91 Ala. 245 | Ala. | 1890
The principles settled in the case of Lehman, Durr & Co. v. Glenn, at the present term (87 Ala. 618), and in Glenn v. Semple, 80 Ala. 159; s. c., 60 Amer. Rep, 92, require an affirmance of the judgment in this case.
The only difference which distinguishes the case at bar from that of Lehman, Durr & Co. v. Glenn, supra, is, that here there has been no recognition by the appellant of his liability
This view is fully met by the case above cited. We there held, that all stockholders in the corporation known as the National Express Company, or under its 'changed name of the National Express & Transportation Company, were to be considered as parties to the suit commenced by the creditors in the Chancery Court of the city of Richmond, in December, 1871, for all the legitimate purposes of that suit, in that the corporation itself was made a party by proper service on its officers, and that the interests of the stockholders were represented by the corporation of which they were members- The decree rendered on December 14th, 1880, in that suit, which was about six years before the prescription of twenty years, would have been complete, was conclusive of the fact that there was no laches, or improper delay in making the call or assessment then ordered by the court, which that tribunal had full authority to make, and which was binding, prima' facie,. upon all whose names appeared upon the company’s books as members and stockholders. It is equally conclusive of the fact that these assessments or calls had not presumptively been made before, nor satisfied by payment. The effect of the call under the decree was to rebut the presumption of payment, which might otherwise have arisen by reason of the lapse of twenty years from the date of the subscription, without any action looking to the enforcement of the stockholders’ liability on these subscriptions. The assessment here sued for, which was made by the Richmond court on March 26th, 1886, was. but a renewed assertion of the continued liability of stockholders for their unpaid subscriptions. The call was one which the officers of the corporation ought to have made. They were the agents of the stockholders, and the negligence of the agents may well be visited on their principals. The Chancery Court., in making the call, had the officers before them, and for this purpose, we repeat, they represented the stockholders, and had full authority to do so.—Glenn v. Williams, 60 Md. 116; Sanger v. Upton, 91 U. S. 56; Great Western Tel. Co. v. Gray, 122 Ill. 630; Lehman v. Glenn, supra; Glenn v. Soule, 22 Fed. Rep. 417.
When that decree was rendered, it necessarily adjudged that
The judgment must be affirmed.
Pettus & Pettus, for appellant. — 1. The court'is asked to reconsider the doctrine' of prescription, as presented by the facts of this case. In the opinion delivered, it is expressly decided against the appellant, as the main feature distinguishing this from the other cases; but it was not argued by counsel in the briefs submitted on the first hearing. “Here,” as. the opinion states, “there has been no recognition by the appellant of his liability as a subscriber for stock in the corporation represented by the plaintiff, from the time it was made in 1866, up to the time of bringing this suit in 1886, which is more than twenty years.” With these facts admitted, the defense of precription is complete, as established by the leading case of McArthur v. Carrie, 32 Ala 88, and adhered to without exception, or shadow of change, in all subsequent decisions ; a defense against which neither infancy, nor coverture, nor war is an exception, and which is recognized by the Supreme Court of the United States, as the established rule of law in Alabama. Phillippi v. Phillippi, 115 U. S. 159; McCartney v. Bone, 40 Ala. 536; Harrison v. Heflin, 54 Ala. 563.
