May v. Black

• Decision Date: 20 May 1890
• Citation: 77 Wis. 101,45 N.W. 949
• Parties: MAY v. BLACK ET AL.
• Court: Wisconsin Supreme Court

77 Wis. 101

45 N.W. 949

MAY

v.BLACK ET AL.

Supreme Court of Wisconsin.

May 20, 1890.

Appeal from circuit court, Fond du Lac county.J. W. Hiner and Van Dyke & Van Dyke, for appellants.

Coleman & Sutherland and Quarles, Spence & Quarles, for respondent.

ORTON, J.

This action was commenced by the respondent on a demand for work and labor, and in behalf of all others, having like claims, who may come in and become co-plaintiffs against the Nanaimo Mining Company, a corporation organized under the laws of the state of Michigan, and John C. Black and others, stockholders of said corporation residing in this state, or amenable to the process of the court. The action is in equity, and the prayer is that the defendant stockholders be decreed and adjudged to pay into court, for the use of the plaintiffs, the amounts due each for such work and labor. No judgment is demanded against the corporation, and it did not appear in the action. It is alleged in the complaint that the corporation is insolvent, and that all of its property has been sold to pay its creditors in attachments. The judgment is at law, that the plaintiff and five others, who had become co-plaintiffs, “have and recover against the defendant John C. Black $1,838.34 and costs, and against John S. McDonald, $529.74 and costs, and that execution issue in due form of law.” The defendant John C. Black held stock as assignee of the said McDonald at the time the labor claims for which judgment was rendered against him accrued, and the defendant McDonald held the same stock when such claims for which judgment was rendered against him accrued, and said Black was not a stockholder when the suit was commenced, but the said McDonald was. The said Black was the cashier of the Continental National Bank of Chicago, and held the stock as such cashier, by assignment from McDonald, as collateral security for a loan made by him of the bank, and not otherwise.

The important questions of law in the case were, therefore: (1) Were the stockholders at the time the debt accrued liable, or those who were such when the action was commenced, or are the stockholders of this corporation liable as copartners or as sureties? (2) Could Black be held liable, holding such a relation to the stock and the bank? (3) Is this the proper remedy, and in the proper jurisdiction? On this appeal these questions were argued before this court by the respective and learned counsel with great force and ability. The third question, of remedy and jurisdiction, should stand first. If this court should hold that the plaintiff has mistaken his remedy or pursued it in the wrong tribunal or jurisdiction, it would be neither necessary nor proper to decide the first two questions. We are compelled by the authorities, and the reasons on which they are based, to hold in the negative as to both questions.

1. This is a corporation of the state of Michigan, and the liability of its stockholders, and the manner of its enforcement, are governed by the laws of that state. It is a special statutory liability, to be enforced by statutory remedies. Section 35, No. 113, of the Public Acts of 1877, of that state, the general law under which this corporation was organized, provides that “the stockholders of all corporations existing hereunder shall be individually liable for all labor performed for such corporation, which said liability may be enforced by action in assumpsit commenced within two years from the time when payment for such labor became due, and not afterwards.” It would seem that an action against stockholders for such labor claims ought to be brought under this statute. But it is contended by the learned counsel of the respondent that, inasmuch as the constitution of that state created this liability without providing any special remedy or method of enforcement, it may be enforced by the usual remedies for the enforcement of any such general liability. The constitutional provision is that “the stockholders of all corporations and joint-stock associations shall be individually liable for all labor performed for such corporation or association.” It was held in Hanson v. Donkersley, 37 Mich. 184, that this liability is not primary but collateral, and in a suit under the statute the statutory conditions must be fully complied with; and in Peck v. Miller, 39 Mich. 594, it was held that, if the constitutional provision is sufficient to execute itself, it can be only by some proceeding in equity, but that there is no remedy at law to do complete justice in such a case without some aid of statutes. In Morley v. Thayer, 3 Fed. Rep. 737, it is held by Judge CLIFFORD that a similar constitutional provision of Massachusetts could not execute itself, and required legislation to carry it into effect, by prescribing the means and mode of its enforcement, and that it is clear that the statutes passed in fulfillment of that requirement constitute the unmistakable rule of decision, and furnish the only basis of judicial action. To the same effect are Fusz v. Spaunhorst, 67 Mo. 256;French v. Teschemaker, 24 Cal. 518; and Groves v. Slaughter, 15 Pet. 449. It is inconceivable how any remedy could be effectual without the aid of statutory provisions. But the plaintiff is estopped from so claiming by his complaint, that predicates the action on the statutory liability, and refers to the statutory proceedings of the corporation by which the liability was incurred. The action is brought under the statute, and, as a matter of course, the statute must be complied with. The remedy provided by the statute is exclusive of all others. “The statute which creates it [the corporation] may also declare the purpose of its creation, and provide for the manner of its enforcement.” Pollard v. Bailey, 20 Wall. 520. “Where the statutes of the state which creates a corporation, making the stockholders liable for the corporate debts, provide a special remedy, the liability of a stockholder can be enforced in no...