Rice v. Merrimack Hosiery Co.

• Citation: 56 N.H. 114
• Parties: Rice v. Merrimack Hosiery Co.
• Decision Date: 13 August 1875
• Court: New Hampshire Supreme Court

56 N.H. 114

Rice v. Merrimack Hosiery Co.

Supreme Court of New Hampshire

August 13, 1875

Equity---Certainty of allegations---Enforcing individual liability of stockholders in a foreign corporation.

In proceedings in equity, whatever is essential to the rights of the plaintiff, and is necessarily within his knowledge, must be alleged positively in the bill. Such convenient degree of certainty must be adopted as will give the defendant full information of the case which he is called upon to answer.

The laws of a foreign state operate beyond its territorial limits only ex comitate. The courts of a state where the laws of such foreign state are sought to be enforced, will use a sound discretion as to the extent and mode of that comity. They will not permit their tribunals to be used for the purpose of affording remedies which are denied to parties in the jurisdiction of the state that enacted the law, and which tend to operate with hardship on their own citizens and subjects.

A creditor of a corporation, created under the laws of Ohio filed a bill to enforce the individual liability of the stockholders of the corporation. The corporation had no assets in this state, and none of its stockholders resided here. The bill contained no recital by what remedial process the individual liability of stockholders is enforced in that state. Held, that

comity does not require the courts of this state, in the exercise of a judicial discretion, to give effect here to the statutes of that state

From GRAFTON Circuit Court

IN EQUITY. The bill was as follows: William A. Rice of Bristol in said county, in behalf of himself and others, creditors of the Merrimack Hosiery Company, who shall come in and contribute to the expenses of this suit, complains against the said Merrimack Hosiery Company, an association of individuals claiming to be a body corporate and politic, and to have and possess certain corporate powers, under and by virtue of the laws of the state of Ohio, and R. A. Holden of Cincinnati, in the county of Hamilton and state of Ohio, and Ira. S. Holden of Baltimore, in the county of Baltimore and state of Maryland, and Edgar B. Thomas of Indianapolis, in the county of Marion and state of Indiana, and William Wood of Cincinnati aforesaid, and A. Shepard of Compton, in the county of Kenton and state of Kentucky, as follows, to wit The said Holdens, Thomas, Wood, and Shepard, as the plaintiff is informed and believes, on the second day of July, 1868 associated themselves with one Charles W. Beal, of Cincinnati aforesaid, now deceased, and perhaps with sundry other persons to the plaintiff unknown, under the laws of the state of Ohio, as an association or joint stock company, under the name of the Merrimack Hosiery Company, claiming certain corporate rights and powers under the laws of said state, with a capital stock claiming to be fifty thousand dollars, with its principal office in Cincinnati aforesaid, for the purpose of conducting in Bristol, in said county of Grafton, the business of manufacturing, by machinery, knit hosiery and other goods, and each of said parties owned or claimed to own stock in said company; that, by the laws of said state of Ohio, as the plaintiff is informed and believes, each and every stockholder in said company was then, and is now, liable for any debt due by said company to any laborer employed by said company in carrying on its manufacturing business; that, some time subsequent to their organization as aforesaid, the said defendants, under the name aforesaid, commenced the business of manufacturing, by machinery, knit hosiery goods, at Bristol aforesaid, and the plaintiff and sundry other persons went into their employ as laborers in said manufacture; that the manufacture so commenced was carried on by them until some time in April, or the first of May, 1872, when they stopped the business of manufacturing aforesaid, after having removed from the state most of their property, except the machinery with which said manufacturing had been carried on;---and, after repeated promises by the defendants and their agents that the business should be resumed, but which promises were as often broken, their property was attached, under process from the court in this state, and on or about the tenth day of December, 1872, upon a petition of one of its creditors, the said Merrimack Hosiery Company was adjudged a bankrupt under the laws of the United States.

