Jerman's Adm'r v. Benton

• Decision Date: 31 October 1883
• Citation: 79 Mo. 148
• Parties: JERMAN'S ADM'R, Appellant, v. BENTON.
• Court: Missouri Supreme Court

79 Mo. 148

JERMAN'S ADM'R, Appellant,

v.BENTON.

Supreme Court of Missouri.

October Term, 1883.

Appeal from St. Louis Court of Appeals.

AFFIRMED.

Broadhead & Haeussler and C. O. Bishop for appellant.

J. M. & C. H. Krum for respondent.

MARTIN, C.

This was a proceeding by motion under the statute for execution against the defendant as a stockholder in the Bellefontaine Railway Company. On the 5th day of March, 1877, the plaintiff's intestate recovered judgment against the Bellefontaine Railway Company in the sum of $13,158.60. This judgment was rendered on certain bonds issued by said company on the 1st day of January, 1866. Execution having been returned nulla bona, the plaintiff filed his motion against William H. Benton for a judgment against him as a stockholder in the company at the date of the issue of the bonds and at the time of filing the motion. The allegations were sufficient to admit the evidence in the case, which was contained in an agreed statement of the facts.

It appears that the company was organized on the 15th day of March, 1864, under a charter granted by special act of the legislature contained in Session Acts 1862-3, page 488; that William H. Benton, defendant, became a subscriber on the 10th day of February, 1865, for 518 shares of the capital stock, of the par value of $100 per share; that by an increase of the capital authorized by vote on the 20th day of September, 1865, he became entitled to another 518 shares, making 1,036 shares in all; that after parting with some of this stock he remained owner of 734 shares, of the par value of $73,400, for which a certificate was issued to him dated June 7th, 1869; that on these shares there was actually paid in, $67 per share, leaving unpaid $33 per share, or a sum equal to $24,222. It also appears that said Benton, on the 22nd day of May, 1876, obtained a judgment against the company for $14,913.10, on which an execution had been returned nulla bona; that on the 10th day of April, 1876, he recovered another judgment in the sum of $13,088.33, upon which he had realized $2,835.50, leaving the remainder unsatisfied; also that he holds as owner thereof a note of the company in the sum of $2,500, due in December, 1875. It was admitted that the plaintiff's intestate acquired the bonds upon which the judgment was rendered by devise from her husband, who died July 25th, 1874. There were other judgments and other execution creditors of the company, claiming judgment against the defendant as stockholder.

The circuit court held the defendant liable to the execution creditors of the company in a sum double the amount of his stock, giving credit of course for the amount of stock paid up, and rendered judgment in favor of the plaintiff in the sum of $16,236.99. This judgment was, on appeal to the St. Louis court of appeals, reversed, with directions to assess judgment against him for the unpaid portion of his stock on the basis of single liability only, and to allow him to offset any matured indebtedness held by him against the company. From this judgment the plaintiff has appealed.

Whether the defendant is responsible as a stockholder under the double liability clause in force at different times in this State constitutes the principal question for decision.

1. STOCKHOLDERS: double liability.

I. It is difficult to perceive how he could be held answerable to this plaintiff under the double liability clause of the constitution of 1866. Although that constitution went into force July 4th, 1865, the double liability clause contained in it was not carried into effect by appropriate legislation until the passage of the act of March 19th, 1865. Afterward, and before the commencement of this proceeding, that clause was entirely repealed by the constitutional amendment of November 8th, 1870. This amendment declared that all laws, ordinances and provisions inconsistent with it should be forever abolished. The law-making power imposed this liability on the stockholder, and it assumed the right to relieve him from it, a right which cannot be questioned except by those creditors, who could successfully show that the obligation of their contracts had been impaired by the act of repeal. Clearly the plaintiff in this case cannot insist that the obligation of his contract has in any way been impaired by this change in the liability of the stockholder, because it originated anterior to the 19th day of March, 1866, at which date the double liability clause of the constitution of 1865 first took effect; the bonds upon which his judgment is founded, having been issued January 1st, 1866. They certainly could not have been issued upon the faith of the double liability clause of March 19th, 1866. And the fact that the act imposing that liability was soon afterward passed, and for a time furnished a better remedy for the enforcement and collection of the bonds would not have the effect of so connecting the double liability clause with the obligation of the bonds as to place that clause beyond the power of the law-making power to repeal it, as the contracts were entered into before it was passed. The protection against repeal of the clause is recognized only as to contracts made on the faith of the clause. Prov. Sav. Inst. v. Jackson Place Skating Rink, 52 Mo. 552; Hawthorne v. Calef, 2 Wall. 10. The court of appeals was, therefore, right in holding that if the defendant was subject at all to the double liability clause, it had to be by reason of some previous law or constitution.

