15 Ga. App. 718 | Ga. Ct. App. | 1915
R. A. Denny, E. W. Butler, and T. K. Scott, as receivers of the Rome Insurance Company, brought an action in the city court of Floyd county against Robert W. Graves, to recover the unpaid balance alleged to be due upon an unconditional stock subscription for $94,500 to the increased capital stock of the Rome Insurance Company. The contract of subscription attached to the petition shows that the original capital stock of the company was $100,000, and states that the increase is to be first offered to its stockholders at par, and that the subscribers to the increased capital stock shall have the privilege of paying therefor in equal annual installments of one, two, three, and four years. The petition alleges, in the first paragraph, that the petitioners are the duly appointed receivers of the insurance company and have duly qualified as such. The second jiaragraph alleges the execution and delivery of the contract of subscription referred to above. The third, fourth, and fifth paragraphs set out separately the amounts due, according to the terms of the contract, on the first day of January, 1911, 1912, and 1913, respectively. In the answer to the petition it is admitted that the plaintiffs were appointed receivers, but it is alleged that they were appointed prior to the appearance term in the case of Miles v. Rome Insurance Company, that the appointment was interlocutory, and that the receivers have no legal power to bring this suit. The defendant admits the subscription, but pleads that by the action of the board of directors of the insurance company, the time of payment of the subscription was extended, and the balance owing to the company on account of the subscription as of January 1, 1911, was made payable on a basis of ten per cent, per annum, ten per cent, being payable on the first day of June, 1912, and a like amount-on the first day of June thereafter. The third, fourth, and fifth paragraphs of the petition are fienicd, and for further
The defendant demurred to the petition generally, on the ground that no cause of action is set forth, and specially on the grounds, (1) that the petition does not show that the receivers have authority from the court to sue upon said claim; (2) that the petition does not show for what purpose the receivers were appointed, or what powers were given them under the order of appointment; (3) that it does not appear whether the receivers were appointed by interlocutory order prior to the trial term of the case or after the facts alleged in the petition under which the receivers were appointed had been passed upon by a jury and final decree entered; (4) that it does not appear what is the character or nature of the petition under which the receivers were appointed, or what are its prayers or purposes, or what property of the Borne Insurance Company the receivers were authorized to take possession of, or what choses in action they were authorized to collect.
The petition was amended by attaching to it a copy of an order of the judge of the superior courts of the Borne circuit in the case of John M. Miles v. Borne Insurance Company et al., in which the plaintiffs were appointed receivers of the property and effects of the Borne Insurance Company and directed to take and retain possession of all its property of every kind and character until further order of the court. The order authorizes the receivers to institute and prosecute any action in favor of the Borne Insurance Company to realize and collect its assets, including actions to recover the balance due upon all stock subscriptions upon which, in their opinion, the persons making such subscriptions are legally liable. The amendment to the petition recites also that there is $245,000 of the
The plaintiffs demurred to the defendant’s answer, upon the ground that it set up no legal or equitable defense. They demurred to the first paragraph of the answer upon the ground that it was immaterial that the appointment was interlocutory or that the cause was not heard in term time, or that the appointment of the receivers had not been made permanent, and that the allegation that the receivers have no legal power or authority to bring the suit is a conclusion of the pleader and fails to show why or wherein they are lacking in power and authority. The second paragraph of the answer was demurred to on the ground that there was no allegation that there was a good or valuable consideration for the alleged extension of time of payment to the stockholders, or that the alleged extension .was approved by the stockholders, or that the directors were fully authorized or given power by the stockholders to make such an extension. The third, fourth, and fifth paragraphs of the answer were demurred to upon the ground that they set up no defense, and the sixth, seventh, and eighth paragraphs were demurred to upon the ground that they set up incorrect conclusions of law, and especially that the facts alleged in the eighth paragraph of the answer failed to present any defense, for the reason that the provisions of section 2396 of the' Civil Code merely gives a board of directors the option to forfeit and cancel stock subscriptions, and there are no allegations showing that the board of directors of the Rome Insurance Company ever complied with or attempted to comply with any of the requirements of that section of the code.
