Anderson v. Abbott

Supreme Court of the United States · 1944 · Corporations

321 U.S. 349 (1944)

Updated August 22, 2026

CorporationsPiercing the corporate veilBank shareholder double liabilityHolding companiesnational bank assessmentdouble liabilityholding companybeneficial ownership

Facts

BancoKentucky Company, a Delaware corporation whose shares were described as full-paid and non-assessable, was organized by the management of the National Bank of Kentucky and the Louisville Trust Company and acquired most of their shares in exchange for Banco shares. Banco then used its capital largely to acquire controlling interests in several banks, including national banks, whose shares carried double liability, while its other assets were insubstantial or dubious. After the National Bank of Kentucky failed, the Comptroller assessed its shareholders; Banco was held liable as holder of the bank shares, but only about $90,000 was collected, so the receiver sued Banco's shareholders for their proportionate shares of the balance. The shareholders included both former bank shareholders who exchanged their bank shares for Banco stock and persons who bought Banco stock for cash or by exchanging shares in other banks.

Issue

Whether shareholders of a bank-stock holding company are liable under the federal double-liability provisions for an assessment on national bank shares held by the holding company. Also, whether the receiver's prior suit against the holding company barred this action against its shareholders by res judicata or election of remedies.

Rule

A receiver may pursue both the record owner and the actual or beneficial owner of national bank shares for a statutory assessment, with recovery against one operating only as a pro tanto discharge of the other. Shareholders of a bank-stock holding company are liable as stockholders of the underlying bank to the extent of their interest where the transfer to the holding company leaves the transferors retaining through it the benefits of ownership, including control, and the holding company is not an adequate financially responsible substitute for the statutory risks, because the corporate form and limited liability may not be used to defeat the federal policy of bank-stock double liability.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Bluegrass National Bank in Lexington failed after its stock had long been held of record by Derby Holdings, Inc. The bank's receiver first obtained a judgment against Derby as the record owner but collected only a small portion, and then sued Nora Ellis, a Derby shareholder, alleging she was a beneficial owner of the underlying bank shares through Derby's structure.

Nora argues the second suit is barred because the receiver already sued Derby and elected that remedy. What is the best answer?

Explanation. The majority held that liability of the record owner and liability of the actual or beneficial owner rest on different bases. Therefore a receiver may sue both, and partial satisfaction from one reduces the other only pro tanto. Prior suit against the record owner is neither res judicata nor an election barring suit against beneficial owners.