Peppers v. Pennsylvania Door & Sash Co.
| Decision Date | 21 June 1926 |
| Docket Number | (No. 75.) |
| Parties | PEPPERS v. PENNSYLVANIA DOOR & SASH CO. |
| Court | Arkansas Supreme Court |
Appeal from Circuit Court, Howard County; B. E. Isbell, Judge.
Suit by the Pennsylvania Door & Sash Company against T. H. Peppers. Judgment for plaintiff, and defendant appeals. Affirmed.
J. G. Sain, of Nashville, for appellant.
R. B. Ivory, of Pittsburgh, Pa., and W. P. Feazel, of Nashville, for appellee.
Appellee brought this suit in the Howard circuit court against appellant, and for its cause of action alleged that on the 16th day of April, 1921, the Pennsylvania Door & Sash Company, a Pennsylvania corporation, entered into a contract with the Peppers Cotton Lumber Company, a California corporation engaged in the sawmill business, for the entire cut of number 2 shop and better white and sugar pine for the season of 1921, estimated at 6,000,000 feet, and that the California corporation, hereinafter referred to as the lumber company, breached this contract by failing to deliver the lumber contracted to be delivered; that T. H. Peppers was the president and principal stockholder of the lumber company, and there was a prayer for damages against Peppers as a stockholder in the lumber company. There was a verdict and judgment for the plaintiff, and Peppers has appealed.
Although a citizen of California, Peppers was served with the summons while sojourning in this state, and he filed an answer denying the material allegations of the complaint
When the cause came on for trial, a motion for continuance was filed, and an exception was saved to the action of the court in overruling this motion. The ground of the motion was that Peppers had left his home in California on February 18, 1925, for the purpose of going to Chicago and New York, and of returning to Nashville, where the case was pending, to be present at the trial, but that it was impossible for him to be present, and that his presence was highly important to a proper presentation of his defense to the cause of action sued on. It was not shown, however, wherein it was impossible for Peppers to be present at the trial. There was no element of surprise in the case, and no unavoidable casualty of any kind was shown. So far as any showing was made, nothing appears, except that Peppers had important business, of an undisclosed character, to which he preferred to attend rather than the trial, and there was, therefore, no error in overruling the motion for continuance. Trumbull v. Harris, 114 Ark. 493, 170 S. W. 222.
The contract which it is alleged the lumber company breached was in writing, and contained specifications as to kind of lumber, dimensions, and prices; the prices being f. o. b. Macdoel, Cal., the place where the mill was located. The lumber company entered upon the performance of the contract, and made a partial delivery of the lumber contracted for, when it ceased to make deliveries under the contract, and later a receiver was appointed by a court in California, who took over the assets and affairs of the lumber company.
There was served on counsel for plaintiff on February 2, 1925, a written notice to produce the original of a contract entered into between J. S. Kent, the receiver of the lumber company, and plaintiff, which was dated November 3, 1921. It does not appear from the notice what the provisions of the contract were, nor the purpose for which it was intended to be used, and its relevancy and materiality do not, therefore, appear. The attorney upon whom the notice was served was called as a witness, and was examined concerning the failure to produce the original contract, as required by the notice. From the testimony of this witness it appears that the contract was executed in triplicate, one copy of which was delivered to the plaintiff. This witness testified that he called upon the plaintiff company to produce the contract and he went through its papers, looking for it without finding it, and had not notified counsel for Peppers of his failure to locate it, for the reason that counsel for Peppers had stated that he would prove the contents of the contract, if the original were not produced, and counsel for appellee consented that this be done.
If for any reason this contract was relevant and material, there was no reason why the deposition of the receiver, who was known to have a copy, could not have been taken. Moreover, a foundation was laid for the introduction of secondary evidence to prove the contents of this writing, and no objection was made to this being done; in fact, consent was given that this be done.
The failure to produce the original of this instrument does not appear to have been sufficient reason for postponing the trial. Counsel, of course, knew the contract had not been produced, and he should, therefore, have taken the deposition of the receiver, or should have offered testimony proving the contents of this instrument, if, in fact, its contents were relevant and material.
It was insisted below — and the insistence is renewed here — that it was error to permit plaintiff to proceed with the suit against Peppers as a stockholder in the lumber company before its claim was established and adjudicated in the state of California. In other words, it is insisted that, as it was not shown that the affairs of the lumber company had been settled, the suit against a stockholder was premature.
The contract which forms the basis of the suit was to be performed in California, and therefore the laws of that state govern in its construction and in the determination of the rights and liabilities of the parties thereto.
Section 3 of article 12 of the Constitution of California contains the following provision:
"Each stockholder of a corporation * * * shall be individually and personally liable for such proportion of all its debts and liabilities contracted or incurred, during the time he was a stockholder, as the amount of stock or shares owned by him bears to the whole of the subscribed capital stock, or shares of the corporation. * * *"
This provision of the Constitution has been frequently construed by the Supreme Court of that state, and the construction by that court of the language quoted is, of course, binding on us. A number of the earlier cases in that state are cited in the case of Chambers v. Farnham, 182 Cal. 191, 187 P. 732. It is the consistent holding of these cases that a stockholder is primarily liable, and that a creditor is not required to first pursue the corporation before bringing suit against the stockholder. See, also, Thomas v. Matthiessen, 232 U. S. 221, 34 S. Ct. 312, 58 L. Ed. 577; Lanigan v. North, 69 Ark. 62, 63 S. W. 62.
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