While the said company were doing business at Bristol aforesaid, and before its adjudication in bankruptcy as aforesaid, it became justly indebted to the plaintiff, for labor and services done and performed in and about its business, to a large amount, to wit, the sum of fifteen hundred dollars, which is still due the plaintiff. And the plaintiff says that, at the time said debt was contracted as aforesaid, nor since, has he any knowledge, except from reports, as to whether said Holdens, Thomas, Wood, and Shepard, either alone or with others, were associated together, under the laws of Ohio, as a corporation, or whether they had corporate powers, or whether the capital stock, if they had any, was paid in, or how it was owned, or whether they were mere partners in business, and by means thereof jointly and severally liable for all debts contracted by them; or, if they were a corporation under the laws of said state of Ohio, whether they had done and performed such acts as by said laws would relieve them, as stockholders, from personal liability for the plaintiff's debt;---and as to all and singular of said facts, queries, and claims, the plaintiff prays the said defendants may be compelled to prove the same by competent evidence, if they claim the benefit thereof. And the plaintiff avers that all said defendants had notice of his debt, contracted as aforesaid, and a demand was made upon said company more than sixty days before the filing of this bill, to wit, on the first day of November, 1872; and, by means of the premises aforesaid, the plaintiff avers that the defendants, whether as stockholders of the Merrimak Hosiery Company or as partners, became and were, personally, jointly, and severally, liable to pay the same; yet they have not paid the same, nor any part thereof, but refuse so to do. And the plaintiff also avers, that the said Ira S. Holden owns a large amount of real estate, to wit, of the value of three thousand dollars, situate in New Ipswich, in the county of Hillsborough in this state, over which said court has jurisdiction.

Wherefore the plaintiff prays that the said defendants may come to a just and fair account of the sum due to the plaintiff upon the demand aforesaid, and that they may be decreed to pay the amount so due to the plaintiff, and for such other relief as may be just.

The defendants demurred to the bill, and assigned the following causes: (1) No equity on the part of the plaintiff is disclosed in the bill. (2) The plaintiff has a plain and adequate remedy at law. (3) Upon the allegations in the bill, the plaintiff is not entitled to the relief prayed for. (4) The assignee of the said hosiery company, in bankruptcy, should be made a party. (5) The bill is, in all respects, uncertain, informal, and insufficient. (6) The plaintiff's only remedy is to be had in the proceeding in bankruptcy, mentioned in the bill.

The questions raised by the demurrer were transferred to this court by FOSTER, C. J.

Barnard, for the plaintiff

As to the first and second reasons assigned for demurrer, it does not

appear from the bill whether the defendant company was a corporation or joint stock company, with corporate powers, or a partnership; nor can these facts be determined until the defendants' answer, nor perhaps until the final hearing. If the remedy is doubtful and obscure at law, equity will assert a jurisdiction. Story's Eq. Jur., sec. 33; W. L. Co. v. Worster, 29 N.H. 433; Rathbone v. Warren, 10 Johns. 587; King v. Baldwin, 17 Johns. 384. As to the third and fifth reasons, I will rest upon the allegation of the bill, until some further suggestions are offered why, upon the facts stated, the plaintiff is not entitled to a judgment for his debt. As to the fourth reason, the assignee receives his appointment from and settles his account with the courts of another jurisdiction, and as he cannot be affected by any decree in the suit, he need not be a party. Busby v. Littlefield, 31 N.H. 193; Bell v. Woodward, 42 N.H. 189; Batchelder v. Wendell, 36 N.H. 213. As to the 6th reason assigned, bankruptcy is not the only remedy, if the defendant company is a corporation. The Ansonia Brass and Copper Co. v. The New Lamp Chimney, New York state, court decision, 10 N. B. R. 355; 2 N. B. R. 108; 2 N. B. R. 81. If not a corporation, whatever was done in bankruptcy is immaterial as affecting this case, as there is no pretence that any other of the defendants are tainted with bankruptcy. Carpenter (with whom was Blair), for the defendants

I. The bill is bad for uncertainty. If it were taken pro confesso, no relief could be granted---no decree be entered up. Story's Eq. Pl., secs. 241--258, and cases cited; Daniels Ch. Pl. and Pr., secs. 411, 412, 420, et seq.; Cresset v. Mytton, 3 Bro. Ch. 481; Jones v. Jones, 3 Mer. 172, 173.

(1) The plaintiff ought not to be permitted to amend. There is not sufficient matter well alleged in the bill to amend by---to furnish a foundation for an amendment. Any serviceable amendment, which can in the nature of the case be made, must be equivalent practically to the filing of a new bill. Such gross looseness in pleading ought to be discouraged emphatically by the court, as prolonging litigation entailing much useless expense upon the parties, and thereby bringing a reproach upon the administration of justice. (2)...