Potter v. Stevens Machine Company

• Decision Date: 12 November 1879
• Citation: 127 Mass. 592
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: Burton W. Potter v. Stevens Machine Company & others

127 Mass. 592

Burton W. Potter v. Stevens Machine Company & others

Supreme Court of Massachusetts

November 12, 1879

Argued October 3, 1878

Worcester.

Exceptions to master's report sustained, and bill dismissed.

L Wallace & F. P. Goulding, for the defendants.

T. L Nelson & B. W. Potter, for the plaintiff.

Colt J. Ames & Soule, JJ., absent.

OPINION

Colt J.

This is a bill in equity, filed May 5, 1876, against a corporation organized under the general laws of this Commonwealth, and against all the stockholders and members thereof, for the purpose of enforcing against the stockholders the payment of a judgment obtained by him against the corporation on three promissory notes.

The suit is brought under the provisions of the St. of 1862, c. 218, § 4, for the benefit of the plaintiff and such other creditors as may come in and become parties to the proceedings. It seeks to charge the stockholders, on the ground that the corporation incurred the debts, claimed to be due, before the capital was fully paid in, and before the stockholders had paid in full the par value of their shares. The case was reserved upon the defendants' exceptions to the master's report.

It appears from the master's report, that the notes, upon which the plaintiff obtained his original judgment at law, against the corporation, belonged to Wright, one of the original stockholders, who is now made a defendant; and that the notes were assigned by Wright to the plaintiff, for the sole purpose of enabling him to conduct these proceedings in his own name, for the benefit of the former, with an agreement to secure him against any personal responsibility for cost and expense, and to pay him for his services. Under such an arrangement, the nominal plaintiff can have no greater rights, against the other stockholders, than his assignor would have. Thayer v. Union Tool Co. 4 Gray 75. All other claims proved before the master were for debts of the corporation to stockholders and directors in the company, who are also included among the defendants to the suit. All the defendants were subscribers to the stock. Some of them had paid in part for the stock subscribed, and some had not paid anything, when this liability was incurred, and no certificates of stock had been issued to any one.

One of the exceptions to the master's report is, that the St. of 1862 only provides a remedy by bill in equity for creditors who are not stockholders or officers of the corporation; and, therefore, that the master was not authorized to find that the defendants are liable for the debts here found due. That is the question presented.

The rights of the parties are to be determined by the St. of 1862, which was in force when these debts were contracted and this corporation organized, but is now repealed by the St. of 1870, c. 224, saving, in § 69, any rights already acquired, or liability incurred, under existing laws. Taylor v. New England Lithographic Co. 108 Mass. 523.

In the opinion of the court, the remedy provided by the statute in question is intended only for creditors who are not members of the corporation, and cannot be availed of by creditors who are also stockholders. The statute carefully defines the liabilities of officers and stockholders...