25 Colo. 551 | Colo. | 1898
Lead Opinion
delivered the opinion of the court.
The specifications of error are voluminous, and, in addition to the questions they raise as to the admissibility and sufficiency of certain testimony, challenge the right of appellees to maintain the action, and also the construction that the court below gave to the statute under which the recovery is sought. In their printed argument, for the first time, counsel question the validity of the act itself, upon the ground that it was never constitutionally passed. Under former decisions of this court and the court of appeals this question is not properly before us for consideration. Marean v. Stanley, 21 Colo. 43; Rice v. Carmichael, 4 Colo. App. 84.
Counsel for appellants insist that the assignee was alone entitled to maintain the action, and that the creditors themselves cannot invoke the interposition of a court of equity to enforce the liability of stockholders, under this statute. Upon whom the right to enforce the remedy devolves, and the mode of procedure that should be adopted, have been in controversy
In Terry v. Little, supra, Chief Justice Waite, in discussing the procedure that should be adopted for the enforcement of a liability provided in the charter of the Merchants’ 'Bank of South Carolina, in language substantially the same as that used in our statute, said:
“ Undoubtedly, the object was to furnish additional security to creditors, and to have the payments when made apply to the liquidation of debts. So, too, it is clear that the obligation is one that may be enforced by the creditors; but as it is to or for all creditors, it must be enforced by or for all.
In Pfohl v. Simpson, supra, it is said:
“ A suit in equity laying hold of all the stockholders in like category and promoted for the benefit of all creditors having like interest, is peculiarly adapted to work out exactly just and equitable results. * * * The object and effect is only to bring to one forum the determination of rights, which must, if prosecuted separately, more or less conflict, to mutual harm. Before that one forum, in one suit, the respective rights and the respective liabilities can be ascertained and determined, and each get his own, and be subjected to his own, and not another’s. And the equities between the respective stockholders can also be adjusted and settled.”
In the recent case of Runner v. Dwiggins, the question as to the right of the assignee of an insolvent corporation to maintain the action was involved, and upon the authority of a large number of the adjudged cases, and the rule as generally laid down in the text-books, his right to maintain the action was denied. Jordan, chief justice, speaking for the court, said:
“ Certainly, it cannot be asserted with any reasonable support that this peculiar liability imposed by the statutes upon those who become shareholders of a banking association organized under the existing law, is in any sense an asset, right or interest of the bank, which it as an insolvent debtor can, by its deed of assignment, pass to its assignee, or in any manner vest the enforcement thereof in him. In the absence of some statutory provision conferring the right, neither the corporation nor its assignee nor receiver can enforce such a liability as that in question.”
We have carefully examined the cases cited and relied upon by counsel for appellants as sustaining their contention. It is true that these cases, while holding that the fund can be reached only by a proceeding in equity, sustain the right of the receiver to enforce the remedy. We are, however, satisfied that the foregoing cases announce the generallyaccepted
The right to maintain the present action is also challenged because it is prematurely brought. It is argued that if, as we have seen, the fund provided by the statute is in the nature of an additional security for the creditors, the liability of the stockholders is secondary, and not enforceable until the assets of the corporation have been exhausted. It is undoubtedly true that this fund does not constitute the primary or regular fund for the payment of the corporate liabilities and that the corporate funds are the primary resource to which creditors must look for the payment of their debts and the discharge of the corporate obligations; but a wed recognized exception to this rule exists when, by reason of dissolution or insolvency, an action against the corporation would be unavailing. Cook on Stock and Stockholders, sec. 200: Terry v. Tubman, 92 U. S. 156; Hodges Wilson v. Silver Hill Mining Co., 9 Ore. 200.
We think the facts averred in the complaint and disclosed , by the evidence bring this case within this exception. It appears that the North Denver Bank, on July 18, 1893, was insolvent, and- made an assignment of all its assets; that the appellees filed their claims with the assignee, and the same were allowed, and there has been paid only twenty per cent of the original amounts. No further sum having been realized during the length of time that has elapsed, it is evident that the remaining assets, if any, consist of worthless or doubtful claims. Under these circumstances the creditors ought not to be compelled to await their collection, or delay the enforcement of the statutory liability against the stockholders; but justice requires that the stockholders themselves should be compelled to pay their claims, and look to the assignee for whatever may be realized from the remaining assets. Moses
As was said in the former case :
“ They (creditors) will not be required to wait the collection of doubtful claims, or claims in litigation. The stockholders must pay promptly and take upon themselves the onus of delay and risk as to all such claims.”
For these reasons we think the foregoing objections to the maintenance of this action by appellees were properly overruled.
It is further contended that the court below erred in its conclusion as to the extent of the liability imposed by the statute, and in rendering judgment against each of the stockholders in double the amount of the par value of the stock owned by them respectively.
The language of the statute is: “ Shareholders in banks * * * shall be held individually responsible for debts * * * of said associations, in double the amount of the par value of the stock owned by them respectively.”
