Kulp v. Fleming
| Citation | 62 N.E. 334,65 Ohio St. 321 |
| Parties | KULP v. FLEMING. |
| Decision Date | 03 December 1901 |
| Court | United States State Supreme Court of Ohio |
65 Ohio St. 321
62 N.E. 334
KULP
v.
FLEMING.
Supreme Court of Ohio.
Dec. 3, 1901.
Error to circuit court, Medina county.
Action by one Fleming against one Kulp. Judgment of common pleas reversing judgment sustaining demurrer to the amended petition, and defendant brings error. Affirmed.
The action below was brought by the defendant in error against the plaintiff in error in the common pleas of Medina to recover on a claimed liability as a stockholder in the State Bank of Kansas, a corporation of that state, the plaintiff below being a creditor of that corporation. A general demurrer to the amended petition having been sustained, and judgment against the plaintiff entered, error was prosecuted to the circuit court, where the judgment of the common pleas was reversed, and the cause remanded for further proceedings. To this judgment of reversal the defendant below brings error.
The amended petition, among other things, avers: That the defendant, Kulp, ‘is, and has been for more than five years last past, a resident of the state of Ohio, and on the 15th day of October, 1886, was, and ever since has been, a stockholder in the State Bank of Oberlin, Kansas, a corporation organized in said state under the provisions of the constitution and laws thereof.’ That by article 12, § 2, of the constitution of the state of Kansas, in force at said date and to the present time, it was provided that ‘dues from corporations shall be secured by individual liability of the stockholders to an amount equal to the stock owned by each stockholder, and such other means as shall be provided by law.’ That section 46 of an act entitled ‘An act concerning private corporations,’ passed by the legislature of said state of Kansas in 1868, and continuing in force to the time of the filing of the amended petition, being section 1206 of the General Statutes of said state, provides ‘that no stockholder shall be liable to pay debts of a corporation beyond the amount due on his stock and an additional amount equal to the stock owned by him.’ That section 40 of the above-entitled act, as amended and passed in 1883, and continuing in force to the time of the filing of the amended petition, being section 1200 of the General Statutes of Kansas, among other things provides ‘that any corporation shall be deemed to be dissolved for the purpose of enabling any creditor of such corporation to prosecute suit against the stockholders thereof to enforce their individual liability, if it be shown that such corporation has suspended business for more than one year.’ That section 44 of said act, continuing in force to the time of the filing of the amended petition, being section 1204 of the General Statutes of Kansas, provides, among other things: ‘If any corporation created under this or any general statute of this state, except railway or charitable or religious corporations, be dissolved, leaving debts unpaid, suit may be brought against any person or persons who are stockholders at the time of such dissolution without joining the corporation in said suit.’ The amended petition further averred a construction of the foregoing sections by the supreme court of the state of Kansas to the effect that under said statutes the liability of the stockholders to the creditors of a corporation is several, and not joint; that each stockholder must be sued separately; that the liability arises upon contract, and the action to enforce it is transitory, and may be brought in any state where service can be obtained on any stockholder; that the creditor who first proceeds by suit against a stockholder obtains a prior lien upon such stockholder's liability. The amended petition made all other averments necessary, showing the ownership of the claim of the plaintiff, the ownership of stock by the defendant, the insolvency of the corporation, its dissolution under the provisions of the foregoing sections of the statute, that its property had been fully administered upon, appropriated, and exhausted for the benefit of its creditors, and that at a date more than one year before the commencement of the action the corporation had suspended business.
1. A provision of statute that the stockholders of a corporation shall be individually liable to creditors for the debts of the company does not alone create the liability. It is rather a legislative requirement that whoever becomes a stockholder shall thereby assume an individual liability, and thus gives legal effect to the acts of the parties. The actual liability becomes operative by the act of a shareholder in becoming such, being founded on his proposal to become liable which arises from the membership and individual agreement to abide by the organic law of the corporation, and the acceptance thereof by the creditor by extending credit. Such obligation is contractual.
2. The law of the state where a contract is executed and is to be performed enters into and becomes a part of the contract in the sense that its construction, validity, and obligatory effect are to be controlled by that law; and, when valid there, the contract will be sustained elsewhere, and accorded the interpretation required by the law of the place where made, unless the contract is against good morals, or contravenes a settled policy of the state in whose tribunals its enforcement is sought.
3. The construction of the statute of a sister state by its highest court will be followed by this court.
4. The individual liability of stockholders for debts of a corporation, provision for which is made by the constitution and statutes of Kansas, is not penal, but is contractual. That liability may be enforced in Ohio. And a petition of a creditor in a suit against a stockholder, which shows the constitutional and statutory provisions respecting such liability, and sets forth the construction given by the court of last resort of Kansas holding the liability to exist, and to be several and contractual, and alleges other facts showing the ownership of the claim by plaintiff, the ownership of the stock by defendant, the insolvency of the corporation, its dissolution under the provisions of the statute, and that it had suspended business more than a year before the commencement of the action, states a cause of action.
[Ohio St. 324]
[62 N.E. 335]
Lee Elliott, for plaintiff in error.
[Ohio St. 334]SPEAR, J. (after stating the facts).
Did the amended petition state a case? is the question before us; the ultimate question being, can a creditor of an...
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Irvine v. Elliott
...... retain control over the cause and the parties until their. ultimate rights shall be determined and adjusted.'. . . In. Kulp v. Fleming, 65 Ohio St. 321, 62 N.E. 334, 87. Am.St.Rep. 611, the court said:. . . 'Our. method of enforcing the liability of ......
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Van Tuyl v. Carpenter
...... Christopher v. Norvell, 201 U.S. 216, 224, et seq.,. 26 S.Ct. 502, 50 L.Ed. 732, 5 Ann. Cas. 740; Kulp v. Fleming, 65 Ohio St. 321, 62 N.E. 334, 87 Am. St. Rep. 611. But if the method of ascertaining such liability is such. as cannot be recognized ......
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...to dissolve a Nevada LLC. Durina v. Filtroil, Inc., 2008 WL 4307892, at *2 (Ohio Ct.App.2008) (citing, inter alia, Kulp v. Fleming, 65 Ohio St. 321, 62 N.E. 334, 337 (1901) ( “[O]ur courts have no jurisdiction to adjudicate the affairs of a foreign corporation, and any attempt to wind up it......
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Van Tuyl v. Carpenter
...made to appear. Christopher v. Norvell, 201 U. S. 216, 224, et seq., 26 Sup. Ct. 502, 50 L. Ed. 732, 5 Ann. Cas. 740; Kulp v. Fleming, 65 Ohio St. 321, 62 N. E. 334, 87 Am. St. Rep. 611. But if the method of ascertaining such liability is such as cannot be recognized in a foreign state beca......