Bell v. Farwell

• Decision Date: 21 December 1898
• Citation: 52 N.E. 346,176 Ill. 489
• Parties: BELL v. FARWELL.
• Court: Illinois Supreme Court

176 Ill. 489

52 N.E. 346

BELL

v.FARWELL.

Supreme Court of Illinois.

Dec. 21, 1898.

Appeal from appellate court, First district.

Action by James Bell against Charles B. Farwell. Judgment for defendant was affirmed by the appellate court, and plaintiff brings error. Reversed.

Cratty Bros., Gray, MacLaren, Jarvis & Cleveland, for plaintiff in error.

Tenney, McConnell & Coffeen (William E. Church, of counsel), for defendant in error.

This was an action of assumpsit brought by James Bell against Charles B. Farwell, a stockholder in the Abilene Central Land Company, a Kansas corporation, to recover the amount of defendant's alleged liability as such stockholder, to be applied in satisfaction of a balance remaining due on a judgment recovered by plaintiff against the corporation in one of the courts of Kansas. The declaration contained two counts. In the first count it was averred that on the 26th day of February, 1890, and prior thereto, at the county of Dickinson, in the state of Kansas, the Abilene Central Land Company was a corporation duly organized and doing business under and by virtue of a statute of the state of Kansas; that the said company was not a railroad nor a religious nor a charitable corporation, nor a corporation organized for such purposes; that at the time of the organization of the corporation, and at the time the liability was incurred, there was in full force and effect in the state of Kansas a provision in the state constitution as follows: ‘Dues from corporations shall be secured by individual liability of stockholders to an additional amount equal to the stock owned by each stockholder, and such other means as shall be provided by law; but such individual liability shall not apply to railway corporations nor corporations for religious or charitable purposes;’ that there was also in force a certain statute, as follows: ‘If any execution shall have been issued against the property of effects of the corporation except a railway or a religious or charitable corporation, and there cannot be found any property whereon to levy such execution, then execution may be issued against any of the stockholders to an extent equal in amount to the amount of stock by him or her owned, together with any amount unpaid thereon; but no execution shall issue against any stockholder except upon an order of the court in which the action, suit or proceedings shall have been brought or instituted, made upon motion in open court, after reasonable notice in writing to the person or persons sought to be charged, and upon such motion such court may order execution to issue accordingly; or the plaintiff in the execution may proceed by action to charge the stockholders wihh the amount of his judgment.’ It is also alleged that the defendant was a stockholder in said land company, and was the owner of 10 shares of the capital stock, of the par value of $500 each; that he had paid therefor the sum of $5,000; that on the 26th day of February, 1890, at a term of the district court of Dickinson county, Kan., a judgment was rendered in favor of plaintiff against the Abilene Central Land Company for $39,755; that execution was issued on said judgment, and returned, ‘No property found;’ that there now remains due on the said judgment $27,856.77, by means whereof defendant became liable to pay plaintiff the sum of $5,000, etc. The second count contains substantially the same allegations as the first, except no reference is made to the section of the statute set out in the first; and, after setting out the section of the constitution of Kansas found in the first count, the declaration proceeds as follows: ‘That during all of said time there was in full force and effect in said state of Kansas a certain statute, in words and figures as follows: ‘A corporation is dissolved, first, by the expiration of the time limited in its charter; second, by a judgment of dissolution rendered by a court of competent jurisdiction; but any corporation shall be deemed to be dissolved for the purpose of enabilng any creditor of such corporation to prosecute suit against the stockholders thereof to enforce their individual liability, if it be shown that such corporation has suspended business for more than one year, or that any corporation not so suspended from business shall, for three months after the passage of this act, fail to resume its usual and ordinary business.’ Gen. St. 1889, par. 1200. And further: ‘If any corporation created under this or any general statute of this state, except railway or charitable or religious corporations, be dissolvedleaving debts unpaid, suits may be brought against any person or persons who are stockholders at the time of such dissolution, without joining the corporation in such suit; and if judgment be rendered and execution satisfied, the defendant or defendants may sue all who were stockholders at the time of the dissolution for the recovery of the portion of such debt for which they were liable, and the execution upon the judgment shall direct the collection to be made from the property of each stockholder, respectively; and if any number of stockholders [defendants in the case] shall not have property enough to satisfy his or their portion of the execution, then the amount of the deficiency shall be divided equally among all the remaining stockholders and collection made accordingly, deducting from the amount a sum in proportion to the amount of stock owned by the plaintiff at the time the corporation dissolved.’ Id. par. 1204. And further: ‘If any stockholder pay more than his due proportion of any debt of the corporation he may compel contributions from the other stockholders by action.’ Id. par. 1205. And further: ‘No stockholder shall be liable to pay debts of the corporation beyond the amount due on his stock, and an additional amount equal to the stock owned by him.’ Id. par. 1206. That the supreme court of said state of Kansas, being the court of last resort of said state, have passed upon and construed the foregoing provisions of said statute, holding that thereunder each stockholder in corporations organized under said statute is severally and individually liable to each creditor of such corporation in an additional amount equal to the amount of his or her stock, to be recovered in an action brought by such creditor directly against such stockholder, without joining said corporation or other stockholders therein as defendants to such action.' That said defendant was a stockholder in the company from its organization until its dissolution. That judgment was rendered, and execution returned unsatisfied, and the debt unpaid, as alleged in the first court. That prior to the 1st day of July, 1891, said Abilene Central Land Company suspended business, and thence hitherto has not engaged in or done any business, by means whereof it was dissolved before the commencement of this suit. To the declaration the defendant interposed a general demurrer, which the court sustained; and, plaintiff electing to stand by his declaration, judgment was entered against him for costs.

