aspect: First, as to the right of the plaintiff if successful; and, second, as to the right of the defendant to a judgment against plaintiff for the value of the property and damages if the plaintiff should fail to prosecute his action. It could not be maintained that the dismissal of the case while pending in the justice court would in any wise preclude the defendant from an assessment of the value and damages, for whatever control the plaintiff may have over his own cause of action, he could not deprive the defendant of his right to recover against the plaintiff. When an appeal is taken, the plaintiff continues to retain the property, and if he dismisses his appeal or dismisses his case, then it seems quite apparent that all he does or can dismiss, unless by consent, is simply his own cause of action, and not the defendant's cross claim. If it were otherwise, the plaintiff, by a wrongful use of judicial process, may take defendant's property, in advance of a trial of right; then by an appeal from the justice of the peace he may continue to enjoy a valuable use of the property until the case is reached in the district court, and, when the case is called for trial, by a dismissal of his appeal he can deprive the defendant of the recovery of any damages against the sureties in the appeal bond. The machinery of justice is not so completely at the mercy of a litigant. A recent text writer upon this subject says: "Where property is taken, replevin differs from all other actions in this respect: that both parties are actors, and, as the plaintiff had taken the property from the possession of the defendant, the law will not permit him to dismiss his action out of court over the objection of defendant.” And again: "He [the plaintiff] cannot dismiss his suit so as to avoid the hearing as to

the value or the damages.

When such purpose is apparent, it is the duty of the court to retain the case, and hear and determine the question as to the damages, and the return of the property." Cobbey, Repl. § 1193. In Broom v. Fox, 2 Yeates, 531, it was said: "Regularly, there can be no discontinuance without leave of the court, and this rule holds with peculiar force in replevins. 1 Leon. 105. There both parties are actors, and yet the avowant cannot discontinue. 1 Strange, 112. When goods are delivered to the plaintiff in replevin, the defendant has an evident interest in the suit, being entitled to a writ of retorno habendo if the issue be found for him." The rule thus arising from the dual nature of replevin proceedings was maintained in numerous cases. Higbee v. McMillan, 18 Kan. 133; Howell v. Foster, 65 Cal. 169, 3 Pac. 647; Mikesill v. Chaney, 6 Port. (Ind.) 52; Moore v. Herron, 17 Neb. 697, 24 N. W. 425; Marshall v. Bunker, 40 Iowa, 121; Wilkins v. Treynor, 14 Iowa, 393; Aultman v. Reams, 9 Neb. 487, 4 N. W. 81; Ahlman v. Meyer, 19 Neb. 63, 26 N. W. 584; Maxey v. White, 53 Miss. 80. In Boutell v. Warne, 62 Mo. 350, it was held that the replevin statutes were intended to permit a complete adjustment of all the rights of the parties in one action. See Manufacturing Co. v. Senn, 7 Mo. App. Append. 585. If the plaintiff could not deprive the defendant of this substantial right by a dismissal of his cause, he cannot do so by merely dismissing his appeal. In Soper v. Hawkins, 56 Mich. 527, 23 N. W. 206, the plaintiff dismissed his appeal against the objection of the defendant, who demanded an assessment of damages, and the supreme court reversed the court below for refusing to assess the damages. The appellant cannot, by applying to the court to dismiss his appeal, relieve his sureties on the appeal bond; and the court could not grant such an application against the defendant's objection, and thus destroy the security provided by the, statute for the benefit of the appellee. There is no error in the record, and the judgment will therefore be affirmed.

SMITH, C. J., and LAUGHLIN, COLLIER, and HAMILTON, JJ., concur.

(4 Kan. App. 273)

PUTNAM v. HUTCHISON. (Court of Appeals of Kansas, Southern Department, E. D. July 13, 1896.) BANKS-PAID-IN CAPITAL-LIABILITY OF STOCKHOLDERS.

1. Nothing contained in the banking law of 1891 prohibits a banking corporation then in existence from continuing in business with only 20 per cent. of its capital stock paid in, provided it is solvent, and complies with the legal requirements of the bank commissioner.

2. The stockholders of a banking corporation, whose charter, verified certificate, and advertisements proclaim its capital stock to be $50,000, and whose verified statements recite that only

$10,000 has been paid in upon such stock, cannot, without changing its charter, verified certificates, advertisements, or verified statements, relieve themselves of their liability to the creditors of such corporation by any agreement among themselves, whether the creditors were such before or after such agreement.

3. A person who subscribes $1,000 to the capital stock of a corporation, and who had paid but $200 on such stock, cannot relieve himself of his liability to the creditors of said corporation for the remaining $800 due upon such subscription by transferring $200 of paid-up stock to another person.

(Syllabus by the Court.)

Error from district court, Franklin county; A. W. Benson, Judge.

Action by W. C. Hutchison, receiver of the Bank of Richmond, against C. E. Putnam. Judgment for plaintiff, and defendant brings error. Affirmed.

