The People v. Farmers State Bank , 371 Ill. 222 ( 1938 )

I do not believe there is any doubt but that a depositor is entitled to interest from a defaulting bank, in case assets are found more than sufficient to pay the principal of his claim and administration expenses. The question presented here does not depend upon that rule but does depend upon the question whether using all the assessments collected from stockholders and then using the remaining bank assets to pay the balance of the claims against the bank with interest, subjects the stockholders to a larger liability than provided in the constitution.

The liability of a stockholder to pay an assessment on his stock has been determined to be a contractual one. (Golden v.Cervenka, 278 Ill. 409.) Hence, every depositor in a bank has a claim upon two funds in case of the bank's suspension. He may file a claim with the receiver and he may sue the stockholders. The fund recovered from the stockholders belongs to the depositor. It is, in a sense, collateral to the promise of the bank to pay in full on demand. In such a case, the creditor may rely on both securities. A creditor secured by collateral is permitted to prove his claim against the estate for the full amount because he has a double right of suing the debtor and also realizing on the collateral. They are concurrent rights and these rights remain the same if the debtor dies and dies insolvent. Furness v. Union Nat. Bank,147 Ill. 570; In re Bates, 118 id. 524; Kittredge v. Nicholes, 162 id. 410.

If a creditor holding a claim secured by collateral against an insolvent estate of a deceased person files and proves his claim for the full amount in the probate court, and, if it is allowed, realizes from his collateral a sum which is less than the amount of his claim, he will be entitled to a dividend upon the whole amount of his claim until it is fully paid. (Furness v. UnionNat. Bank, supra; In re Bates, supra; Kittredge v. Nicholes,supra.) The principle of these cases applies here.

In this suit the contract of the stockholder to pay an assessment to discharge liabilities accruing while he is a stockholder, constitutes a security owned by the depositor in addition to his claim and demand against the bank. Under the above rule, he can apply all sums realized from the assessments upon his deposit debt and then participate in the assets of the bank. If, after applying the collateral fund, the assets of the bank will discharge the principal amount, the surplus may be used to discharge bank obligations — in this case, interest.

Collateral does not become a part of the assets of an estate until the creditor's lien thereon is discharged and cannot be used to benefit other creditors until the claim of the creditor having the lien is paid in full. (Furness v. Union Nat. Bank,supra; In re Bates, supra; Kittredge v. Nicholes, supra.) The "other creditors," thus referred to in this case, would fit the stockholders who have paid their stock liability. Examined in this light, the liability of a stockholder is not increased and he is entitled to a rebate only in case all depositors are paid the full debt owing by the bank.

Nothing has been suggested indicating that a creditor provided with a security for the payment of a debt by constitutional mandate has any other or different rights with respect to the application of the same, than security taken under contract for the same. Therefore, the depositors are entitled to use the entire fund created by the assessment in reduction of their claim and then resort to the assets of the bank to discharge the debts of the bank in full.