Demark v. Barons

• Citation: 52 Kan. 779,35 P. 798
• Parties: M. v. B. VAN DEMARK et al. v. F. E. BARONS
• Decision Date: 09 February 1894
• Court: United States State Supreme Court of Kansas

35 P. 798

52 Kan. 779

M. v. B. VAN DEMARK et al. v. F. E. BARONS

Supreme Court of Kansas

February 9, 1894

Editorial Note:

This Pagination of this case accurately reflects the pagination of the original published, though it may appears out of sequence.

Error from Cloud District Court.

ON the 28th day of September, 1885, before A. B. Chaffee, a justice of the peace of Cloud county, in this state, F. E. Barons recovered a judgment of $ 135.08, and $ 32.03 costs, against the Clyde Milling Company, of Cloud county, for rent of a certain strip of land, upon a written lease, executed the 1st of August, 1884. The rent sued for was for the months of May and June, 1885, at $ 75 per month. On the 17th day of May 1889, the execution was issued by the justice of the peace upon the judgment against the milling company, and returned unsatisfied for want of property on which to levy. On the 3d day of June, 1889, F. E. Barons filed his motion before Samuel Demers, a justice of the peace of the city of Concordia, in Cloud county, to obtain an execution against M V. B. Van Demark and C. W. Van Demark, alleging that such persons were, on and after the 1st day of August, 1884 stockholders of the Clyde Milling Company to the amount of $ 5,000 each in paid-up stock. All of this was sold and transferred in good faith to H. B. Salls, F. W. Frazius, and H. Dobbs, before the 1st of May, 1885. The corporation continued to do business after that time until March 17 1887, when the property was destroyed by fire. When the Van Demarks sold and transferred their stock, their certificates were surrendered and canceled, and new certificates of stock were issued to the purchasers, and proper entries made thereof upon the stock books of the milling company. At the time the action was commenced by F. E. Barons v. The Clyde Milling Company, the Van Demarks were not stockholders in the corporation; neither were they stockholders at the time the judgment was rendered, nor at the time the application was made before the justice of the peace for execution to issue against them as stockholders. On the 7th day of June, 1889, the justice sustained the application of F. E. Barons, and directed an execution to issue. The Van Demarks excepted to the order, and prosecuted proceedings in error to the district court of Cloud county. On the 30th of April, 1890, the district court of the county affirmed the order and judgment of the justice of the peace. The Van Demarks excepted, and bring the case here.

Judgment reversed and cause remanded.

C. W. Van Demark, and Theo. Laing, for plaintiffs in error.

J. W. Sheafor, for defendant in error.

HORTON, C. J., JOHNSTON, J. concurring, ALLEN, J., concurring specially.

OPINION

HORTON, C. J.:

The general rule is, that shares of stock of a corporation, and may be transferred like any other property, unless the transfer is restrained by the charter or articles of association, and that a bona fide transfer terminates the liability of the transferrer either to the company or to creditors. (Thomp. Liab. Stockh., § 210, and cases cited; Mor. Priv. Corp., § 888.) The decisions of the courts upon this question have been exceedingly conflicting, but the rule announced is in accord with the previous intimations of this court. (Valley Bank v. Sewing Society, 28 Kan. 423.) In Plumb v. Bank of Enterprise, 48 Kan. 484, 29 P. 699, it was observed:

"The registration of stock required by statute is in part for the benefit of the public, and to provide creditors with a record of those who are individually liable in case the corporation becomes unable to meet its obligations. . . . The general rule is, that the books of the corporation furnish evidence as to what persons are entitled to the rights and privileges of stockholders, and to whom creditors may look for payment in the event of the insolvency of the corporation." (See, also, Bank v. Wulfekuhler, 19 Kan. 60; Hentig v. James, 22 id. 326.)

This rule also seems to be in accord with the express legislative will. Paragraph 1193, Gen. Stat. of 1889, reads:

"The clerk or other officer having charge of the books of any corporation, on demand of the plaintiff in any execution against the corporation, his agent, or attorney, shall furnish such plaintiff, his agent or attorney with the names and places of residence of the stockholders [so far as known], and the amount of stock held by each, as shown by the books of the corporation."

The constitution of our state ordains that

"Dues from corporations shall be secured by individual liability of the 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 liabilities shall not apply to railroad corporations, nor corporations for religious or charitable purposes."

The provision of the statute permitting an execution to be issued provides that the stockholder is liable to "an extent equal in amount to the amount of stock by him or her owned" etc. (Gen. Stat. of 1889, P 1192.) The true meaning of the constitution and statute is manifest. Each stockholder is liable for the dues of the corporation to an additional amount equal to the stock owned by him or her that is, owned at the time the...