Gibbs v. Davis

• Citation: 8 So. 633,27 Fla. 531
• Parties: GIBBS v. DAVIS.
• Decision Date: 28 January 1891
• Court: Florida Supreme Court

8 So. 633

27 Fla. 531

GIBBS v. DAVIS.

Florida Supreme Court

January 28, 1891

Appeal from circuit court, Volusia county; JOHN D. BROOME, Judge.

Syllabus by the Court

SYLLABUS

1. Under the provisions of section 20, p. 232, McClel. Dig stockholders in corporations are liable, upon a dissolution of the company, for the debts thereof to an amount equal to the amount in par value of the stock held by them at the time of such dissolution.

2. The dissolution of the company is a condition precedent that must appear before the creditor can enforce this statutory liability by suit against the shareholder, under the provisions of said section 20.

3. It is not necessary that this dissolution, in the sense in which the term is used in the statute, shall be first established by legislative enactment or by judicial proceedings before the company's creditors can proceed directly against the stockholders to enforce their statutory liability for the company's debts. It is sufficient, in order that a suit shall lie, for the declaration to state 'that the corporation was dissolved' on or about a date therein named.

4. Such dissolution, in the sense in which the term is used in the statute, takes place when the corporation comes into the condition of having debts and no assets, and has ceased to act and exercise its corporate functions, or has suffered acts to be done which end the object for which it was created.

5. The facts and circumstances relied upon as constituting such dissolution are matters of evidence, and need not be set forth in the pleadings.

6. The liability of the shareholder for the company's debts, as imposed by section 20, p. 232, McClel. Dig., is assumed by the stockholder by the act of subscription for stock, and is therefore a liability arising ex contractu, and, upon a dissolution of the company, a creditor thereof can enforce such liability by suit directly against the shareholder without joining the company in the suit, and without first exhausting his remedy at law against the company.

7. Sections 20, 40, pp. 232, 236, McClel. Dig., compared and construed. Held, that there is no conflict between them, and that section 20 is not superseded by section 40. That it was the intention of the legislature thereby to give to creditors of corporations plain and ample remedies for the enforcement of their claims under differing circumstances and conditions.

8. A single creditor of a corporation can, by a suit at law enforce his own claim alone against any single shareholder of a corporation upon a dissolution of the company, to the amount in par value of the shares held by such person at the time of the dissolution, without resort to a court of equity and without suing on behalf of himself and all other creditors of the company, and without joining all the stockholders of the company as parties defendant.

9. Under the provisions of section 40, p. 236, McClel. Dig where a creditor of a corporation has recovered judgment against the company as such, and no property or effects of the company can be found whereon to levy the same, the judgment creditor may then, upon motion to the court after notice, obtain execution directly against the shareholders to the amount in par value of the stock by them held, without having named them individually as parties defendant in the suit wherein the judgment was recovered. Held, that this is an additional summary remedy afforded to the creditors of corporations, and that it does not supersede the remedy provided by section 20, p. 232, McClel. Dig.

10. A plea by a defendant, who has been personally served with process in a common-law action, 'that he does not reside in the county where the suit is brought, and that the cause of action did not arise or accrue in such county,' is bad, because it does not affirmatively disclose the name of some other county in this state in which alone he claims the privilege of being sued, and such plea is properly overruled upon demurrer.

11. Chapter 3729, Laws, approved May 31, 1887, examined. Held, that it changes the liability of stockholders in corporations so as to limit such liability to the amount that remains unpaid upon their subscriptions, but that said act does not affect rights and liabilities that accrued prior to its enactment.

COUNSEL Hamlin & Stewart, for appellant.

C. P. & J. C. Cooper, for appellee.

OPINION

TAYLOR, J.

Herbert H. Gibbs, on the 23d of April, 1886, instituted his suit at law in the circuit court of Volusia county, in the seventh circuit, against H. S. Sanford and William D. Davis, as stockholders in the Florida Journal Company, a corporation to recover the sum of $700 alleged to be due upon a written contract entered into by and in the name of the said corporation on the 19th of March, 1885.

