3 F. 737 | U.S. Circuit Court for the District of Massachusetts | 1880
Section 44 of the State Statutes provides that if a corporation be dissolved leaving debts unpaid, suits may be brought against any person or persons who were stockholders at the time of such dissolution, without joining the corporation in such suit; and if execution issue, and judgment be satisfied by the parties sued, then those parties may sue all who were stockholders at the time of such dissolution for the recovery of the portion of such debt for which they were liable. Provision is also made by the forty-fifth section of the same article for the recovery of all voluntary pay
Shares in the capital stock of the Port Scott Coal & Mining Company, to the number alleged in the bill of complaint, are owned by the respective respondents; and the complainants allege that the company was duly organized with a capital of $200,000; that they carried on a very large and extensive business until the eleventh of April, 1874, when the company, on the petition of certain creditors, was adjudged bankrupt, and that the persons named in the record were appointed assignees of the' company’s estate; that they accepted their appointment, and received the usual conveyance of the property and effects of every kind and description belonging to the bankrupt company. Due proceedings were subsequently taken by the creditors to establish their claims, and they proved the same to the amounts specified in the bill; and the allegation is that since that time the company has not had any office or place of business in the state. Wherefore, the complainants allege and charge that the corporation has become and is wholly dissolved, and that the stockholders have become and are liable, as well by the constitution as by the laws of the state, to pay the debts and liabilities of the company. Such is the substance of the material allegations of the bill, and the complainants pray that an account may be taken of the assets of the company, and the debts due to the complainants, and all others who may become parties to the suit, and of the stock in fact held by the respondents, and of the amount which each should contribute towards the payment of such debts and liabilities. Service was made, and the respondents appeared and demurred to the bill for the following causes: First, that the complainants have not made such a case as entitles them to
Dues from corporations shall be secured by .individual liability of the stockholders to an additional amount equal to the stock owned by each stockholder, and such other means as shall he provided by law; but such individual liability shall not apply to railroad corporations, nor corporations for religious or charitable purposes. State Const, art. 12, § 2. Appropriate allegations are contained in the hill that the property of the company is insufficient to pay their debts, and that an assessment for that purpose was made by the district court, — the debts amounting to $100,000, while the assets do not exceed the sum of $12,000; that the payment of the assessment was successfully resisted by the respondents because not seasonably enforced, which litigation was the cause of the delay in filing the present bill. Three principal propositions are submitted by the complainants, as follows : First. That suit may be maintained by virtue of the provision of the constitution already referred to, without reference to the statutes of the state providing specific modes of enforcing the liability of the stockholder under special circumstances. Second. That the liability in question is an independent, absolute liability, co-existent with the corporation; that it is in the nature of a contract, assumed by the stockholder when he became the owner of any portion of the capital stock of the company. Third. That the statutes of the state make provision for enforcing the constitutional liability of the stockholder, which is applicable in cases where the corporation is dissolved; that such statutes do not create a new or different liability from that established by the constitution, but are passed in aid of that provision, to remove any doubt which might arise as to the enforcement of the samo after the corporation is dissolved.
Enough appears in the constitutional provision itself to show that the view of the complainants, that the article is self-enforcing, cannot be sustained. It ordains that “dues from
Stockholders are not in general liable at common law for the debts of the corporationnor are they in any case, unless where there has been a fraudulent conveyance of trust property, or where they are indebted to the corporation on account of stock subscribed which remains unpaid, or where there has been a dividend in liquidation or other distribution of the capital stock among the members, leaving the creditor unpaid, or where the stockholders are made liable by some explicit act of the legislature. Gray v. Coffin, 9 Cush. 192, 199 ; Thompson on Liability of Corporations, § 11. Statutes providing such a liability create a new right and impose a new obligation;
Shareholders in a corporation are not individually liable at common law for the debts of the corporation, and, if liable at all, it must be by some statute which not only creates the liability, but also prescribes the manner of its enforcement. Where the liability is general by statute, without specifying any remedy, it may be enforced by an appropriate common-law action; but where the provision for the liability is coupled with a special remedy, that remedy, says Chief Justice Waite, and that alone, must be employed. Bollard v. Bailey, 20 Wall. 520, 527; Grund v. Tucker, 5 Kan. 70, 77.
