Ham v. A.M. Robinson Co.

• Court: Georgia Supreme Court
• Writing for the Court: EVANS, P.J.
• Citation: Ham v. A.M. Robinson Co., 91 S.E. 483, 146 Ga. 442 (Ga. 1917)
• Decision Date: 14 February 1917
• Docket Number: 240.
• Parties: HAM v. A. M. ROBINSON CO. ET AL.

91 S.E. 483

146 Ga. 442

HAM v. A. M. ROBINSON CO. ET AL.

No. 240.

Supreme Court of Georgia

February 14, 1917

Syllabus by the Court.

The personal representative of a deceased defendant may be made a party by rule, as provided in the Civ. Code 1910, § 5601. Where a rule is issued against the executrix of a deceased defendant, and she objects to being made a party on the ground that the rule should not have issued until after the elapse of 12 months from the probate of her testator's will, and, though admitting that she received a copy of the rule by mail, she protests that she was not properly served and where the hearing occurs more than 12 months after the probate of the will, a judgment, making her a party, will not be vacated on these grounds under the circumstances of the case.

A statute, giving a right of action to creditors against persons who organize a corporation and transact business before the minimum capital stock has been subscribed for, is "remedial," and not "penal"; and a cause of action thereunder does not abate with the death of one liable by virtue of the statute.

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Action by A. M. Robinson Company and others against M. M. Ham, and others. From the granting of a motion making Fannie B. Ham executrix of M. M. Ham, deceased, a party defendant, she excepts and brings error. Affirmed.

J. G Collins, of Gainesville, and Moore & Pomeroy, of Atlanta, for plaintiff in error.

Hewlett, Dennis & Whitman, Smith, Hammond & Smith, A. E. Wilson and Jerome Simmons, all of Atlanta, and C. L. Collins, for defendants in error.

EVANS P.J.

A. M. Robinson and others instituted an action against M. M. Ham and others, to recover on debts incurred by the Howard Lumber Company, on the ground that the defendants had organized the company and had transacted business in its name before the minimum capital stock had been subscribed for. At the appearance term the defendants filed pleas to the jurisdiction and to the merits. Before the trial of the case M. M. Ham died testate. Fannie B. Ham probated his will, and, on May 4, 1914, qualified as his executrix. On August 5th following, on motion of the plaintiffs, the court passed an order, requiring Mrs. Fannie B. Ham, as executrix of the estate of M. M. Ham, to show cause, on September 7, 1914, why she as such executrix should not be made a party defendant in the case. A copy of this order was mailed to attorney of record for the defendant. In response to the rule to show cause why she should not be made a party defendant, Mrs. Fannie B. Ham, as executrix of M. M. Ham, filed her response, setting up that the court was without jurisdiction to make her a party, no legal process having been served upon her; that the motion and order to make her a party was received by her through the mail; that she was exempt from suit, and not subject to be made a party defendant until after the expiration of 12 months from the probate of the will of her testator, and then only by scire facias. She further objected to being made a party on the ground that the action against her testator abated with his death. The motion to make her a party was granted on December 20, 1915. Exception is taken to this judgment.

1. The statute provides that in case a defendant shall die pending a suit, the plaintiff may sue out a scire facias immediately after the expiration of 12 months from the probate of the will or granting of letters of administration, requiring such executor or administrator to appear and answer to the cause. Civil Code 1910, § 5599. An additional method is authorized by the act of 1895, which is incorporated in Civil Code 1910, §§ 5601, 5602. There it is provided that when it is necessary or proper to make parties, the judge shall cause a rule to be prepared and signed by him, either in term time or vacation, calling upon the person to show cause why he should not be made a party, the answer to which rule may be heard in term or vacation. This latter procedure is cumulative to the former, and is that followed in the present instance. Inasmuch as the statute (Civil Code, § 4015) exempts an administrator or executor (Civil Code, § 3892) from suit for 12 months after his qualification, and the procedure to make parties by scire facias permits the plaintiff to proceed after the expiration of 12 months from the probate of the will or the granting of letters of administration, it would seem that, if the course authorized by sections 5601 and 5602 be pursued, the motion should be made after the 12 months has expired. This was not done in this case. Nor was a copy of the rule served by an officer or by some other person. Service by mail is not a recognized manner of serving papers of this kind. Nevertheless, as the plaintiff's testator was a party to the original suit, and she admits having received a copy of the rule to show cause, and as the order making her a party was entered after the lapse of 12 months from her qualification as executrix, the court will treat the matter of service, under the circumstances, as more a matter of irregularity in form than a defect in substance, and will proceed to consider the other ground of objection.

2. The executrix of the deceased defendant makes the point that the action against her testator abated with his death. It becomes necessary to inquire into the nature of the liability alleged against her testator, to determine the merits of this contention. Independently of statute, many courts of high repute have adjudged that where persons undertake to organize a corporation and transact business before the corporation comes into legal existence as a de jure corporation by compliance with certain prerequisites, the organizers become personally liable for the debts contracted by the defectively organized corporation. Some place the liability on the suggestion of the court in Lewis v. Nicholson, 18 Q. B. 503, that a person contracting without authority as agent of a named principal warrants his authority as such, and is liable on such warranty. This doctrine was applied in Farmers' Co-operative Trust Co. v. Floyd, 47 Ohio St. 525, 26 N.E. 110, 12 L.R.A. 346, 21 Am.St.Rep. 846, under these circumstances: Certain persons undertook to organize a corporation under the laws of Ohio, and did obtain a certificate of incorporation from the secretary of state. In the certificate the capital stock of the corporation was stated to be $50,000, and yet the organizers chose directors when less than $3,000 had been subscribed and less than $2,000 had been paid in, and began to transact business, incurring a large indebtedness in the name of the so-called corporation. Under the law of Ohio the corporate powers, business, and property of corporations formed for profit must be exercised, conducted, and controlled by...