There appears in the record an amendment to the defendant’s answer, setting up that the suit was not in behalf of the creditors, but a suit filed by and in behalf of the stockholders; that the creditors have no interest in the cause, and the receivers have no right to sue upon the subscription contract in behalf of the stockholders, because the Rome Insurance Company has sufficient assets with which to pay all its creditors without calling upon any subscriber to the capital stock to contribute to the payment of creditors; and that even if it were necessary to collect a part of the stock subscription, there has been no proceeding by the receivers to determine the
The trial judge overruled the demurrer to the petition as amended, and struck the answer. The pleadings and the demurrers raise the following questions, the determination of which control the case: (1) Did the receivers have the right to maintain the suit? (2) If the receivers were proper parties plaintiff, was it e§
1. It was asserted in the demurrers that if the present action can be maintained, the receivers are not proper parties to bring the suit. By attaching a copy of the order of the superior court to their petition, the plaintiffs clearly met the grounds of demurrer as originally set forth, because the order of the judge of the superior court expressly directed the receivers to sue upon all stock subscriptions due the Borne Insurance Company; and this order likewise disclosed the character and nature of the petition under-which the receivers were appointed, and the prayers, purposes, and object of the petition filed by Miles, and the authority of the receivers to take possession of all the property of the insurance company. In our opinion, it was unnecessary for the petition to show whether the receivers were appointed under an interlocutory order, or after a final decree had been entered on the petition; for if the arm of equity is not long enough to. reach the assets of an insolvent debtor and to hold them for the benefit of suffering creditors before a decree, then equity would fail to supply a remedy-where, by reason of its universality, the law is deficient, and the court of equity could afford no relief against an impending loss until after a final decree had been rendered. Besides, as we see it, a decree of the chancellor is conclusive until it is set aside in a court of equity. It is certainly not subject to collateral attack by demurrer in a court of inferior jurisdiction. The fifth ground of the amendment to the demurrer merely charges generally that the plaintiffs’ petition
2. The plaintiff in error, however, strenuously insists that an action for the collection of an unpaid stock subscription to the capital stock of the insurance company can not be maintained unless it is made to appear that the amount necessary to be collected, either for the payment of the debts of the corporation or for purposes of contribution, has been judicially ascertained. To our minds this would be putting the cart before the horse; for where there are a number of unpaid subscriptions to stock, the only way in which it can be ascertained what amount would be necessary to pay the creditors, especially what amount would be necessary to enable stockholders who failed to pay their subscriptions to contribute to stockholders who paid theirs, would be to ascertain by collection how many of the stockholders are insolvent, and therefore unable to contribute either to the- payment of debts or to equalizing the burdens of the stockholders. We hold that the judge of the superior court, as a chancellor, had the undoubted right, in administering the assets of the Rome Insurance Company, to provide for the, marshaling of all its assets; and his order attached to the plaintiff’s petition is neither extraordinary nor at variance with the usual practice in equity in the administration of ordinary insolvent estates. Is there any reason why an unconditional contract of subscription to stock of a corporation should stand upon a higher or different footing than a debt of any other class ? The subscription to the stock of a corporation, until it is paid, is a debt to the corporation,—nothing more, nothing less. It sometimes happens that one who has made but who has not paid in a very large subscription to the capital stock of a corporation assumes himself to be entitled to greater privileges and immunities than a subscriber to a small amount of the stock, and assumes to direct the affairs of the corporation in which he has in fact but little money invested. But this assumption finds no warrant in law or in equity, and, we may add, at least none in good morals. One who owns a majority of the paid capital stock of a corporation is legally entitled to exercise a controlling influence in the direction of its affairs; and, therefore, one who assumes to direct the affairs- of a corporation without hav