2. The court is asked to reconsider the decision as to the defense of the statute of limitations of six years, as announced in Glenn v. Semple, 80 Ala. 159, and modified by the facts shown by the record in this and the other late cases. The corporation became insolvent, and ceased to do business, on the 20th September, 1866, when it executed the deed of assignment to trustees for the benefit of its creditors, conveying to them, as part of its assets, the unpaid subscriptions of its stockholders. This assignment took away from the corporation all power to collect the unpaid subscriptions, and vested it in the trustees ; and if the trustees failed to make proper or necessary calls, .the creditors might have asked the compulsory process
3. The appellant never subscribed for any stock in said insolvent corporation, and he denied the subscription shown by its books, b3r plea verified by affidavit; but he was denied the benefit of this plea, though supported by his own testimony on the trial, and in the absence of any testimony contradicting him. He subscribed only to the proposed National Express Company, before its incorporation; and if the National Express & Transportation Company was the legitimate successor of that proposed corporation, the substantial and material changes in its powers and business purposes discharged him from that subscription.—Knox v. Childersburg Land Co., 86 Ala. 180; Railroad Co. v. Crosswell, 5 Hill, N. Y. 383; Clearwater v. Meredith, 1 Wall. 25; Railroad Co. v. Allerton, 18 Wall. 235; Banit v. Railroad Co., 13 Ill. 510; 2 Dill. C. C. 435; Cook on Stock and Stockholders, § 500, note 1. In Lehman, Durr & Co. v. Glenn, nowrejiorted in 87 Ala. 618, it is said that the legal identity of the two corporations was conclusively determined by the decree of the Virginia Chancery Court; but an examination of the record of that case shows that the point was not decided, nor even presented ; that the bill did not even aver such identity.
4. The most important question in the case, a reconsideration of which is asked, is as to the legal effect of the proceedings and decrees in the Chancery Court of Virginia, as announced in the case of Lehman, Durr & Co. v. Glenn, and applied by reference in the opinion delivered in this case. Under the provisions of the Federal Constitution, “ full' faith and credit shall be given in each State . . to the judicial proceedings of every other State;” and the construction placed on this provision by the Supreme Court of the United States is binding on the several State courts. But the decisions of that tribunal declare, that such judgment is only conclusive ■where the court liad jurisdiction of the cause, of the subject-matter, and of the parties; that a defendant, when sued on it in another State, is not estopped from showing that the court had no jurisdiction of the subject-matter, or of himself personally, nor from setting up any personal defense which he might have pleaded if he had been before the court.—Thomp
The record of the chancery suit in Virginia aboimds in errors and irregularities, which show an entire disregard of the principles of chancery pleading and practice, on the part of the complaining creditors, and great apathy and indifference on the part of the adversary parties, if there were any. But these errors and irregularities go behind the judgment of affirmance,, and are not now available. The question remains, what did the court decide ? and, what could it lawfully decide ? The bill was filed by creditors against an insolvent corporation; and the court, having acquired jurisdiction over the corporation, could lawfully (1) ascertain the debts due from it tO' creditors; (2) construe the deed of assignment made by the corporation to the trustees; (3) remove them when they appeared, and appoint another trustee in their place; (4) make calls for the payment of unpaid subscriptions for stock, as the corporation might have done before the assignment; and (5) make distribution of all moneys collected for the corporation, whether by a party to the suit, or by an officer or agent of the court. These were all matters within the scope and purpose of the suit, and within the jurisdiction of the court; and as to these matters the stockholders were represented by the corporation — there was no antagonism between them. But the court could not lawfully decide, and did not undertake to decide, who were stockholders, or subscribers for stock; how much they owed, if anything; or what personal defenses they might have against any call or claim on the part of the corporation. As to these matters, the corporation and the stockholders are adversary parties, and represent adversary rights, so well defined that Federal jurisdiction may be invoked when their citizenship is in different States.—18 How. 331. As to these matters, the corporation does not, and can not, represent the stockholder; and to hold that a decree against the corporation can establish a personal liability against him as to these matters, would deprive him of due process of law.—Pennoyer v. Neff, 95 U. S. 733.
