Fiery v. Emmert

36 Md. 464 | Md. | 1872

Robinson, J.,

delivered the opinion of the Court.

This bill alleges that the Antictam Manufacturing Company was duly incorporated under the provisions of Article 26 of the Code, with a fixed capital stock of §150,000, of Avhicli about $91,000 \\ras duly taken; that Avith this subscription the company organized and incurred large debts for the purchase of real property, and the erection of buildings, necessary for the purposes of the company; that being so indebted, and for the purpose of securing the payment of the same, the company conveyed by deed of trust all of its property.

The bill further charges that the company is also largely indebted for labor done and machinery furnished; that the creditors, or some of them at least, have brought suits against the complainants, under sec. 52, of Article 26, to enforce the payment of the same; that the debts and liabilities of the company are largely in excess of its assets and property; and that other creditors will seek redress against the complainants and other stockholders, and prays for the following relief:

1. To compel stockholders to pay their subscriptions to the capital stock of the company.

2. To enforce contributions from all of the stockholders to the extent of the several claims, for the payment of which suits have been instituted against the complainants.

3. To ascertain the entire indebtedness by the company, and the apportionment of liability among the stockholders on account of the same.

4. For the appointment of a receiver, &c.

To this bill the defendants filed a general demurrer, and it is from the decree of the 'Court sustaining the demurrer that this appeal is taken.

In support of the demurrer, it is contended, in the first ' place, that the bill is multifarious. It may not be easy to lay down a rule of universal application, as to what constitutes multifariousness. It is a question resting somewhat in the discretion of the Court, under the circumstances of each case, in the exercise of which they will be careful to guard against a multiplicity of suits on the one hand, and the imposition of needless and oppressive costs on the other. As a general rule, however, we may say, that in order to sustain a demurrer to a bill on this ground, it must appear that several matters perfectly distinct and independent are joined in the bill against the same defendant, thus compelling him to unite in his answer and defend different matters wholly unconnected with each other; or the bill must contain the demand of several matters of a distinct and independent nature against several defendants, thus imposing upon each defendant the costs incident to the trial of several claims against the other defendants, with which he has no connection, and in which he has no interest. Story’s Equity Plead., 271, 280, 533; Adam’s Eq., 310. The objection must therefore be confined to cases where the demand against each particular defendant, is entirely distinct and separate in its subject matter from that in which other defendants are interested, and does not apply where there is a common liability in the defendants, and a common, although not co-extensive interest in the complainants. Here the bill is filed by shareholders in a manufacturing company, incorporated under the general corporation law, for the purpose of ascertaining the amount of capital subscribed, by whom subscribed, the amounts paid thereon and by whom paid; to enforce the payment of the same; to ascertain the debts of the company, for the payment of which the stockholders are liable, under the Act of incorporation, to the amount of capital stock subscribed by them respectively, and on account of which suits have already been instituted against the complainants — and to compel a ratable contribution by all of the stockholders towards the payment of the same. In regard to the several matters thus charged in the bill, the complainants and defendants have a common interest and a common liability, to the extent of their individual subscriptions, and we are of opinion, therefore, that the objection of multifariousness cannot be sustained.

In further support of the demurrer, it is insisted that the complainants have no right to invoke the aid of a Court of Equity for the purpose of compelling the payment of unpaid subscriptions. Ordinarily it is true, that the corporation is the proper party to enforce the payment of subscriptions to its capital stock, but it is equally true that the capital stock of these manufacturing companies constitutes, in equity, a trust fund for the payment of creditors, and no one doubts the power of a Court of Equity to subject the entire property of the company to the payment of the claims of creditors. If, however, the property has been assigned, and creditors are seeking their statutory remedy against the stockholders, thus compelling them to pay the debts due by and contracted by the company, there is no good reason why a Court of Equity should not, at the instance of such stockholders, compel subscribers to pay the amounts of their several subscriptions, in order that the common assets of the company may be realized and applied to their legitimate purposes, and the stockholders relieved to that extent from a liability to which they are exposed, and which every principle of justice requires should be borne alike by each; and further, in order that there may be a pro rata apportionment of liability and contribution on ■account thereof, in proportion to the capital stock held by them respectively. Under such circumstances, stockholders are not obliged to wait until judgments are recovered against them and payment of the same enforced. To require this, would not only be oppressive, but in many cases might prove ruinous to parties. Their liability as shareholders to creditors of the company is an original liability, and their right to an apportionment of the same, under the averments in this bill, and under a proper state of pleadings, and to a ratable contribution on account thereof by all other stockholders, stands upon different grounds from those of a surety against a co-surety.

There is a defect, however, fatal to the bill in its present shape. It alleges that the capital stock of the company was fixed at $150,000, of which only about $91,000 was subscribed. Under such a charter we have heretofore decided that the liability of a subscriber for his subscription depended upon the whole capital stock being taken, unless by his acts or declarations, before or subsequent to the organization of the company, he has waived the right to set up this defence. Hughes vs. Antietam Man. Co., 34 Md., 316. The bill ought to have charged that the several stockholders, defendants, had, by their participation in the organization of the company, or by other acts, waived their right to rely upon a partial subscription of the capital stock.

(Decided 20th June, 1872.)

The corporation ought also to have been made a party to the suit. The bill does not allege that it has been dissolved, nor does it pray for a dissolution.

How far a company, by suffering acts to bo done, totally destructive of the end and object for which it was incorporated, may he treated as having virtually surrendered its charter, or its dissolved, is 2 {question not to ho dooidod in this ease. It is 'well settled, that so long as a corporation has the power to increase its subscription — to call in more capital and resume its business, the mere allegation that its debts are largely in excess of its assets, and that it has conveyed its property in trust to pay the same, does not warrant a Court of Equity in treating it as ipso facto dissolved.

Eor these reasons the decree below must be affirmed, hut we will remand the cause in order that the bill may be amended in conformity with the views herein expressed.

Decree affirmed and cause remanded for f urther proceedings.