198 Pa. 68 | Pa. | 1901
Opinion by
The dairy company on June 11, 1889, authorized a call for
The general rales are first, that on an obligation for the payment of money on demand the statute begins to run at once. Suit is a sufficient demand and must be brought within six years: Andress’s App., 99 Pa. 421; Milne’s App., 99 Pa. 483; Boustead v. Cuyler, 116 Pa. 551.
Secondly, where the contract is to pay on the future performance of a condition or happening of an event, or at a certain time after demand, there a demand is necessary to a right of action, and the statute does not begin to run until demand is made: Smith v. Bell, 107 Pa. 352; Eichman v. Hersker, 170 Pa. 402; Taylor v. Witman, 3 Grant, 138.
Whether there is a third rule that if demand is necessary it must be made within six years from the contract, has been both affirmed and denied in our cases, which are much at variance on the question. It was asserted in Laforge v. Jayne, 9 Pa. 410, and oxprossly held in Pittsburg, etc., R. R. Co. v. Byers, 32 Pa. 22, McGully v. Pittsburg, etc., R. R. Co., 32 Pa. 25, Pittsburg, etc., R. R. Co. v. Graham, 36 Pa. 77, and Franklin Savings Bank v. Bridges, 20 W. N. C. 43. On the other hand it was denied generally in Taylor v. Witman, 3 Grant, 138, and expressly rejected in Girard Bank v. Bank of Penn Twp., 39 Pa. 92, Smith v. Bell, 107 Pa. 352, and other cases, on the distinction, however, between obligations for the simple pay
It was expressly held in Pittsburg, etc., R. R. Co. v. Byers, 32 Pa. 22, and the kindred cases already cited, that where no call is made upon subscriptions to corporate stock for six years, the liability of the subscriber is barred by the statute of limitations, thus placing such subscriptions under the first rule as above expressed. These decisions, however, have not commanded uniform assent, and it must be confessed that they are not easy to reconcile with the cases that hold that a call or assessment by the corporation is a necessary foundation for a right of action against the stockholder.
But Pittsburg, etc., R. R. Co. v. Byers and its kindred cases have never been overruled, and in Franklin Savings Bank v. Bridges, 20 W. N. C. 43, they were followed and the principle enforced in an action by the assignee for the benefit of creditors of an insolvent bank upon an assessment made more than six years previously, though in the mean time but also more than six years prior to the suit the'bank had become insolvent and made an assignment for creditors.
The learned court below were of opinion that Bank v. Bridges was overruled by Lane’s App., 105 Pa. 49. In this we cannot concur. The questions raised in Lane’s Appeal related solely to the remedy and the opinion is devoted to the consideration of the defenses set up, first that the creditors generally had a complete and adequate remedy prescribed by the act under which the corporation wa's chartered, and secondly, that the principal creditor, filing the bill had a remedy by attachment execution on his judgment. In an elaborate opinion by the late Justice Green the whole subject was reviewed and in some quotations and observations upon them the statute of limitations was referred to, but it was always arguendo and by way of illustration. No question under the statute arose in the case or was passed upon by the court.
