35 Cal. 155 | Cal. | 1868
Lead Opinion
Action against stockholders of the Pond Gold and Silver Mining Company, to recover against them personally a debt due from the corporation. Section sixteen of the Act authorizing the formation of mining corporations provides, that “'each stockholder shall be individually and personally liable for his proportion of all the debt's and liabilities of the company contracted or incurred during the time that he was a stockholder, for the recovery of which joint or several actions maybe instituted and prosecuted.” We have no doubt of the power of the Legislature, under sections thirty-two and thirty-six of Article IV of the Constitution, to adopt this limitation. The former is in these words: “Dues from corporations shall be secured by such individual liability of the corporators, and other means as may be prescribed by law.” And the latter reads as follows: “Each stockholder of a corporation or joint stock association shall be individually and personally liable for his proportion of all its debts and liabilities.” It was manifestly contemplated that the Legislature should regulate the liability, and prescribe the rule by which each stockholder’s proportion should be ascertained. (French v. Teschemaker, 24 Cal. 539.) The principle adopted by the Legislature makes every stockholder liable for his share of all debts contracted while he is a stockholder. The entire body of stockholders, for the time being, is personally liable for the entire debt contracted—an entire set of stockholders is liable for every debt. This is sufficient to answer all the requirements of the Constitution. There is nothing in the provision that requires each man, when he becomes a stockholder, to do so on the penalty of becoming responsible for all prior liabilities of the corporation that remain uncanceled. This would he to make several different sets of stockholders personally responsible for some debts, and only one set for others. There is nothing in the Constitution requiring such a result.
There is nothing whatever in the testimony tending to
The claim of the respondent that the judgment is itself a contract creating a new debt, within the meaning of the statute, for which all who were stockholders at the date of the rendition of the judgment are personally liable, is too absurd to require argument to refute it. That a judgment is a contract of record, in a certain legal sense, may be conceded, but it creates no such new liability as the statute in question contemplates. The judgment only merges and puts in a new form, against the will of both corporation and stockholders, an indebtedness which has already been contracted. If this is to be construed as the creation of a new liability, there would be no way for a stockholder to escape personal responsibility for all debts which had before been incurred; and the limitation provided for by section sixteen of the Act concerning corporations for mining companies would be utterly nugatory.
We do not understand that the judgment in favor of plaintiff is for more than was due. In order to find out how much any one stockholder is liable to pay to the plaintiff of the amount due from the corporation, it is necessary to find the whole amount of the indebtedness of the corporation created while he is a stockholder. If his share of personal liability, upon the whole indebtedness, is sufficient
The statute authorizes a joint action or several actions.
It is not clear that any fatal defect exists in the certificate of incorporation. If so, it is cured by the Act of April 1st, 1864. (Laws 1864, p. 303.)
On the point as to whether the judgments against the corporation were admissible in evidence, without putting in the entire judgment roll, each party appears to be equally confident, yet neither takes the trouble to cite any authority upon the precise point, and, as the case is decided upon another ground, we shall not perform the duties of counsel in investigating the question for them. If the question is raised again, we hope counsel will be prepared with the authorities to maintain their views.
Judgment and order denying new trial reversed, and new trial granted.
[The above opinion was delivered while Mr. Justice Shafter and Mr. Justice Currey were members of the Court. Ueither Mr. Justice Rhodes nor Mr. Justice Sanderson expressed any opinion. A rehearing having been granted, the following opinion was delivered after Mr. Justice Sprague and Mr. Justice Crockett had become Justices. Mr. Justice Sanderson and Mr. Justice Sprague concur in the opinion of the Chief Justice.]
We granted a rehearing upon the point as to whether, under section sixteen of the Act of 1853, for the formation of mining and certain other corporations, as amended in 1863, a creditor, in his recovery against an individual stockholder on his personal liability, is limited to the stockholder’s share of that particular debt, or whether he can recover the whole amount of his debt against such stockholder, provided the entire amount for which the stockholder is personally responsible upon the aggregate of the corporate debts, is sufficient to pay the debt in suit.
Upon a careful re-examination of the question by the light of the arguments in the several petitions for rehearing, and further briefs, we are unable to find any ground of escape from the conclusion before attained. We can put no other construction upon the provisions of section sixteen, which, to our minds, appears reasonable. The whole section is as follows: “ Bach stockholder shall be individually and personally liable for his proportion of all the debts and liabilities of the company contracted or incurred during the time that he was a stockholder, for the recovery of which joint and several actions may be instituted and prosecuted. In any such action, whether joint or several, it shall be competent for the defendant or defendants, or any or either of them, on the trial of the same, to offer evidence of the payment by him, or them, or any or either of them, of any debts or liabilities of such corporations, and upon proof of such payment, the same shall be taken into account and credited to the party or parties making such payment, and j udgment shall not be rendered against the party or parties, defendant, proving such payment for a sum exceeding the amount of his or their proportion of the debts and liabilities of such incorporations, after deducting therefrom the sums proven to have been paid by him, them, or any or either of them, on account thereof.” (Laws 1863, p. 736.)
