Booth v. Campbell

• Citation: 37 Md. 522
• Parties: WASHINGTON BOOTH v. ROBERT CAMPBELL, JR., and N. A. Ramsburg, Trading as Campbell & Ramsburg.
• Decision Date: 21 February 1873
• Court: Court of Appeals of Maryland

37 Md. 522

WASHINGTON BOOTH v. ROBERT CAMPBELL, JR., and N. A. Ramsburg, Trading as Campbell & Ramsburg.

Court of Appeals of Maryland

February 21, 1873

Appeal from the Superior Court of Baltimore City.

The facts are stated in the opinion of the court, which also sufficiently sets forth the exceptions taken at the trial below.

The cause was argued before BARTOL, C.J., STEWART, BOWIE, BRENT and ROBINSON, JJ.

George C. Maund and George William Brown for the appellant.

In this case all of the capital stock was paid in, after suit, but before trial. Was not that fact a bar to the further continuance of the action? Norris v Johnson, 34 Md. 489, pointedly abstains from deciding this question, and leaves it open.

By the plain intent and policy of the Act of 1868, the individual liability of the stockholder is terminated by payment of the entire capital stock at any time before the trial of the suit against him.

The debts sued upon in this case were contracted after the payment of the capital stock fixed by the original charter. Such payment forever terminated the liability of the stockholder, and such liability cannot arise as to debts subsequently contracted by the company, even though the capital stock be increased, and such increase of stock be unpaid, because the individual liability of the stockholder rests entirely upon statutory enactment, and there is no clause of the statute providing for such liability after the stock fixed by the original charter has all been paid. Smith on Stat. Const. secs. 714-716.

John P. Poe, for the appellees.

The ruling of the court, excluding the certificate, dated August 14th, 1872, was correct.

The claim of the appellees had arisen in the summer and fall of 1871. At this time the appellant was a stockholder to the amount of $5,000, and the capital stock had not been paid up. By the provisions of the law, the right of action of the appellees against the appellant as such stockholder became then complete and perfect. This much is not denied, and if the suit had been tried at the January term or May term, 1872, instead of being continued to the September term, 1872, when it was tried, it will not be disputed that the appellees would have been entitled to recover. But the proposition contended for by the appellant is, that this perfect, complete and absolute right of action in November, 1871, and which so continued until the 14th of August, 1872, was on that day destroyed by the recording of the certificate dated on that day, or in other words, that the recording of such certificate operated as a release of the valid, pre-existing legal right of action of the appellees.

The appellees, on the other hand, maintain that the liability of the appellant became "determined and irrevocable" by the contracting of the debt in question by the corporation, "while the appellant was a stockholder and before the capital stock was fully paid up;" and that the subsequent payment of the whole of the capital stock, which still leaves the company largely insolvent, will not have the effect of putting an end to a previously valid claim against the appellant, and of remitting the appellees to an action against the company.

This question is res adjudicata in this court. Norris v. Wrenschall, 34 Md. 498, 500; Hager v. Cleveland, 36 Md. 476; Code, Art. 26, sec. 59; Norris v. Johnson, 34 Md. 489, 491; Abbott v. Aspinwall, 26 Barb. 207; Moss v. Oakley, 2 Hill, 265; Aspinwall v. Torrance, 1 Lansing, 383.

Even if such antecedent liability could in some cases be released by the subsequent payment of the whole of the capital stock, yet the case of the appellant is not brought within such construction of the Code, because the capital stock was not paid in as required by law. One-half of the increase of $23,000, viz., $11,500, was not paid in within one year from the 28th of April, 1871. This is fatal of itself to the defense of the appellant.

The statutory liability could at most only be discharged by compliance with the statutory requirements, which was not done. Art. 26, sec. 59.

By the terms of Article 26, sec. 69, stockholders in corporations, whose capital is increased as therein provided, continue subject to the liability declared in sec. 59.

Brent J., delivered the opinion of the court.

This case involves the individual liability of the appellant, as a stockholder in the Chesapeake Steamboat Company, a corporation formed under the general corporation law of this State, (1868, ch. 471) for a debt contracted by the company before the whole amount of its capital stock was paid in (sec. 59). All errors in pleading have been waived by an agreement between the parties, and the case is to be tried, upon the facts offered in evidence, without regard to the state of pleadings.

This company was incorporated on the 12th of May, 1868, with a capital of $22,000, and the appellant on the 28th of April, 1870, became a stockholder to the extent of $1,000. On the 24th of May, 1870, a certificate was filed in the office of the Clerk of the Superior Court of Baltimore City, by which it appears that the whole amount of this capital stock had been subscribed and paid for. On the 11th of April, 1871, the stockholders determined to increase the capital stock, and it was accordingly increased to $45,000, and on the 27th of May following a certificate to that effect was duly recorded. Of the increased stock the appellant took $4,000, making the whole amount of stock held by him $5,000, for which he has paid in full. The three promissory notes, which are the causes of action, are dated, one on the 14th of July, and the other two on the 14th of September, 1871, and the suit was brought on the 10th of November of the same year.

After these facts had been offered at the trial, the appellant offered to give in evidence a certificate, duly executed and recorded, showing that the whole amount of the increased capital stock of the company had also been subscribed, and paid in as follows: $8,500 on the 28th of April, 1871, $1,800 within one year from that date, and the balance, $12,700 within thirty days before the 14th of August, 1872, the date of the certificate. This certificate was...