Hawkins v. Donnerberg

• Decision Date: 18 November 1901
• Parties: HAWKINS et al. v. DONNERBERG et al. [1]
• Court: Oregon Supreme Court

66 P. 691

40 Or. 97

HAWKINS et al. v. DONNERBERG et al. ^[1]

Supreme Court of Oregon

November 18, 1901

Appeal from circuit court, Multnomah county; John B. Cleland, Judge.

Action by D.R. Hawkins and another against August Donnerberg and others. From a judgment in favor of plaintiffs, defendants appeal. Reversed.

This is a suit by a judgment creditor of an insolvent corporation to recover from certain of its stockholders the sum alleged to be due from each, respectively, on account of stock subscription. The facts are that the Citizens' Real Estate & Investment Company, having been duly incorporated under the laws of the state of Oregon with a capital stock of $500,000, divided into 5,000 shares of the par value of $100 each, adopted by-laws containing the following provision "The stock of this corporation shall be paid for in monthly installments of five per cent. upon the par value thereof;" that on September 19, 1891, L.L. Hawkins loaned said corporation the sum of $6,000, for which it executed to him its promissory note, payable on demand, with interest at the rate of 10 per cent. per annum; that on February 21, 1894, E.A. King loaned it $3,500, and took its note for that sum, payable in 90 days, with like interest that these notes were assigned to plaintiff, who, on November 10, 1898, secured a judgment against said corporation for the sum of $11,875, upon which was collected $4,491.25 and $1,986.87 on December 27, 1898, and July 21, 1899 respectively, and that said corporation is now insolvent. The complaint alleges that the defendants subscribed for stock of said corporation, and stipulated in their agreement to pay monthly therefor the sum of $5 per share, until the par value thereof was fully paid; that they became the owners and holders of said stock on or before the date set opposite their respective names, upon which there is now due and unpaid, not including interest, as follows, to wit "Donnerberg & Co., July 11, 1891, 6 shares, $120.00." Then follow like statements in respect to the other defendants. A demurrer to the complaint on the ground that the suit had not been commenced within the time limited therefor having been overruled, each defendant averred in his answer "that more than six years have elapsed since the cause of suit alleged in the complaint accrued against these defendants, and the said suit is barred by the statute of limitations of the state of Oregon." A trial being had resulted in a decree for plaintiff, and defendants appeal.

Geo. H. Williams, for appellant L.G. Clark.

H.M. Cake, for appellants Stubbs & Lawrence.

H.E. Thomas, for other appellants.

H.K. Sargent, for respondents.

MOORE J. (after stating the facts).

