Dickens v. Radford-willis Southern Ry. Co

• Decision Date: 20 September 1917
• Citation: 93 S.E. 625
• Parties: DICKENS et al. v. RADFORD-WILLIS SOUTHERN RY. CO.
• Court: Virginia Supreme Court

93 S.E. 625

(121 Va. 353)

DICKENS et al.

v.RADFORD-WILLIS SOUTHERN RY. CO.

Supreme Court of Appeals of Virginia.

Sept. 20, 1917.

Sims, J., dissenting.

Appeal from Corporation Court of Radford.

Suit by S. T. Dickens and others against the Radford-Willis Southern Railway Company. From a decree dismissing the bill on demurrer, plaintiffs appeal. Affirmed.

Harless & Colhoun, of Christianburg, and H. C. Tyler, of East Radford, for appellants.

Jordan & Roop, of East Radford, and W. W. Goldsmith, of Radford, for appellee.

WHITTLE, P. Appellee, the Radford-Willis Southern Railway Company, pursuant to section 1103a of the Code, was proceeding by separate motions on the common-law side of the corporation court of the city of Radford to recover from Dickens and other stockholders the amount of their respective subscriptions to the capital stock of the company, when appellants obtained a temporary injunction restraining the company from the prosecution of the motions at law. The bill likewise contained the prayer for cancella tion and rescission of the contracts of subscription for shares of stock on the ground that they were procured by false and fraudulent representations of the company and its officers and agents. From a decree dismissing the bill on demurrer this appeal was granted.

The statute (now section 1103a of the Code) first appeared in the Acts of 1895-96, p. 25, and was amended by Acts 1897-98, p. 16. It is matter of local history that this legislation was the product of the "boom" of 1890, which swept over the state at that period leaving financial ruin in its trail. The legislation was distinctly intended as a relief measure to subscribers to stock in these boom corporations, which sprang up in almost every section of the state.

We shall first consider the objection raised to the constitutionality of section 1103a on the ground of alleged insufficiency of the title under section 52 of the Constitution.

The title reads:

"Procedure by which unpaid subscriptions to joint-stock companies may be recovered by said companies, their creditors, receivers, trustees, assignees, or any other person."

And the act is as follows:

"All suits or motions for the recovery of unpaid subscriptions to the stock of any joint-stock company shall be brought in the courts of common law of this commonwealth in the county or corporation where the defendant resides, if he be a resident of this state, or in the case of a joint or partnership subscription then in the county or corporation in this state in which either of the joint subscribers or any member of the partnership subscribing shall reside; and said courts shall have exclusive jurisdiction to hear and determine all questions involving the validity of such subscriptions, but nothing herein contained shall be construed to deprive courts of chancery of their jurisdiction to settle and wind up the-affairs of insolvent corporations or to make assessments on unpaid stock subscriptions.

"In all cases where it is necessary to resort to a court of equity fox the purposes aforesaid the courts shall direct the trustee, assignee, or receiver, as the case may be, to sue at law when necessary to recover any call or assessment, and the defendant shall be entitled to a jury where the amount involved exceeds $20, and said suits shall be governed in all respects by the provisions of this act. All pleas, defenses, and evidence which would be admissible if the company were solvent shall be equally admissible and shall have the same effect in law in any action brought after the insolvency of any such company, except where the defense relied upon is an agreement on the part of the corporation not to assess the face value of the stock subscribed and such agreement was unknown to the creditor at the date of his contract; and this act shall apply to all suits heretofore or hereafter brought where no final judgment or decree on the merits has been rendered: Provided, that where chancery suits are pending at the time of the passage of this act, in which it is sought to recover unpaid stock subscriptions, the statute of limitations shall not run as to any alleged subscription during the time which shall have elapsed between the institution of such suit and one month after an order shall have been entered authorizing a common-law action as provided in this act for the recovery of such subscription."

The objection, if we apprehend it, is not that the title does not sufficiently express the main object of the act, which is to prescribe the procedure by which the company, and other designated parties, may recover unpaid subscriptions to joint-stock companies, but that the act deprives courts of equity of jurisdiction to determine the validity of such subscriptions, without making mention of such purpose in the title. This we conceive to be a misconception both of the title of the act and the design of section 52 of the Constitution.

