Glenn v. Dorsheimer

• Decision Date: 09 April 1885
• Citation: 23 F. 695
• Parties: GLENN v. DORSHEIMER and others. [1] SAME v. HUNT. SAME v. LIGGETT. SAME v. FOY. SAME v. PRIEST. SAME v. DAUSMAN. SAME v. VON PHUL SAME v. SCOTT and another. SAME v. TAUSSIG and another. SAME v. TRIPLETT. SAME v. DIMMOCK and another. SAME v. NOONAN and others. SAME v. LUCAS and others. SAME v. LOCKWOOD and others.
• Court: U.S. District Court — Eastern District of Missouri

23 F. 695

GLENN v. DORSHEIMER and others. ^[1]

SAME v. HUNT.

SAME v. LIGGETT.

SAME v. FOY.

SAME v. PRIEST.

SAME v. DAUSMAN.

SAME v. VON PHUL

SAME v. SCOTT and another.

SAME v. TAUSSIG and another.

SAME v. TRIPLETT.

SAME v. DIMMOCK and another.

SAME v. NOONAN and others.

SAME v. LUCAS and others.

SAME v. LOCKWOOD and others.

United States Circuit Court, E.D. Missouri.

April 9, 1885

T. K Skinker, for plaintiff.

W. H Clopton, for Dorsheimer, Foy, Priest, Lucas, and others.

C. M Napton, for Hunt.

Smith &amp Harrison, for Liggett and Dausman.

Walker & Walker, for Von Phul.

Wilbur F. Boyle, for Scott and others.

Geo. W. Taussig, for Taussig and others.

Thos. C. Fletcher and Geo. D. Reynolds, for Triplett, Noonan, and others.

Dryden & Dryden, for Dimmock and others.

Noble & Orrick, for Lockwood and others.

BREWER J., (orally.)

There is a confused mass of law in the books bearing on the questions which are involved in these cases. In a general way, the facts as stated in the petitions in the law cases, and the bills in the equity suits, are that the National Express Company was organized on the twelfth day of December, 1865; it continued in business until the twentieth day of September, 1866, less than one year. The defendants are charged as stockholders in that corporation. An assignment was made of all the properties of the company, all debts due to it, whether from stock subscriptions or otherwise. This assignment was made on the twentieth of September, 1866. Nothing, then, seems to have been done until November 28, 1871, more than five years thereafter, when one creditor brought his bill in the chancery court of Richmond, Virginia, in behalf of himself and other creditors, to establish his and their claims against the company, and compel an assessment upon the stockholders. These proceedings terminated in a decree in that court on the fourteenth day of December, 1880, more than nine years thereafter, by which debts were established against the company to the amount of half a million dollars and over, an assessment of $30 a share ordered, the assignees removed, and the present plaintiff appointed as trustee. Between three and four years after that, these suits were commenced in this court; so that 18 years after the established insolvency of the company, its cessation of business, its assignment of its property, for the first time these defendant stockholders are notified that they have to pay something to discharge the debts of the corporation.

Passing all other defenses, the single one that we shall notice is that of the statute of limitations. These subscriptions, as I say, were payable on the call of the corporation; and the first call was made in 1880. So it is argued by counsel for the trustee that the statute of limitations begins to run then, and then only; that the obligation of the stockholders is a conditional obligation, becoming absolute only when the call has been made. On the other hand, counsel for the defendant read to us some cases in Pennsylvania, which affirm that the obligation of stockholders in a corporation similar to the one before us, is like the obligation of one who has given a note payable upon demand, where the statute of limitations commences to run within a reasonable time, and it is assumed that the demand is, or must be, made at once. I cannot assent to that doctrine as broadly as stated by the supreme court of Pennsylvania, and I think the court in Mississippi has drawn a wise distinction. The obligation in the first instance is a conditional obligation. The stockholders are not to pay until a call has been made. As was suggested in the argument, these debts due by the stockholders to the corporation are its assets, and furnish its means for transacting business, and so long as the corporation is a going concern, doing business, it may not need to have these obligations called in; and so, while it is a going concern, I think it is fair to say, as is said by the supreme court of Mississippi, that theirs is a conditional obligation, and that while the corporation continues to transact business, whether 5, 15, or 50 years, the stockholders' liability continues and becomes absolute only after a call is made. But that is not this case, and the court in Mississippi draws the distinction very nicely. In 1866 this corporation ceased to do business. It ceased to be a going concern. It turned over its property, including the debts due from its stockholders, to the assignees, to collect its debts, dispose of its property, and pay its creditors. Whenever such a cessation of business occurs, it seems to me fair to say that the liability of the stockholders becomes absolute,-- a fixed, unconditional obligation. And, although no call be made by the company, or by the assignees, yet these debts from the stockholders could have been reached by the creditors. That seems to be settled by the decision in Ogilvie v. Insurance Co. 22 How. 380, where the supreme court held that creditors, who had reduced their claims to judgment against the corporation, might proceed directly by bill against one or more stockholders. The language is this:

'The objection made to the bill, for want of proper parties, is equally untenable. The creditors of the corporation are seeking satisfaction out of the assets of the company, to which the defendants are debtors. If the debts attached are sufficient to pay their demands, the creditors need look no further. They are not bound to settle up all the affairs of this corporation, and the equities between its various stockholders, partners, proprietors, or debtors. If A. is bound to pay his debt to the corporation in order to satisfy its creditors, he cannot defend himself by pleading that these complainants might have got their satisfaction out of B.'

The court adds further:

'It is true, if it be necessary to a complete satisfaction to the complainants that the corporation be treated as an insolvent, the court may appoint a receiver, with authority to collect and receive all the debts due to the company and administer upon its assets, and in this way stockholders or debtors may be made to contribute.'

While such is a proper proceeding, of course, yet the court affirms the right of a creditor to reduce his claim to judgment in a court of law and proceed against one or more stockholders and that which is true of one creditor is true of all. In the aggregate, all the creditors can have no greater rights than as individual creditors. So these creditors could have reduced their claims against the corporation to a judgment, immediately after the assignment in 1866, through the simple processes of an ordinary action at law, and then brought their bill against the various stockholders to enforce payment here or elsewhere....