It is contended by defendants' counsel that the right of a creditor of an insolvent corporation to subject its unpaid stock subscription to the satisfaction of his demands is limited to the rights of the corporation, and, as the subscriptions to the capital stock of the Citizens' Real Estate & Investment Company were payable in monthly installments, the statute of limitations had run against it and hence the court erred in decreeing a recovery of any sum. The plaintiffs' counsel maintain, however, that a stockholder who has not paid his subscription occupies towards the creditors of a corporation the relation of guaranty, in which he undertakes, to the extent of his unpaid subscription, to pay the indebtedness of the corporation if it should become insolvent, and, this being so, his liability does not become absolute, so that the statute of limitations is set in motion, until the contingency occurs upon the happening of which his undertaking of indemnity is predicated; and if it be assumed, though denied, that the defense relied upon bars plaintiffs' right of suit, the expiration of the period of the statute of limitations is manifest from an inspection of the complaint, and hence the immunity invoked is available only by demurrer, but the defendants, having answered over after their demurrer was overruled, thereby waived the privilege conferred by the statute. It will be remembered that the bylaws of the corporation provided that its stock should be paid for in monthly installments of 5 per cent. upon the par value thereof, and that the defendants stipulated in their subscription agreement to pay $5 per month for each share of the stock negotiated for. The terms imposed by the by-laws and prescribed by the agreement required the defendants to pay the face value of the stock subscribed for in 20 months; so that, if the statute of limitations can be invoked in their favor at all, it began to run against the monthly installments as they severally matured. The statute provides that a defendant may demur to the complaint within the time required by law to appear and answer, when it appears upon the face thereof that the action has not been commenced within the time limited thereby. Hill's Ann.Laws Or. § 67. But if not apparent from an inspection of the complaint that the remedy is barred, the objection can only be taken by answer. Id. § 3; Spaur v. McBee, 19 Or. 76, 23 P. 818; Davis v. Davis, 20 Or. 78, 25 P. 140. It will be remembered that the complaint avers that the defendants became the owners and holders of the number of shares of said stock on or before the dates set opposite their respective names, upon which there was then due and unpaid, not including interest, as follows: "Donnerberg & Co., July 11, 1891, 6 shares, $120," etc. Adding 20 months to the time when the defendants respectively subscribed for their shares of stock as the limit of time within which they agreed to pay therefor, and computing the time from such extended dates, more than 6 years had elapsed before this suit was instituted, and therefore the question to be considered is whether the complaint discloses that any payments were made by either of said defendants on account of their stock subscriptions within that period. It having been alleged that Donnerberg & Co. subscribed for six shares of stock, upon which there was due and unpaid $120, and the complaint having disclosed that this stock was of the par value of $600, it is fairly inferable from the averments of the complaint that these parties had paid on account of their subscription the sum of $480. It does not appear, however, when such payment was made, or upon what installments of the debt created by the subscription agreement it was applied. If paid, however, upon each of the installments, it would necessarily interrupt the running of the statute of limitations. Bartel v. Mathias, 19 Or. 482, 24 P. 918. But, the complaint having failed to disclose facts upon its face which might toll the plaintiffs' remedy, the issue of the bar could not be tendered by a demurrer predicated upon the statutory ground that the suit had not been commenced within the time limited therefor, and hence the objection upon that basis could only be taken by answer. As opposed to this view, plaintiffs' counsel call our attention to 13 Enc.Pl. & Prac. 206, where the editors of that valuable work say: "Averments of payments may avoid the bar of the statute and prevent the bill or petition from being demurrable, but such allegations must be certain;" citing in support of the text the case of Murphy v. Phelps, 12 Mont. 531, 31 P. 64, in which it was held that a complaint in an action on a note appearing on its face to be barred by limitation, which alleges the indorsement on the note of the receipt of a certain sum, without a direct averment that the maker had paid any sum thereon, is bad on demurrer. In that case the complaint purported to set out a copy of the note sued on, and alleged that the same was indorsed, "December 30, 1888, received $90.30." It was also averred in another part of the complaint that "said note of $558.26, less the indorsement thereon of $90.30, is now due and unpaid." Mr. Justice Harwood, in deciding the case, says: "A statement in a complaint that an indorsement of the receipt of a certain sum appears on the promissory note sued on is not an averment that the obligor has paid any sum thereof. The indorsement could be placed thereon without payment, and the statement in the complaint that the note is indorsed, 'December 30, 1888, received $90.30,' could be made in truth, although the maker of the note had paid nothing whatever thereon. Neither is the allegation of the sixth paragraph of the complaint that 'said note, less the indorsement thereon of $90.30, is now due and unpaid,' an averment that said sum was paid on said note. It might be truly alleged that the amount of the note was due, less the amount of said indorsement, when in fact the whole amount of the note was due and unpaid, including the sum stated as indorsed thereon. When the vital question is whether the claim is or is not barred by the statute of limitations, and the determination of such question depends upon the fact of the payment, such uncertain allegations as to that fact are insufficient. Therefore, if defendant had rested on his demurrer, we should be constrained to hold the complaint defective in thus failing to state facts sufficient to constitute a cause of action." In the case at bar the allegation in the complaint that each defendant, on or before the date stated, subscribed for and became the owner and holder of a certain number of shares of said capital stock, upon which there is due and unpaid a stated sum, which is less than the par value of the stock, is equivalent to an averment of payment of the difference, the only uncertainty being in respect to the time when such payment was made. The complaint does not disclose the time, and, since a payment removes the bar of the statute by fixing a new period from which it begins to run, the certainty of that date as...