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December 17, 1934

QUIGLEY et al.

The opinion of the court was delivered by: AVIS

The bill of complaint alleges that the defendant Robert J. Quigley, on December 12, 1928, and some time prior thereto, was the owner of 60 shares of the capital stock of Atlantic City National Bank; that on that date the defendant Robert J. Quigley caused said shares of stock to be transferred and assigned to himself as trustee for Mary R. Quigley, his daughter, who was then a minor; that on January 30, 1933, the said bank was declared insolvent by the Comptroller of the Currency; that plaintiff was duly appointed receiver of said bank, and that on or about February 8, 1933, the comptroller made an assessment and requisition upon the shareholders of said bank for $300,000, being at the rate of $100 per share.

The bill further alleges that the said Mary R. Quigley has no beneficial interest in the said shares of stock; that the true owner thereof, for the purpose of answering to the assessment, is the defendant Robert J. Quigley, who, it is claimed, has always received the dividends paid on said stock, and prays that the alleged transfer to defendant, as trustee, may be set aside; and that the defendant may be decreed to be liable to plaintiff for the full amount of the assessment, to wit, $6,000 with interest thereon from March 15, 1933.

 At the hearing, practically all of the allegations of the bill, so far as they related to the facts, were admitted to be true.

 The defendant, in support of his claim that he is not legally liable for the amount of the assessment, presented a written declaration of trust, created and signed by himself, and naming himself as trustee, by which it appears that on December 12, 1928, he created a trust of the 60 shares of bank stock, and provided therein that the trustee should hold said shares, collect the income therefrom, pay same to Quigley during his lifetime, after his decease to his wife, Agnes Quigley, and upon the death of his wife to pay the principal and accumulated income unto his daughter, Mary R. Quigley. This trust agreement contained a provision that it was irrevocable, and was signed and acknowledged only by the said Robert J. Quigley. It appears that this agreement, since its execution, has been in the possession of the said Robert J. Quigley.

 Many cases hold that the real owner of the shares may be held responsible, although the stock is not in fact registered in his name, and I assume that the law is clear that the actual owner cannot escape liability by transferring stock, or having it registered in the name of a third person.

 See Ohio Valley National Bank v. Hulitt, 204 U.S. 162, 27 S. Ct. 179, 51 L. Ed. 423; Corker v. Soper (C.C.A. 5) 53 F.2d 190, certiorari denied Corker v. Howard, Receiver, 285 U.S. 540, 52 S. Ct. 313, 76 L. Ed. 933; Laurent v. Anderson (C.C.A. 6) 70 F.2d 819.

 In the instant case, entirely different circumstances are encountered. The defendant Robert J. Quigley honestly, I believe, endeavored to create a trust for the benefit of himself and his family, without any thought or intention, at the time, of evading or attempting to evade the liability of an assessment upon the stock. It appears by the evidence that the stock at that time had a market value of approximately $60,000, and seemingly no person would fraudulently endeavor to escape liability for an assessment of $6,000 with stock then having a much greater value.

 In the case of Early, Receiver v. Richardson, 280 U.S. 496, 497, 498, 50 S. Ct. 176, 74 L. Ed. 575, 69 A.L.R. 658, the Supreme Court had certified to it by the Circuit Court of Appeals for the Fourth Circuit, 42 F.2d 1014, the following question of law:

 "Is one, who purchases shares of stock of a national bank, liable for an assessment subsequently imposed by the Comptroller of the Currency upon the stock for the benefit of the creditors of the bank after the insolvency thereof, when it appears that the purchaser bought the stock from the registered holder thereof and received a certificate therefor endorsed in blank by the holder, with intent at the time of such purchase and delivery of giving the stock to his minor child, but without knowledge at that time of the failing condition of the bank, or intent to avoid the stockholder's liability, and when, after the acceptance of the endorsed certificate from the seller, and before the insolvency, the purchaser with like knowledge and intent, promptly presents the certificate to the bank, causes the shares to be registered and a new certificate to be issued in the child's name?"

 The third syllabus in that case correctly defines the decision of the court and reads as follows:

 "One who in good faith purchases stock of a national bank with the intention of making a gift thereof to his minor children, and causes the transfer to be made to them upon the books of the bank and certificates to be issued in their names, is, nevertheless, liable for assessments on the stock made subsequently for the benefit of creditors, when the bank becomes insolvent, since the transferees, being minors, are without legal capacity to assume the obligation, and the transfer, having resulted to their disadvantage, will be avoided for them by the law."

 As to the liability of the father, the person who owned the stock, and who directed that it issue to his son ...

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