Cleveland v. Burnham

55 Wis. 598 | Wis. | 1882

The following opinion was filed, upon the appeal from the order refusing to set aside the judgment:

Cole, C. J.

We are disposed to hold that the defendant Burnham made out a case of excusable neglect within the statute (sec. 2832, R. S.), and should have been let in to defend. It is true, he was personally served with process when the suit was commenced, in April, 1862. It likewise appears-that an answer was served by the firm of Butler, Buttrick & Oottrill for the defendants, including Burnham. But the affidavit of Mr. Oottrill fully explains how this mistake was made. It shows conclusively — as does the affidavit of Burn-ham — that this firm was not retained by Bwrnham, and had no authority whatever to represent him in the action. We shall not refer to the circumstances under which the firm happened to appear for him, further ^than to say it was owing to a very natural mistake, which any lawyer might make. There was certainly nothing wrong in the conduct of any member of the firm in regard to such appearance, or which could possibly cast a suspicion upon their deservedly high professional character. But true it is, that firm had no authority to appear for Mr. Bwrnham, or represent him in the action. In his affidavit Mr. Bwrnham states on this point that on being served with process he employed his co-defendant, D. A. J. Upham,— since deceased,— to whom he committed his entire defense; that from time to time he consulted with Mr. Upham concerning the action and about his defense, and was repeatedly told by Upham that the suit would not be pressed; that he need pay no attention to it until so advised by him, Upham; that he was surprised at learning in November, 1881, that judgment had been rendered against him; that he had no notice of the proceedings therein, but supposed from the statements of his counsel that the action had been discontinued years before. Mr. Burnham is probably not correct in saying that he had had no notice of the proceedings, for it does appear while the motion for judgment was pending that Mr. Butler spoke tq him on the subject; but it is doubtless true that Mr. Bm'nham supposed from the advice of his counsel that no judgment could be obtained against him, and he therefore did not appear to resist the entry of judgment against him. But while it could scarcely be claimed that Mr. Bwrnham was active and vigilant, as he should have been, in attending to the suit and in employing counsel to make his defense after Mr.-Upham died, still the fact that the suit was permitted by the plaintiff to sleep so many .years was well calculated to throw him off his guard or lull him into security. Besides, it must be remembered that the principal defendant in the action was the Marine Bank. It was sought to hold Burnham and others liable for the debts of the bank as stockholders. Burnham or his counsel may Rave supposed that the property of the bank would be ample to pay its indebtedness; if not sufficient, that no stockholder would be charged for the deficiency without some subsequent proceedings, of which the stockholders would have notice. However that may be, we think Mr. Burnham)s neglect to make his defense in season was excusable upon the facts of the case. For, as we have said, it was nearly twenty years from the time the suit was commenced before judgment was obtained; so not without reason might Mr. Burnham entertain the belief that the action was discontinued as to him, or that it would not be necessary for him to take any steps in the case until he had further notice. The statute, which authorizes the court to relieve a party from a judgment within a year after notice thereof on the ground of “ excusable neglect,” goes upon the theory that such party has not exercised due and proper diligence. Of course his neglect must admit of palliation, or be worthy of being excused. Under the circumstances disclosed in the affidavits, we think this can be said of the neglect of Mr. Burnham to make a defense.

The next question to be considered is, does the verified answer served with the motion papers set up a defense? It is claimed by plaintiff’s counsel that it does not. The material clause of the answer consists of a denial that Burnham was, on the 12th day of Uovember, 1859, when the written promise set forth in the amended complaint was executed by the president of the bank, a stockholder of the bank, or owned any stock whatever therein; or that he was a stockholder of said bank, or owned any stock therein, on the ■3d “day of January, 1861 (when the second cause of action accrued), or that he was ever a stockholder of said bank, or ■owned any stock whatever therein, prior to either of said two last mentioned dates.

