Frantz v. Idaho Artesian Well & Drilling Co.

• Citation: 46 P. 1026,5 Idaho 71
• Parties: FRANTZ v. IDAHO ARTESIAN WELL AND DRILLING COMPANY
• Decision Date: 03 December 1896
• Court: United States State Supreme Court of Idaho

46 P. 1026

5 Idaho 71

FRANTZ v. IDAHO ARTESIAN WELL AND DRILLING COMPANY

Supreme Court of Idaho

December 3, 1896

LOAN OF STOCKHOLDERS TO CORPORATION-CORPORATION'S LIABILITY.-The defendant, a corporation, having a judgment rendered against it upon which the sale of its property was imminent, not being able to procure money to satisfy said judgment upon its own credit, the money was raised by certain stockholders upon their individual note, the corporation agreeing to protect them from the payment of said note. The corporation paid a portion of said note; the balance was paid by the individuals. Held, that the corporation was liable to the parties so praying for the amount paid by them. And the cause of action accrued at the time said payments were made.

STATUTE OF LIMITATIONS.-The statute of limitations is a personal privilege, and, to be made available, must be pleaded. It cannot be interposed by argument or inference.

(Syllabus by the court.)

APPEAL from District Court, Bannock County.

Affirmed, with costs.

H. V A. Ferguson, for Appellant.

In August, 1891, the defendant corporation was a judgment debtor, and was in danger of losing all its personal property by an execution sale. It had no money in its treasury, and as a corporation, it was unable to effect a loan adequate to its needs, it had repeatedly attempted to make a loan and had failed. Among others, it applied to the First National Bank of Pocatello. The bank, through its cashier, M. C. Senter Esq., informed the representatives of the corporation that it would not accept the corporation as security for a dollar; but it also informed them, in substance, that if they individually wished to procure a loan of money they could have it; that the bank considered them responsible citizens, and would cheerfully take their individual or joint paper. It appears that these preliminary facts were laid before the corporation at what is denominated in the corporation's minute-book a "stockholders'" meeting. It appears further that it was suggested that certain persons borrow money themselves and loan it to the corporation, or that certain persons volunteered to borrow money themselves and loan it to the corporation, upon the understanding that the corporation, being thereto authorized by resolution, would make and deliver its note to these private parties for the amount they loaned it, and secure the payment of said note by a chattel mortgage upon all the corporate property and effects. If the money was paid at "the special instance and request of the defendant," he must do one of two things: show an actual request by competent evidence, or show a state of facts which in law amounted to a request, and which it was necessary to regard in order to do substantial justice between the litigants, although, before the law will imply a request, there must have been duress of person or property, or a voluntary payment supplemented by an express promise to pay, or a legal liability to pay the debt or answer for the default or miscarriage of another. ( Keith v. Easton Congregational Parish, 21 Pick. (Mass.) 261; Nicholls v. Buckman, 117 Mass. 488; Smart v. White, 88 Mo. 566; Kenan v. Holloway, 16 Ala. 53, 50 Am. Dec. 1621; Wolff v. Matthews, 39 Mo.App. 376; Hale v. Huse, 10 Gray (Mass.), 99; Reeves v. Goff, 3 N. J. L. 194; Hogg v. Longstreet, 97 Pa. St. 255.) There was no privity, no contractual relation, between the plaintiff, his assignor and the defendant corporation. There can be no recovery unless it can be shown that the money has been received by the defendant or its agent. (Coates v. Bainbridge, 5 Bing. 58, 15 Ency. Com. L. 368; Brent v. Davis, 9 Md. 217; Isom v. Johns. 2 Munf. (Va.) 272; Rush v. Good, 14 Serg. & R. (Pa.) 226; Allen v. South Boston R. Co., 150 Mass. 200, 15 Am. St. Rep. 185, 22 N.E. 917; Sterling v. Ryan, 72 Wis. 36, 7 Am. St. Rep. 818, 37 N.W. 572; Cobb v. Curtiss, 8 Johns. 470; Allen v. Woodward, 22 N.H. 544; Walker v. Conant, 69 Mich. 321, 13 Am. St. Rep. 391, 37 N.W. 292; Stoudt v. Hine, 45 Pa. St. 30; Westcott v. Sharp, 50 N. J. L. 392, 13 A. 243; National Bank v. Grand Lodge, 98 U.S. 123.) If the mortgage was valid, then the law is clear; the plaintiff and his associates in the obligation should have foreclosed their mortgage before bringing their suit at law. (Barbieri v. Ramelli, 84 Cal. 154, 23 P. 1086, and cases cited. See, also, 2 Morawetz on Corporations, sec. 627, on ratification of directors' acts by the corporation.)

