45 S.E. 94 | S.C. | 1903
July 1, 1903. The opinion of the Court was delivered by The following statement appears in the record:
"The first above stated action was commenced on the 3d day of February, 1900, for winding up the affairs of the Commercial and Farmers' Bank of Rock Hill, S.C. insolvent, by the appointment of a receiver to collect and distribute its assets, including the fund due from its stockholders; all of said stockholders being made defendants. A *509 receiver was duly appointed in this action, who is now administering the affairs of said bank.
"The other two actions, in the nature of creditors' bills, were brought about the same time against certain of the stockholders of said bank (named also as defendants in the first action) to recover the amounts of their individual liability to depositors.
"The said three actions were consolidated by an order of the Court, dated the 29th day of May, 1900.
"By amended complaint in the first above stated action, E.B. Mobley, John G. Anderson and N.B. Williams were made defendants therein on the 2d day of May, 1900. These three defendants are not parties to either of the other two actions. As none of the parties to the second above stated action have anything to do with this appeal, they are, to avoid confusion, named as respondents.
"A referee was appointed to take the testimony and report upon all of the issues of law and fact; and these consolidated actions came up for a hearing at the November (1902) term of the Circuit Court for York County, upon so much of said referee's report as related to the liability of stockholders, and exceptions thereto; all other issues being reserved. Upon these issues, his Honor, James Aldrich, filed his decree herein on the 9th day of February, 1903. E.B. Mobley, John G. Anderson and N.B. Williams, defendants in the first action, gave due notice of their intention to appeal from the said decree in so far as it held them liable as stockholders, and subsequently duly served their exceptions. The plaintiffs, Blackmon, Estridge Co., gave due notice of their intention to appeal from said decree in so far as it held that the Rock Hill Real Estate and Loan Co. was not liable as a stockholder, and thereafter, within the time required by law, served their exceptions."
The decree of his Honor, the Circuit Judge, and the appellants' exceptions will be set out in the report of the case.
While the decree fully and ably disposes of all the questions raised by the said exceptions, we, however, deem it *510
advisable to add some words in explanation of the principle under which the Rock Hill Real Estate and Loan Company is enabled to escape the statutory liability imposed upon the stockholders of the Commercial and Farmers' Bank, on the ground that its contract for subscription to the shares of stock was prohibited by statute and was, therefore, ultra vires. There is a general discussion of this subject in LancasterCountry v. R.R. Co.,
In Central Transp. Co. v. Pullman Pal. Car Co.,
Lord Mansfield, in Holman v. Johnson, 1 Comp., 341, thus states the rule: "The objection that a contract is immoral or illegal as between the plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed, but it is founded in general principles of policy which the defendant has the advantage of, contrary to the real justice as between him and the plaintiff by accident, if I may so say. The principle of public policy is this: Exdolo malo non oritur actio. No Court will lend its aid to *512 a man who founds his cause of action upon an immoral or an illegal act."
The Court, in Pullman Pal. Car Co. v. Central Transp.Co.,
Under the caption, "Provisions Applicable to Corporations Generally," in the Code of Laws, section 1843 (subdivision E), appears the following: "No part of the capital stock or any of the funds of such corporation shall at any time during the continuance of their charter be used or employed, directly or indirectly, in banking operations, or for any purpose whatsoever inconsistent with the provisions *513 of their respective charters." Section 1775 of the Code of Laws is as follows: "The stockholders of banks shall be liable to the amount of their respective share or shares, and five per cent. thereof in addition thereto, for all of its debts and liabilities upon note, bill or otherwise."
The foregoing cases show that a contract which is ultravires cannot be made the foundation for the liability of the corporation, and, furthermore, that a corporation cannot be made liable on a contract which the law prohibits it from entering into. When the Rock Hill Real Estate and Loan Company purchased the shares of stock in the Commercial and Farmers' Bank, it was in violation of the statute. The Court will not lend its aid in the enforcement of rights growing out of a contract expressly forbidden by statute, but will leave the parties to the unlawful contract where it finds them.
It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.