In Glenn v. Semple, 80 Ala. 159, two propositions were declared : First, when the directprs of a private corporation, having authority, neglect or refuse to call in unpaid subscriptions for stock, necessary to pay the claims of creditors, a court of equity will take jurisdiction and make the
A preliminary question arises on the al]oAArance of an amendment to the complaint. The cause of action presented by each count of the original complaint is.an express contract of subscription for ten shares of stock made with the National Express <fc Transportation Company, under the name of the National Express Company. The amendment, which was made during the trial, introduces the common counts for money had and recei\'ed, account staled, money paid, work and labor done, and goods and chattels sold; all of them, except the one for money had and received, being promises to plaintiff as trustee of the National Express & Transportation Company. Not only is there nothing in the record to authorize the presumption that the amendment Avas not intended to introduce
. Appellee sues to recover a call oí fifty per cent, of the par value of ten shares of the capital stock of the National Express & Transportation Company, ordered March 26, 1886, by the Chancery Court of the city of Richmond, Virginia, on a creditors’ bill, seeking the construction and enforcement of a deed of trust, by which the corporation assigned all its property, rights, and credits, including the unpaid subscriptions for stock, to three named persons for the benefit of its creditors, and the marshalling and distribution of the corporate assets. The record and proceedings of the Chancery Court were admitted in evidence against the objection of defendant. The specific objection is, that the record fails to show service of process on the corporation, and a valid decree fro eonfesso; in other words, that the Chancery Court did not obtain jurisdiction of the corporation. The bill was filed, in December, 1871, against the corporation, some of its officers, and the •trustees. It does not appear that any subfwna was issued against the corporation, until the day after an amended and supplemental bill was filed, August 4, 1879, when one was issued on the original, amended and supplemental bill. It was served on a director and the cashier of the company, both of whom appeared and answered; but neither having answered in the name of, or for the company, the bill was taken as confessed against the corporation. The question of the sufficiency and validity of the service of process was directly brought, by the petition of the stockholders, before the Circuit Court of Henrico county, to which the cause had been removed. By that court the service was adjudged to be valid, and that the corporation was before the court. The judgment of the Circuit Court denying the prayer of the petitioners, was affirmed by the Court of Appeals, which necessarily involved the validity of the service of process, though not passed on in terms.—Hamilton v. Glenn, 85 Va. 901. It may be that the record and proceedings abound in errors and irregu
Printed copies of the proceedings of the meetings of the subscribers to the stock of the National Express Company were also admitted in evidence against the objection of defendant. It does not appear from the record that the identification or correctness of the copies, or that the minutes were made by any person authorized to make them, was shown. But, as no objection on this ground seems to have been made in the trial court, nor made here, we must assume that this ground of objection was waived. The complaint avers, that defendant subscribed for ten shares of the capital stock of the National Express & Transportation Company, under the name of the National Express Company; and plaintiff introduced in evidence a written subscription to the latter company, eo nomine, and claims that by virtue thereof defendant is a stockholder in the National Express & Transportation Company. It was threl'ore incumbent on plaintiff to show the legal identity of the two companies.
The statement in the opinion in Lehman, Durr & Co. v. Glenn, supra, that the legal identity of the companies was one of the points conclusively determined by the Richmond Chancery Court, does not seem to be sustained by the record. An examination shows that the identity of the two companies was not within the issues in the suit, nor was it decreed. That court Ayas dealing Avitli the National Express & Transportation Company as an original corporation, and only from the time of its organization; the preliminary proceedings, looking to incorporation, were not involved. By reference to the proceedings, it appears that, at a meeting of the citizens of Richmond, on September 18, 1865, it Avas proposed to organize a Rational Express Company, making the act of the legislature of Virginia, passed March 22, 1861, incorporating the Southern Express Company, the basis of the corporation ; and as a larger capital Avould be necessary than that authorized by the act, and as other provisions, not contained therein, would be required, to apply to the legislature to grant the company a modified charter, adapted to its objects and the magnitude of its plans. On the 19th day of the same month, a committee .was appointed to memorialize the General Assembly for the passage of an act increasing the capital stock, changing the corporate name, and for such other modifications as may be deemed necessary. On October 12, 1865, certain gentlemen were appointed to visit several named cities, among them the city of Montgomery, to receive subscriptions to the stock of
It is contended that the term, “ National Express Company,” does not import doing a general transportation business, and that the change of name, and the enlarged powers conferred, is a material departure from the character and pimposes of the proposed corporation to which defendant subscribed; in consequence of which, the subscription of defendant did not become a complete contract', and binding obligation. The minutes of the meetings of the subscribers to the National Express Company, if identified or shown to be correct, or authoritatively made, are prima facie evidence of the preliminary proceedings for its incorporation, and are admissible for the purpose of showing that, in the incorporation of the National Express & Transportation Company, there is no material change or departure from the original character and purposes of the corporation intended to be formed.
