Kritzer v. Woodson

• Decision Date: 31 January 1854
• Citation: 19 Mo. 327
• Parties: KRITZER, Plaintiff in Error, v. WOODSON et al., Defendants in Error.
• Court: Missouri Supreme Court

19 Mo. 327

KRITZER, Plaintiff in Error,

v.WOODSON et al., Defendants in Error.

Supreme Court of Missouri.

January Term, 1854.

1. Under section 20 of article 1 of the act concerning corporations (R. C. 1845,) the directors of an incorporated company are not liable to a stockholder for the excess of the indebtedness of the company contracted during their administration, over the amount of the capital stock paid in.

2. They are not liable to any person, unless the indebtedness existing at one time exceeds the stock paid in.

Error to Jackson Circuit Court.

Smart and Sheley, for plaintiff in Error.

1. Debts having been contracted by the company exceeding the capital stock actually paid in, and while the defendants were directors, they became liable in their individual capacity to pay the same. R. C. 1845, tit. corporations, art. 1, sec 1.

2. The plaintiff is entitled to recover from the defendants the amount he was compelled to pay out of his individual means to satisfy the debts so created by them.

A. Leonard, for defendant in error.

1. The liability of the directors who violate the law, is to corporate creditors and not to the stockholders.

2. The petition is defective, in not showing an indebtedness beyond the lawful limit, existing at one time, and contracted during the administration of the defendants.

GAMBLE, Judge, delivered the opinion of the court.

Kritzer was a stockholder in an incorporated company, called “The Independence and Missouri River Railroad Company.” Woodson and others, the defendants, were directors of the company. The petition alleges that the defendants, as directors of the company, incurred debts on the part of the company, to an amount exceeding the amount of the capital stock paid in; the excess being three thousand dollars. It is next alleged, that a creditor of the company recovered judgment against it, and having, upon execution, sold all the corporate property, without satisfying his execution, he issued an alias execution, upon which the plaintiff, Kritzer, as a stockholder, was compelled to pay the sum of seventy-two dollars, as his proportion of the unsatisfied balance of the execution. This action is brought by the stockholder, to recover from the directors the amount so paid by him. The defendants demurred to the petition, and the demurrer was sustained.

Two questions are presented for consideration; 1st. Whether the directors of an incorporated company are liable to the stockholders for the excess of the indebtedness of the company, contracted during their adadministration, over the amount of the capital stock paid in? 2d. Whether the directors are ever liable to any person, unless it is expressly charged that the indebtedness existing at one time exceeded the stock paid in?

I. The general assembly, with the design of securing those who might deal with corporations, provided by a general law concerning corporations, that, in all corporations, unless otherwise specified in their charter, in case of deficiency of corporate property liable to execution, the individual property of every member of the corporation, having shares therein, should be liable to be taken in execution, to double the amount of his stock, and no more, for all debts of the corporation contracted during his ownership of such stock. R. C. 233, sec. 13. The act then proceeds to give to the creditor very stringent remedies against the stockholders. The 19th section provides that, if the directors of a corporation shall declare and pay any dividend, when the corporation is insolvent, or the payment of which would render it insolvent, they shall be jointly and severally liable for all the debts of the corporation then existing, and for all debts that shall thereafter be contracted as long as they shall continue in office: provided, that the amount for which they shall all be so liable, shall not exceed the amount of such dividend. It appears very clear, that the responsibility of the directors, under ...