Commonwealth v. Iverson Brown, 91 Va. 762, 21 S. E. 357, 28 L. R. A. 110, is the leading case on the subject. Riely, Judge, in delivering the opinion of the court, discussing this provision at page 771 of 91 Va., at page 360 of 21 S. E. (28 L. R. A. 110), observes:

"The provision of the Constitution is a wise and wholesome one. Its purpose is apparent. It was to prevent the members of the Legislature and the people from being misled by the title of a law. It was intended to prevent the use of deceptive titles as a cover for vicious legislation; to prevent the practice of bringing together into one bill for corrupt purposes subjects diverse and dissimilar in their nature, and having no necessary connection with each other; and to prevent surprise or fraud in legislation by means of provisions in bills of which the titles gave no intimation. And, on the other hand, it was not intended to obstruct honest legislation, or to prevent the incorporation into a single act of the entire statutory law upon one general subject. It was not designed to embarrass legislation by compelling the multiplication of laws by the passage of separate acts on a single subject Although the act or statute authorizes many things of diverse nature to be done, the title will be sufficient if the things authorized may be fairly regarded as in furtherance of the object expressed in the title. It is therefore to be liberally construed and treated, so as to uphold the law, if practicable."

This lucid exposition of the subject by Judge Riely is sustained by the highest authorities, and has been uniformly followed by subsequent decisions of this court. It leaves nothing to be said in defense of the title to section 1103a. The fact that a new procedure was to be provided by the act for the recovery of unpaid subscriptions necessarily implied that a change in existing remedies was intended. And, besides, it would be impracticable to embrace in the title to such an act the various remedies, offensive and defensive, affecting subscriptions to stock. Yet, the omission of any one of them, according to the contention of appellants, would render the act unconstitutional. Such a construction of this wise provision can hardly be expected to meet with favorable consideration.

Some confusion of thought seems to have arisen with respect to the scope of the remedy provided by section 1103a. It applies exclusively to suits or motions by the company and creditors (or subordinate claimants under the company) to recover unpaid subscriptions to the stock. In such proceeding, therefore, the stockholder must necessari ly occupy the position of defendant; but the statute imposes no limitation upon the right of a stockholder who chooses to take the initiative (before suit or motion under section 1103a has been instituted) to resort to any appropriate remedy for relief from liability on his subscription. If, however, he delays action until after suit or motion has been brought against him to recover his unpaid subscription, he cannot then by resort to equity, or otherwise, oust the exclusive jurisdiction acquired by the common-law court under the statute. Nevertheless, the statute affords the stockholder an adequate and complete remedy, and clothes the common-law court with exclusive jurisdiction to hear and determine all questions involving the validity of such subscription.

The defendant is entitled to a trial by jury; and in Burks' Pleading and Practice, § 100, p. 174, it is said:

"Defense may be made either by formal pleas, or by an informal statement in writing of the grounds of defense. In these proceedings by motion it is intended that, in so far as possible, all formalities and technicalities shall be done away with. And this policy extends to the modes of making defense, as well as to the notice of the motion. Accordingly, it is held that no formal pleas are necessary, except in cases where statutes require them, but that the defendant may make his defense by an informal statement in writing of the grounds of his defense. This statement will be treated as a plea or pleas, and the plaintiff may reply thereto with like informality. The defendant, however, may plead formally if he chooses, according to the course of the common law, and this is in all cases the better practice. But in every case an issue must in some way be made up on the record, in order to have a trial by jury." Supervisors v. Dunn, 27 Grat. (68 Va.) 608; Preston v. Salem Improvement Co., 91 Va. 583, 22 S. E. 486; HaU v. Ratliff, 93 Va. 327, 24 S. E. 1011.

The construction that we have placed upon section 1103a leaves unimpaired the right of a stockholder proceeded against under that statute to avail of all defenses afforded by section 3299; yet by implication it qualifies section 3300 to the extent of denying to such stockholder, who has not filed a special plea of set-off, power to defeat the exclusive jurisdiction of the common-law court by going into equity under that section. Section 3300 does not invest a litigant with additional remedies in equity, but...