First National Bank of Garretsville v. Greene

• Decision Date: 17 October 1883
• Parties: FIRST NAT. BANK OF GARRETSVILLE v. GREENE, ADM'R, ETC
• Court: Iowa Supreme Court

17 N.W. 86

64 Iowa 445

FIRST NAT. BANK OF GARRETSVILLE v. GREENE, ADM'R, ETC

Supreme Court of Iowa, Davenport

October 17, 1883

THURSDAY OCTOBER 9.

Appeal from Linn Circuit Court.

IT appears from the averments of the petition that on the fourth day of June, 1878, the plaintiff recovered a judgment in the circuit court of Linn county, against the Burlington, Cedar Rapids and Minnesota Railroad Company, for some sixty-five thousand dollars, and that on the twentieth day of June 1880, an execution was issued on said judgment and placed in the hands of the sheriff, who, being unable to find any property of said railway company, made a demand upon the vice-president, and upon the general superintendent of the company, that property be shown whereon to levy said execution, and said vice-president and general superintendent failed and neglected to point out any such property; that said railway company, at the time said judgment was rendered and prior thereto, was, and still is, a corporation organized and existing under the laws of Iowa, and George Greene, at the time said demand was made by the sheriff for property on which to levy said execution, and prior and subsequent thereto, was the owner of nine hundred and ten shares, of one hundred dollars each, of the capital stock of said company; that said Greene continued to be the owner of said stock until his death, and the same is still the property of his estate; that there was paid by said decedent to said corporation but twenty per cent of the par value of said stock, and that there yet remains due a balance of eighty per cent, amounting to about seventy-two thousand dollars. This action was commenced against William Greene, the administrator of the estate of George Greene, to recover the amount due on the judgment previously rendered against the railroad company.

The answer, among other defenses, set up the following:

"Defendant admits that plaintiff obtained judgment against the B., C. R. & M. R'y Co., as stated in said petition; admits that execution was issued on said judgment, and returned, as stated in said petition; but says that plaintiff's judgment is founded on certain bonds issued by the said B., C. R. & M. R'y Co., and that said company became totally insolvent and ceased to do business in May, 1875, and has done no business, and has not exercised or used its franchise, since that date, and had not then, or since, any corporate property which could be reached or levied on for the payment of its debts; that the bonds upon which plaintiff's said judgment is founded became due and payable July 1, 1875; that the plaintiff brought its suit on said bonds against the B., C. R. & M. R'y Co. on the day of , 1878, and recovered judgment, as set forth in plaintiff's petition in the circuit court of Linn county, Iowa, on the fourth day of June, 1878; that on said judgment the plaintiff caused execution to issue on the twenty-second day of July, 1880, and caused the same to be served August 10, 1880, by demand to be shown property upon which to levy upon Wm. Greene, general superintendent, and S. P. Wisner, vice-president, of said B., C. R. & M. R'y Co., the last elected officers thereof, who failed to point out any property, whereupon said execution was returned unsatisfied; that this action was not commenced against this defendant until April 11, 1881.

"Wherefore this defendant says that, by reason of the facts set forth herein, the plaintiff's alleged cause of action is fully barred by the statute of limitations in that behalf."

A demurrer was interposed to this defense, and was overruled. The plaintiff thereupon declined to plead further, and elected to stand upon the demurrer, and judgment was rendered thereon for the defendants. Plaintiff appeals.

AFFIRMED.

P. Henry Smyth & Son, for appellant.

Hubbard, Clark & Dawley, for appellee.

ROTHROCK CH. J., BECK, J. ADAMS, J., REED, J., dissenting.

OPINION

ROTHROCK, CH. J.

It is not claimed that the liability of the estate of Greene is based upon a written contract. It is claimed that Greene was, and his estate is, the owner of nine hundred and ten shares of the stock of the railway company, and that twenty per cent only of the par value thereof has been paid. The bar of the statute, therefore, applies in five years after the cause of action accrued, and the question to be determined is, when did the right of action accrue.

It appears from the averments of the answer that the bonds upon which plaintiff's judgment is founded became due and payable July 1, 1875. The right of action against the company was then complete. The defendant's obligation upon the unpaid balance of the shares of stock then existed, and any action of the railroad company to recover such unpaid balance would have been barred by the statute in five years. The question to be determined, then, is, whether the general statute of limitations, applicable to the case as between the parties to the contract, is in any manner changed by the statute which provides that the stock-holder shall be liable to the creditors of the corporation for unpaid installments on the stock owned by them.

Appellant contends that under the statute no right of action accrued to the plaintiff against the defendant until after a judgment was obtained against the company, and execution was issued, and property demanded upon which to levy. Appellee insists that a right of action accrued against the defendant, without judgment against the corporation. And the defendant further claims that, if a judgment against the company was necessary before suit could be brought against the defendant, the judgment should have been obtained and the suit commenced against the defendant within five years.

Without determining whether or not the creditor of a corporation can in any case maintain an action against a stock-holder without first obtaining judgment against the corporation, we think that there is nothing in the law making a stockholder liable to a creditor in such cases which in any manner enlarges the operation of the statute of limitations, or affects any right which the stockholder has thereunder. If the theory of the plaintiff be correct, it would be within the power of a creditor of a corporation to extend the statutory bar for a period which surely never was contemplated by the law-making power. In the case at bar, the action upon the bonds might have been brought at any time within ten years after they became due. The issuance of execution, and demand for property to satisfy the same, could have been delayed for another period of ten, or possibly twenty, years, and an action brought against a stockholder five years thereafter. It is not the policy of the law to put it in the power of a party to thus extend statutory limitations. Counsel on both sides have presented numerous adjudged cases in courts of other states, which, it is claimed, are in point upon the question involved in the appeal. We need not cite or comment upon them, because we think the principle here involved has been determined by this court. In Baker v. Johnson Co., 33 Iowa 151, it was held that the statute of limitations commenced to run from the time the plaintiff had a claim against the county, and not from the time he presented it to the board of supervisors for allowance. In that case, he had no right to institute suit against the county until he presented the claim to the board, and it was held, nevertheless, that the statute commenced to run before the claim was presented. This case was in principle followed in Prescott v. Gonser, 34 Iowa 175, and in Beecher v. Clay Co., 52 Iowa 140; and in Hintrager v. Hennessy, 46 Iowa 600, it was held that the statute of limitations commenced to run against one claiming under a tax deed from the time he was entitled to a deed, and not from the time when the deed was actually executed and delivered. The ground of all these decisions is, that a party holding a claim or right of action may not be allowed to prolong the operation of the statute by refusing to take the steps which the law requires in order to authorize the maintenance of an action.

In the case at bar, the plaintiff recovered judgment against the corporation on the fourth day of June, 1878. It took no further action until July 22, 1880, when execution was issued and demand made upon the officers of the corporation for property upon which a levy could be made. And this action was not commenced until April 11, 1881. No cause for delay is shown; and there can be no such...