79 Mo. 148 | Mo. | 1883
This was a proceeding by motion under the statute for execution against the defendant as a stockholder in the Bellefontaine Railway Company. On the 5th day of March, 1877, the plaintiff’s intestate recovered judgment against the Bellefontaine Railway Company in the sum of $13,158.60. This judgment was rendered on certain bonds issued by said company on the 1st day of January, 1866. Execution having been returned nulla bona, the plaintiff filed his motion against William H. Benton for a judgment against him as a stockholder in the company at the date of the issue of the bonds and at the time of filing the motion. The allegations were sufficient to admit the evidence in the case, which was contained in an agreed statement of the facts.
It appears that the company was organized on the 15th day of March, 1864, under a charter granted by special act of the legislature contained in Session Acts 1862-3, page 488; that William H. Benton, defendant, became a subscriber on the 10th day of February, 1865, for 518 shares of the capital stock, of the par value of $100 per share; that by an increase of the capital authorized by vote on the 20th day of September, 1865, he became entitled to another 518 shares, making 1,036 shares in all; that after parting with some of this- stock-he-remained owner of 734 shares, of the par value of $73,400, for which a certificate was issued to him dated June 7th, 1869 ; that on these shares there was actually paid in, $67 per share, leaving unpaid $33 per share, or a sum equal to $24,222. It also appears that said Benton, on the 22nd day of May, 1876, obtained
The circuit court held the defendant -liable to the execution creditors of the company in a sum double the amount of his stock, giving credit of course for the amount of stock paid up, and rendered judgment in favor of the plaintiff in the sum of $16,236.99. This judgment was, on appeal to the St. Louis court of appeals, reversed, with directions to assess judgment against him for the unpaid portion of his stock on the basis of single liability only, and to allow him to offset any matured indebtedness held by him against the company. From this judgment the plaintiff has appealed.
Whether the defendant is responsible as a stockholder under the double liability clause in force at different times in this State constitutes the principal question for decision.
II. It is claimed by counsel for plaintiff that the defendant was subject to the double liability clause of section 13, chapter 34, being “An act concerning corporations.” 1 R. S. 1855, p. 372. It is unnecessary to consider the language of this section. It purports to embrace “ all corporations hereafter created by the legislature, unless otherwise specified in their charter,” and imposes upon the stockholder thereof the double liability clause as to “ all debts contracted during his ownership ” of the stock. The Belle
It will hardly be claimed that all the railroads existing in the State in 1855 with the rights and privileges peculiar to their different charters, could have been organized under the act of 1855. The point for decision cannot be very satisfactorily disposed of by considerations extending no further than the actual methods of locomotion employed
But even applying this narrow test embraced in the methods of locomotion, it would be impossible to exclude the Bellefontaine Railroad Company from the meaning and operation of the 57th section of the Railroad Act. By the 7th subdivision of the 29th section of that act, every company organized under it is authorized “to take and convey persons and property on their railroad, by the power or force of steam, or of animals, or by any mechanical power, and to receive compensation therefor.” 1 R. S. 1855, p. 426. By the 2nd section of the charter of the Bellefontaine Railway Company, it was authorized to operate a double or single track “in the city and county of St. Louis.” By the 4th section it is provided that “the said railway shall be operated by horse power only within the limits of the city of St. Louis.” Sess. Acts 1863-4, pp. 488, 489. As to that part of its line at that time outside of the city limits, there would seem to have been no prohibition against the use of steam. Curiously enough the charter contains no express provision indicating what shall be carried whether freight or passengers or both. But undoubtedly the broader test of comparison is the safer one. Horse or street railroads, as far as they are employed in the cities, serve the same uses and purposes for which railroads are used between distant points in the country. They possess the same
The learned counsel for the plaintiff insists that these judgments and cross-demands in favor of the defendant cannot be taken into consideration in determining the defendant’s statutory liability. The right to offset the indebtedness of the company to him against this liability has come quite frequently before the courts of late years, but has never been passed upon by this court. The decisions in other states are so conflicting that they fail to furnish any very satisfactory guide in the construction and enforce