It is very apparent that both the complaint and proposed answer go upon the theory that the shareholders when the indebtedness was contracted were alone liable under the provisions of the banking law, and not the shareholders when, the suit was commenced. But that view is clearly incorrect, as was practically conceded by plaintiff’s counsel. It is the shareholders when the suit is commenced who are made individually responsible, to the amount of their respective-shares, for the indebtedness of the bank. The shares are-transferable,— that is, are subject to sale and assignment like, other property of this character,— but the shareholder who buys stock succeeds to all the rights and is subject to all the-liabilities of a prior shareholder. The law so expressly declares. Now thé objection taken to the answer is that it tenders an immaterial issue by denying that Burnham was a stockholder at two' particular dates, or prior to either of those dates. And further, it is claimed that the answer, while denying that he was a stockholder at either of those dates, or prior thereto, carries an implication or admission that he was a stockholder at some other time; that is to say, when the suit was commenced. A negative pregnant in pleading is doubtless bad. But it will be noticed that the answer squarely meets the real issues of the complaint; therefore, while it may not contain a good defense to the action, the fact that it meets those issues fairly is entitled to considerable weight when passing on the merits of defendant’s application to be let in to defend. That the answer does fully and distinctly traverse the facts upon which Burnr~ ham's liability is based in the complaint does not admit of doubt. But plaintiff’s counsel insist that the answer should not only contain a denial that Burnham, was a stockholder at the time of incurring the indebtedness, but should have negatived every possible state of facts which would have-charged him. In determining the sufficiency of the answer we can apply no such strict rule of pleading. We have said the complaint goes upon the theory that the stockholders when the indebtedness accrued are liable, whether they are ¡stockholders when the suit is commenced or not. The answer fairly meets that issue, and must be deemed sufficient on this application.

The question whether or not one who was a stockholder when the debt accrued, but had transferred his stock in good faith before suit was commenced, was liable, is a point which has not been decided by this court. ¥e have indicated our opinion that it is the stockholder when the suit is commenced who is chargeable to the amount of his stock.

In Coleman v. White, 14 Wis., 700, a creditor of the bank brought an action at law against the stockholder to recover a debt due from the bank. The court decided that the remedy was by a suit in equity in which all the creditors should join, •or one or more should sue for the benefit of all, and that the action should be against the bank and all the stockholders. There was no occasion to consider the question whether a ■stockholder who had transferred his stock before suit brought was liable, and it was not discussed. It is true, the chief justice, in the opinion, says that the liability of the stockholder was primary and absolute, attaching the moment the •debt was contracted by the bank. But that remark was made when considering the remedy to be adopted to enforce .the liability of the stockholders. So in Cleveland v. Bank, 17 Wis., 545, the question decided was whether a creditor of the bank, without having obtained a judgment at law against it, ■could maintain the action pointed out in Coleman v. White. It was held he could. But neither in that case was it necessary to determine whether the liability was to be enforced against the stockholder when the debt was contracted, or the person owning the stock when the suit was commenced. 'That point is not even alluded to in the opinion by the chief justice. The same remark is true of the case of Merchants' Bank v. Chandler, 19 Wis., 435.

In the last case the chief justice, while considering the objections to the complaint, that there was a defect of parties defendant, observes that all the parties owning stock before the transfer to the bank itself were before the court, and if such transfer was fraudulent and void the proper parties were brought in so that the question might be litigated. Rut it is obvious that in none of these cases was the precise question ever expressly decided whether a person not a stockholder when the action is brought was liable. The question may be inferentially decided in Cleveland v. Bank, supra, as counsel contends, so as to be res adjudícala in this action, but nothing more.

By ch. 242, Laws of 1861, the liability of a stockholder was continued for six months after he had transferred his stock. This amendment to the banking law, which was submitted to and approved by the electors of the state, clearly shows that the understanding was previously that a stockholder who made a bona fide transfer of his stock before suit brought was exonerated from all liability. Whether that law could continue the liability of a stockholder who had sold his stock before it took effect is not a question presented for decision now. It is admitted by all the counsel that the assets and property of the bank must be first exhausted before the stockholders who are liable can be called upon to make good any deficiency. The proceedings on the reference in this case do not seem to be regular, but as the defendant should be let in to make his defense, that matter becomes unimportant.

It follows from these views that the order of the circuit court must be reversed, and the cause remanded for further proceedings in accordance with this opinion.

By the Court.— So ordered.

Upon the appeal from the judgment, the following opinion was filed:

Cole, C. J.

This is an appeal from a judgment. There is no bill of exceptions, and we can only look to see if there is any error apparent on the record which should work a reversal of the judgment. "We see none. But we have reversed the order of the circuit court refusing to vacate the judgment and let the defendant Burnham in to defend. In order that he may have the benefit of that decision we shall dismiss the appeal herein. The circuit court will, doubtless, set the judgment aside in accordance with the direction given in the opinion on the appeal from the order.

By the Court.— The appeal is dismissed.