CRAIG, J. (after stating the facts).

Ti is first insisted in the argument that the provision of the constitution of Kansas set out in the declaration is self-executing, and intended to take effect without any legislation. We do not concur in that view. It is apparent from the reading of the provision itself that legislation was contemplated in order that it might be properly enforced; otherwise the last clause, ‘and such other means as shall be provided by law’ (article 12, § 2) would never have been incorporated in it. Moreover, this provision of the constitution of Kansas was involved in Tuttle v. Bank, 161 Ill. 497, 44 N. E. 984, and upon careful consideration it was expressly held that it was not self-executing. The same doctrine was announced in Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, and Bank v. Lawrence (Mich.) 76 N. W. 105, where the same provision of the constitution of Kansas was involved.

The right, however, of the appellant to maintain this action, does not depend upon the disposition of this question. As has been seen, in the second count of the declaration it is averred that the corporation in which the defendant was a stockholder had suspended business for more than one year. It is then averred that there was in full force in the state of Kansas a statute which provides that ‘any corporation shall be deemed to be dissolved for the purpose of enabling any creditor of such corporation to prosecute suit against the stockholders thereof to enforce their individual liability, if it be shown that such corporation has suspended business for more than one year.’ It is also averred that the statute further provides: ‘If any corporation created under this or any general statute of this state, except railway or charitable or religious corporations, be dissolved leaving debts unpaid, suits may be brought against any person or persons who are stockholders at the time of such dissolution, without joining the corporation in such suit.’ It was further averred in the declaration ‘that the supreme court of said state of Kansas, being the court of last resort of said state, have passed upon and construed the foregoing provisions of said statute, holding that thereunder each stockholder in corporations organized under said statute is severally and individually liable to each creditor of such corporation in an additional amount equal to the amount of his or her stock, to be recovered in an action brought by such creditor directly against such stockholder, without joining said corporation or other stockholders therein as defendants to such action.’ The facts set up in the declaration are admitted by the demurrer, and the question presented is, admitting the facts as pleaded to be true, is the appellant entitled to maintain his action against the defendant to enforce his liability as a stockholder in the corporation? Where ...