176 U.S.

521
20 S.Ct. 419
44 L.Ed. 571

LOUISE M. MATTESON and Charles D. Matteson, Plffs. in

Err.,
v.
WILLIAM H. DENT, as Receiver of the First National Bank of
Decorah, Iowa.
No. 124.
Submitted January 29, 1900.
Decided February 26, 1900.

On October 31, 1864, Sumner W. Matteson became the owner of ten

shares of capital stock of the First National Bank of Decorah, established
in the city of Decorah, state of Iowa, and the shares were duly registered
on the books of the bank in his name. In July, 1895, Matteson, whilst the
stock was yet owned by him and still stood registered in his name, died
intestate at St. Paul, Minnesota, where he resided, leaving surviving his
widow and six children, two of whom were minors. The probate court of
Minnesota having jurisdiction over his estate appointed an administrator,
who filed an inventory in which was embraced the shares of stock in
question. In September, 1896, a final account having been previously filed
by the administrator, a decree turning over the estate, including the ten
shares of stock, was entered. Under this decree the widow and heirs took
the ten shares of stock in indivision in proportion to their interest in the
estate; that is to say, the widow became the owner of an undivided third
interest in the stock and each of the children, there being six, of a oneninth interest therein, thus the widow owned three ninths of the ten shares
and each of the six children one ninth. No notice of the death of Matteson
or of the allotment in question was conveyed to the bank, nor was any
transfer of the stock on the books of the bank operated at the time of the
allotment or subsequent thereto. Indeed, under the proportions of
undivided ownership of the stock in the widow and heirs, it was
impossible to have registered on the books of the bank in the name of each
owner separately according to their respective ownership in the ten shares
without some further partition of the undivided ownership existing
between them. It follows that the stock which stood on the books of the

bank in the name of Matteson during his life continued to so stand after
his death, so remained at the time of the allotment, and was so registered
at the time this suit was brought. On November the 10th, 1896, the bank
became insolvent and was closed by the comptroller of the currency, who
on the 24th of November, 1896, appointed a receiver. In January, 1897, in
order to pay the debts of the bank, under the authority conferred on him
by law (Rev. Stat. 5151), the comptroller made an assessment upon the
shareholders of $100 upon each share, and proceedings for its
enforcement were by him directed to be taken. The assessment not having
been paid, although due notice was given to do so, the receiver sued in the
state court of Ramsey county, Minnesota, the widow and children of
Matteson, as next of kin, asking judgment for the amount of said
assessment. The suit was in conformity to the General Statutes of 1894 of
Minnesota, which, in 5918et seq., permitted an action to be brought
against all or one or more of the next of kin of a deceased person, by the
creditor of an estate, to recover the distributive shares received out of such
estate, or so much thereof as might be necessary to satisfy a debt of the
intestate or of his estate. Service was had only upon the widow and one of
the children. A general demurrer to the complaint was filed and overruled,
and the order so overruling the demurrer was, upon appeal, affirmed by
the supreme court of the state. 70 Minn. 519, 73 N. W. 416. Thereafter the
demurring defendants answered, setting forth in substance their
nonliability to pay said assessment under the statutes of the United States
governing the winding up of insolvent national banking associations. A
motion for judgment upon the pleadings was thereupon made and granted,
and judgment was entered in favor of the receiver against Louise M.
Matteson and Charles D. Matteson, and each of them, in the sum of
$1,000 with interest and costs. On appeal to the supreme court of the state
of Minnesota, that court affirmed the judgment. 73 Minn. 170, 75 N. W.
1041. A writ of error was allowed, and the judgment of affirmance is now
here for review.
Messrs. Edmund S. Durment and Albert R. Moore for plaintiffs in error.
Messrs. Frank B. Kellogg, Daniel W. Lawler, George R. O'Reilly, and
Fitzhugh Burns for defendant in error.
Mr. Justice White, after making the foregoing statement, delivered the
opinion of the court:

The questions arising on this record involve a consideration of 5918 et seq.

of the General Statutes of the state of Minnesota and of the sections of the

Revised Statutes of the United States, which are in the margin.

