Merchants' Ins. Co. v. Hill

• Citation: 12 Mo.App. 148
• Parties: MERCHANTS' INSURANCE COMPANY, Respondent, v. BRITTON A. HILL, STOCKHOLDER, Appellant.
• Decision Date: 02 May 1882
• Court: Court of Appeal of Missouri (US)

12 Mo.App. 148

MERCHANTS' INSURANCE COMPANY, Respondent,

v.BRITTON A. HILL, STOCKHOLDER, Appellant.

St. Louis Court of Appeals, Missouri.

May 2, 1882.

1. A motion in a case is no par, of the recordt and if its terms are material, it must be incorporated in the bill of exceptions.

2. In a proceeding by motion against a stockholder, under the statute, it is not material, on appeal, to consider what were the terms of the motion, and hence, it is sufficient if the record shows that the motion was filed.

3. A charter which exempts the stockholders of the corporation from the operation of the statute imposing a “double liability,” does not change the general liability of the stockholders.

4. The statute of 1865 merely changed the creditor's remedy against a stockholder, without changing the latter's liability, is not retrospective, and is applicable to stockholders of a corporation in existence at the date of the act.

5. Where stockholders are exempted by special law, from the statutory double liability, without leaving any method of enforcing the general liability in favor of creditors, the adoption of a general provision for enforcing this liability does not derogate from the special charter exemption.

6. A proceeding by motion under the statute against a stockholder is a proceeding at law, and evidence taken therein will not be reviewed on appeal.

7. A stockholder proceeded against by motion under the statute, may offset any subsisting debt due by the corporation to him.

8. A counter-claim, where there is no current account, must be adjusted between the parties before it can be allowed as an offset, and cannot be allowed if barred by the statute.

APPEAL from the St. Louis Circuit Court, BOYLE, J.

Affirmed.

N. HOLMES, for the appellant: A general statute treating the subject in a general manner, and not expressly contradictory to the special act, shall not be considered as intended to affect the more particular and positive provisions of it, unless it is absolutely necessary to give the general statute such a construction, in order that its words shall have any meaning at all.-- The State ex rel. v. McDonald, 38 Mo. 529; The State v. Alexander, 23 Mo. 508; The State v. Macon County, 41 Mo. 458, 459; The State, v. Insurance Co., 47 Mo. 149; The State v. Fiala, 47 Mo. 310-320. For the further and forcible reason that such a construction of these general laws of 1865 and 1879, as would make them apply to this special and private act, and subject the stockholders of this corporation to this summary proceeding on motion, would make those laws unconstitutional, as being retroactive, and as depriving those stockholders of rights and defences which they before had, and as imposing on them liabilities to which they were not subject, when they became stockholders, under the rights, privileges, and exemptions conferred on them by the special charter; and it is a settled principle that a construction which would make an act unconstitutional will not be given to it, “unless it, in clear and express terms, admit of no other rational explanation.”-- Shaw v. Gregoire, 41 Mo. 415, 416; Hope Mutual Ins. Co. v. Flynn, 38 Mo. 483; Provident Savings Instn. v. Bathing Rink, 52 Mo. 557; Fairchild v. Hunt, 71 Mo. 531, 532; Moart v. Minnick, 3 N. H. 477; Society v. Wheeler, 2 Gall. 105-139. At common law, and independently of these general statutes, no action would lie by a creditor of the corporation against a stockholder, because there was no privity of contract between them, though in equity he could have a bill against all or some of the stockholders of an insolvent corporation, upon an equity worked out through the liability of the corporation to him, and of the stockholders to the corporation, for a balance of unpaid stock, by a species of subrogation, to compel them to contribute their pro rata shares (within the amounts owed by them) towards making up the amount of the creditor's demand against the corporation, in which an account could be taken, and claims of set-off and other equitable defences could be adjusted, and an apportionment made of the common burden among all the defendants.-- Lionberger v. Bank, 10 Mo. App. 499; Vose v. Grant, 15 Mass. 505; Spear v. Grant, 16 Mass. 15; Wood v. Dumme, 3 Mason, 308; Briggs v. Penniman, 8 Cow. 387; Hume v. Minyan, 1 Car. L. J. 217; Nathan v. Whitlock, 9 Paige Ch. 152; Mann v. Pentz, 3 N. Y. 422. In this proceeding the right of the plaintiff attaches to those only who were stockholders owing an unpaid balance of stock at the time when the motion was filed or notice was given, and not to those who were stockholders owing a balance of unpaid stock at any prior time.-- McClaren v. Franciscus, 43 Mo. 452. It was left open to this corporation to increase or diminish its capital stock within the limits prescribed by its charter, and the reduction made, in 1871, with the consent of all the stockholders, was binding and effectual on them and as against all others but existing creditors.--Ang. & Aes on Corp., sect. 556; Somerset, etc., R. Co. v. Cushing, 45 Me. 524-530. The offset of the defendant, claimed against the corporation in 1872, before this plaintiff appears to have become a creditor, and acquiesced in by the corporation for seven years before this motion was filed, was a legal and valid satisfaction of the balance of his stock then remaining unpaid, both as against said corporation and against this plaintiff.-- Webber v. Leighton, 8 Mo. App. 502. The plaintiff in this motion had no action at law, and no right under this statute, to hold the defendant for anything but an actual debt due and owing from the defendant to said corporation at the date of his motion for an unpaid balance of stock; and if that were fully satisfied, he was not liable otherwise for any debt of the corporation.-- Schicke v. Ridings, 65 Mo. 208. Looking to the previous state of the law, it is evident that this statute did not intend to create any new right in the plaintiff, nor any new indebtedness on the part of the stockholder, but merely to give a more summary remedy, concurrent with the existing remedy in equity, but not exclusive of it, in cases arising under it, subsequent to its passage.-- Lionberger v. Bank, 10 Mo. App. 499. It is quite analogous to garnishment, where the plaintiff attaches a debt due to his debtor, subject to set-off and all other legal and equitable defences, which the garnishee may have against his own creditor.-- Firebaugh v. Stone, 36 Mo. 114; Weil v. Tyler, 38 Mo. 545; s. c. 43 Mo. 581; Hannah v. Moberly Bank, 67 Mo. 686.

