Perry v. Turner

• Decision Date: 28 February 1874
• Citation: 55 Mo. 418
• Parties: CHAS. A. PERRY, et al., Appellants, v. RICHARD E. TURNER, et al., Respondents.
• Court: Missouri Supreme Court

55 Mo. 418

CHAS. A. PERRY, et al., Appellants,

v.RICHARD E. TURNER, et al., Respondents.

Supreme Court of Missouri.

February Term, 1874.

Appeal from Buchanan Circuit Court.

Vineyard & Chandler, and White, for Appellants.

I. The court below erred in refusing to require the defendants to answer jointly, as their separate answers were exact copies of each other. (Wagn. Stat., 1017, § 14.)

II. The allegations of the petition are sufficient, in a proceeding like this, to show a dissolution of the corporation. (Slee vs. Bloom, 19 Johns., 456; Briggs vs. Penniman, 8 Cow., 387; Moore vs. Whitcomb, 48 Mo., 543; State Sav. As'n. of St. Louis vs. Kellogg, 52 Mo., 583.)

III. The liability of defendants for the debt due plaintiffs is that of original obligors, springing out of and co-existent with the contract between the St. Louis and St. Joseph Railroad Company and plaintiffs as its creditors. It may be conceded that, under our statutes, the right to enforce this liability was held in abeyance until the dissolution of the corporation; but that they became and were, concurrently with the company, from the inception of the debt, personally liable, there can be no question. (25 N. Y., 222; 57 Barb., 489; Conant vs. Van Shaick, 24 Barb., 87; Corning vs. McCullough, 1 N. Y., 47; Young vs. Rosenbaum, 39 Cal., 646; Windham Prov. Ins. vs. Sprague, 43 Ver., 502; Norris vs. Wrenschall, 34 Md., 492; Hawthorne vs. Calef, 2 Wall., 10; Prov. Sav. Ins. vs. The Jackson Place Sk. & B. Rink, 52 Mo., 552; Allen vs. Sewall, 2 Wend., 327; Moss vs. Oakley, 2 Hill., 265; Wright vs. Field, 7 Ind., 376; Middleton Bank vs. Magill, 5 Conn., 28; Adkins vs. Thornton, 19 Ga., 325.) And if the defendants are liable to plaintiffs for their debt due them from the company as original obligors, then, to the extent of that liability, they are jointly so liable, and under our statute any number of them may be sued in the same action.

IV. The language of that section of the statute under which this suit was brought, (Wagn. Stat., 293, § 22,) plainly indicates the right of plaintiffs to sue in one common action all, or any number, of those who were stockholders of the corporation at the time of its dissolution. It declares that “suits may be brought against any person or persons, who were stockholders at the time of such dissolution;” and also “if judgment be rendered and execution satisfied, the defendant, or defendants, may sue all who were stockholders at the time of dissolution, &c.” Our Supreme Court, by holding that a suit against several stockholders was properly brought, has decided that the liability of stockholders under this section was not several only but joint. (State Sav. As'n vs. Kellogg, 52 Mo., 583.)

V. The plaintiffs were not compelled to institute suit for the benefit of all the creditors of the company in order to have a standing in court. The personal liability provisions of the law against stockholders was not enacted for their benefit, but for the benefit of the creditors; and the latter are very properly left, as in other cases, to a race of diligence in the recovery of their claims, even though the stockholders may be subjected to more suits in consequence thereof. Plaintiffs are not compelled to bring suit in equity. (Norris vs. Johnson, 34 Md., 485; Weeks vs. Love, N. Y. Ct. App., [April Term 1873]; Middleton Bank vs. Magill, 5 Conn., 28; Adkins vs. Thornton, 19 Ga., 325; Bullard vs. Bell, 1 Mason, [U. S. C. C.] 244; Ang. Am. Corp., § § 624, 625, 626; Allen vs. Sewall, 2 Wend., 327.)

VI. The amendment to section 6, of article 8, of the State Constitution, adopted at the general election in November, 1870, did not relieve the defendants from their liability for plaintiffs' debt, contracted before the adoption of that amendment. To hold that they were so relieved, would be to decide that a law might be passed impairing the obligation of a contract. (Conant vs. Van Schaick, 24 Barb., 87; Hawthorne vs. Calef, 2 Wall., 10; Prov. Sav. Ins. vs. Jackson Place Sk. & B. Rink, supra.)

VII. All of the defendants are, and each one of them is, liable for the entire debts of the company remaining unpaid at its dissolution. (Wagn. Stat., 293, § 22.)