Under a statute in New York which provided “ that for all debts due and owing by the company at the time of its dissolution, the persons then composing such company shall be individually responsible to the extent of their respective shares of stock and no further,” it was held in a suit in equity by a creditor against the stockholder, that they were entitled to a deduction on their liability, for such sums as they had paid in good faith for the debts of the company and for money advanced for the benefit of the company. Briggs v. Penniman, 8 Cow. 387. Under another statute in the same state which provided that “the total amount of indebtedness shall not exceed three times the amount of the capital stock actually paid in; and in case of any excess the directors who suffered it shall in their individual capacity jointly and severally be liable for such excess to the corporation, and in event of dissolution, to any of the creditors, to the full amount of such excess;” it was held that the directors, in a suit against them by creditors, were entitled to offset their advances to the company and debts contracted by them for the benefit of the company. Talmadge v. Fishkill Iron Co., 4 Barb. 382. In a proceeding in behalf of creditors to wind up an insolvent bank in the same state, under an act of the legislature of 1849, it was held that the stockholders were not entitled to any deduction for debts due them by the company. The decision was placed by Judge Denio upon the peculiar character of the proceeding authorized by the statute, which had for its object the enforcement of every stockholder’s liability and the distribution of what was collected to all the creditors, whether stockholders or not. He remarks: “Under the Manufacturing Act and in some other corporations, a creditor might sue a single stockholder, who might set up in reduction of his liability that he was also a cred
This right of reduction was ably examined by Chief Justice Church in Mathez v. Neidiz, and it was conceded to the stockholder upon equitable principles. He says : “ This is not a direct provision of the statute, but an equitable construction of it, on the assumption that it was not the design of the framers of it, that a stockholder, who was a creditor of the company to the full amount of his stock, should be individually liable to another creditor, as he stands upon the same ground and is entitled to claim under the act equally with the creditor who is not a stockholder.” The doctrine of this case is expressly recognized in the recent case of Wheeler v. Millar, a case which might be misunderstood upon a casual reading. In this last case the stockholder held a small debt against the company, while the company held a much larger one against him on account of his subscription for stock. In an action under the statute against him by an outside creditor, it was held that as the balance of accounts between himself and the corporation was against him, be was not a creditor, and possessed nothing which could be noticed in reduction of his statutory liability. His claim as a creditor was exhausted as an offset against his liability as a subscriber for stock, and left nothing to be credited on his statutory liability, which,
Under a statute in Illinois declaring that “ whenever default shall be made in the payment of any debt or liability contracted by the corporation, the stockholders shall he held individually responsible for an amount equal to the amount of stock held by them respectively,” it was decided that a stockholder could not, in an action by a creditor to enforce this liability, set-off" an indebtedness of the company to himself, for want of mutuality. Buchanan v. Meisser, 105 Ill. 638. The court in its opinion decline to say what would be the result if the statute liability was exceeded in amount by counter-indebtedness of the company. It has been held in the same state that the stockholders under this statute are liable in the nature of partners to the extent of the amount of their stock. Gauch v. Harrison, 12 Bradw. 457; Meisser v. Thompson, 9 Bradw. 368.
A statute in the state of Maine provided that “ the individual property of every stockholder shall be liable to the amount of his stock for all debts due from the corporation contracted during his ownership of the stock.” In construing this statute the court, as well as all parties to the cause, seem to have assumed that without some statute authorizing it, the indebtedness due to the stockholder from the corporation could not be taken into account against his stock liability, and the principal issue in the case was, whether the indebtedness pleaded by the defendant came within the purview of a subsequent act of the legislature permitting certain payments to the use of the company to be taken into account. Grose v. Hilt, 36 Me. 22. In a suit in Penn
A statute in Maryland provided that the “ stockholders shall be severally and individually liable to the creditors of the company in which they are stockholders to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by such company until the whole amount of capital stock fixed and limited by such company shall have been paid in.” It was held in a suit in equity by creditors that this statute contemplates an absolute liability irrespective of debts, and that there could be no set-off as against creditors. Mathews v. Albert, 24 Md. 527.
A charter of a corporation in Georgia contained a provision that “ the stockholders in said company shall be liable pro rata for the debts of said company to the amount of the stock they respectively hold.” In construction of this clause it was decided that if a stockholder had paid his pro rata share of the debts of the company, or if the company was indebted to him in good faith for an amount equal to his pro rata share, he could not be made liable again. Boyd v. Hall, 56 Ga. 563.