It is said that the true intent and meaning of this language is to make the stockholders responsible to the amount of stock subscribed, and in addition thereto a sum equal to its par value, or, as expressed, by counsel: “ He is first liable to the corporation to the full par value of his stock, and next, liable to the creditors in an equal amount; ” and that this constitutes the double liability contemplated by the statute ; that the judgment of the court below in effect imposed upon them a triple liability. As supporting this view counsel cite Beach on Private Corp. § 152; Thompson’s Liability of Stockholders, § 37; 1 Cook on Stockholders, etc. § 215; 2 Morawetz on Private Corp. § 881.
For instance, as said by Mr. Beach: “ Statutes imposing a liability ‘ to double the amount of stock held by them ’ receive the same construction as those making shareholders liable ‘ to the amount of their stock.’ ” And like expressions are found in the other works referred to. As supporting this conclusion they cite Perry v. Turner, 55 Mo. 418; Matthews v.
In addition to these Mr. Beach also cites Appeal of Parish et al., 19 Atl. Rep. 569.
Upon a careful examination of these cases we are unable to find any warrant for the rule as announced. In Matthews v. Albert and in Norris v. Johnson, the statute under consideration provided that the stockholders were severally and individually liable to the creditors of the company to an amount equal to the amount of the stock held by them respectively, etc., and it was held that the liability to creditors -was measured by the par value of the stock, without reference to the amount they may have paid on the stock.
To the same effect is Gay v. Keys, supra. In Schricker v. Ridings, the only question considered was whether a stockholder could be made liable to a creditor when the full amount of stock owned by him had been paid, under sec. 6, art. 8, of the Constitution of Missouri as amended in 1870, which enacted that “ in no case shall any stockholder be individually liable in any amount over'and above the amount of the stock owned by him or her; ” and the court held that he could not, by reason of the negative form of expression employed, but said: “If the amendment of 1870 had declared in express terms that every stockholder should be individually liable to the amount of the stock owned by him it might well be argued, on the authority of the cases cited by the plaintiffs’ counsel, that as they were already liable to the creditors of the corporation for the full amount of their stock, paid and unpaid, the constitution intended to provide further security for such creditors by superadding the individual liability of stockholders in a sum equal to the amount of their respective shares of stock.”
We find no expression in any of these decisions that intimates that statutes imposing a liability “ to double the amount of stock held,” should be given the same signification and receive the same construction as those making shareholders lia
It has been almost uniformly held that when a statute fixes the liability of stockholders “ in an amount equal to the stock held by them,” or “to the amount of their stock,” it imposes a liability to the amount of the-par value of their shares, in addition to their subscription to the stock. McDonnell v. Alabama Gold Life Ins. Co., 85 Ala. 401; Briggs v. Penniman, 8 Cowen, 387; Pettibone v. McGraw, 6 Mich. 441; Root v. Sinnock, 120 Ill. 350; Lane’s Appeal, 105 Pa. St. 49; Buenz v. Cook, 15 Colo. 38.
It therefore logically follows that where the language is “in double the amount of stock held,” an obligation in double the amount of such par value is imposed. Appeal of Parish, supra ; Terry v. Little, supra.
In the latter case the charter under consideration provided that stockholders should be “ liable and held bound * * * for any sum not exceeding twice the amount of * * * their * * * shares.” After quoting this language, Chief Justice Waite said:
“ This, as we think, means that on the failure of the bank each stockholder shall pay such sum, not exceeding twice the amount of his shares, as shall be his just proportion of any fund that may be required to discharge the outstanding obligations.”
Although the double liability clause, as found in our stat
As we have seen, statutes of this character are intended to furnish a fund exclusively for the benefit of creditors, and under the rule laid down in all the cases, they are to be construed as imposing an individual liability upon stockholders, in addition to their liability to the corporation for the amount of their subscription to the stock. Accepting this as the correct rule of construction, the plain and obvious import of the language of our act is, to make stockholders in banking associations individually liable for the debts of the association in double the amount of the par value of the stock owned by them, notwithstanding they may have paid, or are still liable to the corporation, for their original subscription.
But it is said that the judgment is excessive for the further reason that appellees were allowed interest upon their claims. We do not think this claim is well founded. The stockholders are responsible for the debts, contracts and engagements of the bank, and if from the nature of the contract or debt, interest was allowable against the bank, it would constitute a part of its indebtedness, for which the stockholders are made liable,.if within the maximum liability as fixed by the statute. Richmond v. Irons, 121 U. S. 27; Wheeler v. Millar, 90 N. Y. 353.
, It is also urged that the relation of appellants, as stock
“ It shall be the duty of the directors or trustees of every such corporation * * * to cause a book to be kept by the secretary or clerk thereof, containing the names of all persons, alphabetically arranged, who are or shall within one year have been stockholders of such corporation showing * * * the number of shares of stock held by them respectively, and the time when they respectively became the owners of such shares, and the time when they ceased to be such stockholders *. * *. Such books shall be presumptive evidence of the facts therein stated in any suit or proceedings against such corporation, or against any one or more stockholders.”