Argument to show that section 32, of article 4, does not furnish any ground to support the present suit is quite unnecessary, as it merely purports to give a remedy to the creditor in a case where he has recovered judgment against the corporation, and there cannot be found any property whereon to levy the execution; in which event the remedy is given only in the court where the judgment was rendered. State St. 188, art. 4, § 32. Incorporated companies may be dissolved in two modes, as provided by section 40 of the State Statutes; and the next section provides to the effect that a corporation which does not commence active operations within five years after filing its charter with the secretary of state shall become and be dissolved. State St. 200. These sections define what is meant by dissolution in the statute, which plainly gives the definition to explain the meaning of the subsequent sections •of the same statute. Individual liability of the stockholders in this statute is first provided for in section 32, which prescribes the extent of the liability and the mode of enforcing it, as before explained.
Like most of the statutes in other states imposing such liabilities, the said section provides that the creditor, before proceeding against the stockholder, shall obtain judgment against the corporation; the rule being that the corporation is the principal debtor, and that the liability of the stockholder being only of a secondary character’, it is reasonable that the cred
Courts have often held that a corporation may be dissolved by an unconditional repeal or surrender of its charter, in a manner authorized by law, and the court of errors of New York once held that if a corporation suffers acts to be done which destroy the end and object for which it was created and organized, that such acts are equivalent to a surrender of its chartered rights; nor is it necessary in this case to contravert that proposition, as it is clear that such a corporation, under a- proceeding in bankruptcy, cannot be discharged of its debts, nor will such a proceeding have any tendency to deprive the corporation of the power to continue or to resume its business. Slee v. Bloom, 19 John. 456, 474. In coming to the conclusion, said Spencer, C. J., that the corporation in this case is dissolved, I lay out of the case everything of misuser or nonuser, excejfling the influence which the fact of nonuser may have as evidence, connecting, with other facts, to show the renunciation of corporate rights. Upon these authorities, and for the reasons given by the chancellor, the chief justice admitted that neither misuser nor nonuser could be regarded as a substantial and specific ground of dissolution. Since that time the court of appeals has decided that, in order to infer a surrender of corporate franchise, the circumstances must be such that the corporation has lost all poioer to continue or resume its business ; which is not true of the corporation in this case, and never can be by the operation of the bankrupt proceedings, not even when such proceedings are followed by misuser or nonuser. Bradt v. Benedict, 17 N. Y. 93, 99. When the cases are carefully considered, it is clear that the exact rule to be applied in such a case, in Massachusetts and New York, is not substantially different. Controversy upon that subject can hardly exist; but the complainants contend that a corporation within the meaning of the state statute is dissolved when it has gone into bankruptcy, and has ceased
When a general liability is created by statute without a remedy being given, the right may be enforced by an appro
Sufficient has already been remarked to show that when a statute confers a right and imposes a liability, without providing a distinct remedy for its enforcement, the common law will supply the omission by giving to a party an appropriate action by which his right may be enforced; but it is equally well settled in principle, and by all the authorities, that when a statute confers a right and provides a remedy, that remedy, and that only, must be pursued. Knowlton v. Ackley, 8 Cush. 93, 97; Kelton v. Phillips, 3 Met. 61; Dauchy v. Brown, 24 Vt. 197-203. Apply that principle in the case before the court, and it is plain that the bill in this case cannot be maintained, as the statute plainly indicates an action
Equity, in the form of a creditors’ bill, is the remedy chosen by the complainants, to which the respondents have demurred for the want of equitable support, or of authority under the state statute. Among other things, the statute provides that when such a corporation is dissolved, leaving debts unpaid, suits may bo brought against any person or
Eosort to equity is wholly unnecessary in this case, the facts showing that the complainants, if they have any claim, may enforce it in a suit at law; nor has the court any discretion upon the subject, as it is reasonably plain that an action at law is the remedy contemplated by the legislature; or, if not, then it is plainly a case whore a liability is imposed by statute, without providing the means for its enforcement, in which the general rule is that it must be enforced by an appropriate common law action. Bollard v. Bailey, 20 Wall. 520, 527; Knowlton v. Ashley, 8 Cush. 93-97. For these reasons I am of the opinion that there is no equity in the bill, and that the demurrer must be sustained.
Decree for the respondents, dismissing the bill of complaint.