Chilberg v. Siebenbaum

• Decision Date: 23 February 1906
• Citation: 84 P. 598,41 Wash. 663
• Parties: CHILBERG v. SILEBENBAUM et al.
• Court: Washington Supreme Court

84 P. 598

41 Wash. 663

CHILBERG v. SILEBENBAUM et al.

Supreme Court of Washington

February 23, 1906

Appeal from Superior Court, Jefferson County; George C. Hatch Judge.

Action by J. E. Chilberg against John Siebenbaum and others. From a judgment for defendants, plaintiff appeals. Affirmed.

G. M Emory and F. R. Conway, for appellant.

A. W Buddress, for respondents.

RUDKIN, J.

This action was brought by a judgment creditor of the Copper River Transportation & Mining Company, an insolvent corporation, to enforce the stock subscription liability of certain of its stockholders. Several defenses were interposed by answer, but only one of these is before us for consideration on this appeal. The answer averred, in substance, that the Copper River Transportation & Mining Company was organized on the 26th day of November, 1897; that prior to the 1st day of April, 1898, said company disposed of all of its property and assets, became insolvent, and ceased to do business, and since said 1st day of April, 1898, said company has transacted no business of any kind, has had no property or assets, and has been notoriously insolvent and defunct; that a receiver was appointed for said company, as an insolvent corporation, at the suit of the plaintiff's assignor and one Barneson, on the 28th day of October, 1898, and, on the 24th day of October, 1900, the receiver was discharged for the reason that there was no longer need for a receivership there being no property or assets of any kind belonging to said company; that this action was commenced on the 24th day of October, 1904, on a judgment theretofore recovered on certain demand notes executed by said company, under date of March 23, 1898; and that by reason of the foregoing facts the action was not commenced within the time limited by law. The court found the facts substantially as alleged in this affirmative defense, found that the action was not commenced within the time limited by law, and entered a judgment of dismissal. From that judgment the plaintiff has appealed.

From the foregoing statement it will appear that the only question presented on this appeal is, when does the right of action in favor of the creditors of an insolvent corporation, as against its stockholders, to enforce the stock subscription liability, accrue? We are of opinion that such right of action accrues, at least, as soon as the corporation disposes of all of its property and assets, ceases to be a going concern, and becomes notoriously insolvent, and that is as far as we are required to go in this case. In McKay v. Elwood, 12 Wash. 579, 41 P. 919, the court said: 'We think, also, that from the time of an assignment by a corporation, the obligation of each stockholder to make payment of the amount remaining unpaid on his subscription to stock, or so much thereof as might be necessary to satisfy the indebtedness of the corporation, must be treated as a debt that is presently due, because, after the assignment, no power remains in the directors to make a call, and it would be contrary to all considerations of right to permit the stockholder, thereby, to avoid making payment for his stock as against creditors of the corporation.' See, also, Cook on Corporations (5th Ed.) 200; 26 Am. & Eng. Ency. of Law (2d Ed.) 1049; Terry v. Anderson, 95 U.S. 628, 24 L.Ed. 365; Hatch v. Dana, 101 U.S. 205, 25 L.Ed. 885; West v. Bank, 66 Kan. 524, 72 P. 252, 63 L. R. A. 137, 97 Am. St. Rep. 385; Hodges & Wilson v. Silver Hill Mining Co., 9 Or. 200; Swearingen v. Dairy Co., 198 Pa. 68, 47 A. 941, 53 L. R. A. 471; Hardware Co. v. Milling Co., 13 Utah, 423, 45 P. 200; Franklin Sav. Bank v. Bridges (Pa.) 8 Atl. 611. In Bennett v. Thorne, 36 Wash. 253, 78 P. 936, 68 L. R. A. 113, this court held that a right of action accrued in favor of the receiver of an insolvent banking corporation to recover the superadded or statutory liability of the stockholders upon the declared insolvency of the bank, and that the statute of limitation commenced to run from that date. Unless there is a distinction between the right of action to enforce the statutory liability of stockholders and the right of action to enforce the stock subscription liability, that case is controlling here.

Counsel for appellant claim there is a distinction, and that such distinction was recognized by this court in Bennett v Thorne. In support of this contention, counsel quote from the opinion in that case as follows: 'As we have above indicated, it is the respondent's contention that the statute of limitations did not begin to run against the liability until the date of the decree ordering the assessment, and a number of cases are cited in support thereof. The cases cited, however, with one exception, are not in point. They relate to the stock subscription liability, or to national bank cases, both of which are governed by entirely different principles from those controlling the liability created by the Constitution. The necessity of a call and assessment on unpaid stock subscription is based solely on the express contract of the parties. Scovill v. Thayer, 105 U.S. 143, 26 L.Ed. 968; Terry v. Anderson, 95 U.S. 628, 24 L.Ed. 365. The contract of the subscriber to the stock is that he will pay upon a demand by the proper authorities of the corporation. And it has been invariably held that, as to the stock subscription liability, a call or demand must precede the suit.' The rule there stated is, no doubt, correct, but the necessity for a call or demand is not as general as might be inferred from the language used. Section 4262, Ballinger's Ann. Codes & St., provides as follows: 'The stockholders of any corporation formed under this chapter may, in the by-laws of the company, prescribe the times, manner, and amounts in which payments of the sums subscribed by them, respectively, shall be made; but in case the same shall not be so prescribed, the trustees shall have the power to demand and call in from the stockholders the sums by them subscribed, at such time and in such manner, payments or installments, as they may deem proper.' And as between the corporation and its stockholders, so long as the corporation is solvent and a going concern, this statute will doubtless control. But when the corporation disposes of all its property, ceases to be a going concern, and becomes insolvent, the whole situation is changed; the liability of the stockholder becomes fixed, and the unpaid stock subscription becomes immediately due. In Adamant Manufacturing Co. v. Wallace, 16 Wash. 614, ...