Diversey v. Plankinton

• Citation: 42 Am.Rep. 14,103 Ill. 378,1882 WL 10327
• Parties: JOHN DIVERSEYv.BYRON M. SMITHTHOMAS M. BURKETT et al.v.JOHN PLANKINTON et al.
• Decision Date: 21 June 1882
• Court: Supreme Court of Illinois

103 Ill. 378

1882 WL 10327 (Ill.)

42 Am.Rep. 14

JOHN DIVERSEY

v.BYRON M. SMITHTHOMAS M. BURKETT et al.

v.JOHN PLANKINTON et al.

Supreme Court of Illinois.

Filed at Ottawa Jun. 21, 1882.

OPINION TEXT STARTS HERE

APPEALS from the Appellate Court for the First District;--heard in that court on writs of error to the Superior Court of Cook county; the Hon. JOSEPH E. GARY, Judge, presiding.

The first of these actions, Diversey v. Smith, was an action of debt, brought by John Diversey, for use, etc., a creditor of the Germania Insurance Company, a corporation organized under an act of the legislature of this State for the business of fire insurance, against Solomon A. Smith, appellee's testator, who was a stockholder in the corporation, to enforce his individual liability as a corporator under the general laws of the State. The defendant demurred to the plaintiff's declaration, and the Superior Court of Cook county sustained the demurrer. The appellant appealed to the Appellate Court, and during the pendency of that appeal the defendant died. His death was suggested, and on motion a scire facias was issued to the appellee, the executor of the last will of the defendant. The Appellate Court, on appellee's motion, dismissed the appeal, on the ground that the cause of action did not survive the defendant's death against his legal representatives. From that order appellant appealed to this court.

Messrs. SHUFELDT & WESTOVER, for the appellant, made the following among other points:

The constitution of 1848, under which the charter was granted, required that dues from such corporations should be “secured by such individual liabilities of the corporators, or other means,” as might be prescribed by law. By an amendment to the charter, accepted prior to the passage of the general law of 1869, a right was reserved by the State to bind it in the future by general law. These provisions created each a compact between the company and the State, and the subsequent general law securing creditors by a limited liability of stockholders was but carrying these compacts into effect, and is not a penalty, unless made so by its terms. Arenz v. Weir, 89 Ill. 15; Union Iron Co. v. Pierce, 4 Biss. 327; Butler v. Walker, 80 Ill. 345; Gulliver v. Rœlle, 100 Id. 141; Tomlinson v. Jessup, 15 Wall. 457; Miller v. State, 15 Id. 478; Sherman v. Smith, 1 Black, 587; McLaren v. Pennington, 1 Paige, 102; In re Reciprocity Bank, 22 N. Y. 9; In re Oliver Lee's Bank, 21 Id. 9; Bailey v. Hollister, 12 Id. 112; Stanley v. Stanley, 26 Maine, 191.

The language of the statute, that the corporators “shall be severally liable for all debts,” etc., “to the amount by him or them subscribed, until the whole amount of the capital of such company shall have been paid in, and a certificate thereof recorded,” imposes no penalty, but defines an original liability, as required by the constitution. Aspinwall v. Sacchi, 57 N. Y. 331; Bird v. Hayden, 1 Robertson, 383; Corning v. McCullough, 1 Comst. 47; Coleman v. White, 14 Wis. 762; Culver v. Third Nat. Bank, 64 Ill. 529; Fuller v. Ledden, 87 Id. 310; Harger v. McCullough, 2 Denio, 123; Norris v. Wrenschall, 34 Md. 492; Paine v. Stewart, 33 Conn. 516; Young v. Rosenbaum, 29 Cal. 646.

A statutory penalty is imposed by way of a fine or punishment for the non-performance of a duty imposed by statute, or for the performance of an act forbidden by statute. Cable v. McCune, 26 Mo. 371; Provident Savings Inst. v. Skating Rink, 52 Id. 552; Gregory v. German Bank of Denver, 33 Col. 332; Union Iron Co. v. Pierce, 4 Biss. 327; Derrickson v. Smith, 27 N. J. 166; Craw v. Easterly, 4 Lans. 513; Kelton v. Phillips, 3 Mass. 361; Franklin Glass Co. v. White, 14 Id. 286; Ripley v. Sampson, 10 Pick. 370; Stedman v. Evelith, 6 Metc. 119; Bolen v. Crosby, 49 N. Y. 183; Whitney Arms Co. v. Barlow, 41 N. Y. St. 220; Jones v. Barlow, 38 Id. 142; Nemmons v. Tappan, 2 Sweeney, 652; Strong v. Sproul, 4 Daly, 326; Barnett v. A. & P. R. R. Co. 68 Mo. 56; Nassau Bank v. Brown, 30 N. J. Eq. 478; Sturges v. Burton, 8 Ohio St. 215; Irvine v. McKeon, 23 Cal. 472; Lawler v. Burt, 7 Ohio St. 341; First Nat. Bank v. Price, 33 Md. 487; Garrison v. Howe, 17 N. Y. 458; Andrews v. Murray, 33 Barb. 354; Shaler v. Bliss, 34 Id. 309; Boughton v. Otis, 21 N. Y. 261; Squire v. Brown, 22 How. 45; Halsey v. McLean, 12 Allen, 438; Bank v. Commonwealth, 26 Pa. 451; Kritzer v. Woodson, 19 Mo. 327; Hill v. Frazier, 22 Pa. 230; Norris v. Wrenschall, 34 Md. 492; Cameron v. Seamen, 69 N. Y. 396; Steam Engine Co. v. Hubbard, 101 U. S. 188; Merchants' Bank v. Bliss, 35 N. Y. 412; Corning v. McCullough, 1 Comst. 47.

