Pulsifer v. Greene

• Citation: 52 A. 921,96 Me. 438
• Parties: PULSIFER v. GREENE. SAME v. HEARD.
• Decision Date: 14 May 1902
• Court: Supreme Judicial Court of Maine (US)

52 A. 921

96 Me. 438

PULSIFER

v. GREENE.

SAME

v. HEARD.

Supreme Judicial Court of Maine.

May 14, 1902.

(Official.)

Report from supreme judicial court, Androscoggin county.

Actions by James A. Pulsifer, administrator, against Henry Greene and Carlos Heard. Cases reported, and judgments for plaintiff.

Assumpsit by a creditor of a Kansas corporation to enforce the double liability against a stockholder resident in Maine.

Argued before WISWELL, C. J., and SAVAGE, WHITEHOUSE, STROUT, and POWERS, JJ.

H. W. Oakes, J. A. Pulsifer, and P. E. Ludden, for plaintiff.

H. M. Heath and C. L. Andrews, for defendant Greene.

Enoch Foster, O. H. Hersey, and N. B. Walker, for defendant Heard.

POWERS, J. This is an action of assumpsit brought by a creditor of the Clyde Banking Company, a corporation organized and existing under the laws of the state of Kansas, to enforce the double liability of the defendant, a nonresident stockholder in the corporation.

The case shows the following facts: The administrator of the plaintiff's intestate recovered judgment against the corporation on April 15, 1895, in the district court of Cloud county, Kan., for $25,523.20 debt and $10.50 costs. Execution thereon was duly issued, and returned unsatisfied, for the reason that no property could be found whereon to levy it. The judgment is still unsatisfied, and on July 23, 1900, this action was brought against the defendant, who on January 1, 1895, was, and still is, the owner of five shares of the capital stock, of the par value of $100 each. No other action has been brought against the defendant, and he has no claim in set-off against the corporation.

Article 12, § 2, of the constitution of the state of Kansas provides as follows:

"Dues from corporations shall be secured by Individual liability of the stockholders to an additional amount equal to the stock owned by each stockholder, and such other means as Shall be provided by law; but such individual liability shall not apply to railroad corporations, nor corporations for religious or charitable purposes."

And in the General Statutes of Kansas of 1889, in force on January 5, 1895, are found the following provisions, later embodied in the Revision of 1897, and which are still the law of that state:

"1192, § 32. If any execution shall have been issued against the property or effects of a corporation, except a railway or a religious or charitable corporation, and there cannot be found any property whereon to levy such execution, then execution may be issued against any of the stockholders, to an extent equal in amount to the amount of the stock by him or her owned, together with any amount unpaid thereon; but no execution shall issue against any stockholder, except upon an order of the court in which the action, suit, or other proceeding shall have been brought or instituted, made upon motion in open court, after reasonable notice in writing to the person or persons sought to be charged; and upon such motion such court may order execution to issue accordingly, or the plaintiff in the execution may proceed by action to charge the stockholders with the amount of his judgment,"

"1200, 40. A corporation is dissolved— First, by the expiration of the time limited in its charter; second, by a judgment of dissolution rendered by a court of competent jurisdiction; but any such corporation shall be deemed to be dissolved for the purpose of enabling any creditors of such corporation to prosecute suits against the stockholders thereof to enforce their individual liability, if it be shown that such corporation has suspended business for more than one year."

"1204, § 44. If any corporation created under this or any general statutes of this state, except railway or charitable or religious corporations, be dissolved leaving debts unpaid, suits may be brought against any person or persons, who were stockholders at the time of such dissolution, without joining the corporation in such suit; and if judgment be rendered and execution satisfied, the defendant or defendants may sue all who were stockholders at the time of the dissolution, for the recovery of the portion of such debt for which they were liable, and the execution upon the judgment shall direct the collection to be made from property of each stockholder, respectively; and if any number of stockholders (defendants in the case) shall not have property enough to satisfy his or their portion of the execution, then the amount of the deficiency shall be divided equally among all the remaining stockholders, and collections made accordingly, deducting from the amount a sum in proportion to the amount of stock owned by the plaintiff at the time the company dissolved."

"4095, § 18. Civil actions, other than for the recovery of real property, can only be brought within the following periods, after the cause of action shall have accrued, and not afterwards :

"First, within five years: An action upon any agreement, contract, or promise in writing.

"Second, within three years: An action upon a contract not in writing, express or implied; an action upon a liability created by statute, other than a forfeiture or penalty."

The claim of the plaintiff is resisted on three principal grounds: First, that the liability of the defendant is purely statutory, and does not extend beyond the jurisdiction of the state which created it; second, that the remedy given is special, exclusive, and unknown to our laws, and cannot be enforced in this state; third, that the limitation found in the statutes of Kansas does not merely affect the remedy, but has extinguished the substantive right of the creditor.

1. The double liability of the stockholders of the corporation was created for the benefit of its creditors. While it is not an asset of the corporation, adds nothing to its pecuniary resources, and is not available to or enforceable by the corporation itself, it does add to its commercial credit. It is enforceable by its creditors, and persons who contract with and give credit to the corporation may well be presumed to do so upon the faith of the liability of its stockholders. It is elementary that every person who voluntarily becomes a stockholder in a corporation thereby agrees to the terms of its charter. The law which created the defendant's liability was a part of the same system of laws which permitted him and his fellow stockholders to be a corporation. It is to be read into its charter. The two go together. He cannot with one hand grasp the benefit, and with the other reject the burden. When he voluntarily became a stockholder in the Clyde Banking Company, incorporated under the laws of the state of Kansas, he must be held to have contracted with reference to, and have agreed to be bound by, the laws of that state, which entered into and formed a part of the constitution of the company. The obligation which he thereby assumed, though statutory in its origin, was contractual in its nature, and as such not local, but transitory. It goes with him wherever...