Commercial Nat. Bank of Omaha v. Gibson

• Decision Date: 04 October 1893
• Citation: 37 Neb. 750,56 N.W. 616
• Parties: COMMERCIAL NAT. BANK OF OMAHA ET AL. v. GIBSON ET AL.
• Court: Nebraska Supreme Court

37 Neb. 750

56 N.W. 616

COMMERCIAL NAT. BANK OF OMAHA ET AL.

v.GIBSON ET AL.

Supreme Court of Nebraska.

Oct. 4, 1893.

Syllabus by the Court.

1. After the issues have been fully made up, it rests within the sound judicial discretion of the trial judge either to permit amendments of the pleadings in furtherance of justice, and on such terms as may be proper, or absolutely to refuse the right of amendment.

2. Under section 4, art. 11, of the constitution of Nebraska, the original subscribers for stock of a corporation or joint–stock association are liable to the creditors of such corporation or association for the amount unpaid on said subscription, and such liability shall follow the stock without releasing such subscriber.

3. The constitutional requirements that the exact amount justly due shall be first ascertained, and that the corporate property shall have been exhausted, before enforcing individual liability for unpaid subscription for stock, are sufficiently met by the rendition of a judgment and the return of an execution nulla bona against the corporation whose stockholders are sought to be held liable to its creditors.

Commissioners' decision. Appeal from district court, Douglas county; E. Wakeley, Judge.

Action in equity by the Commercial National Bank of Omaha and another against Edward Ainscow, John H. Gibson, and others. From the decree rendered, defendant Gibson and others appeal. Affirmed.Lake, Hamilton & Maxwell, for appellant C. D. Layton.

A. S. Churchill, for appellant Egbert E. French.

Montgomery & Montgomery, for appellees Commercial Nat. Bank and L. C. Gillespie.

Gregory, Day & Day, for appellee Ainscow.

RYAN, C.

On the 31st day of October, 1888, the Commercial National Bank of Omaha and L. C. Gillespie, as plaintiffs, filed in the district court of Douglas county, Neb., their petition, in which were made defendants Edward Ainscow and the Omaha Varnish Company of Omaha, with various other parties whom it alleged were or had been stockholders of the said varnish company. It was alleged in this petition that the articles of incorporation of the Omaha Varnish Company, defendant, were duly adopted, subscribed, and acknowledged on the 20th day of April, 1887, and that it was provided in said articles that said corporation should commence on the 18th day of April, 1887, and terminate 100 years from that date; that said company commenced doing business soon thereafter, and in the course of its business became indebted to the Commercial National Bank on account of money loaned, and to the plaintiff L. C. Gillespie on account of goods by him sold to said company; that on August 4, 1888, the said plaintiff the Commercial National Bank recovered a judgment against said Omaha Varnish Company for the sum of $2,179.72, and that L. C. Gillespie recovered judgment in the sum of $1,882.02 on the same date, which judgments, by their terms, drew interest at 10 per cent. per annum from May 14, 1888; and that no part of either of said judgments had been paid. The petition further alleged that on the 7th day of August, 1888, executions were duly issued upon said judgments and delivered to the sheriff of said Douglas county, and by him, on the 19th day of October, 1888, were returned unsatisfied for want of goods, chattels, lands, or tenements of the said defendant the Omaha Varnish Company whereon to levy, the said sheriff, after diligent search, having been unable to find any property of the said varnish company; and that the Omaha Varnish Company of Omaha, Neb., is insolvent, and has no property out of which the said plaintiffs can make their judgments aforesaid. The petition further alleged that it was provided by the articles of incorporation of the Omaha Varnish Company that the capital stock thereof should be $25,000, divided into shares of $100 each, which should be subscribed and paid for in installments, the first installment to be 15 per cent., and the subsequent ones as might be required by order of the board of directors. The petition then in detail recited the subscription for or acquisition of stock by transfer of each of the 16 defendants described as stockholders of and therefore associated with the said Omaha Varnish Company as defendants. The prayer of the petition was that each of the defendants then or theretofore holding stock in the Omaha Varnish Company should be held liable for the unpaid 85 per cent. due upon each of the respective shares of stock by them held, and that such defendants, as stockholders, be required to pay Edward Ainscow (a codefendant, who, by reason of having a claim against said company and refusing to join in said petition, was made a defendant) the amount which was due him from said varnish company, and that judgment be rendered accordingly. Several of the defendants made default, and judgment was thereupon rendered against them as prayed.

