22 S.C. 292 | S.C. | 1885
The opinion of the court was delivered by
The defendant, Wm. H. Calvert, was a member of the company incorporated in 1881, under the style and name of “The Merchants’ and Planters’ Transportation Company,” the charter of which provided that each stockholder, besides his stock proper, shall be jointly and severally liable to the creditors thereof “in an amount not exceeding five per cent. of the par value of the share or shares held by him,” &c.
The plaintiffs, claiming to be creditors of the corporation in the sum of $74.91, instituted this action in behalf of themselves, and all other creditors of the corporation. The complaint alleged that the steamer “Clarendon,” which belonged to the company, “had been sold at a price inadequate to satisfy the debts, and
The company and all its stockholders were summoned, and the corporation as such and most of its members (excepting Calvert) answered, admitting the allegations of the complaint, and the individual liability of each stockholder to pay five per cent, upon the amount of his stock, according to the terms of the charter. On March 11, 1884, Judge Kershaw referred the matter to Master Sass, with instructions to collect the five per cent, from all the stockholders who had answered, and, after paying the costs and a reasonable counsel fee to plaintiffs’ attorney, to hold the remainder of the fund for the payment of the debts, with leave to call in the creditors, hold references, and report any special matter. After this, on March 14, Calvert’s attorney gave notice of an appearance, and further time to answer’ being extended to him, he filed his answer on April 10, denying that he was in default in paying his original subscription, which, as he alleged, was only one share, one hundred dollars, and had been paid in full. He further insisted that, as the plaintiffs had not before commencing action obtained judgment against the corporation and exhausted their legal remedies, they had no right to invoke the equitable jurisdiction of the court to enforce the collection of the five per cent, against individual stockholders, and that all the orders previously passed were without authority, and the complaint should be dismissed as to all parties for want of jurisdiction.
From this order Calvert appeals upon the following grounds: “1. Because the order of reference of March 11, 1884, should not have been granted, and should now be set aside, inasmuch as
Under the code, different causes of action may be united in the same complaint. The plaintiffs sued the corporation, and at the same time charging that the artificial entity known as the corporation owned no property and was utterly insolvent, asked further relief against the individual stockholders under the charter. The corporation as such was regularly made a party by service upon its officers, and answered admitting the debt, and therefore the judgment against it was regular and bound all the members as corporators, whether they individually answered or not. The question as to further liability for the five per cent, on stock was personal, which each stockholder could raise or not for himself as he saw fit. When most of the stockholders admitted the utter insolvency of the corporation and their liability for the assessment, and actually paid it under orders of the court, we do not think those orders should be set aside only for the reason that one of their number had not then answered, and afterwards answered, objecting to the jurisdiction of the court. Upon that subject he had the right to speak for himself, but not to make issues for others, who had the same right to speak for themselves. The court certainly had jurisdiction to render judgment against the corporation and all those stockholders who admitted the insolvency and their liability, and the orders made as to them must stand.
It is urged, however, that as to the five per cent, claimed by the creditors to be assessed on himself, Calvert’s plea to the jurisdiction should have been sustained on the ground, as we understand it, that the proceeding to enforce its payment was in the nature of a proceeding in equity, a creditor’s bill, which will not
But be that as it may, it seems to us clear that this is not a case belonging to the class above described, in which the aid of equity is requested to remove some obstacle in the way of legal process, and the performance of certain primary duties is required as an indispensable prerequisite to the exercise of such jurisdiction. On the contrary, there is here no obstacle in the way of enforcing an obligation which is purely statutory, a contract created by the accepted charter of the company, which is the law of the case, not only as to the measure of liability, but also as to the conditions of its enforcement. By the common law no liability attached to the stockholders of an incorporated company beyond their subscriptions to the capital stock. Creditors had no rights except against the artificial existence known as the corporation and its corporate property. But its property, including unpaid subscriptions, was held as a trust fund for creditors, who could, by showing that the corporation was insolvent, obtain the appointment of a receiver and enforce the payment of subscriptions. Code, §265; Clinkscales v. Pendleton Man. Co., 9 S. C., 824.
The constitution of 1868 authorized an enlargement of the
Without entering at length into the argument, it strikes us that this provision creates no liability secondary in its nature. It will be observed that regulations are made as to the time within which “proceedings to hold such stockholders liable” must be commenced; but nothing whatever is said as to any difference between stock and assessment, or, as to the latter, the necessity of having a prior judgment and execution. The individual liability of the stockholders is made as direct and unconditional for the five per cent, as for the subscribed stock itself. The words are, each stockholder shall be liable “in an amount, besides the value of his share or shares therein, not exceeding five per cent.,” &c. The obligation in one sense may possibly be termed collateral, but we cannot see that in any sense it is secondary, and enforceable only after judgment and a return of nulla bona on the execution against the corporation. See Thomp. Liab. Stock., §§ 34, 292, 321; Johnston v. S. W. R. R. Bank, 3 Strob. Eq., 273; Terry v. Martin, 10 S. C., 263; Sullivan v. Sullivan
The case last cited, of the Bivingsville Manufacturing Company, was an action against the stockholders, and no prior judgment had been obtained against the corporation, and the court, construing the provisions of the charter, said: “Their primary liability on contracts made by the corporation is in their character as partners, and no obligation is imposed by the act on creditors to exhaust the assets of the corporation, nor is there any condition which requires them to pursue it to insolvency before they shall commence their actions against them as general partners. In this respect the act differs from the statutory provisions of other states, which make the absolute liability of individual stockholders for debts due by the company depend upon its dissolution, or upon the return of an execution against the corporation unsatisfied. Bank of Poughkeepsie v. Ibbotson, 24 Wend., 473; Moss v. Oakley, 2 Bill [N. Y.), 265.” See, also, Terry v. Tubman, supra.
The judgment of this court is that the judgment of the Circuit Court be affirmed.