The next objection is to the admission in evidence of the books of the corporation. It may be difficult, on principle, or well recognized rules of evidence, to maintain the proposition, that when the name of an individual appears on the books of a corporation as a stockholder, the presumption is, that he is the owner of the stock, and casts on him, in a suit against him as a stockholder, the burden of rebutting the presumption, without showing that it was placed there by his authority, express or implied, or that he had any notice of his name appearing on the books ; but the proposition is upheld by the great weight of authority, and should now be regarded as placed beyond the pale of discussion.
More than twenty years elapsed from the organization of the corporation, and from the execution of the deed of trust, before the commencement of this suit; and there is no evidence of the recognition of his liability on the part of defendant, during this period, or anything to rebut the presumption of payment arising from the lapse of time, unless it be the call made by order of the court in December, 1880. Being, doubtful whether this defense is sufficiently pleaded, we should probably decline its consideration, had it not been stated, in the former opinion in this case, as the feature which distinguished it from the case of Lehman, Durr & Co. v. Glenn, supra; and then ruled, that the effect of the call of
This court has adhered with uniform tenacity to the doctrine of prescription, and has repeatedly held, that the lapse of twenty years, without recognition of right, or admission of liability, operates an absolute rule of repose. McArthur v. Carrie, 32 Ala. 88, is the leading case in this State. A slave had been illegally sold by an administrator, and possession held by the purchaser more than twenty years. During that time there was no one who could have sued, and the plaintiff instituted suit immediately after being appointed administrator. There was no statute of limitations applicable. After observing that a prima facie presumption is raised, whenever there is satisfactory proof of twenty years uninterrupted, adverse enjoyment and possession, Stone, J. says : “ This prima facie case may, of course, be overturned. It can not be done by proving that the title was, in its inception, defective. Proof, to be effectual for this purpose,, should be addressed to the character of defendant’s possession, either in its acquisition or -ase; must tend to show that such possession is not inconsistent with the plaintiff’s right, or some other cause, independent of the original defect of title, must be given for the seeming long acquiescence.” It was further said, that in the absence of such excuse, {heprima facie presumption becomes conclusive. The court has, not only never departed from the principles thus declared, but repeatedly approved and affirmed them. Hence it has been held, that a presumption of settlement, operating a positive bar to proceedings bjr a distributee to coerce a settlement, is created by the lapse of twenty years from the time a settlement of the administration and distribution of the assets could have been compelled in the Probate Court, without the administrator’s recognition of the administration, within that period, as a continuing, subsisting, and undischarged trust.—Harrison v. Heflin, 54 Ala. 552; Greenlee v. Greenlee, 62 Ala. 330. Also, that twenty years adverse possession of land will bar an infant’s right of entry, though the entire period of adverse holding was during his infancy. Woodstock Iron Co. v. Roberts, 87 Ala. 436. AÍso, if a mortgagee allows twenty years to elapse without taking any steps to compel the settlement of the mortgage, or to assert any rights of property under it, the presumption of payment or .settlement arises.—Goodwyn v. Baldwin, 59 Ala. 127. And, though the statute of limitations has no application to express trusts — trusts exclusively of equitable cognizance — until there
In Phillippi v. Phillippi, 115 U. S. 151, this was stated tO' be the settled doctrine in Alabama. Woods, J. says : “ It is well settled by the decisions of the Supreme Court that, even in the absence of a statute of limitations, if twenty years are allowed to elapse from the time at which proceedings could have been instituted for the settlement of a trust, without the commencement of such proceedings, and there has been no' recognition or admission, within that period, of the trust as continuing undischarged, a presumption of settlement would arise operating as a positive bar.” This rule of repose “ has-been declared applicable to all kinds of debts and pecuniary obligations, including judgments, bonds and mortgages, embracing also fiduciary debts of every character due from trustees to cestuis que trust?—Garrett v. Garrett, 69 Ala. 429. It is impliedly recognized as applicable to the claim of plaintiff,, in Hawkins v. Glenn, 131 U. S. 319, where it is said, “And here there was a deed of trust made by the debtor corporation for the benefit of its creditors, and it has been often ruled in Virginia, that the lien of such a trust deed is not barred by any period short of that sufficient to raise a jiresumption of payment.” Also, Hamilton v. Glenn, supra, was a suit by the present plaintiff to collect the call of December, 1880. The decision, that the claim was not barred by the statute of limitations, is placed on the ground, that “ the lien of the trust deed is not barred by any period short of that sufficient to' raise a presumption of payment.”