Thomas F. Terrell, for Respondent.

The liability of the corporation need not be founded on written contract, but upon the duty the law imposes, from benefits it has received. (Morawetz on Private Corporations, secs. 526, 715, 716; Beach on Private Corporations, secs. 422, 423, 425; Clark on Contracts, 286, 287; 27 Am. & Eng. Ency. of Law, 371-374, and notes following each page; Memphis etc. R. R. Co. v. Dow, 19 F. 388; Sherman Center Town Co. v. Morris, 43 Kan. 282, 19 Am. St. Rep. 134, 23 P. 569; Seeley v. San Jose etc. Co., 59 Cal. 22; San Francisco Glass Co. v. San Francisco, 9 Cal. 453; Argenti v. San Francisco, 16 Cal. 256; Santa Cruz R. R. Co. v. Spreckels, 68 Cal. 193-199, 3 P. 661, 802; Topeka Primary A. U. R. Co. v. Martin, 39 Kan. 750, 18 P. 941; State Board of Agriculture v. Citizens' St. Ry., 47 Ind. 407, 17 Am. Rep. 702; Dill v. Wareman, 7 Met. (Mass.) 438; Waitz v. Ormsby Co., 1 Nev. 370; Slater Woolen Co. v. Lamb, 143 Mass. 420, 9 N.E. 823; Oneida Bank v. Ontario Bank, 21 N.Y. 490; Rider Life Raft Co. v. Roach, 97 N.Y. 378.) Where directors or stockholders of a corporation give their individual note to a bank, either directly for money or as collateral for money delivered to and used by the corporation, as between the corporation and the persons who gave the note to the bank, the relation of principal and surety exists. (Street v. Old Town Bank of Baltimore, 67 Md. 421, 10 A. 319.) The right to interpose the plea of the statute of limitations is waived, unless taken advantage of by demurrer or answer. (Reagan v. Justice Court, 75 Cal. 253, 17 P. 195; Kelley v. Kriess, 68 Cal. 211, 9 P. 129; Gratton v. Wiggins, 23 Cal. 16; Osment v. McElrath, 68 Cal. 466, 58 Am. Rep. 466.) If the demand be in truth barred, but the facts do not appear on the face of the complaint, the defense must be made in the answer. (Smith v. Richmond, 19 Cal. 477; Mason v. Cronise, 20 Cal. 217; Cameron v. San Francisco, 68 Cal. 390, 9 P. 430; Manning v. Dallas, 73 Cal. 420, 15 P. 34.) As to the manner of pleading the statute of limitations, see Revised Statutes of Idaho section 4213.

HUSTON, J. Morgan, C. J., and Sullivan, J., concur.

OPINION

HUSTON, J.

This is an appeal from a judgment of the district court for Bannock county. The facts are substantially as follows, as shown by the record: In August, 1891, the defendant was, and for some time previous to that date, had been, a corporation organized under the laws of Idaho and doing business in this state. Being in need of money to carry on the business in which they were engaged, and not being able to procure the same upon the credit of the corporation, at a stockholders' meeting held on the fifth day of August, 1891, the following record was made: "Meeting called to devise means to raise money to satisfy a judgment rendered in district court against the Artesian Well and Drilling Company in favor of the Carlisle Manufacturing Company of Carlisle, Pennsylvania. It was moved and seconded that a note payable at the First National Bank be made to satisfy said judgment, and that a mortgage be executed to protect the signers of said note, covering the entire...