It would be no strained construction to so hold upon the
The two Acts of 1850 and 1853, are two distinct and wholly independent Acts, each embracing a separate and distinct, not the same, subject matter. They both relate to corporations, but not to the same corporations. The Act of 1850, it is true, originally covered the whole field of corporations. It was divided into several chapters, each chapter providing for certain classes of corporations. The first chapter contained certain general provisions, applicable to all created under that Act, and said section thirty-two is found in said chapter. Chapter V of that Act provided for corporations for manufacturing, mining, mechanical or chemical purposes. (Stat. 1850, pp. 347, 365.) But in 1853 a new Act, “ to provide for the formation of corporations for certain purposes,” which included manufacturing, mining,
Section sixteen of the latter Act is the only one touching the question, and the decision of the point now under consideration must depend alone upon the construction given to said section. As the two sections, then, are in different Acts, and have no application to the same subject matter, there is no occasion to give a construction that shall harmonize the two, for each can have a full and complete operation upon its own subject matter, however different the provisions, and their construction may be.
Section sixteen of the Act of 1853, and section thirty-two of the Act of 1850, were both amended by two several Acts, passed on the same day, April 27th, 1863, but neither amend
“Each stockholder of any corporation shall be severally, individually, and personally liable for such proportion of all its debts and liabilities as the amount of stock owned by him in such corporation bears to the whole of the capital stock of the corporation, for the recovery of which joint and several actions may be instituted and prosecuted; and in any such action against any of the stockholders of a corporation, the Court shall ascertain and determine the proportion of the debt which is the subject of the suit for which each of the stockholders who are defendants in the action are severally liable, and judgment shall be given severally in conformity therewith. If any stockholder in a corporation shall pay his proportion of any debt due by such corporation he shall be released and discharged from any further individual or personal liability for such debt.”
It will be seen by comparison that those two sections are wholly different; that they could not be made to apply to the same subject matter, and could not possibly be intended to accomplish the same object. Both provide for prosecuting joint or several suits to enforce the liability, but section thirty-two provides that in any such action against any of the stockholders “the Court shall ascertain and determine the proportion of the debt which is the subject of the suit, for which each of the stockholders who are defendants in the action are severally liable, and judgment shall be given severally in conformity therewith.” This provision expressly contemplates that each creditor shall recover a portion of the whole personal liability of the stockholder, corresponding to the portion of the whole indebtedness held by him, and no more, and directs the Court to ascertain the proportion of
Under the view here taken, each section is consistent with itself in the general theory upon which it proceeds, and in the provisions general and specific for giving it effect; while under the other view, section sixteen would be inconsistent Avith itself in these respects. We are unable to give any other construction, which appears to us reasonable, to the statute in question, than that before adopted.
Whichever view prevails, the result on this appeal is not changed, for the judgment must be reversed on other grounds. But the question is directly presented in the record, and it will necessarily arise on the next trial. For this reason, and as it has been fully argued, we deem it proper to determine it now.
. The judgment and order denying a new trial are reversed, and a new trial granted, and the remittitur directed to issue forthwith.
Concurrence Opinion
■ The solution of the questions upon which the rehearing was granted, depends, in my judgment, upon the construction of section sixteen, and not of section thirty-two.
The first clause of section sixteen declares the liability of stockholders. “ Each stockholder shall be individually and
Should the opposite construction be given, consequences more injurious to the creditors and more absurd in their
Dissenting Opinion
I dissent from the opinion of my associates on the important question involved in this case. The order granting • a rehearing confined the argument of counsel to the questions relating to the liability of the defendants as stockholders in a mining corporation, under section sixteen of the Act concerning mining corporations, as amended in 1863. (Stats. 1863, p. 736.)
The question to be considered is one of great practical importance in this State, and is accurately stated in brief of defendant’s counsel, as follows:
“Can a creditor of a mining corporation recover from any individual shareholder the proportion due from the latter of the aggregate debts and liabilities of the corporation, or so much thereof, as will satisfy the creditor’s debt? or is the recovery to be limited to the proportionate share of the. debt sued for due from the stockholder ?”
