BANKS AND BANKING - BANK STOCK HOLDING COMPANY AS FRAUD ON DOUBLE LIABILITY STATUTE

Authors

Abstract

The question as to when, to prevent evasion of a statutory liability, a court will look behind a corporate entity in order to hold individual stockholders liable has been raised in two recent cases. The first, a federal case, involved the Detroit Bankers Company, a Michigan corporation formed for the purpose of holding and investing in bank stocks. Each corporate stock certificate of the holding company contained an "agreement" that the holder of the stock would be liable for his pro rata share of any assessment for which the corporation might become liable as a result of the failure of a bank in which it held stock. The corporation owned almost the entire capital stock of several banks which became insolvent and on the stock of which assessments were made. The holding company failed, and a receiver was appointed. The court in the instant case refused to enjoin the receiver of The First National Bank-Detroit, 97 per cent of whose stock was held by the corporation, from collecting a stock assessment directly from the stockholders of the Bankers Company.

Recommended Citation

BANKS AND BANKING - BANK STOCK HOLDING COMPANY AS FRAUD ON DOUBLE LIABILITY STATUTE, 33 Mich. L. Rev. 273 (1934).
Available at: https://repository.law.umich.edu/mlr/vol33/iss2/5