This is an action brought in the district court of Franklin county, Kan., by W. C. Hutchison, as receiver of the Bank of Richmond, to recover from C. E. Putnam the amount claimed to be due from said Putnam as the unpaid portion of his subscription to the capital stock of said bank. The case was tried by the court without a jury, and the following findings of fact and conclusions of law were made:

"Findings of Fact. (1) On July 11, 1890, C. E. Putnam, W. D. McFarlane, E. W. Spear, J. A. Hutchison, M. L. Waldo, W. E. Gault, H. H. Staley, Peter Hastert, and N. M. Spaulding organized themselves into a savings association as provided by article 16, c. 23, Gen. St. 1889. A charter was accordingly prepared, subscribed by the incorporators above named, duly acknowledged, and filed in the office of the secretary of state, as provided by article 1 of said chapter, wherein the name of the corporation is stated as the Bank of Richmond, its place of business, Richmond, Franklin county, Kansas, and its capital stock $50,000, divided into 500 shares of $100 each. (2) At the time of such organization the defendant, C. E. Putnam, in writing, as set out in the petition, subscribed and agreed to take and pay for ten (10) shares of said capital stock, amounting to $1,000, and certificate No. 1 was duly issued to him therefor, a copy of which is attached to the petition, upon which he paid in cash 20 per cent. of their par value, to wit, $200, and has paid no more thereon. The other 490 shares were duly subscribed for, 20 per cent. paid thereon, and no more, and certificates duly issued to the several subscribers in the same form. (3) On July 11, 1890, the stockholders, including all the subscribers to said charter, duly met, and elected a board of directors,-among others, this defendant,-and thereupon said board on the same day elected the defendant president, and also elected a vice president and cashier and secretary, and thereafter, on August 19, 1890, the president and secretary made, acknowledged, and filed in the office of the register of deeds of this county the cer tificate required by section 264 of said chap

ter 23, Gen. St. 1889, in which the capital stock was stated to be $50,000, and the bank at once entered upon the business of banking, and continued such business at Richmond until on or about July 18, 1893. (4) About September 15, 1891, but covering some time before and after said date, upon request of the cashier, who was actively managing said bank, and who owned a majority of the stock, the various stockholders returned their certificates of stock upon which 20 per cent. had been paid, as before stated, and received new certificates therefor, in the same form, for the number of shares such 20 per cent. already paid in would fully pay for, except the holder of one certificate of ten shares, which was not surrendered, and is still outstanding, although the holder consented to the arrangement. The defendant accordingly surrendered his certificate No. 1, for ten shares, and in lieu of it received a new certificate, No. 55, for two (2) shares, also signed by himself as president, and by the cashier, upon the back of which was written 'Fully paid up,' and signed, 'A D. Sowerby, Cashier.' All the old certificates thus returned were reattached to the stubs from which they had been separated when issued, and above the face of each was written in the margin, 'Certificate No. issued in place of this, Septr. 15, 1891;' the blank being filled in in each case with the number of the new certificate issued in its place. In this manner all the old certificates upon which 20 per cent. had been paid were returned and reattached to the stubs in the book of blank certificates, each indorsed 'Fully paid up,' issued for onefifth the original number of shares in their place. (5) The surrender and reissue was done because of the enactment of the banking law of 1891, being chapter 43, Sess. Laws 1891, and to make it appear that the capital stock of the bank was fully paid in, and it was so done upon the advice and request of the cashier, and upon informal and casual conversations between various stockholders and officers as they chanced to meet. No meeting of stockholders or directors was ever called or held to consider the matter, and no action whatever taken by the board of directors thereon, nor by the stockholders, except acting individually in surrendering the old and taking the new certificates as stated. No resolution, motion, vote, or other action was presented to, considered, or passed by the directors or stockholders to reduce the capital stock, or to authorize such surrender or reissue, or to release the stockholders from further payments. (6) No action was ever taken by the directors or stockholders ratifying such surrender and reissue unless the following is to be so considered: Just before January 28, 1892, this defendant and the vice president assigned their respective certificates of such reissued stock so indorsed 'Fully paid up,' and thereupon the board of directors met upon proper call, and the object of the meeting was stated by the cashier, as follows:

"That the president, C. E. Putnam, and the vice presidert, W. D. McFarlane, having sold their respective stock in this bank, and thereby becoming disqualified to hold office, it is necessary to fill the vacancies.' Thereupon the board proceeded to do so by electing their successors, who entered at once upon their respective duties. (7) On the 16th day of February, 1892, the bank commissioner issued to said bank, under his hand and seal, a certificate, a copy whereof is attached to the answer herein: 'State of Kansas. Ad Astra per Aspera Office of Bank Commissioner. I, Chas. F. Johnson, bank commissioner of the state of Kansas, do hereby certify that the Bank of Richmond, county of Franklin, state of Kansas, has the sum of $10,000.00 capital paid in, and is authorized to transact a general banking business, as provided by an act of the legislature of the state of Kansas entitled "An act providing for the organization and regulation of banks. and prescribing penalty for violations of the provisions of this act." In testimony whereof I have hereunto subscribed my name, and affixed my official seal. Done at Topeka, Kansas, this 16th day of February, A. D. 1892. Chas. F. Johnson, Bank Commissioner.' This certificate was framed and hung up in the front part of the bank, where it was visible to the customers, and to everybody that came into the bank to do business, from the time it was received until the failure. (S) The assignment by the defendant of said reissued certificate No. 55 for two shares of the capital stock of the bank, referred to in finding No. 6, above, was made under the following circumstances: He became dissatisfied with the cashier, because of the latter's drunkenness, also because he believed some loans made by the cashier were not safe. At one time he found the cashier too drunk to sign a draft which he was endeavoring to draw, and he then determined to sell out, and so informed the cashier, and threatened to apply for a receiver unless his stock was purchased. Thereupon the cashier agreed to and did purchase said stock for $180. The certificate was assigned by writing on the back, signed by the defendant, and delivered to the cashier, who reattached it to the stub in the book of blank certificates, where it yet remains. On February 4, 1892, however, Sowerby, the cashier, sold his stock (two shares) to J. A. Hutchison, then recently elected president, and certificate No. 99 was issued accordingly therefor. On the stub, on the blank book of certificates, is this statement: 'Issued in lieu of certificate No. 55.' The defendant promised the cashier, when he made such assignment, to say nothing about it. He made the assignment because he feared financial loss if he continued to hold to it, believing that the bank was unsafe because of the misconduct of the cashier. (9) The bank continued business until the 18th day of July, 1893, when, upon an examination made shortly be fore that by the bank commissioner, it was