We have in the present case three dates from which it is claimed by appellant that the statute began to run, and all of
When does the right of action by the creditors for unpaid subscriptions accrue ? Such subscriptions are a fund in the hands of the stockholders charged with a trust for the payment of the corporate debts. This trust does not depend on any statute but is deduced on general principles of equity from the premise that the capital is publicly pledged to those who deal with the corporation for their security: Lane’s App., supra. So long as the corporation is solvent, the whole subscription is due in accordance with its terms and is payable when and as called for by the corporation. But when the corporation becomes insolvent, the contract between it and the subscriber is terminated and his debt to it then is only for such part of his subscription as is required to pay the corporate debts. It is a debt not to it in its own right but in the right of its creditors. But it would seem that the status of the stockholder as holder of a fund hablo at least contingently to the creditors, must be fixed at the time and by the fact of the ascertainment of insolvency. It is the general rule that insolvency fixes the relative rights of all the parties concerned. From that moment the unpaid subscriptions become part of the assets for payment of the creditors. It is true they are special or as they may be called
No other case has been cited, nor has my own examination found any other in which it has been directly decided that on the insolvency of the corporation the creditor’s right of action for unpaid subscriptions is complete .and hence that the statute of limitations begins to run, but the general trend of judicial expression is in that direction. Thus in Wilbur v. The Stockholders of the Corporation, 35 Legal Int. 346; 18 Nat. Bankruptcy Reg. 178, Cadwalader, J., says, “ Upon the insolvency of the corporation, the obligations of the stockholders thus at once become assets for the payment of its debts to such an extent as other assets are deficient.” And in Myers v. Seeley, 10 Nat. Bankruptcy Reg. 411, Treat, C. J., says, “If a company is insolvent the original mode of making call on stock is not to be pursued in the enforcement of the decree; for the debt is then due on the stock without demand.” Both these cases are cited in Lane’s App. In Sawyer v. Hoag, 84 U. S. 610, the stockholder was a creditor of the corporation and sought to set
All of the cases say that on a creditor’s bill an account must be taken of the debts, assets and unpaid subscriptions in order to determine how much of the latter should be called. This clearly implies that the creditors need not wait until full administration has exhausted the other assets, but may proceed at once to ascertain and liquidate the stockholders’ liability, even though payment may not be enforced until actual necessity has been shown. And the decisions in analogous cases are in harmony with this view. Thus in Cornell’s App., 114 Pa. 153, a bill by judgment creditors of a corporation against certain stockholders on their unpaid subscriptions was sustained on the averments of insolvency of the corporation and the exhaustion of plaintiff’s remedies at law, though no account had been taken of the other liabilities of the corporation, and other stockholders were not made parties, Trunkey, J., saying: “ The right of the complainant to immediate and entire relief is not to be delayed by any questions of expediency, or of the ultimate rights of the defendants to contribution.” A similar bill was sustained in Bell’s App., 115 Pa. 88. In Citizens & Miners Savings Bank v. Gillespie, 115 Pa. 564, it was held that while ordinarily an account and assessment are necessary to fix the amount of the stockholders’ liability on his unpaid subscription, yet “ the necessity for this does not exist where the whole amount is required to pay the debts. . . . The assignee may sue at once for all that is required.” And in Hatch v. Dana, 101 U. S. 205, a creditor’s bill against a single stockholder was
No sufficient reason is perceived why these principles should not apply to cases like that at bar, at least to the extent of ascertaining and liquidating the liability of the stockholders promptly and while evidence on disputed facts is presumably obtainable. The very numerous questions of contested liability particularly in the federal courts under the bankruptcy acts show that this is a matter of practical concern. And the interests of creditors not less than the rights of the stockholders are served by this view. If there is no right of action for unpaid subscriptions until full administration of all the other assets, then this case is an illustration of the delay and difficulties imposed on the creditors. Eight years and a half elapsed from the assignment till the filing of this bill, and in the mean time the creditors were exposed not only to the delay but also to the chances of failure of assets by the death and distribution of the estates of some of the stockholders, and the insolvency or financial inability of others besides all the vexatious questions of colorable or bona fide transfers of the stock. If a bill had been filed in 1891 averring insolvency and entire insufficiency of other assets, it is clear that it would not have been demurrable, and the final determination of how much of the unpaid subscriptions should be assessed and collected might well have been entrusted to a court quite competent to settle it with equity to all parties.
We are of opinion therefore that not only is the case of Franklin Savings Bank v. Bridges an express authority, but also that it is supported by correct reasoning from admitted principles. The right of action of the plaintiff, whatever it was, accrued upon the fact of insolvency of the dairy company shown by the assignment for the benefit of creditors, and the statute of limitations began to run from that date. The bill therefore was too late.
The decree is reversed and the bill directed to be dismissed with costs.