Bowden v. Johnson. capitalists to come in, but I am afraid it is too late now. With $4,000 cash I could have infused new life into our stock and built it right up. Please let me hear from you, as I suppose you must feel an interest in Mrs. Valentine's stock." Johnson did not offer himself as a witness. 2. Mrs. Valentine was called as a witness by the plaintiff. Her deceased daughter was the wife of Johnson. She herself was divorced from her husband, and he was not dead that she knew of. Johnson had no children. Her daughter died in 1864. She herself lived in California with her husband for thirteen years. She came from California in 1865 or 1866, and went to live at Mr. Johnson's house in Kearney township, New Jersey, in 1871. She was examined as a witness in August, 1877. She endeavors to make out a consideration for the transfer of the stock to her, in this way: * 營 * * "Mr. Johnson owed me for services rendered after we came to live where we are. He was to pay me $1,000 a year for my services. He was away a great deal of the time, and I took care of every thing while he was gone. He went away two winters to California, and I had the care and responsibility of every thing the entire place while he was gone. We have been at the place six years. He was away the second winter; then two winters intervened, and he was away another winter. * * Question. Please explain why Mr. Johnson should have paid you by the assignment of the Norfolk Bank instead of money, if he was indebted to you and wished to make payment. Answer. Because I preferred that. He would have paid money if I had wished it. I thought it would be less trouble for me in that way, already invested, and I had to pay no taxes. Q. Did Mr. Johnson's engagement to pay you $1,000 per year for services commence at the time you moved to Kearney township, six years ago, as you have said? A. It did. Q. Mr. Johnson has not been indebted to you, has he, for any other matter or thing except such service for the last six years? A. Since my daughter's death I have had all the charge of Mr. Johnson's clothes, and of his house at San Francisco, and here also. There was no agreement between us for compensation till we came here to Kearney. I always supposed he would compensate for these. Q. What price were you to allow Mr. Johnson in payment for that stock? A. Fifty cents on the dollar; that was the price Mr. Lamb, the president of the bank, offered for it at the time Mr. Johnson transferred it to me. Q. Did you suggest to him or he to you the purchase of this stock? A. I really can't tell. I think I proposed to him to take it instead of money. I am not positive. I think that was the way. Q. Please explain, if you can, how you came to the knowledge that he was the owner of the Norfolk Bank stock? A. He told me that he had the stock before he went to Norfolk to see the land that he then thought of exchanging the stock for. I think that was the first I knew of it. Q. And when he came back, or soon after, he proposed to you to take the Bowden v. Johnson. stock, did he not? A. It was a long time after he came back; several months I think. Q. Are you not mistaken in saying it was several months? A. It may not have been several months after; it was some time after. Q. Really, Mrs. Valentine, on reflection, was it more than one month? A. Perhaps not. I cannot remember. Q. When Mr. Johnson proposed that you should purchase the stock, what did he propose? Please give me, as near as you can, the language he used in relation thereto. A. I cannot remember the language used. Q. Have you now, or had you at the time you took the assignment of this stock from Mr. Johnson, any money, or any property, to purchase the stock, other than the alleged indebtedness for annual services rendered by you to Mr. Johnson? A. I am not dependent entirely; I am not destitute; have enough to keep me from want. Q. Did you give any money or other valuable thing to Mr. Johnson for the transfer of the stock other than his alleged indebtedness to you for services? A. I told him at the time he might consider all my jewelry his for part compensation Q. He did not accept of the jew elry, did he? A. Well, it remained in the house, as it always had. Q. The stock that Mr. Johnson transferred to you was not paid for by either your obligation or promise of payment further than the alleged indebtedness to you, was it? A. It was not. Q. Had you, at that time, any other stock, bonds, bank account, or money in hand, or on deposit in any bank or banks, or in anywise invested for you or for your use? A. I had no bank account, no stock. I am never without any money to use. I have no bonds. Q. The moneys that you had were merely pocket funds, of small amount, were they not? A. Yes, sir. Q. In what month was the arrangement made between you and Mr. Johnson about the stock? A. In December, 1873. Q. You stated, in reply to the thirty-second direct question, that you thought you proposed to Mr. Johnson to take the stock instead of money. Did you mean to be understood, by any subsequent answer, that the proposition for you to take the stock arose with Mr. Johnson? A. No." The Circuit Court dismissed the bill, taking, as we think, an erroneous view of Mrs. Valentine's testimony in one important particular. It was assumed that she testified that she had had charge of Johnson's house and family since the death of Mrs. Johnson in 1864, at the fixed compensation of $1,000 per year; that is, that the compensation was for taking care of Johnson's house and family from 1864 until the stock was transferred, in 1873, and that the compensation of $1,000 a year was fixed in 1864. Whereas, what Mrs. Valentine says expressly is that the engagement to pay her $1,000 a year for her services commenced in 1871, when she moved to Kearney township, and not till then; and that what Johnson owed her for was for services rendered after that. The winters Johnson was away were the winters of 1872 and 1875. At most, according to Mrs. Valentine's own story, less than three years' services, at $1,000 a year, had been Bowden v. Johnson, rendered by her when she took this stock at $6,500. No alleged indebtedness accruing subsequently to the transfer of the stock in December, 1873, can be looked at. Mrs. Valentine says she supposed Johnson would compensate her for what she had done before she went to Kearney in 1871,but she does not pretend that there was any such obligation recognized by Johnson, or any debt for the same. That Mrs. Valentine, knowing that the alleged indebtedness to her did not amount to the alleged price