In general, liabilities of this nature, or kindred liabilities, have been held to survive the death of the stockholder. Bailey v. Hollister, 12 N. Y. 112; Burr v. Wilcox, 22 Id. 551; Diven v. Duncan, 41 Barb. 520; Diven v. Lee, 36 Id. 302.

There is a clear distinction between a liability that is primary, and therefore ex contractu, and one for a wrong doing and in tort. As an illustration of the former, see Corning v. McCullough, 1 Comst. 47; Allen v. Sewall, 2 Wend. 338; Moss v. Oakley, 2 Hill, 265; Bailey v. Blancker, 3 Id. 188; Harger v. McCullough, 2 Denio, 119; Ex parte Van Riper, 20 Wend. 614. In illustration of such as are in tort, see Garrison v. Hare, 17 N. Y. 458; Andrews v. Murray, 33 Barb. 354; Shaler v. Bliss, 34 Id. 309; Boughton v. Otis, 21 N. Y. 261; Squire v. Brown, 22 How. 45; Halsey v. McLean, 12 Allen, 438; Lawler v. Burt, 7 Ohio St. 341; Derrickson v. Smith, 27 N. J. 166; Bank v. Commonwealth, 26 Pa. 451; Kritzer v. Woodson, 19 Mo. 327; Hill v. Frazier, 22 Pa. 230.

Mr. JOHN S. COOPER, for the appellee Smith:

The liability imposed upon stockholders of insurance companies, by section 16 of the act of 1869, is penal in its character, and can be sustained only on that ground. Weidenger v. Spruance, 101 Ill. 278; Gulliver v. Rœlle, 100 Id. 141; Gridley v. Barnes et al. 103 Id. 211; Merchants' Bank of New Haven v. Bliss et al. 35 N. Y. 412; Losee et al. v. Bullard, 79 Id. 404; First National Bank v. Price et al. 33 Md. 487; Derrickson v. Smith, 27 N. J. L. 166; Cairo and St. Louis R. R. Co. v. Warrington, 92 Ill. 157; Cable v. McCune, 26 Mo. 380; Halsey v. McLean, 12 Allen, 438; Sturges v. Burton, 8 Ohio St. 215; Lawler v. Burt, 7 Id. 340; Moies v. Sprague, Admr. 9 R. I; Steam Engine Co. v. Hubbard, 101 U. S. (11 Otto,) 188; Richardson v. Aikin, 87 Ill. 138.

Mr. JOHN H. THOMPSON, for the appellees Plankinton and others:

A writ of error against an executor will be abated when the cause of action does not survive. Barrett et ux. v. Gaston, Exr. Breese, 255.

A provision of law imposing an individual liability for a corporate debt, is to be construed strictly. Gray v. Coffin et al. 9 Cush. 199; Moyer v. Pennsylvania S. Co.71 Pa. St. 293; Appeal of Means, 85 Id. 75. The legislature may impose a reasonable penalty for the non-performance of a legal duty, although the duty may have been declared, and its performance enjoined, by the principles of the common law or by a prior statute. Chicago, Rock Island and Pacific R. R. Co. v. Reidy, 66 Ill. 43; Chicago and St. Louis R. R. Co. v. Warrington, 92 Id. 157; Burnett v. Chicago and Pacific R. R. Co. 68 Mo. 56.

The liability imposed by sec. 16 of the general Insurance act of 1869, is a statutory penalty. Weidenger v. Spruance, 101 Ill. 278; Bank v. Price et al. 33 Md. 487; Cameron v. Seaman, 69 N. Y. 396; Derrickson v. Smith, 27 N. J. L. 166; Steam Engine Co. v. Hubbard, 101 U. S. 188; Kritzer v. Woodson, 19 Mo. 327; Cable v. McCune, 26 Id. 371; Hill v. Frazier,22 Pa. St. 320; Harrisburg Bank v. Commonwealth, 26 Id. 451; Lawler v. Burt, 7 Ohio St. 341; Sturges v. Burton, 8 Id. 215; Halsey v. McLean, 12 Allen, 438.

When a statute, directly or indirectly, requires a company, its officers or stockholders, to do anything, or prohibits the company or its officers from doing a thing, and imposes a liability for its violation upon either the company, its officers or stockholders, such statute is of a penal character. But when the statute imposes a liability on the stockholders for some benefit to the public, or to some class, and contains no command to do or not to do anything, it is not penal, but creates a primary liability ex contractu upon the stockholder.

Mr. JUSTICE SCHOLFIELD delivered the opinion of the Court:

In these cases the facts are, in all material respects, similar, and the single question presented by the record, and discussed in arguments of counsel, is common to both. In each the action is debt, upon a policy of insurance issued by a company which was organized under a special charter enacted by the General Assembly long prior to July 1, 1869, against a stockholder of the company, who had become such by making, and performing on his part, a contract of subscription for stock, prior, also, to July 1, 1869. Judgments were rendered in the Superior Court of Cook county for the defendants. From those judgments appeals were taken to the Appellate Court for the First District, and while the appeals were there pending, and before argument, the defendants died, testate. The deaths of the defendants were suggested, and thereupon writs of error were sued out and served, making their executors parties. On motion of the executors, the Appellate Court dismissed the writs of error, and gave judgments for costs. To reverse those judgments the present appeals are prosecuted.

For convenience we shall treat the cases as one, and speak of the parties in the singular number only.

If the action is for a statutory penalty, it does not survive the death of the testator, and the writ was properly dismissed, as is conceded by counsel for appellant. 1 Chitty's Pleadings, (7th Am. ed.) 103, *104; Hambly v. Trott, Cowp. 372; Barret et ux. v. Gaston, Breese, 255. The question, therefore, is, whether the action is on a contract or for a statutory penalty.

We do not think it needful at this time to discuss whether it was competent...