116 Ky. 759 | Ky. Ct. App. | 1903
Opinion of the court by
Affirming.
The record in this case is voluminous, and we will state only such facts as ara necessary for a proper understanding of the questions1 involved. It appears that the appellant, the Gamewell Fire Alarm Company, is a foreign corporation organised under the laws of the State of New York. The New Gaynor Electric Company is a corporation organized under the laws of this State, and likewise the Fire and Police Telegraph Company. It appears that the New Gaynor Company was organized in June, 1892, and that the Fire and Police Company was organized in July, 1894. That, prior to this last date, the New Gaynor Company was a competitor of the appellant, Gamewell Company, in this territory; they being engaged in the same line of business. The Game-well Company had three or four agents representing it in Louisville, and they, with the president and other officials of the appellant, conceived the plan and purpose of organizing thé Fire and Police Company, and preventing further competition by the New Gaynor Company by purchasing its stock. That since the organization of the Fire and Police Company it has owned all the stock of the New Gaynor Company, and there has not been held, or pretended to be held, any stockholders’ meeting of the New Gaynor Company, or the election of any officei’s thex’eof. That since that
The appellant claimed to be one of the creditors of the Fire and Police Company, and in the year 1900 brought this action against it for about $8,000, and also made the New Gaynor .Company a defendant, claiming that, by reason of the matters hereinbefore stated, its property and effects, were also liable to the payment of the claims of the Fire and Police Company’s creditors, and made the necessary allegations for the appointment of a receiver to take charge of the property and assets of both defendant corporations. Appellant also alleged in its petition that the property of
The real appellees in this case are the creditors of the New Gaynor Company and of the Fire and Police Company. The E. A. Kinsey Company, as a creditor of the New Gaynor Company, filed its petition, asking that it be made its answer and counterclaim to appellant’s petition and cross-petition against the Fire and Police Company. Ini these petitions and amended petitions, the Kinsey Company alleges that the creditors of the New Gaynor Company were numerous, and that its interests and the interests of all the other creditors of «the New Gaynor Company were identical, and that the questions involved a common and general interest of many persons; that the
These appellees, the creditors of the two defendant corporations, admitted the attempted transfer, of the property of the New Gaynor Company to the Fire and Police Company, and of the purchase by the Fire and Police Company of the New Gaynor Company stock, but say that it was done without any notice to them, or their having any knowledge or information thereof, and for a fraudulent purpose, and with the intent to cheat the creditors of the two companies, and with intent to benefit the appellant. They further allege that the' appellant, Gamewell Company, the Fire and Police Company, and the Gamewell Fire Alarm Auxiliary Company (which was a Maine corporation) were, at and during the times mentioned in the petitifon, organized, and had become a pool, trust, combine, and confederation, for the purpose of regulating, controlling, increasing, and fixing the price of electrical apparatus and appliances and fire alarms in the city >of Louisville and community, and for the purpose of fixing, establishing, and limiting the amount and quantity of such articles to be produced and manufactured, bought
The issues were made up, the proof was heard, and the court adjudged, in substance, as follows: Among other things, it gives judgment to the creditors of the New Gay-nor Company for the amount of their respective- claims, by confirming the commissioner’s report allowing their claims. It gives judgment to the creditors of the New Gaynor Company against the Fire and Police Company as stockholder in the New Gaynor Company upon the balance of these claims of the creditors of the New Gaynor Company remaining unpaid after its assets had been distributed. It gives' judg
The appellant asks for a reversal of this case for several reasons1. It contends that the court erred in adjudging that the stockholders in the Fire and Police Company were subject to the double liability imposed by section 547 of the Kentucky Statutes of 1899, claiming that it appeared from the charter of the Fir» and Police Company that its business was solely and exclusively that of selling agent of appellant, Gamewell Company, in the construction and installation of fire alarm1, telegraph, and police alarm telegraph plants, and that by this'section of the statutes the stockholders therein were expressly exempt from this double liability. The statute, in so far as is necessary for the determination of
The Fire and Police Company, having been organized in 1894, before these acts became laws, the stockholders therein were nevertheless liable, because it continued to do business after the law went into effect, and up to the time of the institution of this action, in 1900, provided they are not relieved by the exceptions contained in the statutes, which is the contention of the appellant. We quote so much of the charter of the Fire and Police Company as will aid in determining the question under consideration: “The business which said Corporation proposes to carry on shall be the manufacturing and dealing in electric machinery, apparatus and supplies; conducting a general electric business, and exploiting or promoting the fire and police telegraph business; the purchasing or otherwise acquiring stock, bonds or other obligations of
The appellant, the Gamewell Company, contends that even admitting its double liability, under the statutes, as a stockholder in the Fire and Police Company, it was error of the court in so adjudging in this action, for the reasons that the other stockholders in the Fire and Police Company were not made parties to this action, and that it,'the sole stockholder before the court in this action, was made responsible upon its statutory liability. From the record it appears that the stockholders in this corporation were unknown to appellees, and the presumption is that the appellant, knew the stockholders in the Fire and Police Company, it being one of them; and, if it deemed it necessary that the other stockholders should be made parties to the action, it could have, by appropriate pleadings and proceedings, made them parties, but it made no effort in this direction. Even if this was error, it was not prejudicial to the substantial rights of the appellants. All the stockholders of the Fire and Police Company were responsible for the double liability under the statute quoted, 'but the liability of each stockholder therein was several and individual, equally and ratably, but not one for the otliei*. The only thing necessary to be done was to ascertain the indebtedness of the corporation, and deduct its assets therefrom, and then ascertain the amount of liability of appellant under the statute quoted. The case of Castleman v. Holmes, 4 J. J. Marsh., 5, was where stockholders in a corporation had been sued. In that case the court said: “The liability of the defendants .is several, and not joint. They were properly united in the same action, as we have already seen; but when the rule of apportionment was ascertained, and the cause prepared as to any one, we can not see any sufficient reason why he should not be