3. The third question presented is: Was a judicial ascertainment of the amount due on the defendant’s subscription, either for the purpose of paying debts or for the purpose of contribution, an essential preliminary to the bringing of the action by the receivers ? If so, section 2245 of the Civil Code, which provides that upon the dissolution of a corporation its property and assets constitute a fund for the payment of its debts and for distribution among its stockholders, and section 2249, which provides that the individual liability of stockholders is an asset of the corporation, and as such
5. Having disposed of the main contentions of the plaintiff in error, we come now to deal with rulings in which it is insisted that the court committed error even if the suit was properly brought and the plaintiffs were prima facie entitled to recover. It is insisted by counsel for the plaintiff in error that at least the fifth, sixth, and seventh paragraphs of the defendant’s answer, which categorically denied the fifth, sixth, and seventh paragraphs of the plaintiffs’ petition, in accordance with the “Neal act,” should not have been stricken^ but that the issue raised by these paragraphs of the answer should have been submitted to a jury. Nothing is better settled than that the plea of general issue raises no issuable defense to a suit upon an unconditional contract in writing. The defendant having in his answer admitted the execution and delivery of the contract, the fifth, sixth, and seventh paragraphs of his answer as pleaded presented no defense to a recovery upon the contract according to its terms. It amounted to a statement simply that “I promised to pay the plaintiff, I have not paid him, but I do not owe him.”
6. The demurrer to the second paragraph of the answer was properly sustained. In this paragraph of the answer the defendant
. 7. The eighth paragraph of the defendant’s answer sets up that a forfeiture of the stock is the sole remedy in this case. It is to be borne in mind that the defendant’s indebtedness evidenced by a contract of subscription for the insurance company’s stock was not for the original stock, but was created by a subscription to an increase in the capital stock. Eor this reason section 2396 of the Civil Code has no bearing, and the defendant’s plea was without merit. In the next place, this paragraph of the answer was properly stricken because, under the provisions of section 2396, the cancellation of stock for the non-payment of subscription, and the
8. As we view the case, the amendment to the petition plainly identified the action as a demand on the part of the receivers in behalf of the paid-up stockholders, who, in order that they might have their pro rata share of the assets, had paid $245,000 of their money into the corporation, which had gone out of business. Section 2249 of the Civil Code declares that “such individual liability shall be an asset of such corporation to be enforced by the assignee, receiver, or other officer having the legal right to collect, marshal, and distribute the assets of such failed corporation.” To enforce the liability upon the contract of subscription it was not necessary to apply to a court of equity, although the direction of such a court was essential to the marshaling and distribution of the assets of the failed corporation as a whole. A corporation’s assets of every description constitute a fund, first, for the payment of debts, and then for equal distribution among its members; and to this end the superior court of the county where the corporation was located had authority to appoint receivers to properly administer such assets under its direction. Civil Code, § 2245. Certainly this section would be without meaning if the superior court could not direct the receivers to sue debtors of the corporation (who refused to pay voluntarily), in order that the fund—-as to which ordinary creditors are preferred creditors and stockholders secondary creditors—might be raised. The statute is silent as to the manner in which unpaid stock subscriptions are to be collected, but it authorizes the superior court to appoint a receiver, and under proper re
Learned counsel for the plaintiff in error insist that section 2251 of the Civil Code provides how receivers can sue on unpaid subscriptions, and that the provisions of that section limit the amount that can be recovered by receivers to an amount sufficient to satisfy such debts. We can not concur in this opinion. True, no more than this amount could be equitably retained, but it is for the court, upon a full adjudication of the case, to determine what amount will be necessary in order to equalize all stockholders; and, for reasons heretofore stated in this opinion, these facts can not be ascertained in advance of a final decree by the court of equity distributing the fund, and it is to be presumed that the court in molding the decree will do equity.
It seems that no case identical with that at bar, in the respect that the suit by the receiver was brought on behalf of fulty-paid
Judgment affirmed.