In construction of the 20th section of the Bankrupt Act, which declares that “ in all cases of mutual debts or mutual credits between the parties, the account between them shall be stated and one debt set-off against the other, and the balance only shall be allowed or paid,” it was held, after suit brought by an assignee and bill filed by the defendant to enforce the set-off of a debt against the company, that such indebtedness did not constitute either a legal or equitable offset, and it could not be accepted in reduction of the stockholder’s liability. Sawyer v. Hoag, 17 Wall. 610. The doctrine of this case has been recently recog
In this State the summary remedy for the enforcement of the double liability of stockholders as contained in section 13, (Wag. Stat., 291,) of the chapter on corporations, having been changed so as to conform with the repealing amendment of 1875, declares that “if any execution shall have been issued against the property or effects of a corporation, and if there cannot be found whereon to levy such execution, then such execution may be issued against any of the stockholders to the extent of the amount of the unpaid balance of such stock by him or her owned.” R. S. 1879, § 736. The right of the plaintiff to an execution against the defendant rests upon this section; and the right, of the defendant to a reduction of his statutory liability on account of debts due him from the company must depend upon the construction and effect given to it by the courts-under our existing law. It is evident that the question could be decided either way in pursuance of good authority. The popular efficiency of numerical majorities as applied to' judicial authorities cannot be accepted in disposing of legal questions. It, therefore, becomes necessary to look at the principles underlying the point in controversy, and the probable consequences which must follow its final determination.
In the first place it may be observed that there is a marked distinction between our statutes and the statutes, in the other states which have been referred to. In the statutes of such states when the particular contingency defined by them respectively happens, the stockholder becomes individually liable to the creditor in an amount equal to the full amount of the stock owned by him. This liability is. not affected in any manner by the condition of his stock account. It is a matter of no consequence whether his stock has been paid up or not paid up. The liability is a creature of statute, and is not based on any liability whatever of the stockholder to his company. After having paid
Certainly there is no mutuality of indebtedness in this case, if we look merely at the parties between whom the-controversy has arisen. And a want of such mutuality, to-be determined by inspection of the parties, is sufficient to-exclude the defendant from the benefits of a legal offset. But the inability of the defendant to avail himself of a legal offset, constitutes one of the recognized grounds upon which equity interposes its relief in favor of the cross-demand. Barnes v. McMullins, 78 Mo. 260.
The argument of those who deny the equity belonging to the relation of a stockholder as a creditor, starts with the
In this case the defendant holds executions against the company amounting to about $28,000 — more than double the amount of plaintiff’s demand as a creditor. His executions have been returned unsatisfied. The extreme limit of his liability at law for unpaid stock is $24,000. The company, however, would not be justified in calling for it except on the terms of liis contract of subscription. Neither could it call from him any more than the same per cent-age which it calls from the other stockholders; and, according to the best considered authorities, he would have the right to set-off his judgments against the company in reduction or extinguishment of liability on the call. As a creditor he has an equitable interest in this fund, which distinguishes him from other stockholders; but the extent of it cannot be ascertained and adjudged in any proceeding at law instituted by or against him. Neither can he, like any other judgment creditor, as already stated, invoke the statutory remedy against this fund as assets of the company, not being able to move for an execution against himself, In no proceeding, except in equity, can liis share in this fund be ascertained and adjudged, because in no other proceeding can an account be taken of the total amount of debts and liabilities, the amount and number of shares of stock, the amount of capital paid in, and the amount remaining unpaid from each stockholder, and the fractional portion of liability which must fall upon each stockholder.
Eor these reasons I am persuaded that the conclusion reached by the St. Louis court of appeals in Webber v.
Under the double liability clause, which was enforced in the circuit court, the plaintiff had such a ivealth of liability to count upon, that he could afford to pass without scrutiny a credit of thirty or forty thousand dollars. Since the fund he resorts to, is greatly reduced, it is proper he should have an opportunity to examine the genuineness of the credits which were admitted without question on the
In the case of Cushman v. Benton, the same questions wore presented and the same decision made as in the foregoing case, Mabtin, C., delivering the opinion.