Gianella v. Bigelow

96 Wis. 185 | Wis. | 1897

PiNNey, J.

1. The liability sought to be enforced against the stockholders of the bank in this action is founded upon sec. Vi, ch. 419, Laws of 1852 (1 S. & B. Ann. Stats., p. 1228), which provides that “ the stockholders of every corporation or association, organized under the provisions of this act, shall be individually responsible, to the amount of their respective share or shares for all its indebtedness and liabilities of every kind; ” and by sec. 22 of the act it is provided: “ The shares of such association shall be deemed personal property, and shall be transferable on the book of the association ; and every person becoming a shareholder by such transfer, shall, in proportion to his shares, succeed to all the rights, and be subject to all the liabilities, of prior stockholders.” It is argued that these executors are not within the liability of the statute; that they are hot persons becoming shareholders by transfer of their shares to them on the books of the bank ; and that they have no greater rights, and are subject to no greater liabilities, than if Cary and Sander-son each, in his lifetime, had executed to them an assignment of his stock; and that they could not become stockholders until a transfer of the stock was made to them on the books of •the bank. But this action does not proceed, as against these executors, upon the theory that they became stockholders, as between them and the bank, by purchase and transfer of the shares, or that by reason of their interest in and relation to the stock, in their representative capacities, they have become subject to any personal liability. They have not assumed •or consented to any such position. The action is to charge them, in their representative capacities of executors, with the statutory liability which their respective testators in their lifetime were under, as shareholders of the Plankinton Bank, and through such executors to reach the estates of said deceased shareholders, in order to discharge the same. This liability of the shareholder does not die with him, but survives in respect to his estate in the hands of his executors or administrators. Thomp. Corp. § 3320. TJpon the death of Cary and Sanderson the stock which stood in their names, respectively, on the books of the bank, was cast upon, their personal representatives; and this liability remained against their respective estates, the same as any other liability or •debt, to°be enforced, through such personal representatives, toy some court having adequate equity jurisdiction. To this ■end, no assignment of the stock is necessary, and their personal representatives continued the legal personality of the deceased stockholders. Lowell, Transfer of Stock, §§ 35-36. The case of Cleveland v. Burnham, 64 Wis. 357, in which the opinion was expressed that a transfer “ on the books ■of the bank should be shown, upon which to found the liability,” was in respect to the liability of the purchaser of stock, ■who took the same by transfer inter vivos, and not where it -passed by bequest or operation of law. The title or interest •of these executors is first for the purposes of administration, •and then to execute the trusts upon which it was bequeathed to them, respectively; and they are chargeable in this action, for such liability, only to the extent of the assets severally received by them. 1 Cook, Stock (3d ed.), § 248; Taylor v. Taylor, L. R. 10 Eq. 477; In re St. George Steam Packet Co., Hamer’s Case, 3 De Gex & S. 279; Grew v. Breed, 10 Met. 569; Chase v. Lord, 77 N. Y. 1; In re Bingham, 127 N. Y. 296.