Holland, Oliver & Stringfellow, and Ben Loan, for Respondents

I. Plaintiffs' remedy against the corporation should have been exhausted and shown ineffectual, before proceeding against private stockholders, (McClaren vs. Franciscus, 43 Mo., 452; Wagn. Stat., 293, § 22; R. C. 1855, p. 402, § 32.) For legislation of construction of § 32, of act 1855, see § 39 of same statute page 403. The act of 1855, being revised by the law of 1865, is to be construed as meaning just what is meant in 1855. In 1858 it did not mean double liability.

II. The creditor of a corporation which has dissolved cannot sue the stockholders alone. The suit must be brought for the benefit of all the stockholders. (Crease vs. Babcock, 10 Met., 525; 24 Ill., 47.) The constitution does not inforce itself. (39 Mo., 489; 15 Peters, 469.)

III. This action will not lie against defendants jointly. They are alleged to be stockholders in a defunct corporation, but they each own separate shares of stock, and for different amounts. An action at law will not lie under such circumstances. Different judgments must be rendered against each. A joint judgment could not be rendered.

IV. The stockholders are only liable for the unpaid balance due on their subscription and one hundred per cent. in addition thereto. This an entire liability.

NAPTON, Judge, delivered the opinion of the court.

As the only question in this case arises on the sufficiency of the petition, it will be necessary to state it in substance. The action is brought by Perry & Brothers, a partnership firm doing business under that name, against Turner, Hays, Wasson and others, alleged to be stockholders in the St. Louis and St. Joseph railroad company, to recover the amount of $22,500, alleged to be due from that company to the plaintiffs.

It is alleged that in 1868 the company was duly organized under the general law concerning private corporations, for the construction and operation of a certain railroad therein described; that the capital stock of the company was divided into shares of $100 each; that said road was built and operated up to the date of the dissolution of the company hereinafter stated.

The number of shares of stock which each defendant held is there stated, as also the fact that they continued to hold such shares up to the date of said dissolution; that none of the defendants had paid the debts sued for, or any part of them, nor have they or either of them ever paid into said company any amount over and above the amount of capital stock held by each.

The plaintiffs then proceed to set out at large the various items of indebtedness of the company to them growing out of work and labor done and materials furnished, and certain bills of exchange drawn on the company and accepted by them, but which the plaintiffs having indorsed had ultimately to pay, and also sundry settlements had with the company which left the company in debt to them in the sum of $7,858.13, due on the 18th day of October, 1870; and for all these items or amounts, with interest, they ask judgment. The details of these claims are immaterial to the consideration of the questions to be decided. The plaintiffs further state that on the 20th of December, 1870, the company became and was wholly and completely insolvent and unable to pay its debts and liabilities; that on said day said company was declared bankrupt by a court of competent jurisdiction, and thereupon all its property, real, personal, etc., was assigned and transferred to an assignee appointed by the said court in bankruptcy; that from this time the company abandoned its business, and ceased to operate its road and has never since re-organized, etc. Whereupon the plaintiffs state that by reason of the facts above stated said company was dissolved on the day and year last aforesaid. Plaintiffs also state that by virtue of the statutes relative to corporations and by virtue of the provisions of the constitution and laws of the State of Missouri, the defendants became and are liable for the debts aforesaid; wherefore they demand judgment, that the said St. Louis and St. Joseph railroad company may be judicially declared and adjudged to have been dissolved on the 29th day of December, 1870, and that said defendants may be required to pay the plaintiffs the amounts of their several claims hereinbefore described and sued for, and that they may have such other and further relief, with their costs, as may be deemed just and proper.

After answers and replications had been filed, and the case came up for trial, the plaintiffs offered evidence to sustain the various allegations of the petition, which being objected to, the court sustained the objection. Whereupon the plaintiffs took a non-suit, with leave, etc.

This petition is obviously framed upon a misconstruction of the 22d section of the first article of our law concerning Private Corporations. The suit is brought against several stockholders to recover certain debts against the company, on the allegation of a dissolution of the corporation. The 22d section provides “that if any company formed under this act dissolve, leaving debts unpaid, suits may be brought against any person or persons who were stockholders at the time of such dissolution, without joining the company in such suit.” And it is assumed that this language is broad enough to declare that the stockholder or stockholders sued, are liable for the amount of the indebtedness, without regard to the amount of stock he holds. In other words, upon a dissolution of a corporation, under the act, each stockholder is responsible for the debts of the corporation, as in case of partnership. A stockholder owning only one share, if a hundred dollars, is liable for a debt of the corporation which may be to fifty times the amount of his stock. Such a...