MacKay v. Elwood

• Decision Date: 18 September 1895
• Parties: MACKAY v. ELWOOD.
• Court: Washington Supreme Court

41 P. 919

12 Wash. 579

MACKAY v. ELWOOD.

Supreme Court of Washington

September 18, 1895

Appeal from superior court, Whatcom county; John R. Winn, Judge.

Action by W. D. Mackay, assignee of the W. J. Pratt Hardware Company, against John Elwood, to recover the unpaid balance of the purchase price of certain stock. From a judgment for plaintiff, and from an order denying his motion for a new trial, defendant appeals. Affirmed.

Fairchild & Rawson, for appellant.

Kerr &amp McCord, for respondent.

GORDON J.

In 1890 the Pratt Hardware Company filed its articles of incorporation pursuant to the laws of this state, and commenced business in the city of Whatcom, with a capital stock of $40,000, divided into 400 shares of the par value of $100 each. In June, 1892, a receiver was appointed for said corporation, who qualified, and took possession of its assets. Thereafter said corporation made an assignment of all of its assets to Charles Requa, for the benefit of all its creditors pro rata in proportion to their respective claims which deed of assignment was executed in pursuance of the resolution of the board of directors of said corporation acting under the authority and direction of its stockholders. The assignee qualified, and began proceedings to remove the receiver, and to possess himself of the property of the corporation, pending which proceedings the respondent Mackay, was selected to act as assignee by the creditors of said corporation at a meeting called for that purpose. Thereupon said Requa (the original assignee), in pursuance of an order of court, and of a mutual arrangement between all parties concerned, made in open court, deeded all the property of said corporation to respondent, and the receiver surrendered to him the possession thereof. Said Mackay qualified as assignee, and proceeded to dispose of the property of the estate, realizing therefor about $7,000; and claims of creditors were filed with and allowed by him aggregating upwards of $21,000. At the time of said assignment there was due the corporation from various stockholders upon unpaid stock subscriptions about $10,000, which amount (if fully paid in), together with the other assets of the corporation, would have been inadequate to discharge the indebtedness owing by the estate. The assignee having made application to the superior court of Whatcom county for that purpose, a call was issued for the balance remaining unpaid upon subscriptions to the stock of said corporation. Appellant was a subscriber originally to 10 shares of said stock (of the par value of $1,000), and thereafter, and in addition to said subscription, had agreed orally to take an additional 40 shares of said stock (amounting to the par value of $4,000), and had paid into the treasury of said corporation, on account of the said subscription, the sum of $3,750, prior to the making of said assignment, leaving an unpaid balance of $1,250, to recover which last-mentioned sum this action (after the making of said call, demand, and refusal of payment) was instituted in the superior court. A demurrer to the complaint having been overruled, appellant answered by a general denial; and from a judgment on the verdict of a jury in favor of the respondent, and from an order denying appellant's motion for a new trial below, this appeal was taken.

It is first contended that the court below erred in overruling the demurrer to the complaint, and counsel for appellant urges in this court that said complaint is defective in that it does appear therefrom (1) that the capital stock of said corporation had been all subscribed; (2) that it affirmatively appears that at the time of the execution of the deed by the corporation to Requa no call had been made by the trustees for the balance remaining unpaid upon appellant's stock subscription. In answer to the first objection, it is sufficient to say that, for the purposes of this action, it was not necessary for the pleader, in framing his complaint, to allege that all of the stock of the corporation had been subscribed, nor to anticipate defenses growing out of irregularities in the organization of the corporation. The complaint, among other things, alleges that the "W. J. Pratt Hardware Company is, and at and during all the time hereinafter mentioned has been, a duly-organized and existing corporation." This allegation we think sufficient. Boone, Code Pl. § 138, and authorities there cited. As a general rule, it is well settled that a want of capacity to sue must appear from the facts that are stated and not from the omission of facts that would have exposed such want. Id. § 48. The remaining objection to the complaint involves necessarily a consideration of the nature and effect of the original deed of assignment by the corporation to Requa. The appellant insists that the law of this state governing assignments for the benefit of creditors has no application to insolvent corporations, and such was the holding of this court in Nyman v. Berry, 3 Wash. St. 734, 29 P. 557, in construing the provisions of chapter 143 of the Code of 1881. An examination convinces us that the reasons for the holding in Nyman v. Berry are as applicable to the existing statute as to the one under consideration in that case, and that the contention of appellant in this regard must be upheld. But respondent insists that the assignment is sufficient and effectual as a common-law deed of assignment. In Nyman v. Berry, supra, this court held that in this state an insolvent corporation might make a common-law deed of assignment of all its property to a trustee for the benefit of all its creditors. That a corporation, unless restrained by the act under which it is incorporated, or prevented by other provision of statute, may assign its property to a trustee, to sell the same, and apply the proceeds to the payment of its debts, is fully sustained by the authorities. Ardesco Oil Co. v. North American Oil & Mining Co., 66 Pa. St. 375; De Ruyter v. St. Peter's Church, 3 Barb. Ch. 119; Robins v. Embry, Smedes & M. Ch. 207; Dana v. Bank, 5 Watts & S. 223; Haxtun v. Bishop, 3 Wend. 13; Lenox v. Roberts, 2 Wheat. 373. The appellant seems to concede that the assignment to Requa was effectual as a common-law assignment, but contends that a stockholder is not liable on a stock subscription until after a call or assessment is made by the directors of such corporation; and that, inasmuch as no call therefor had been made at the time of the assignment to Requa, his liability had not ripened into an obligation upon which an action could be maintained, and was not at that time an existing asset, and did not pass by the deed to the trustee. We are unable to find any authority that will support this contention. 1 Hill's Code, § 1511, provides: "*** Each and every stockholder shall be personally liable to the...