2

Leaving out of view for the moment the legal effect of the allotment of the ten
shares of stock to the next of kin of Matteson, let us consider what, if any,
liability rested upon his estate to pay the assessment on the ten shares of stock
which stood at his death in his name, and so remained up to the time of the
allotment. Because the insolvency of the bank took place after the death of
Matteson, did it result that the assessment, which was predicated upon the
insolvency, was not a debt of his estate? To so decide the statute must be
construed as imposing the liability on the shareholder for the amount of his
subscription when necessary to pay debts, only in case insolvency arises during
the lifetime of the shareholder. In other words, that all liability of shareholders
to contribute to pay debts ceases by death. This construction, however, would
be manifestly unsound. The obligation of a subscriber to stock to contribute to
the amount of his subscription for the purpose of the payment of debts is
contractual, and arises from the subscription to the stock. True, whether there is
to be a call for the performance of this obligation depends on whether it
becomes necessary to do so in consequence of the happening of insolvency. But
the obligation to respond is engendered by and relates to the contract from
which it arises. This contract obligation, existing during life, is not extinguished
by death, but like other contract obligations survives and is enforceable against
the estate of the stockholder. The principle controlling the subject was quite
clearly stated by Shipman, J., in Davis v. Weed, 44 Conn. 569, Fed. Cas. No.
3,658. There, stock of a national bank stood in the name of a person who died
in January, 1871. Nearly one year afterwards, on December 12, 1871, the bank
became insolvent, and more than five years thereafter several assessments were
made by order of the comptroller of the currency, and an action was instituted
against the administrator to enforce payment. Two defenses were interposed by
the administrator, as follows: 1, that the estate of the decedent had been settled
according to law, prior to the assessments, and that as there were no assets in
the hands of the administrator at the time of the demand, and he had fully
administered the estate and had received no assets since the demand, no
judgment could be rendered against him; and, 2, that inasmuch as the
insolvency of the bank occurred after the death of the intestate, when the title of
the stock became vested in the administrator, no debt or liability existed at any
time against the estate; that the liability, if any, was against the administrator,
who, by 5152 of the Revised Statutes, was freed from personal liability, and
was only liable to the extent of the trust estate and funds in his hands at the time
of the demand.

The first contention was held untenable, upon a consideration of the statutes of
Connecticut in regard to the settlement of estates, and the presentation,

allowance, and payment of claims against the estates of solvent deceased

persons. In disposing of the second contention the court said: 'The original
liability of the intestate to pay the assessments which may be ordered by the
comptroller was a voluntary agreement, evidenced by his subscription or by his
becoming a stockholder. It is not imposed by way of forfeiture or penalty. It is
imposed by the statute, but it also exists by virtue of the contract which the
intestate cntered into when he became a stockholder. When the stockholder
dies his estate becomes burdened with the same contract or agreement which
the dead man had assumed, and so long as it, through the executor or
administrator, holds the stock as the property of the estate, and the stock has not
been transferred on the books of the bank, and the liability has not been
discharged by some act which shows that the new stockholder has taken the
place of the old one, the contract liability still adheres to the estate. This
liability is not the result of any new contract, for the administrator did not
voluntarily become the owner of the stock; it came to him as the dispenser of
the goods of the dead, and the liability rested upon the stock, and was a part of
the contingent liability of the estate, at least until it was transferred to some
other person by a transfer free from fraud.'
4

The question was settled in Richmond v. Irons, 121 U. S. 27, 30 L. ed. 864, 7
Sup. Ct. Rep. 788, where the court said (pp. 55, 56, L. ed. p. 873, Sup. Ct. Rep.
p. 801):

'Under that [the national banking] act the individual liability of the
stockholders is an essential element in the contract by which the stockholders
became members of the corporation. It is voluntarily entered into by
subscribing for and accepting shares of stock. Its obligation becomes a part of
every contract, debt, and engagement of the bank itself, as much so as if they
were made directly by the stockholder instead of by the corporation. There is
nothing in the statute to indicate that the obligation arising upon these
undertakings and promises should not have the same force and effect, and be as
binding in all respects, as any other contracts of the individual stockholder. We
hold, therefore, that the obligation of the stockholder survives as against his
personal representatives. Flash v. Conn, 109 U. S. 371, 27 L. ed. 966, 3 Sup.
Ct. Rep. 263; Hobart v. Johnson,1 19 Blatchf. 359. In Massachusetts it was
held, in Grew v. Breed, 10 Met. 569, that administrators of deceased
stockholders were chargeable in equity, as for other debts of their intestate, in
their representative capacity.'