PATTISON & CRANE, for the respondent: The motion, upon which this proceeding is based, is not made a part of the bill of exceptions. Upon the reasoning of the cases already decided by this court ( Bremen Savings Bank v. Allen, and Allen v. Benton), there is nothing for this court to pass upon.--See also Colby v. Tracy, 62 Mo. 511; The State v. Ware, 69 Mo. 332. The corporation had no right to reduce its stock except in a manner that would leave its creditors in no worse position than they were before the reduction.-- Gill v. Balis, 72 Mo. 424 (followed in Chouteau Ins. Co. v. Floyd, decided at the present term); County of Morgan v. Allen, 103 U. S. 498; Kehlor v. Lademann, 11 Mo. App. 550. A change of the remedy for violation of a contract, or a change in the method of enforcing a contract, is not an impairment of its obligation.--Story on Const. (4th ed.), sect. 1385, esp. note 3 on p. 245, and notes 2 and 3 on succeeding page; McElrath v. Railroad Co., 55 Pa. St. 189, 204. “If a statute declares that any stockholder may be recovered against by a creditor of the corporation to the extent of the balance unpaid on his stock subscription, nothing is thereby added to the stockholder's ultimate liability, but something may be added in the more direct means for its enforcement.”-- Lewis v. St. Charles County, 5 Mo. App. 231. See also Walker v. Crain, 17 Barb. 119, 128. The claim of appellant was one for unliquidated damages, and therefore does not constitute a set-off. Whenever such a defence is allowed a stockholder, it is allowed him on the ground that it constitutes a set-off at law.-- Webber v. Leighton, 8 Mo. App. 502; Re Whitehouse & Co., 9 Ch. Div. 595; Arcade Co. v. Dowling, L. R. 3 C. P. 175. If there ever was a subsisting claim by the stockholder against the corporation, it is barred by the statute of limitations.

THOMPSON, J., delivered the opinion of the court.

This was a proceeding by motion in the St. Louis Circuit Court against the appellant, Britton A. Hill, as a stockholder in the defendant corporation, for an alleged balance of unpaid stock, under section 736 of the Revised Statutes of 1879 (p. 121). Adopting the clear and accurate statement of the appellant, it appears that on the hearing of the motion the plaintiff offered evidence tending to show that the defendant corporation was chartered by the special and private act of February 7, 1859 (Sess. Acts 1859, p 74), with “the same rights, privileges, and restrictions” as the Washington Insurance Company, chartered by the act of March 3, 1857 (Sess. Acts 1857, p. 544), excepting only so much of section 8 of that act as declared it “a public act,” and thereby excepting the new corporation out of the operation of sections 7, 13, 14, 15, 16, and 18 of Article I. of the general “corporations” act of November 23, 1855, (Rev. Stats. 1855, p. 372.) The capital stock was thereby limited to not less than $50,000, and not more than $1,000,000; but it was otherwise left open to the corporation to determine the amount.

That on the 20th of July, 1866, the defendant Hill became a subscriber for sixty-four shares of the stock of the corporation, of the par value of $100 a share, and paid up twenty-five per cent thereof in cash on subscription, and gave his stock-notes for the balance thereof, one dated the 11th of July, and three dated the 20th of July, 1866, payable on demand and subject to calls for instalments...