This book conforms to these requirements. The witness also testified that it was kept in the ordinary course of business, while he was connected with the bank, and that he made some of the entries himself, and that the persons named took part in the meetings of stockholders during the period of time their names' appeared on the book. We think the book, together with this testimony, was sufficient.
A further ground urged for reversal is that the findings of the trial court are not supported by proper and competent evidence.
The claims sued upon consist of money deposited with the bank, time and demand certificates of deposit, and drafts that had been issued by the bank, and protested for nonpayment. To prove these claims appellees called as a witness Mr. Root, who was cashier of the bank during the time the deposits were received and the certificates and drafts issued, and who had acted as assignee of the bank since it ceased doing business. He produced and identified what is called the daily balance book, which showed the accounts of depositors, and the time certificate register, and the demand certificate book,
Objection was made by appellants to the introduction of these books in evidence, on the ground, first, that they were not properly authenticated, and second, because they did not constitute the best evidence, and were not admissible against the defendants. We think these objections are untenable. The witness testified that he was familiar with the books of the bank; that these books were used by the bank in conducting its business; that the bank did not keep an individual ledger, and the daily balance book was the only one that showed the state of the depositors’ accounts, and the entries therein were made by the employees of the bank, under his supervision, as cashier, and that of the other officers; that the books had been in his possession since the assignment. .
It is insisted that this showing is not sufficient, under our statute (sec. 4817, Mills’ Ann. Stats.) to render the books admissible. The object of that section is to enable a party to use his own books as evidence in his own behalf, and is not applicable where the books are introduced to show admissions against the interest of the party making them.
In order to render the books of a party admissible for the latter purpose, it is only necessary that they be shown to be his books, kept in the regular course of his business, and that entries therein were made by himself or an agent, authorized to make them.
In McHose v. Wheeler, 45 Penn. St. 32, it was held that “ a ledger found after the company had failed, with other papers of the company in the office of a director, and he had left the state, and which that director had produced in other ■ proceedings as the ledger of the company, is sufficiently proved for admission in evidence as such; and entries therein, showing the nature and amount of the indebtedness of the company to the plaintiffs, are competent evidence upon their part, of the fact.”
“ It is true that the entries are made by an officer of the bank and not by the stockholder. But such officer, in making the written entries, -acts as the agent and representative hot only of the corporate entity known as the Bank, but of the stockholders regarded as unincorporated partners. The written evidence of indebtedness is as binding upon the latter as upon the former.”
We think, therefore, the books were properly admitted in evidence, and were competent to show the amount of the deposits for’ which' the bank was liable; ’ that certain eertificates of deposit and drafts were issued by the bank, at the time, for the amounts,-and to the parties therein named, and that such certificates were still outstanding. But this in
We think, therefore, that the court erred in allowing a recovery upon these certificates, and upon the. Ohilcott draft for $13.25, without requiring them to be produced upon the; trial, or their loss or destruction shown. .This necessitates a, reversal of the judgment, so far as the allowance of these claims is concerned. But since they are distinct, and can easily be separated from the other claims that were properly proved and allowed, a reversal of the entire judgment may be. avoided. The judgment, therefore, as to all the appellees
Judgment modified.
Rehearing
ON REHEARING.
On petition for rehearing on the part of appellants, we have been favored with elaborate and able arguments, both printed and oral, by which the main questions upon which the decision of this cause is predicated, have been very fully presented and argued; but after mature deliberation, we are satisfied that the views announced in our former opinion are correct, and fully sustained by the authorities cited. One question argued, namely, the failure of appellees to make the bank and assignee parties, should be further noticed. That they were not joined as plaintiffs did not render the complaint defective, in failing to state a cause of action against the stockholders, for the reason already given, that the liability of appellants, as shareholders, is solely for the benefit of the creditors of the bank, and for the purpose of creating a fund over which neither the bank nor its assignee has any control or authority to collect; but conceding, that, for the purpose of' a complete determination of all the fights involved, they should have been made parties defendant, by virtue of either sec. 497, Mills’ Ann. Stats. or sec. 16 of the code, the failure to do so cannot be considered here, because appellants, by answering over, after demurrer, on the ground of defect of parties, have waived the right to raise the question on appeal: Sams Automatic Car-Coupler Co. v. League, 25 Colo. 129; 54 Pac. Rep. 642; nor does the fact thatneither the bank nor assignee were made parties defendant, in any manner affect the rights of the stockholders; because, whether sued alone, or in connection with the bank and. its assignee, they
In support of their petition for rehearing, appellees have brought in and filed with the clerk of this court certain evidences of indebtedness of the bank, which were not presented on the trial below, and with respect to which the judgment has been reversed, and ask that we now modify our former opinion, by directing judgment upon these claims. We cannot consider original evidence in the case, and it is obvious, therefore, that the directions in the original opinion, with reference to these matters, are proper.
Petitions for rehearing denied.
Campbell, C. J., not participating in this, or former, opinion.