And a similar determination as to the nature of a responsibility like the one in

question has been arrived at by state courts in decisions on kindred statutes,
and, indeed, its correctness is not controverted by any authority to which we

have been referred or which we have been able to examine. The accepted
doctrine finds nowhere a more lucid statement than in the courts of New York.
Thus, in Bailey v. Hollister, 26 N. Y. 112, judgment having been recovered
against a manaufacturing company upon indebtedness which arose in the years
1849, 1850, 1851, 1852, and 1853, an action was brought, after return of
execution unsatisfied, to recover the same debt from the personal
representatives of the estate of one Kirkpatrick, on the ground that when such
indibtedness was contracted the estate of Kirkpatrick was a stockholder, and, as
such, personally liable under the charter of the company. Kirkpatrick had died
intestate in 1832, and the stock stood on the books of the company in his name
until 1844, when it was entered in a new stock ledger in the name of the estate,
which thereafter received dividends. The facts of this transfer and the payment
of dividends were not, however, in the opinion of the court treated as material
factors in the decision. The court, in an opinion delivered by Gould, J., said (p.
116):
7

'It will be conceded that when a stockholder in any corporation dies, his estate
succeeds him in the title to, and the rights in, the stock he held. Of necessity, it
must take that title and those rights subject to any liability then existing upon
them; and so long as the estate is, by operation of law, the holder of such stock,
the estate must become responsible for any obligations accruing during that
time which the law may impose upon any holder of the stock as such. Such
liability proceeds, not from any new contract made by or on behalf of the estate,
but it is inherent in the property itself. To avoid it the estate must part from the
property; must cease to be the holder of the stock. Or, calling it a contract
liability, it arises out of a contract made by the stockholder, and binding his
personal representatives, as it bound him, as long as the relation of stockholder
existed.'

And it may be added, the law presumes, in the absence of express words, that
the parties to a contract intend to bind, not only themselves, but their personal
representatives. Kernochan v. Murray, 111 N. Y. 306, 2 L. R. A. 183, 18 N. E.
868.

The doctrine enunciated in Bailey v. Hollister, as above stated, was later applied
in Cochran v. Wiechers, 119 N. Y. 399, 403, sub nom. Cochran v. Matthiessen,
7 L. R. A. 553, 23 N. E. 803, where the court held that liability imposed by
statute upon stockholders in limited liability companies to respond for the debts
of the company, 'to an amount equal to the amount of stock held by them
respectively,' was in the nature of a contract obligation which survived the
death of the stockholder. The court, after approvingly quoting a portion of the
opinion of Gould, J., above excerpted, added (p. 404, L. R. A. p. 555, N. E. p.

805):
10

'The liability of the estate of the deceased stockholder under the statute is so
well established, upon principle and authority, that further discussion is
unnecessary. Chase v. Lord, 77 N. Y. 1; Flash v. Conn, 109 U. S. 371, 27 L.
ed. 966, 3 Sup. Ct. Rep. 263; Richmond v. Irons, 121 U. S. 27, 30 L. ed. 864, 7
Sup. Ct. Rep. 788.'