On the 13th day of December, 1888, Egbert E. French, one of the defendants, answered, denying any knowledge as to whether there had been judgments rendered against the Omaha Varnish Company in favor of the plaintiffs, or that execution had issued on such alleged judgments. The answer of French admitted that he was at one time a stockholder of the Omaha Varnish Company, but alleged that on October 17, 1887, he had sold and transferred unto William J. Paul all the stock and interest he ever had in said association, since which time he had had no connection or interest therein; that at the time of transferring said stock said corporation was solvent, and abundantly able to pay all its debts and liabilities. On the 9th day of January, 1889, C. D. Layton, one of the defendants, answered, admitting that there had been a formal transfer to him of stock in the Omaha Varnish Company by one George W. Bodine, but alleged that no registry of said transfer was ever made by said company, and denying that such registry had by him ever been authorized to be made, and that upon a date, which he unfortunately left blank, he had transferred his certificates of stock to one John H. Rikerd. This defendant also denied that certificates of stock alleged to have been issued to him were so issued. Further answering, this defendant alleged that no part of said pretended indebtedness or liability of said varnish company to said plaintiffs, to said codefendant Ainscow, or to either of them, had been incurred by said company while this defendant formally held the aforesaid certificates of stock therein, as hereinbefore admitted; and this defendant further alleged that at the time of transferring said certificates of stock, as aforesaid, to said Rikerd, the said Omaha Varnish Company was solvent, and abundantly able to pay all its debts and liabilities. The answer closed with a denial of every allegation in the petition not before specifically admitted or modified. The plaintiffs replied to the answer of defendant Layton by a denial of the several averments thereof. Thereupon the reply alleged that the Omaha Varnish Company never had any notice of the alleged transfer of stock certificates in said corporation by the said defendant Layton to the said John H. Rikerd, and that no such transfer was ever registered by said corporation, and that neither plaintiffs nor any other creditor of said Omaha Varnish Company had any notice of such alleged transfer. The reply admitted that the indebtedness of the Omaha Varnish Company to plaintiffs and to defendant Ainscow had been incurred before the transfer of the stock of Bodine to the defendant Layton, and alleged that said varnish company was then and continued liable for all of it while the defendant Layton was a stockholder in said company. The reply further denied that the Omaha Varnish Company had been solvent or abundantly able to pay all its indebtedness or liabilities during any of the time since defendant Layton had become a stockholder in said corporation, except as such payment might be made by calling upon the individual stockholders in said varnish company for payment of their unpaid subscriptions. In reply to the answer of defendant French, the plaintiffs denied the transfer alleged in said answer, and averred that, if said defendant French entered into any arrangement with the defendant William J. Paul for the transfer of said stock of said company, no notice that such arrangement had been made for said transfer had been given; and that there had been no transfer of said stock; and that neither plaintiffs nor any other creditor of said Omaha Varnish Company had any notice of any arrangement for or attempted transfer of stock by the said French to said Paul; and that there had been no transfer of said French's certificates of stock upon the books of said corporation; and that no request for such transfer had ever been made by either said French or Paul. This reply closed with the same denial as to the solvency of the varnish company as is found in the reply to the answer of Layton. These replies were filed in March of 1889. Edward Ainscow, who by the petition had been alleged to be a holder of a claim against the Omaha Varnish Company, answered, admitting the existence of the indebtedness as charged from the Omaha Varnish Company to him, and alleging that said indebtedness was still due. This defendant further answered as follows: “And this defendant, without relinquishing or waiving any of his rights against the makers of said notes in question, makes such tender, and such tender only, of the notes in question, as will enable the same to be equitably enforced against the defendant the Omaha Varnish Company and its stockholders who have been made defendants.” The defendant Ainscow thereupon prayed that his claim might be considered in so far only as it should affect the liability of the defendant the Omaha Varnish Company and the defendants as stockholders of the same, and that said Ainscow have and obtain such order and decree for the payment of the same as to the court should seem meet...