Malloy v. Mallett
| Decision Date | 30 June 1863 |
| Citation | 6 Jones 345,59 N.C. 345 |
| Court | North Carolina Supreme Court |
| Parties | NEILL MALLOY v. CHARLES B. MALLETT and others. |
Upon the dissolution of a corporation by the expiration of the time for which it was chartered, its debts become extinct.
Under a provision in an act of incorporation, “that the private property of the individual stockholders shall be liable for the debts, contracts and liabilities of the corporation,” it was held that the responsibility on the individual stockholders is a secondary one, and that when the debts against the corporation became extinct by the expiration of its charter, the liability of the individual stockholders became extinct also.
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CAUSE sent from the Court of Equity of Cumberland county.
All the facts necessary to the understanding of this cause are stated in the opinion of the Court.
Buxton, for the plaintiff .
C. G. Wright and Bryan, for the defendants .
Several interesting questions are presented by the pleadings, and have been discussed in the argument, but in the view which we feel constrained to take of the case, it is only necessary for us to notice one of them. The bill was filed after the expiration of the charter of the company for whose debts, private property of the defendants, as individual stockholders, is sought to be made liable. It is a well settled principle of the common law, that upon the dissolution of a corporation, its debts become extinct. This principle was held, in the case of Fox v. Horah, 1 Ired. Eq. 358, to be in full force in this State. Hence, when the “Phenix Company” expired by the limitation of its charter on the 1st day of January, 1860, it ceased to owe any debts, because it no longer had any existence by which it could be a debtor. The question, then, is, could the private property of the persons, who were the individual stockholders of the company at the time of its dissolution, be made liable under the 10th section of the act of incorporation, for such of its debts as were then unpaid? The proper answer to this question depends upon anothcr enquiry; that is, whether the responsibility imposed by the act upon the individual stockholders, is a primary or only a secondary liability. The language of the charter, after creating the corporation, with the usual powers and privileges, for the purpose of manufacturing wool and cotton goods, and after prescribing various regulations ordinarily found in charters of the like kind, declares, in the 10th sectio...
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Scott v. Gittings
...Horrah, supra, that the English common-law doctrine before stated was in force in that state, and that decision was approved in Malloy v. Mallett, 59 N.C. 345. But the force these decisions as an authority for the doctrine was completely nullified in the case of Van Glahn v. De Rosset, 81 N......