11

The debt then being one due by the estate of Matteson, if the allotment of the
shares in indivision be not considered, the question then is, Taking the
allotment into view, what was its effect? The arguments is that the next of kin
to whom the allotment was made can only be held responsible to the extent of
the interest which they took in the stock, and therefore there was error
committed in enforcing the whole amount of assessment against the next of kin
who were served, to the extent of the distributive share of the property of the
estate received by them. But this contention directly conflicts with the
interpretation of the statutes of Minnesota by the court of last resort of that state
in this case. It is clear that, by necessary implication, it was decided that by the
statutes of Minnesota under which the allotment in indivision was made, the
heirs or next of kin remained, by operation of law, to the extent to which they
received the property of the estate, subject to be sued and to respond to the
debts of the estate existing at the time the allotment took place. But the rights
arising from the allotment, under the statutes of Minnesota, cannot be greater
than those which the statutes in question conferred. The contention, therefore,
amounts to this, that in so far as the statutes of Minnesota operated in favor of
the participants in the allotment the statutes are to be respected, but to the
extent that they imposed obligations upon the allottees they are not bound
thereby. It is argued, however, that as by law of Minnesota the liability to be
called upon to pay a debt of the estate, to the extent of the distributive share
received, depended solely upon whether there was such debt existing at the
time the allotment was made, and as there was no such debt in the present
instance, no duty to respond arose. This is predicated upon the assumption that
because the insolvency happened after the allotment, therefore there was no
debt at the time of the allotment. This assumes that whether there was a debt
depended upon the date of the insolvency. In effect, this is but to argue that the
estate was never liable at all. Such, clearly, is the essence of the proposition,
for if it be that whether there was a debt is to be alone ascertained by the
happening of insolvency, and not by referring to the date of the subscription,
then where insolvency occurred after the death of the stockholder there would
be no responsibility. The unsoundness of this view has been already
demonstrated. Moreover, the supreme court of Minnesota, in effect, in this case,
has held that the statute of that state making the allottees liable, each to the

amount of their distributive share, for the debt of the estate, embraced a
contract liability to pay an assessment contingent on the happening of
insolvency, although that event had not taken place at the time of the allotment.
12

The contention is next made that conceding there was a debt of the estate, and
granting that the statute embraced a pre-existing contract obligation which had
not ripened into an actual demand because insolvency had not taken place,
nevertheless the court below erred, because by the effect of the allotment the
estate had ceased to exist and all its property had passed to the allottees. This
but reiterates the misconception already disposed of. Whether the effect of the
allotment was to extinguish the estate was wholly dependent on the Minnesota
law. That law, as construed by the courts of Minnesota in this case, in substance
provides (for the purpose of the enforcement of the debts of the estate then
actually existing or resting in contract, and liable to arise from events to take
place in the future) that the estate should, in legal effect, continue to exist, to
the extent provided, for the purpose of enforcing the debts in question.

13

These considerations would dispose of the case, since they demonstrate that no
substantial Federal question was involved but for the fact that it is claimed that
as under the statute of the United States each stockholder in a national bank can
only be liable to the extent of the amount of his stock therein, at the par value
thereof, in addition to the amount invested in such shares, therefore the
enforcement of the liability for the whole amount against one of the allottees
deprives him of the benefit of the Federal statute and involves a
misconstruction of its provisions. This contention was considered and adversely
decided below. It is conceded that no notice of the allotment was ever given to
the bank, and that the stock in question was never registered in the name of the
allottees. But the settled doctrine is that, as a general rule, the legal owner of
stock of a national banking associationthat is, the one in whose name stock
stands on the books of the associationremains liable for an assessment so
long as the stock is allowed to stand in his name on the books, and,
consequently, that although the registered owner may have made a transfer to
another person, unless it has been accompanied by a transfer on the books of
registry of the association, such registered owner remains liable. Upton v.
Tribilcock, 91 U. S. 45, 23 L. ed. 203; Sanger v. Upton, 91 U. S. 56, 23 L. ed.
220; Webster v. Upton, 91 U. S. 65, 23 L. ed. 384; Pullman v. Upton, 96 U. S.
328, 24 L. ed. 818; Anderson v. Philadelphia Warehouse Co. 111 U. S. 479, 28
L. ed. 478, 4 Sup. Ct. Rep. 525; and Richmond v. Irons, 121 U. S. 27, 58, 30 L.
ed. 864, 874, 7 Sup. Ct. Rep. 788. This principle thus settled as to the
stockholders in national banks is in entire accord with the rule established by
state courts in construing statutes containing substantially similar provisions. In
Shellington v. Howland, 53 N. Y. 376, it was said: 'There may have been a

