249 P. 188 | Cal. | 1926
This is an appeal by the defendant from an order of the trial court denying her motion to discharge an attachment. The action was brought to recover on defendant's liability as a stockholder of the Pearson Ranch Company, a corporation, having a capital stock of $500,000, divided into 5,000 shares of the par value of $100 each, of which the defendant is alleged to be the owner of 4997 shares. The corporation created an indebtedness of $188,000, evidenced by 188 first mortgage bonds, secured by a trust mortgage upon 1803.6 acres of land in Glenn County. Plaintiff is the owner of 91 of these bonds. Upon the filing of the complaint the plaintiff procured the issuance of a writ of attachment, which was thereafter duly levied upon certain real property of the defendant. In appellant's opening brief it is said:
"The only question presented . . . is this: Is a creditor of a corporation, upon a debt incurred by such corporation, which debt is secured by a mortgage or lien upon property of the corporation, entitled to the issuance of an attachment *288 against the property of a stockholder of such corporation in an action instituted by such creditor upon a stockholder's liability based upon such debt of such corporation so secured, without showing by affidavit that such security has become valueless?"
The only case cited or discovered that is directly in point isForeign Mines Development Co. v. Boyes, 180 Fed. 594. The decision in that case supports appellant's contention. It is there said: "It is held in Kennedy v. California Sav. Bank,
The principle upon which a stockholder becomes liable for corporate debts is analogous to that which binds the writer of a general letter of credit which contemplates "a course of future dealing," as provided by section 2864 of the Civil Code. When such a letter of credit is accepted by giving credit in compliance with its terms, "there springs from the letter and its acceptance a distinct contract . . . which is binding upon the writer of the letter. And this writer is upon default of the debtor liable to those who gave credit in accordance with its terms." (Lafargue v. Harrison,
While all the rules relating to the liability of a guarantor are not applicable to a stockholder's liability, the obligation of the latter is in the nature of a continuing guaranty of payment of debts contracted by the corporation during his ownership of stock and to the extent provided by the constitution. The liability of a guarantor is distinct and independent of that of the principal debtor. (Cooke v.Mesmer,
"There can be but one action for the recovery of any debt, or the enforcement of any right secured by mortgage upon real or personal property." (Code Civ. Proc., sec. 726.) "An independent action at law cannot be maintained for a debt, whatever the form, if it is secured by a mortgage." (WesternFuel Co. v. S.G. Lewald Co.,
Section 537 of the Code of Civil Procedure provides that the property of a defendant may be attached "in an action upon a contract, express or implied, for the direct payment of money, where the contract . . . is not secured by any mortgage or lien upon real or personal property, or any pledge of personal property." In this case the corporation and the defendant stockholder had assumed independent obligations to pay the corporate debt. While the contract of the corporation was secured by the mortgage, the contract of the defendant as a stockholder was not so secured. A corporation and a stockholder thereof are not jointly liable for a corporate debt. They may be sued jointly, but only several judgments may be rendered. (Avery v.Chucawalla Development Co.,
In appellant's closing brief it is suggested that, since she owned 4,997 shares of the capital stock of the corporation out of a total capitalization of 5,000 shares, she and the corporation were one and the same entity and that, therefore, the mortgage of the corporation was in effect her individual mortgage. "When necessary to redress fraud, protect the rights of third persons, or prevent a palpable injustice, the law and equity will intervene and cast aside the legal fiction of independent corporate existence . . . and deal with the corporation and stockholders as identical entities with identical duties and obligations." (Wenban Estate, Inc., v. Hewlett,
The order is affirmed.
Richards, J., Seawell, J., Waste, C.J., and Shenk, J., concurred.
Rehearing denied. *295