There can be no question as to the double liability of the Fire and Police Company to the creditors of the New Gaynor Company. It being the sole stockholder and a corporation does not alter the case. The statute says that all stockholders, unless within the excepted class, shall be liable. It does not make any distinction between the stock-holding corporation and an individual. Their responsibility under the statutes is the same. Nor does it relieve it of liability because it was the sole stockholder of the New Gaynor Company. It placed stock in the hands of three persons, who were thus qualified to be, and did continue to be,' officers of the New Gaynor Company, until a receiver was appointed in this action. This was a fraudulent transaction entered Into by the appellant, the Fire and Police Company, and the New Gaynor Company, for the purpose of holding the New Gaynor Company out as a real corporation and as a pretended competitor, when it was in fact only a dummy for the appellant, and the Fire and Police Company, with a view to beat the public. This fraud might have been taken advantage of by parties in interest not implicated, but it can not relieve the parties who caused or induced the wrong from liability imposed by their own acts. See Louisville Gas Co. v. Kaufman, 20 R., 569, 105 Ky., 131, 48 S. W., 434, and Louisville Banking
The appellant contends' that appellees’ pleadings by which they sought to enforce appellant’s liability as a ■stockholder under section 547 of the Kentucky Statutes of 1899 did not constitute a counterclaim, and, being by a defendant against the plaintiff, could not be a cross-petition. We are of the opinion that the facts1 stated constituted a counterclaim. A counterclaim is defined by section 96 of the Civil Code to be a cause of action in favor of a defendant against a plaintiff, or against him and another, which arises out of the contract or transaction stated in the petition as the foundation of the plaintiff’s claim, or which is connected with the subject of the action. The purpose of this action, as stated by appellant in the prayer •of its. petition, was to have the affairs of the insolvent resident corporations placed in the hands of a receiver of the court, and their assets collected, and the same paid to the creditors of the two corporations. The assets of the two corporations consisted; in addition to visible personal property, in debts due them by contract, as well as sums: due from stockholders under their liability created by the statutes. It was certainly connected with the subject of this action and the settlement of these insolvent corporations for the appellees to ask the court to require the appellant, a nonresident corporation, to pay and settle the amount it owed under its statutory liability. This would not have been improper even if it had been a resident corporation. The court was right in not permitting appellant, a foreign corporation, to receive its pro rata on its claim, and then leave the State and compel its creditors to seek a foreign jurisdiction for their relief. See Forbes & Bro. v. Cooper &
The appellant also objects to the relief granted by the .lower court to all the creditors of the insolvent resident corporation other than the appellees Kinsey Company and' Southern Company, they being the only creditors to file written pleadings setting forth their claims. The appellant contends that the judgments rendered in behalf of the other creditors are erroneous and should be reversed. All these creditors had a common or general interest in requiring the appellant io account for its statutory liability as a stockholder of the Fire and Police Company, and the creditors were numerous, and it would have been impracticable to bring them all before the court within a reasonable time. For them to appear in the circuit court by written pleadings would have been unnecessary and exceedingly expensive, and the court had, at the beginning of the action, on the application of appellant, enjoined and restrained all these creditors from bringing or prosecuting any action or actions on their claims, except in this action. The Kinsey Company and the Southern Company were authorized by an order of court to prosecute and defend for
creditor appearing before the commissioner and presenting his claim becomes thereby a party to the action, and is concluded by the final judgment of the court in allowing or rejecting his claim.” In view of the fact that these creditors had filed their claims before the master commissioner as required by statute, and that the Kinsey Company and the Southern Company had prepared and filed pleadings for the benefit of themselves and all the creditors having a common or general interest with them, and had been permitted by an order of court to sue and defend for all', and in view of the provisions of the Code last quoted, and the further fact that these creditors had been enjoined and restrained, at the instance of appellant, from prosecuting actions for their relief except in this action, and the enormous additional expense herein if they had been required to file separate written pleadings in behalf of each of the hundred or more creditors setting forth their claims, it would be a travesty on justice to say that they were not entitled to the relief granted them herein by the lower court.
The appellant further complains of the action of the lower court in allowing a certain per cent, of the amounts recovered to be charged against all the creditors who were not represented by special counsel. Admitting this to be true, it is not a cause for reversal of the judgment, for the reason that the creditors who were required to pay it have not appealed, and the appellant has no interest in the matter, as it does not have to pay any part of it.
Perceiving no error prejudicial to the substantial rights of the appellant, the judgment of the- lower court is affirmed.