transfer by the defendant of his stock to the corporation in 1869, valid as

between the parties to the transaction, and sufficient to vest the equitable title in
the transferee, but the transfer was not consummated in the form required by
statute, so as to affect the rights of strangers or to relieve the defendant from his
legal liability to third persons for the debts of the corporation. . . . The transfer
of stock, quoad the public, is not complete until entered on the book designated
by statute. An entry upon the books of registry of stockholders is required for
the protection of the company and its creditors, and each may hold the
stockholders to their liability as such until they have devested themselves of the
title to their shares by a completed transfer, as prescribed by law. No secret
transfer will avail to release the stockholder from his obligations, or deprive the
creditors of the corporation of the right to look to him as the responsible party
liable for the debts of the corporation.'
14

Indeed, this doctrine is so universally settled that it is treated as elementary. See

Thomp. Corp. 3283, 3284.

15

True it is that exceptions have been engrafted upon this doctrine as to national
bank stockholders by decisions of this court, but none of them are germane to
the matter now considered. Cases enunciating certain of the exceptions referred
to are cited in the following summary:

16

1. Where a transfer has been fraudulently or collusively made to avoid an

obligation to pay assessments, such transfer will be disregarded and the real
owner be held liable. Germania Nat. Bank v. Case, 99 U. S. 628, 631, 632, 25
L. ed. 448, 449; Bowden v. Johnson, 107 U. S. 251, 261, sub nom. Adams v.
Johnson, 27 L. ed. 386, 389, 2 Sup. Ct. Rep. 246.

17

2. Where a transfer of stock is made and delivered to officers of a bank, and

such officials fail to make entry of it, the acts referred to will operate a transfer
on the books, and extinguish the liability as stockholder of the transferrer.
Whitney v. Butler, 118 U. S. 655, 30 L. ed. 266, 7 Sup. Ct. Rep. 61. In the case
just cited, in applying the exception, the court very carefully and accurately
restated the general rule.

18

3. Where stock was transferred in pledge, and the pledgee for the purpose of
protecting his contract caused the stock to be put in his name on the books as
pledgee, it has been held that such a registry did not amount to a transfer to the
pledgee as owner, and that he therefore was not liable, although the pledgeor
might continue to be so. Pauly v. State Loan & T. Co. 165 U. S. 606, 41 L. ed.
844, 17 Sup. Ct. Rep. 465.

19

These and other cases unnecessary to be referred to do not impair, but, no the
contrary, serve to prove, the general rule. As in the case now before us the
stock remained on the books in the name of Matteson, continued as a liability
of the estate, and was never transferred under the allotment, it follows that the
allottees have no right to complain because the receiver has availed himself of
the provisions of the Minnesota statute.

20

Judgment affirmed.

Sec. 5139. The capital stock of each association shall be divided into shares of
one hundred dollars each, and be deemed personal property, and
transferable on the books of the association in such manner as may be
prescribed in the by-laws or articles of association. Every person becoming a
shareholder by such transfer shall, in proportion to his shares, succeed to all the
rights and liabilities of the prior holder of such shares; and no change shall be
made in the articles of association by which the rights, remedies, or security of
the existing creditors of the association shall be impaired.
*****
Sec. 5151. 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; except that shareholders of any banking association
now existing under state laws, having not less than five millions of dollars of
capital actually paid in, and a surplus of twenty per centum on hand, both to be
determined by the comptroller of the currency, shall be liable only to the
amount invested in their shares; and such surplus of twenty per centum shall be
kept undiminished, and be in addition to the surplus provided for in this title;
and if at any time there is a deficiency in such surplus of twenty per centum,
such association shall not pay any dividends to its shareholders until the
deficiency is made good; and in case of such deficiency the comptroller of the
currency may compel the association to close its business and wind up its
affairs under the provisions of chapter four of this title.
Sec. 5152. Persons holding stock as executors, administrators, guardians, or
trustees shall not be personally subject to any liabilities as stockholders; but the
estates and funds in their hands shall be liable in like manner and to the same
extent as the testator, intestate, ward, or person interested in such trust funds

would be, if living and competent to act and hold the stock in his own name.
1

8 Fed. Rep. 493.