Root v. Sinnock

• Decision Date: 23 March 1887
• Citation: 11 N.E. 339,120 Ill. 350
• Parties: ROOT v. SINNOCK.
• Court: Illinois Supreme Court

120 Ill. 350

11 N.E. 339

ROOT

v.SINNOCK.

Supreme Court of Illinois.

March 23, 1887.

Appeal from appellate court, Third district.

Suit brought by appellee, Thomas Sinnock, as a creditor of the Union Bank of Quincy, against appellant, Henry Root, as a stockholder in the bank, to collect a debt claimed to be due from the bank to appellee. Judgment for Sinnock. Root appeals.

Sibley & Pape and Almeron Wheat, for appellant.

Wm. McFadon, for appellee.

SCHOLFIELD, J.

We have carefully considered the questions discussed in the printed arguments before us, and we concur in the conclusions reached by the appellate court.

1. The contention of appellant is that the liability imposed by the seventh section of the charter of the Union Bank of Quincy upon the stockholders is simply to pay the creditors of the bank the balance unpaid upon subscriptions for stock. The language of the seventh section, affecting this question, is: ‘Provided, also, that the stockholders in this corporation shall be individually liable to the amount of their stock for all debts of the corporation, and such liability shall continue for three months after the transfer of any stock on the books of the corporation.’ The plain and obvious meaning of this language is, to our minds, the stockholders are liable to creditors for their debts to an extent measured by the amount of their stock. Omitting the clause expressing the extent of liability, and we have this: ‘The stockholders in this corporation shall be individually liable for all debts of the corporation.’ If this were all, their liability would be unlimited; they would be absolutely liable for all debts of the corporation. The intention, however, is to limit that liability. But to what extent? The answer is, ‘To the amount of their stock,’ not to the amount unpaid upon their stock. The language makes the liability because of the fact of being stockholders, and not because of the fact of being debtors of the corporation. If the liability intended was simply to pay the creditor the amount due the corporation, what would have been more natural and easy than to have used just that language? The difference between a stockholder and a debtor for unpaid stock is recognized in several of the sections, and so was at the time in the legislative mind, and it must therefore be presumed that words expressing the one would not have been used to express the other, in this instance. Thus, in section 3 a majority of the corporators are required to designate a time and place for the first election of the directors of said corporation ‘by the parties subscribing for the capital stock thereof; and each share of stock so subscribed for shall be entitled to one vote.’ By section 4 ‘the payments of the stock so subscribed shall be made and completed by the subscribers at such time and manner as the said directors shall prescribe.’ By section 14 ‘the directors shall have the right, in case that any stockholder shall fail to pay any installment for thirty days after a call thereof, * * * to declare the stock forfeited to the corporation, * * * or sue for and receive the entire amount of a subscription remaining unpaid.’ By section 5 ‘no subscriber of the stock * * * shall have the right to vote at the first election of the directors, unless he shall have paid ten per cent. of the amount subscribed; * * * nor shall any subscriber or stockholder have at any time the right to vote at any election held by virtue of this act, who shall be in default to the corporation for any payments, either in stock held by him or otherwise.’ And by section 10, ‘in all elections of directors, and in deciding all questions at meetings of stockholders, each stockholder shall be entitled to one vote for each share, * * * and no stockholder whose liability is past due shall be allowed to vote.’

In no instance is the word ‘stock’ used in the sense of a debt or obligation due from the stockholder, but it is at all times used to express the idea of property in the corporation,-what may be the subject of a debt, it is true,-but is not itself a debt any more than is any other property; and in this connection we will observe that we are unable to appreciate the distinction which counsel seek to draw between the words ‘liable to the amount of their stock,’ and the words ‘liable in a sum equal to the amount of their stock,’ which is frequently found in similar charters; they conceding, as we understand their position, that on the authority of decided cases, if the latter language had been here used, their client would be liable, as held by the lower courts. But since the words ‘to the amount of their stock’ in no view mean the thing which is itself to be paid to the creditor, but are, in every view, simply used to express the measure by which the sum of money of which the creditors may enforce payment is ascertained, ‘liable to the amount of their stock’ is but stating elliptically what is fully stated by the words ‘liable in a sum equal to the amount of their stock.’ ‘Liable to an amount’ can mean only liable to pay a sum which reaches or comes up to, or, in short, equals, the given amount. So here the nominal or face value of the shares of stock are $100 each; and, if A. have two shares, we say the amount of his stock is $200, the nominal or face value of his stock; and therefore, to say that he is liable to the amount of his stock for the debts of the corporation is only another form of saying that he is liable to the amount of $200 for the debts of the corporation.

Counsel for appellant, by contending that the liability of their client is only for the amount of his unpaid indebtedness on his subscription for stock, impliedly concede the correctness of this construction; for, if he be thus liable, the words ‘liable to the amount of’ must be held to mean liable in a sum equal to the amount of the balance unpaid on his subscription for stock. The same necessity for comparison, and the same words of comparison, equally apply in either view; the only difference being that the measure or standard by which the comparison is to be made is in one view the nominal or face value of his stock, and in the other the nominal or face value of the amount unpaid on...