The solution of this question will depend upon the proper construction of section thirty-two of the general Incorporation Act as amended in 1863, (Stats. 1863, p. 766,) and the sixteenth section of the Act concerning mining corporations, as amended in 1863. (Stats. 1863, p. 736.) Both these amendments were passed and took effect on the same day, and must be construed together, so as to harmonize their
“Bach stockholder of any corporation shall be severally, individually, and personally liable for such proportion of all its debts and liabilities as the amount of stock owned by him in such corporation bears to the whole of the capital stock of the corporation, for the recovery of which, joint or several actions may be instituted and prosecuted; and in any such action against any of the stockholders of a corporation, the Court shall ascertain and determine the proportion of the debt which is the subject of the suit for which each of the stockholders who are defendants in the action are severally liable, and judgment shall be given severally in conformity therewith. If any stockholder in a corporation shall pay his proportion of any debt due by such corporation, he shall be released and discharged from any further individual or personal liability for such debt.”
Section sixteen is as follows: “ Bach stockholder shall be individually and personally liable for his proportion of all the debts and liabilities of the company contracted or incurred during the time that he was a stockholder, for the recovery of which joint or several actions may be instituted and prosecuted. In any such actions, whether joint or several, it shall be competent for the defendant or defendants, or any or either of them, on the trial of the same, to offer evidence of the payment by him, or them, or any or either of them, of any debts or liabilities of such corporations, and upon proof of such payment, the same shall be taken into account and credited to the party or parties making such payment, and judgment shall not be rendered against the party or parties defendant proving such payment for a sum exceeding the amount of his or their proportion of the debts and liabilities of such incorporation after deducting therefrom the sums proven to have been paid by him, them, or any or either of them, on account thereof.”
It will be borne in mind that this section is a part of the general Act, applicable to all corporations, except mining and other corporations organized under the Act of 1853; whereas, section sixteen, already quoted, is a portion of the Act relating especially to mining and certain other specified corporations. It is insisted by counsel that the Legislature, in enacting the sixteenth section, intended to establish a system of liability in respect to stockholders in these particular corporations different from that which applies to stockholders in corporations generally; and that the liability of a stockholder in a mining corporation is to be governed exclusively by that section. Whilst there is much force in this suggestion, it is a well established rule in construing statutes that the Court will look into cotemporaneous legislation on the same or kindred subjects, in order the better to comprehend the meaning of doubtful clauses in the particular statute under discussion. But if the question we are considering be tested by the sixteenth section alone, it is by no means free from doubt. This section manifestly authorizes a stockholder in a mining corporation to elect to which
The majority of the Court holds that the right which this section confers upon the stockholder, to elect to which of the creditors he will pay the whole or any part of his proportion of the aggregate debt of the corporation, necessarily implies that each creditor has a correlative right to collect his entire debt from any one of the stockholders whose proportion of liability for the entire debts of the corporation is equal to the sum due to that particular creditor. If the creditor has this right, it is only by implication, for it is not expressly given; and inasmuch as it is a right which does not appertain to creditors of corporations generally, it is for those who maintain the proposition to establish that in this particular class of corporations the creditor has a different and more plenary remedy 'against the stockholder than is provided for creditors of corporations generally. I do not perceive that there is any necessary or even reasonable connection between the two propositions, or that one is the correlate of the other. Bor reasons satisfactory to the Legislature, it has seen fit to authorize a stockholder of mining, ■or certain other specified corporations to elect to which one of the creditors he will pay his proportion of the corporate indebtedness. It is not for us to attempt to explain or justify the motives or policy which led to this enactment. It is enough for our purpose that “ita est scripta lex.”
It does not follow, however, as a logical or reasonable sequence, in the absence of any provision to that effect, that
The genera] policy of our legislation on this subject, has been to secure to each creditor of the corporation his proportionate part of whatever was due from each stockholder on account of his liability for the entire corporate indebtedness. The sixteenth section, it is true, departs from this policy, in so far as it permits a stockholder to pay to any one or more creditors the whole or any part of the sum due from such stockholders; but this is a personal privilege accorded to the stockholder, for reasons satisfactory to the Legislature, and with which we have no concern. I am unwilling, however, by mere implication to establish the proposition that any creditor, by compulsory process, may compel the application to his own debt of the entire sum due from one or more stockholders, on account of the corporate indebtedness, whilst there are other debts of the corporation unpaid. I am unable to perceive any valid reason for such a discrimination in favor of mining, and a few other specific corporations; and in the absence of legislation to that effect, it should not be established by mere implication.
In my opinion, the judgment should be reversed.