Booth v. Campbell, 37 Md. 522

Booth v. Campbell

37 Md. 522 | Md. | 1873

Brent, J.,

delivered the opinion of the Court.

This case involves the individual liability of the appellant, as a stockholder in the'Chesapeake Steamboat Company, a corporation formed under the general corporation law of this State, (1868, ch. 471) for a debt contracted by the company before the whole amount of its capital stock was paid in (sec. 59). All errors in pleading have been waived by an agreement between the parties, and the case is to he’ tried, upon the facts offered in evidence, without regard to the state of pleadings.

This company was incorporated on the 12th of May, 1868, with a capital of $22,000, and the appellant on the 28th of April, 1870, became a stockholder to the extent of $1,000. On the 24th of May, 1870, a certificate was filed in the office of the Clerk of the Superior Court of Baltimore City, by which it appears that the whole amount of this capital stock had been subscribed and paid for. On the 11th of April, 1871, the stockholders determined to increase the capital stock, and it was accordingly increased to $45,000, and on the 27th of May following a certificate to that effect was duly recorded. Of the increased stock the appellant took $4,000, making the *526whole amount of stock held by him $5,000, for which he has paid in full. The three promissory notes, which are the causes of action, are dated, one on the 14th of July, and the other two on the 14th' of September, 1871, and the suit was brought on the 10th of November of the same year.

After these facts had been offered at the trial, the appellant offered to give in evidence a certificate, duly executed and recorded, showing that the whole amount of the increased capital stock of the company had also been subscribed, and paid in as follows : $8,500 on the 28th of April 1871, $1,800 within one year from that date, and the balance, $12,700, within thirty days before the 14th of August 1872, the date of the certificate. This certificate was duly filed for record in the office of the Clerk of the Superior Court of Baltimore City on the day after its date.

Upon objection made by the plaintiffs the Court refused to allow this certificate to go in evidence to the jury, and this refusal forms the subject matter of the first bill of exceptions.

As no objection is taken- to the certificate upon any .ground of informality or other defect, the -sole question presented by the exception is, whether the liability of a stockholder under the 59th section of the Act of 1868, (supplement to the Code 1868, Art. 26,) for a debt of the company, contracted before the capital stock has been paid in, is terminated by the payment in of such capital stock, or continues after that event. The section provides that “all the stockholders of any such corporation shall be severally and individually liable to the creditors of the corporation of which they are stockholders, to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by the corporation, until the whole amount of the capital stock fixed and limited by the corporation shall have been paid in, and a certi*527ficate thereof made and filed as prescribed in the following section of this article ; and the capital stock so fixed and limited shall all be paid in, one half thereof in one year, and the other half thereof in two years from and after the incorporation of said company, or such corporation shall be dissolved.” It is insisted by the appellees that the provision “until the whole amount, &c., shall have been paid in” refers to debts that may have been contracted, while on the part of the appellant it is claimed, that it has reference to the individual liability of the stockholder, and fixes a period when such liability is to cease. We think the construction contended for by the appellant is the proper one. In construing a statute the usual and ordinary meaning of words is to be adopted and followed, unless there exists a strong and controlling reason for giving them an unusual signification. The law before us was drafted and reported to the Legislature by a commission composed of very able gentlemen, and we must infer that in knowing the ordinary meaning of terms, they used such as were best calculated to indicate the purpose of the law. The word until is not synonymous with the word before, and if the contingency mentioned in this section was intended to apply to debts, the expression used would have been, “for all debts and contracts made before the whole amount, &c.,” and not “until the whole amount of the capital stock, &c.” This view is strengthened by reference to the language used in section 64, where it is intended to make the liability of a stockholder fixed and determinate upon the happening of a contingency. There the language used is not until, but “*before the making, &c.” If the punctuation is to be any guide, this also indicates that the word until is not designed to apply exclusively to the debts made by the corporation, as it is separated by appropriate punctuation from that expression, and is thereby made to refer to a provision antecedent to that one. *528Manifestly to our minds the construction of this section is to refer the words “until the whole amount of capital stock, &c.,” to the expression “shall he severally and individually liable.” By doing so the word until is accepted in its ordinary signification, and is the appropriate one to be used in that connection. We therefore read the section to mean, that the several stockholders of a corporation are individually liable until the whole amount of its capital stock shall have been paid in, for any debts of the corporation contracted before that time. This construction fixes a period of time, at which the individual liability of the stockholder ceases; and the creditor is to look for payment to the corporation, the payment in of whose capital stock has now been secured as a fund out of which its liabilities are to be met. If therefore the whole capital stock of this company was paid in before the trial of this suit, the antecedent liability of the appellant had terminated, and the appellees were not entitled to prosecute their claim to a judgment against him.

The argument, that the right to an action against a party, upon his liability for a debt, once .given cannot be divested, may be true where it is given unconditionally. But if given to depend upon a contingency it is otherwise. The same law which confers it may direct it to cease upon the happening of a certain event. Nor do we agree with the appellees’ counsel that the appellant cannot avail himself of the defence that the whole amount of capital stock has been paid in, because it was not paid, one-half in one year, and the other half in two years, as required ’by the section which we have been considering. .The failure to make the payment in the time mentioned subjects the corporation to proceedings for a dissolution, but has no reference or application to the defence of an individual stockholder .sued, as in the present case, for the recovery of a debt of the corporation.

*529It was intimated at the argument, that the Court below would have given the same construction to this section which we have placed upon it, but lor an expression used in the opinion delivered in the case of Norris vs. Wrenschall, 34 Md., 492. The point we have been considering did not arise in that case, and was not involved in its decision. The language used in the opinion must be confined, as it was intended, to a case where the debt was contracted by the corporation, “whilst the defendant was a stockholder, and before the capital stock is paid up.” If these two conditions concur at the time of trial, there can he no doubt of the liability. In another case, (Norris vs. Johnson, 34 Md , 485,) argued and decided at the same time, the point was distinctly adverted to and left undecided — and it was so intended by the Court.

The second exception is taken to the rejection of the prayer of the defendant, in which the Court is asked to instruct the jury, that the defendant is not liable if the whole amount of capital stock, fixed and limited by the original charter of the company, was paid in before the debt to the plaintiff was contracted, although they may find the increased stock of the company was not so paid in. The language of the section authorizing an increase of the capital stock of a corporation is too clear in its language to admit of any question upon this point. It provides (sec. 69,) “And every corporation incorporated under the general laws of this State or under this Article which shall so diminish or increase its stock, shall remain subject in other particulars to the provisions of this Article ”• This clearly embraces the 59th section, and makes its provisions applicable as well to the increased capital stock of a corporation as to the capital fixed in its original charter. This prayer was therefore properly refused.

But for the error in refusing to allow the certificate, mentioned in the first bill of exceptions, to be given in evidence to the jury, the judgment below will be reversed. *530As this certificate appears from the record before us to be conclusive against the right of the appellees to recover, a new trial will not be ordered. ■

(Decided 21st February, 1873.)

Judgment reversed.

Stewart, J.-, dissented.