of the stock, was conscious that the transaction was not an honest one, is shown by her admission that the stock was not paid for by her to Johnson, by either her obligation or promise of payment, further than the alleged indebtedness to her. This was less than $3,000 in December, 1873. To make up the difference between the indebtedness and the $6,500, she resorts to the bald suggestion that she told Johnson at the time that he might consider all her jewelry as his, "for part compensation" for the transfer of the stock, the jewelry remaining in the house as it always had. Equally bald is the suggestion that she was saving trouble in making an investment in a stock that was worth only fifty cents on the dollar. The conclusion of the Circuit Court was that there was no bad faith or fraud in the transfer. But what are the facts proved? Johnson, being a stockholder, goes to Norfolk and has interviews with the officers of the bank in regard to making a loan of $25,000 to the bank. He is appealed to as a stockholder to make the loan. His position as a stockholder involved not merely the value of the stock, but his liability for $13,000 more. The urgency of the needs of the bank is pressed upon him. The facts that the capital of the bank had been impaired, and that it had lost business, are brought to his attention. The bank had made a dividend in July, 1870, and one in February, 1873, and none since. Can it be doubted, from the foregoing testimony and Johnson's subsequent action, that he examined into the affairs of the bank sufficiently to satisfy himself that the failure of the bank, and the loss of its entire capital stock, and the attaching of the statutory liability of the stockholders, were impending in the near future? He was at Norfolk the last of November or the first part of December. Mrs. Valentine says that the arrangement between her and Johnson about the stock was made in December. Bowden v. Johnson. He sends the certificate and the power to Lamb on the 5th of December. He loses no time in assigning his stock. Lamb understood what Johnson was doing. He sent to Cole the letter from Johnson, and directed Cole to inquire as to Mrs. Valentine's responsibility. He received information that she had none, and that she was Johnson's sister. With that knowledge he acted as Johnson's attorney in transferring the stock. He evidently thought there were no bona fides in the transfer, for, in his letter sending the certificate to Johnson, although Johnson had instructed him to send it to Mrs. Valentine at a given address, he addresses Johnson as if he were still a stockholder. He refers to the future, and to the necessity of doing something at once, and to the prospective worthlessness of the stock, and winds up with the sarcastic remark that he supposes Johnson must feel an interest in Mrs. Valentine's stock. Mrs. Valentine was wholly unable to respond for any liability as a stockholder. This was known to her and to Johnson. Johnson, notwithstanding all the testimony on the part of the plaintiff, is not sworn as a witness for himself. It is worthy of note that the answer does not set forth what the consideration was for the transfer to Mrs. Valentine The bill alleges that there was no legal consideration. The answer merely avers that the transfer was not without legal consideration, and that it was made in good faith and for a valuable and lawful consideration. It is manifest that, at the very best, on Mrs. Valentine's evidence, supposing it to be entitled to credit, and on her statement of the price at which she took the stock, there was only $2,500 of consideration, at the rate of $1,000 a year for two years and a half, leaving the transfer as to eighty shares of the stock without consideration. The entire theory of the defense is that there was a sale, and not that there was any gift. The provisions of section 12 of the act of June 3, 1864 (13 Stat. at Large, 102), which govern the present case, are as follows: "The capital stock of any association formed under this act shall be divided into shares of $100 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; and 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 the shares, and no change shall be made Bowden v. Johnson. in the articles of association by which the rights, remedies, or security of the existing creditors of the association shall be impaired. The shareholders of each association formed under the provisions of this act, and of each existing bank or banking association that may accept the provisions of this act, 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 said shares." The answer sets forth that Johnson became the purchaser and owner of the one hundred and thirty shares in 1869. As such shareholder, he became subject to the individual liability prescribed by the statute. This liability attached to him, until without fraud as against the creditors of the bank, for whose protection the liability was imposed, he should relieve himself from it. He could do so by a bona fide transfer of the stock. But where the transferrer, possessed of information showing that there is good ground to apprehend the failure of the bank, colludes and combines, as in this case, with an irresponsible transferee, with the design of substituting the latter in his place, and of thus leaving no one with any ability to respond for the individual liability imposed by the statute, in respect of the shares of stock transferred, the transaction will be decreed to be a fraud on the creditors, and the transferrer will be held to the same liability to the creditors as before the transfer. He will be still regarded as a shareholder quoad the creditors, although he may be able to show that there was a full or a partial consideration for the transfer, as between him and the transferee. The appellees contend that the statute does not admit of such a rule, because it declares that every person becoming a shareholder by transfer succeeds to all the liabilities of the prior holder, and that therefore the liabilities of the prior holder, as a stockholder, are extinguished by the transfer. But it was held by this court in National Bank v. Case, 99 U. S. 632; 2 Nat. Bank Cas. 25, that a transfer on the books of the bank was not in all cases enough to extinguish liability. The court, in that case, defined as one limit of the right to transfer, that the transfer must be out and out, or one really transferring the ownership as between the parties to it. But there is nothing in the statute excluding, as another limit, that the transfer must not be to a |