2. The objections to the jurisdiction of the court, to the sufficiency of the complaint, and the contention that, the ■claims in suit against the estates of ’ Cary and of Sanderson were barred by the statute of limitations, all rest upon"the same grounds, and may be conveniently considered together. The nature of the liability of stockholders under the section of the banking law relied on, and the manner in which it must be enforced, came before this court at an early day, in a series of carefully considered cases, and the law was so-fully and firmly settled that further discussion would be inappropriate and unnecessary. In Coleman v. White, 14 Wis. 700, which was, an action at law by a single creditor against an individual stockholder to recover a debt due from the bank,'the court said: “We are of the opinion that the liability is primary and absolute, and attaches the moment the debt is contracted by the bank; that it is a liability of all the stockholders, to all the creditors, on the principle of co-partnership,— the stockholders standing on substantially the same footing as though they were partners, save only that the responsibility of each is limited to a sum equal to his share or shares of stock. Subject to this limitation they are answerable as original or principal debtors, and their liability more nearly resembles that of copartners than any other with which it can be compared.”. As to the remedy, the court said:- “We are persuaded that the remedy should be by 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, unless -it be impossible or impracticable to bring them all before the court, or some other cause for the omission be shown;” that this conclusion followed necessarily “from the nature of the obligation imposed, it being a liability on the part of all the stockholders, in proportion to the amounts of their respective shares, to all the creditors, according to the sums severally due them. It is an indebtedness which a court of law has no power to regulate and adjust, and to which the jurisdiction and powers of equity are peculiarly. and exclusively adapted.” 1 Cook, Stock (3d ed.), § 222; Arthur v. Willius, 44 Minn. 409; Walsh v. M., C. & N. W. R. Co. 2 McCrary, 156; Umsted v. Buskirk, 17 Ohio St. 113; Hadley v. Russell, 40 N. H. 109; Erickson v. Nesmith, 46 N. H. 371. This view of the liability and remedy under this statute has been ever since strictly maintained. In Cleveland v. Marine Bank, 17 Wis. 545, it was held that the suit, which was framed as indicated, might be maintained without a judgment having been obtained at law against the bank. And subsequently, in Merchants’ Bank v. Chandler, 19 Wis. 437, it was held that a judgment creditor of the bank, whether or not he had docketed his judgment and issued execution against the real estate of the bank, might maintain the action, in behalf of himself and all other creditors who may choose to become parties thereto, against the bank, jointly with the stockholders, to reach and apply its assets and enforce the liability of the stockholders. There is at this time no ground for question as to the nature of the liability, or that it can be enforced only in equity; and it is equally well settled that the bank and all its stockholders must be parties defendant, unless it is impossible or impracticable to bring them all before the court.

3. It is contended that the liability in question, upon the facts stated in the record, can be enforced only in the county court of Milwaukee county, in the regular settlement of the estates of the said deceased testators, and that as a time had been fixed in which creditors of the respective testators might present their claims against them for allowance, and notice of such limitation, and of the time of hearing proofs of claims, had been given, the circuit court was prohibited by the statute (R. S. sec.- 3845) from entertaining jurisdiction of these claims. This section provides: “No action shall be commenced against an executor or administrator, excepting actions for the recovery of specific real or personal property, or actions to establish, enforce or foreclose a lien or right of lien on real or personal property, . . . until the expiration of the time limited for the payment of debts. Nothing in this section shall prevent any person having a lawful claim against a deceased person from bringing an action therefor against the executor, administrator, heir, devisee or legatee of such deceased person, when no time has been fixed in which creditors may present their claims against the deceased for allowance, or when no notice of such limitations has been ordered or given.” By sec. 3844: “ Every person having a claim against a deceased person, proper to be allowed by the court or commissioners, who shall not, after notice given as required by section 3839, exhibit his claim to the court or commissioners within the time limited for that purpose, shall be forever barred from recovering such demand, or from setting off the same in any action whatever.”

The relief demanded and given against these executors is for the payment of money, and it is argued that the complaint fails to state a cause of action, in that it is not alleged that no time had been fixed within which the creditors might present their claims for allowance, or that no notice of such limitation had been ordered or given, and that the judgment, therefore, is not warranted by the pleadings and findings. In Price v. Dietrich, 12 Wis. 626, and Ernst v. Nau, 63 Wis. 134, which were actions brought for the recovery of legal demands, the statutory prohibition in sec. 3845 against bringing actions against executors or administrators except in the cases therein specified was applied, and it was held that the remedy in the county court by presentation and proof of such claims is exclusive.