The declaration, filed May 2, 1887, alleges that the defendants, Sanford and Davis, are stockholders in said company, Sanford to the amount of $2,500, and Davis to the amount of $500; that said company was duly organized and incorporated in accordance with the general act of incorporation of Florida, as contained in chapter 34, McClel. Dig.; that said company first incorporated under the name of the 'Putnam County Journal Association,' but afterwards changed its name to 'The Florida Journal Company;' that under and within the terms of the written contract, attached as a part of said declaration, made by said company in its corporate name, there is due and owing to the plaintiff $700, that has never been paid; that the said corporation was dissolved on or about the 3d day of August, 1887, leaving the said indebtedness to the plaintiff still due and unpaid; that the defendants, Sanford and Davis, were stockholders as aforesaid, and to the respective amounts aforesaid, at the time of its dissolution, and became then and are now liable to the plaintiff for said indebtedness due to him from said company to the amount of stock then owned by them, respectively, in said corporation.

The summons issued in the cause having been returned non est inventus as to the defendant H. S. Sanford, the plaintiff, by his attorneys, on June 7, 1886, filed with the clerk the request in the words following: 'You will note of record the non-service of the summons ad respondendum on H. S. Sanford, defendant herein.'

The defendant Davis interposed eight pleas, but for the purposes of this decision we deem it unnecessary to notice any of them particularly except the seventh, which is as follows: 'And for a seventh plea defendant says that as a stockholder in the Putnam County Journal Association, under the laws of Florida, defendant is not liable to or indebted to plaintiff in any amount, no judgment or execution having been obtained by plaintiff against said company and levied upon its property, or returned, showing that said company had no property out of which said judgment could bemade.' To this seventh plea, as well as to the first, second, third, fourth, and fifth, the plaintiff demurred. Upon this demurrer the court below rendered the following judgment: 'The demurrer to the defendant's pleas having been argued by counsel for plaintiff and defendant, and the court being advised, it is ordered that the demurrer to first and second pleas be sustained, and the demurrer to the remaining pleas is overruled, the court holding that the plaintiff's amended declaration is bad in law, because there had been no judgment and execution against the corporation before action brought against the defendant stockholders; and it is adjudged that the plaintiff take nothing by his suit and the defendant go without day.' From this judgment the plaintiff appeals to this court.

The issue presented involves a construction of section 27, c. 1639, Laws Fla., approved August 8, 1868, (section 20, p. 232, McClel. Dig.,) and of section 9, c. 3165, Laws, approved March 11, 1879, (section 40, p. 236, McClel. Dig.) It may be well to observe that section 9, c. 3165, Acts 1879, was originally included as section 22, in chapter 1639, Acts 1868, and was repealed by chapter 2016, Act Feb. 12, 1874, but was re-enacted in 1879, as section 9, c. 3165.

The learned counsel for the defendant contends: (1) That no suit can be maintained by a creditor of a corporation against an individual stockholder thereof without first exhausting his remedy against the corporation itself. (2) That under this statute stockholders are not liable at all in this state for the debts of the corporation. (3) That section 27, c. 1639, Laws 1868, (section 20, p. 232, McClel. Dig.,) that reads as follows, (its proviso omitted:) 'If any company formed under this chapter is dissolved, leaving debts unpaid, suits may be brought against any person or persons who were stockholders at the time of such dissolution, without joining the company in such suit, to an amount equal only to the amount in par value of the stock held by such person or persons, the collection to be made from the property of each stockholder, respectively; and if any number of stockholders [defendants in the case] shall not have property enough to satisfy his or their portion of the execution, then the amount of deficiency shall be divided equally among all the remaining stockholders and collection made accordingly, deducting from the amount a sum in proportion to the amount of stock owned by the plaintiff at the time the company was dissolved,'--is superseded by section 9, c. 3165, Acts 1879, (section 40, p. 236, McClel. Dig.,) that reads as follows: 'If any execution shall have been issued against the property or effects of any corporation, and if these cannot be found whereon to levy, then such execution may be issued against any of the stockholders to an extent equal in amount to the amount of stock by him owned, together...