II. It is claimed by counsel for plaintiff that the defendant was subject to the double liability clause of section 13, chapter 34, being “An act concerning corporations.” 1 R. S. 1855, p. 372. It is unnecessary to consider the language of this section. It purports to embrace “all corporations hereafter created by the legislature, unless otherwise specified in their charter,” and imposes upon the stockholder thereof the double liability clause as to “all debts contracted during his ownership” of the stock. The Bellefontaine Railway Company was created by the legislature after the enactment of this chapter; there was no provision in its charter inconsistent with the section imposing the double liability; and the bonds upon which plaintiff obtained judgment were issued while defendant was owner of the stock in controversy. If the defendant, as stockholder of this company, is not in some manner relieved from the effect of the double liability clause of the Corporation Act, then the plaintiff, as a holder of the bonds so issued, must have the right to invoke its advantages as a part of the obligation of his contract, notwithstanding any subsequent repeal.

2. _____. _____: railroad companies.

III. The court of appeals held that the defendant, as a stockholder in a railway company, was relieved from the double liability clause of the Corporation Act, by virtue of section 57 of the 39th chapter of the statute of 1855, containing “An act to authorize the formation of railroad associations and to regulate the same;” (R. S. 1855, p. 438, § 57;) which reads as follows: “All existing railroad corporations within this State, and such as now are or may be hereafter chartered, shall respectively have and possess all the powers and privileges contained in this act; and they shall be subject to all the duties, liabilities and provisions, not inconsistent with the provisions of their charter, contained in this act.” One of the “privileges” and “provisions” in this Railroad Act, extended by the 57th section to all existing and after-chartered railroad corporations is contained in the 10th section thereof and reads as follows: “Every stockholder of any company formed under this act, shall be individually liable to the creditors of such company, to an amount equal to the amount unpaid on the stock held by him, for all debts and liabilities of such company, until the whole amount of the capital stock so held by him shall have been paid to the company.” * * It will be observed that this clause assumes to fix the liability of the stockholder to creditors, and that such liability so fixed is measured by the unpaid amount of his capital stock. Of course this provision is inconsistent with the double liability clause in the general Corporation Act, and I think the court of appeals was right in holding that it established and was intended to establish the single liability clause with respect to stockholders in railroad corporations. It is true that the section on its face purports to apply to corporations “formed under this act,” and that the Bellefontaine Railway Company was not formed under the act. But we have seen that the 57th section extends the “privileges” and provisions of the act to all existing railroads in the State, and such as should thereafter “be chartered.” This was a subsequently chartered railroad, and if it is a “railroad corporation” within the meaning of the 57th section, then its stockholders are protected by the 10th section, which imposes the single instead of the double liability on such corporations.

3. THE BELLEFONTAINESTREET RAILWAY COMPANY.

IV. The court of appeals held that a horse or street railroad, like the one of which the defendant is a stockholder, was a railroad corporation within the meaning of the 57th section of the Railroad Act of 1855. Not deeming it proper to express an opinion outside of the case before us, it is sufficient to say that in our opinion the ruling was correct in its application to the Bellefontaine Railway Company. The precise question is not whether a horse or street railroad company could have organized and become a legal corporation under the general railroad act of 1855, but whether the 57th section of that act was broad enough to include what is known as a horse or street railroad under the general term of “existing railroad corporations,” or such as should thereafter be “chartered.”

It will hardly be claimed that all the railroads existing in the State in 1855 with...