Pease v. the Underwriters' Union

• Decision Date: 30 April 1878
• Parties: SAMUEL W. PEASE ET AL.v.THE UNDERWRITERS' UNION, use, etc.
• Court: United States Appellate Court of Illinois

1 Ill.App. 287

1 Bradw. 287

SAMUEL W. PEASE ET AL.

v.THE UNDERWRITERS' UNION, use, etc.

Appellate Court of Illinois, First District.

April Term, 1878.

OPINION TEXT STARTS HERE

Appeal from the County Court of Cook county; the Hon. Mason B. Loomis, Judge, presiding.

Messrs. Eldridge & Tourtellotte, for appellants; argued that the certified copy of articles of incorporation offered in evidence was incompetent, as against strangers, and cited Chase v. Sycamore & Courtland R. R. Co. 38 Ill. 215; Whitaker v. Wheeler, 44 Ill. 440; Yocum v. Benson, 45 Ill. 435.

That the record fails to state sufficient grounds to authorize the commencement of garnishee proceedings: Mich. Cen. R. R. Co. v. Keohane, 31 Ill. 145; Campbell v. McCahan, 41 Ill. 45.

That the burden of proof is upon the plaintiff to show that defendants were stockholders: Kergin v. Dawson, 1 Gilm. 86; McCoy v. Williams, 1 Gilm. 584.

As to conditions under which a subscriber to capital stock may become a stockholder, and when not: Busey v. Hooper, 35 Md. 15; Chase v. Sycamore & Courtland R. R. Co. 38 Ill. 215; Starratt v. Rockland F. & M. Ins. Co. 65 Me.; Belfast & M. R. R. Co. v. Cottrell, 66 Me.; Bucher v. Dillsburg, etc. R. R. Co. 76 Pa. St. 306; Steele v. Dunne, 65 Ill. 298; Stowe v. Flagg, 72 Ill. 397; Thrasher v. Pike Co. R. R. Co. 25 Ill. 393.

That defendants' liability, if any, is individual and not joint: Hurd's Stat. 1874, 288; Baker v. Adm'r of Backus, 32 Ill. 82; Crystal Lake Ice Co. v. Backus, 32 Ill. 116.

Mr. J. W. Waughop, for appellee; as to liability of a stockholder on unpaid subscriptions for stock, cited Upton, assignee, v. Tribilcock, 8 Chicago Legal News, 65; Butler v. Walker, 80 Ill. 345.

That the original judgment against the corporation is not a necessary jurisdictional part of this case: Warne v. Kendall, 78 Ill. 598.

That the liability is joint: Hurd's Stat. 1877, 285, § 8.

MURPHY, P. J.

This is a garnishee proceeding commenced in the County Court of Cook county, by George W. Miller, against the appellants as stockholders of the Underwriters' Union, a corporation organized under the laws of this State. Such proceedings were had in the court below at the January term, A. D. 1878, as resulted in a judgment against Samuel W. Pease and Charles F. Loomis, as garnishees of said corporation, jointly, for the sum of $550.00, from which they prosecute an appeal to this Court, and assign for error:

First, that the court erred in admitting improper evidence offered on the part of the appellee, and in overruling the appellants' objection thereto.

Second, that the judgment is contrary to law.

Third, the judgment is not supported by the evidence.

Fourth, the judgment, if any, should have been against the appellants separately. There are other errors assigned, but it is not deemed necessary for us to consider them.

This was a proceeding under the 8th section of chapter 32, of the Revised Statutes of 1877, at page 284, being an act concerning corporations, approved April 18, 1872, which reads as follows:

“Every assignment or transfer of stocks on which there remains any portion unpaid, shall be recorded in the office of the recorder of deeds of the county within which the principal office is located, and each stockholder shall be liable for the debts of the corporation to the extent of the amount that may be unpaid upon the stock held by him, to be collected in the manner herein provided. No assignor of stocks shall be released from any such indebtedness by reason of any assignment of his stock, but shall remain liable therefor jointly with the assignee until the said stock be fully paid. Whenever any action is brought to recover against the corporation, it shall be competent to proceed against any one or more stockholders at the same time to the extent of the balance unpaid by such stockholders upon the stock owned by them respectively, whether called in or not, as in cases of garnishment. Every assignee or transferree of stock shall be liable to the company for the amount unpaid thereon to the extent and in the same manner as if he had been the original subscriber.”

It will be seen that by the terms of this statute a new remedy is provided for the creditors of corporations, by providing that “Whenever any action is brought to recover any indebtedness against the corporation, it shall be competent to proceed against any one or more stockholders at the same time * * as in case of garnishment.” There has been some discussion between counsel in the case, as to the proper form of procedure by the usee Miller, to avail himself of the benefit of this new remedy.

There has been no judicial construction of this statute that we are aware of, and we are left to determine just what the mode of proceeding contemplated by the legislature was.

We think the language employed in the statute is unambiguous, and fairly interpreted means that a creditor of a corporation may bring suit in any of the usual forms of action for any indebtedness due to him from such corporation, and upon suing out summons, may by virtue of this statute sue out at the same time a garnishee summons, directed to any of the stockholders of such corporation, whose subscription to the capital stock thereof is wholly or in part unpaid, and that by the service of such garnishee summons upon such stockholder, prevent his further payment for such stock to the corporation, but hold the same in abeyance, to await the result of the trial of the original cause, and when a recovery is had (if at all) the garnishee may be then compelled to respond to such judgment creditor instead of paying his said indebtedness to the corporation.

This is briefly and substantially the...