The case of Lannon v. Hackett, 49 Wis. 261, was an action brought by a surviving partner against the executor of his deceased partner, his widow, and his heirs at law, for an accounting for moneys received by the deceased partner in his lifetime, the proceeds of partnership property, to two thirds of which, the plaintiff was entitled, but no part of which had been paid to him; and judgment was sought that the executor of the deceased partner should pay the amount found due him. on such accounting. The widow and heirs at law were made parties defendant only as being interested in the assets in the executor’s hands, and no attempt was made to charge them personally, or to establish a lien on any real estate that had come to them. In brief, tlmonly relief which the plaintiff asked was a judgment for the payment of money only, against the executor of the deceased partner. The cause of action was clearly for equitable relief, and it ivas not essential to the adjudication of the claim in the county court that any other party should be brought before it. The presence of the claimant and of the executor was sufficient to give that court jurisdiction to adjudicate the claim. After a careful examination'of the powers and jurisdiction of the county and circuit courts in relation to claims against the estates of persons deceased, in view of the fact that county courts had equitable jurisdiction, it was held that the provisions of the statutes under consideration applied to equitable as well as to legal claims, and that equitable claims not presented within the time limited by statute, and proved, would in like manner be barred. It was said in that case: “ The fact that the claim is one rvhich can be enforced in a court of equity alone is no reason for proceeding in the circuit court. The county court has ample power to determine equitable as well as legal claims. The only exceptions are those expressly mentioned in the statutes, and possibly actions to ascertain an equitable claim, and, then enforce it as a lien upon specific personal property or real estate which may have come to the hands and possession of the executor or administrator as a part of the estate of the decedent.” It was further said that “of the power of the legislature to take away the jurisdiction of the circuit court in actions to charge the estates of deceased persons with the pajnnent of the debts of the decedent, there can be no doubt;” that, “if the legislature can take away its jurisdiction as to cases at law, it can as to cases in equity.” Accordingly it.was held that as the plaintiff had not shown that no time had been fixed by the county court within which creditors might present their claims, or that no notice of hearing had been given, as required by statute, he had failed to show any reason for bringing his action in the circuit court, and, the subject matter of the action being within the exclusive jurisdiction of the county court, the complaint was held fatally defective, and that there could be no recovery.

It is material to observe that this decision expressly recognizes the fact that there may be implied exceptions, in addition to those specified in the statute, in respect to certain equitable causes of action, as instanced in the opinion; that the language, though very broad and general, must be taken and considered with reference to the case then before the court; and that the decision cannot be fairly held controlling upon facts or conditions not presented and evidently, therefore, not within the mind of the court. The power of the legislature to take away the jurisdiction of the circuit court in legal or equitable actions is not absolute, but is subject to the condition that a substantial remedy must be conferred on some tribunal of competent and adequate jurisdiction.

In Hasbrouch v. Shipman, 16 Wis. 296, the court, speaking of the power of the legislature to change, modify, or alter the laws governing proceedings in courts of justice, both in respect to past and future contracts, stated: “T,ke rule extracted from the cases was that this power was unrestricted so long as a substantial remedy was afforded according to the course of justice as it existed at the time the contract was made. But the legislature must give some remedy, and not destroy the legal force and obligation of a contract, taking away all existing remedies.” Von Baumbach v. Bade, 9 Wis. 559; Morse v. Goold, 11 N. Y. 281; Bronson v. Kinsie, 1 How. 311; McCracken v. Hayward, 2 How. 608; Curran, v. Arkansas, 15 How. 304.

To give this legislation the construction and 'effect upon which the defendants insist, would render it unconstitutional, as applied to equitable causes of action, such as are stated in the complaint, where various parties necessary to litigate and determine them cannot be cited and brought before the court. In the present case the county court had no power to cite and bring before it the bank, or its assignee, or any of its numerous stockholders, without whose presence the question of the liability of the estates of Cary and of Sander-son, or of their executors in their representative capacity, for these claims, could not be considered and determined, within the rule laid down in Coleman v. White, 14 Wis. 700, and other cases cited. The court c.ertainly did not, in Lannon v. Hackett, 49 Wis. 261, intend, even by the broad and general language used, to hold that the jurisdiction of the circuit court in all equitable claims or demands was taken away by ’ the statute, except as therein stated, but simply that such would be the result as to all claims, whether legal or equitable, that could be effectively litigated in the county court, and in respect to which its jurisdiction is complete and adequate to the ends of justice; in other words, that the provisions of secs. 3844 and 3845 apply only within the legal competency of their jurisdiction. The case of Lannon v. Hackett must therefore be understood accordingly. The ease of Bostwick v. Estate of Dickson, 65 Wis. 593, was for a money demand due from the estate of Dickson by reason of an express trust, and no other parties than those airead}7-before the court wherein the claim was filed were necessary to litigate it.

