Glenn v. Scott

28 F. 804 | U.S. Circuit Court for the District of Western Virginia | 1886

Bond, J.

The demurrer to the declaration in this case is interposed to raise the question whether the trustee of the National Express & Transportation Company, the plaintiff in this suit, has properly brought the action in his own name, instead of in the name of the company suing for his benefit.

The court is of tbe opinion that the action is rightly brought in the name of the trustee. The main ground of the demurrer is that the action was based upon the defendants’ subscription to the capital stock of tbe company, and that, tbe subscription having been assigned by- the company to the trustees, in whose place the plaintiff has been substituted by the decree of the chancery court of the city of Richmond, the assignment conveyed an equitable right only, and that in such case, at common law, the action should have been brought in the name of the assignor company for the benefit of the plaintiff, and that the Virginia statute (chapter 141, § IT, Code 1873,¹ which is the same as the Code of 1849, p. 583, c. 144, § 14) authorizing assignees to sue in their own names does not include the assignee of the subscription to the capital stock of a joint-stock incorporated company like the present. But the court is of a different opinion. The. history of the various acts from 1730 to the said act of 1849 plainly shows that each of the several acts was intended, step by step, to enlarge and extend the cases in which assignees of writings not negotiable should be enabled to sue in their own names, and the said act of 1849 is broad and comprehensive in its terms, and applies to any writing not negotiable, and, being remedial in its nature, should be liberally construed and applied.

The ancient common-law rule has itself been greatly relaxed by the courts, and modified or set aside by'various exceptions. One of these is that where the payee of a debt or liability assents to the assignment, and thereby promises to pay, the assignee may sue in his own name. This declaration sets out a case of that kind, and expressly alleges that the defendant assented to the deed of trust by which the company assigned his subscription and those of his associates, in trust for the payment of the corporate debts. Apart, therefore, from the Virginia statute, this action was properly brought in the name of the substituted trustee. The statute, however, is perfectly clear upon the subject. The demurrer is therefore overruled.

The case having been submitted to the jury upon proofs showing that the defendant was a subscriber for 100 shares of the capital stock of the company, and that he had paid an assessment thereon, and that, in consequence and by authority of a resolution of the board of directors of the second of March, 1866, he had transferred to the company 50 shares of his stock in satisfaction of a new assessment of 5 per cent, on the 100 shares, and that subsequently he had assigned and transferred the other 50 of the 100 shares to third persons, the court instructs the jury:

1. That the said transfer or assignment of 50 shares of stock to the company was ultra vires, and absolutely void as to the plaintiff in the present suit, representing the creditors and the company; and that, when such a defense is brought forward by the defendant in an action of assumpsit, it is competent for the court to inquire into its validity; and to hold and to pronounce it to be void.

2. That, by the assignment of the residue of shares to third persons, the defendant did not rid himself of his original liability to pay his subscription, or so disconnect himself from the company as to become a stranger thereto. On the contrary, the court is of the opinion, and instructs the jury, that by virtue of the twenty-sixth¹ and twenty-ninth ² sections of chapter 57 of the Code of Virginia of 1873, repealing the provisions of the Code of 1849, the defendant, notwithstanding the said transfer of 50 shares of his said stock to the company, above mentioned, and notwithstanding his said transfer of 50 shares of said stock to third persons, remained in such relations to the said company as to make him liable for any assessments that might be lawfully made on the capital stock of the company for the payment of its debts; and that the said defendant is bound by the decree of the chancery court of the city of Richmond of the fourteenth day of December, 1880, making a call of 30 per cent, on said capital stock, precisely as if he had not attempted to rid himself of his liability in the several ways above mentioned.

The court therefore instructs the jury to bring in a verdict in favor of the plaintiff for^SO per cent, of the said 100 shares of stock for which he subscribed, with interest thereon from the third day of January, 1881, the date of the qualification of the plaintiff as substituted trustee under the said decree.

1 "The assignee of any bond, note, or writing not'negotiable may maintain any action in his own name which the original obligee or payee might have brought, but shall allow all just discounts not only against himself, but against the assignor, before the defendant had riotiee of the assignment. ” Code Va. 1873, c. 141, |S 17.

1 “ No stock shall be assigned on the books, wiihout the consent of the company, until all the money which has become payable thereon shall have been paid; and in any assignment the assignee and assignor shall each be liable for any installments which may have accrued, or which may thereafter accrue, aud may be proceeded against in the manner before provided;” that is, by action or motion. Code Va. 1849, 1860, 1878, c. 57, | 26.

2 “ If any person shall, for valuable consideration, sell, pledge, or otherwise dispose of any of 1ns shares of stock to another, and deliver to him the certificate for such shares, with a power of attorney authorizing the transfer of the same on the books, the title of the former, both at law and equity, shall vest in the latter, so far as may bo necessary to effect the purpose of the sale, pledge, or other disposition, not only as between the parlies themselves, but also as against the creditors of, and subsequent purchasers from, the former, subject to the provision of the twenty-sixth section.” Code Va. 1873, c. 57, § 29.