The evidence shows that a call was ordered by the Richmond Chancery Court in December, 1880, but the record does not disclose any evidence showing the institution of proceedings against defendant, to enforce its collection. Appellee insists, that the delay in making the call was owing to the failure of the officers of the corporation, who were the agents, of the stockholders, and that the negligence of their agents may be well visited on them; that there has been no laches, or improper delay, on the part of the creditors. It was certainly the duty of the company to make the call as soon and whenever it was ascertained that payment of the subscriptions was necessary to meet the demands of creditors: But, when the deed of trust was executed, the trustees, who represented the creditors as well as the corporation, had authority to collect the subscriptions, and if a call by a court was deemed
It is further insisted, that the effect of a call by order of the court rebuts the presumption of payment arising from the lapse of time, on the ground that the stockholders were represented in that suit by the corporation, and. that the decree making the call is a judicial assertion of the liability of the stockholders binding them personally. The stockholders were represented by the corporation, so far as to render binding on them the decrees of the court in respect to corporate matters, and their property rights and interests in the corporation. The decrees of the Richmond Chancery Court may be regarded as having adjudged the fact and amount of the corporate indebtedness; that the creditors were not barred from asserting their claims as against the corporation; and that calls were necessary to meet their demands, which the court had authority to order, and did order. For these purposes the stockholders were not necessary parties; and being represented by the corporation, the decrees, in the respects above stated, are binding on them; but they can not legally operate to fix a personal liability on the stockholders, who were not made parties. Making a call by the court authorized the trustees to bring suits against the stockholders, or those claimed to be stockholders, in courts having jurisdiction over them personally. The suit in the Chanceiy Court is, in no sense, a suit against, the individual stock!lolders. No decree was rendered adjudging who were stockholders, but merely the number of shares issued, and the places where held. No more binding effect ought to be given to a call made in such suit by the court, than would be given to a call made by the corporation itself, imless the individual stockholder is a party, and his personal liability determined. It will scarcely be contended, that had the corporation continued business, a call, though made wdthin twenty years from the organization, would, without the commencement of proceedings for its enforcement, be efficient to rebut the presumption of payinent.. The legal effect of a decree in such suit is not to deprive the stockholder of, or
The doctrine of prescription rests on principles different from the statute of limitations. The presumption of payment is not countervailed by evidence of intervening infancy, coverture, or any disability of suit. In Harrison v. Heflin, supra, speaking of the effect of the suspension oí the statutes of limitation during the war, upon the presumption arising from the lapse of time, it is said: “This may acquit suitors of the imputation of laches; but the presumption rests, not only on want of diligence in asserting rights, but on the higher ground, that it is necessary to suppress frauds, to avoid long dormant claims, which, it has been said, have often more cruelty than justice in them; that it conduces to the peace of society, and the happiness of families, and relieves courts from the necessity of adjudicating rights so obscured by the lapse of time, and the accidents of life, that the attainment of truth and justice is next to impossible.”
We can perceive no sufficient reason why claims of the nature of plaintiffs should be excepted from the operation of the rule, when no sufficient cause is shown for the long delay. On the foregoing well established principles in this State, nothing short of a recognition of right or admission of liability, or the institution of legal proceedings against the stockholder sought to be charged, within twenty years, will prevent the presumption of payment irom becoming conclusive.
The foregoing principles will serve as a sufficient guide on another trial.
Reversed and remanded.