The law does not require a party to do a vain thing. There is no reason for saying that a claimant is bound to present his claim to a tribunal for allowance, which has no power to adjudicate it, or, failing to do so, that he shall be barred of his rights. Although the ordinary jurisdiction of courts of equity over administrations has been taken away and conferred on probate courts, or has become obsolete, yet there still remains an auxiliary or supplementary jurisdiction, to be exercised in exceptional cases, where the jurisdiction of the probate court is confessedly inadequate, or has been found insufficient, and “the jurisdiction over estates, interests, and primary rights, purely equitable, and to administer equitable remedies, is nowhere lost merely because the interest, right, or remedy grows out‘of, or is-connected with, the estate of a deceased person which is in. the course of administration, even though the administration proper, the accounting and final settlement, are carried on under the exclusive jurisdiction of another tribunal. In all such cases, however, the jurisdiction must, of course, be based or grounded upon some distinctive and independent ground of equitable cognizance, and its exercise may then result in a remedy which is a material aid to a pending administration, or which removes an impediment from the final settlement of the estate.” 1 Pomeroy, Eq. Jnr. §§ 347-351. And it is no objection to the jurisdiction that when the rights of the plaintiff shall have been determined the judgment will have to be executed by the county court in probate, in the manner directed by the statute. Catlin v. Wheeler, 49 Wis. 507, 520.

The jurisdiction of the circuit court in the present case-may well be rested upon the inability of the county court to-afford to the plaintiff any adequate remedy in the regular course of administration; and the circuit court will decline-to take jurisdiction in matters arising in or relating to the administration of the estates of decedents, except where special circumstances show that a complete and adequate remedy cannot be given by the county court. Hawley v. Tesch, 72 Wis. 299, 304; Meyer v. Garthwaite, 92 Wis. 571, and previous cases there cited. The cases of Nolan v. Hazen, 44-Minn. 478, and Hospes v. N. W. Mfg. & Car Co. 48 Minn. 174, 31 Am. St. Rep. 637, were both in the district court of Minnesota, a court having the same equitable jurisdiction as the circuit court in this state; and the case of Estate of Warren, 52 Mich. 557, seems to proceed upon the ground that the liability there under consideration was one at law, and which might be enforced without the presence of other stockholders and parties, and does not appear to be in accord with the rule in this state. Coleman v. White, 14 Wis. 700. It is apparent, therefore, that the complaint is sufficient, and! that the circuit court had jurisdiction of the subject matter and of the action, and that the statute bar, under sec. 3844,. R. S., is not applicable to these claims.

4. It is further assigned as error that the circuit court by its judgment awarded execution against the executors of' Cary and of Sanderson, to be levied upon and collected out of the property and assets received by them as such executors and in their hands at the time of the commencement of the action. The statute (sec. 3845, E. S.), in substance,, provides that no attachment or execution shall be issued against the estate of the deceased, or the executor or administrator thereof, until the expiration of the time limited for the payment of debts, except in certain cases not here material to state. Vhether the time limited for the payment of debts has expired, or whether an order has been made for such payment, the record does not show. We think that this, statute is applicable, and that, after the amount of the claims, have been established, no execution should be awarded on the judgment, but that the judgment must be certified to the-county court, to the end that the claims established by it be directed to be paid as claims against the estates of these respective decedents, with other claims, in the order prescribed by law. E. S. sec. 3852. The necessity for equitable aid or relief having ceased, the powers of the county court are entirely adequate to the enforcement of the claims. If the-executions, as awarded, should be enforced, it might result in-giving the claimants an unfair preference over creditors of the estate. The case is also clearly within the rule stated in Catlin v. Wheeler, 49 Wis. 507, 519, that, when the rights of the parties have been adjudicated and determined by the proper judgment in the case, the county court may proceed, at the instance of the plaintiff or of the executors, to execute such judgment -in the manner provided by the statute.

It follows, therefore, that the judgment appealed from should be affirmed, except as to the portion awarding executions against these executors, and that as to such portion it should be reversed. No costs will be awarded on these appeals, but the fees of the clerk of this court are to be paid by the respondent.

By the Gourt.— Judgment is ordered accordingly.

Case Details

Case Name: Gianella v. Bigelow

Court Name: Wisconsin Supreme Court

Date Published: Apr 30, 1897

Citation: 96 Wis. 185

Court Abbreviation: Wis.