Cottrell v. Manlove

• Decision Date: 10 July 1897
• Docket Number: 9673
• Parties: J. F. COTTRELL et al. v. O. MANLOVE et al
• Court: Kansas Supreme Court

49 P. 519

58 Kan. 405

J. F. COTTRELL et al. v. O. MANLOVE et al

No. 9673

Supreme Court of Kansas

July 10, 1897

Decided January, 1897.

Error from Miami District Court. Hon. John T. Burris, Judge.

Judgment reversed.

R. W Blue, J. D. McCleverty, Sheldon & Sheldon, J. S. Beeson and E. L. Gates, for plaintiffs in error.

Snoddy & Snoddy, for defendants in error.

OPINION

DOSTER C. J.

The Kansas Commercial Mutual Fire Insurance Company was a corporation organized in 1882 under chapter 111 of the Laws of 1875. By chapter 132, Laws of 1885, the act under which the company did business was repealed; but companies incorporated under the earlier law were allowed until December 31, 1885, to reorganize in compliance with the later act. This company did not reorganize under the new law, but, on December 1, 1885, at a meeting of its members or stockholders, it resolved to cease business and close up its affairs. On December 23, 1885, the board of directors, in pursuance of such resolution of the members, notified all policy-holders that neither they nor the company would be liable for losses occurring after the thirty-first day of that month. Immediate steps in the process of closing the company's business were taken and continued, including among other things the appointment of a receiver. In July, 1886, during the period of liquidation of the company's affairs, the defendants in error, Manlove and Harkness, holding one of the company's policies, met with a loss; and, finally, on December 26, 1892, after protracted litigation, recovered judgment against the company. April 26, 1893, execution was issued on this judgment, and thereafter was returned unsatisfied. June 14, 1893, motions were made under the statute for leave to issue execution against the members, as stockholders of the company, for the collection of the judgment against it; which motions were allowed; and from the orders allowing them this proceeding in error was taken.

Under the above state of facts, the Statute of Limitations is invoked by the stockholders, the plaintiffs in error, in bar of the proceedings against them. Two remedies against stockholders of a corporation are afforded by the statute to its creditors. They are contained in sections 32 and 44 of the chapter on Corporations, General Statutes of 1889 (PP 1192, 1204).

"SEC. 32. If any execution shall have been issued against the property or effects of a corporation, except a railway or a religious or a 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 other proceeding 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 with the amount of his judgment."

"SEC. 44. If any corporation, created under this, or any general statute in this State, except railway or charitable or religious corporations, be dissolved, leaving debts unpaid, suits may be brought against any person or persons who were 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 dissolution, for the recovery of the portion of such debt for which they were liable, and the execution...