Lehman v. Glenn

• Decision Date: 27 February 1889
• Citation: 6 So. 44,87 Ala. 618
• Parties: LEHMAN ET AL. v. GLENN.
• Court: Alabama Supreme Court

6 So. 44

87 Ala. 618

LEHMAN ET AL. v. GLENN.

Supreme Court of Alabama

February 27, 1889

Appeal from circuit court, Montgomery county.

Action by John Glenn, trustee under a deed of trust executed by the National Express & Transportation Company to trustees to whom said Glenn was successor, against Lehman, Durr & Co., to recover unpaid subscription to the capital stock of the company. Judgment for plaintiff, and defendants appeal. For a more full statement of the facts involved, reference is made to the various decisions in other actions by said Glenn referred to in the opinion, and to Lewis' Adm'r v. Glenn, 6 S.E. Rep. 866.

Williams & Williams, for appellants.

W S. Thorington and John Howard, for appellee.

SOMERVILLE J.

This case is analogous, in its leading facts, to Glenn v Semple, 80 Ala. 159. Its merits may be disposed of by a few propositions abundantly supported by authorities precisely in point:

1. The decree of the chancery court of the city of Richmond, rendered on the 14th day of December, 1880, on a creditors' bill previously filed in December, 1871, against the National Express & Transportation Company and the trustees of that corporation, is not only admissible in evidence in this case against the defendants as stockholders in said company, but is entitled to as full faith and credit in the courts of this state as it would be in the courts of Virginia, where the corporation was located and had its principal office, and where the decree was rendered. If the court had jurisdiction of the subject-matter and of the parties, and the stockholders are to be regarded as parties to that suit for any purpose, this is the necessary legal effect of the decree under the constitution and laws of the United States. Christmas v. Russell, 5 Wall. 291; Maxwell v. Stewart, 22 Wall. 77.

2. The record in that case, which is made a part of the record before us, shows sufficiently that the court acquired jurisdiction of the corporation itself by service of process on the proper officers. This service was on two of the directors, one of whom appeared and answered, and also on the cashier of the company, who also appeared and answered. The Virginia court decided that this service was sufficient to give jurisdiction, and that decision is binding on us. It cannot be collaterally attacked. If erroneous, it should have been corrected on direct appeal. The precise point was so decided in Glenn v. Springs, 26 F. 494, and again in Glenn v. Williams, 60 Md. 93.

3. The same cases also hold that the decree rendered against the corporation in that case was conclusive against the stockholders, so far as it affects the condition and status of the corporate property, although they were not personally made parties to the proceeding by service of process on them. The rule in cases of this nature is that the interest of the stockholders is represented by the presence of the corporation for all the purposes of that suit. It was said in Glenn v. Williams, supra: "When the court obtained jurisdiction of the corporation, every stockholder, in his corporate capacity, was a party to the cause, and was supposed to be represented by the president and the directors, who were intrusted with the management of the corporate interest of all the stockholders." It was observed, further, that the stockholders being distributed among the several states, many of them being non-residents of Virginia, ordinary process of the courts of that state could not reach them, and, if the court were required to make them parties personally, the creditors of the corporation would be without adequate remedy. The unpaid subscriptions of stock are assets of the corporation, being a trust fund for the payment of its debts, and "as against a creditor, with an established debt against the corporation, by judgment or decree, the stockholder has no right to withhold the funds of the company upon the ground that he was not individually a party to the pleadings in which the recovery was obtained." Glenn v. Williams, 60 Md. 116; Sanger v. Upton, 91 U.S. 56; Telegraph Co. v. Gray, 122 Ill. 630, 14 N.E. 214; 27 Amer. Law Reg. 160, and note 168; Vanderwerken v. Glenn, 6 S.E. Rep. 806.

4. The decree of the Richmond court also conclusively determined the following points: First, that there was no laches on the part of the corporation or its trustees in the prosecution of that suit, or in obtaining the decree, which as we have stated, was rendered on December 14th, 1880; secondly, that the statute of limitations did not bar the claims of creditors up to that time; thirdly, ...