Rowland v. Company

• Decision Date: 12 December 1908
• Docket Number: 15,715
• Citation: 99 P. 212,79 Kan. 134
• Parties: B. L. ROWLAND et al., as Partners, etc., v. THE FOREST PARK CREAMERY COMPANY et al
• Court: Kansas Supreme Court

99 P. 212

79 Kan. 134

B. L. ROWLAND et al., as Partners, etc., v. THE FOREST PARK CREAMERY COMPANY et al

No. 15,715

Supreme Court of Kansas

December 12, 1908

Decided July, 1908.

Error from Franklin district court; CHARLES A. SMART, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. CONSTITUTIONAL LAW--Self-executing Provisions--Liability of Corporate Stockholders. Section 2 of article 12 of the constitution of this state is not self-executing, but amounts to a mere direction to the legislature, and its provisions are ineffectual until enforced by appropriate legislative action. The liability of stockholders therein provided may be imposed, modified or withdrawn at the will of the legislature whenever vested rights are not thereby affected injuriously.

2. CONSTITUTIONAL LAW--Impairment of Contractual Obligations. Where a statute imposing a double liability upon stockholders has been repealed, a creditor whose claim against the corporation originated after such repeal has no vested right under the law repealed, and can not be injured thereby.

3. CORPORATIONS--Liability of Stockholders. The Forest Park Creamery Company was incorporated and its stock issued while sections 1302 and 1315 of the General Statutes of 1901 were in force. On March 17, 1903, these sections were repealed by chapter 152 of the Laws of 1903. Held that a creditor whose claim against the corporation originated after such repeal is not entitled to the rights against stockholders provided by the repealed sections.

J. W. Deford, for plaintiffs in error.

F. M. Harris, for defendants in error.

GRAVES J. BENSON, J., not sitting.

OPINION

GRAVES, J.:

Rowland & Moyer, a partnership, recovered judgment against the Forest Park Creamery Company, a corporation. The company being insolvent, plaintiffs were unable to collect the judgment by ordinary execution, and made application to the district court of Franklin county for a receiver, under the provisions of section 1302 of the General Statutes of 1901, which reads:

"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 can not be found any property upon which to levy such execution, such corporation shall be deemed to be insolvent; and upon application to the court from which said execution was issued, or to the judge thereof, a receiver shall be appointed, to close up the affairs of said corporation. Such receiver shall immediately institute proceedings against all stockholders to collect unpaid subscriptions to the stock of such corporation, together with the additional liability of such stockholders equal to the par value of the stock held by each. All collections made by the receiver shall be held for the benefit of all creditors, and shall be disbursed in such manner and at such times as the court may direct. Should the collections made by the receiver exceed the amount necessary to pay all claims against such corporation, together with all costs and expenses of the receivership, the remainder shall be distributed among the stockholders from whom collections have been made, as the court may direct; and in the event any stockholder has not paid the amount due from him, the stockholders making payment shall be entitled to an assignment of any judgment or judgments obtained by the receiver against such stockholder, and may enforce the same to the extent of his proportion of claims paid by them."

This application was made upon the theory that the stockholders were liable for this debt by force of the provisions of section 1315 of the General Statutes of 1901, commonly known as the "double liability law," which reads:

"The stockholders of every corporation, except railroad corporations or corporations for religious or charitable purposes, shall be liable to the creditors thereof for any unpaid subscriptions, and in addition thereto for an amount equal to the par value of the stock owned by them, such liability to be considered an asset of the corporation in the event of insolvency, and to be collected by a receiver for the benefit of all creditors."

This application was denied by the district court upon the ground that these sections were repealed March 17, 1903, and the liability upon which the judgment was obtained arose since such repeal. This action of the court is complained of, and constitutes the error presented. It appears that the creamery company was incorporated and its stock issued long before these sections of the statute were repealed. Several months after March 17, 1903, the creamery company became financially embarrassed, and determined to sell its plant. Rowland & Moyer, real-estate agents, were employed to effect a sale thereof, which they did, and thereby became entitled to a commission therefor. Payment being refused, they obtained the judgment now sought to be enforced.

It is insisted by the plaintiffs that, as the stock now held and owned by the stockholders of the creamery company was taken by them while the double liability law was in force, this statute and section 2 of article 12 of the constitution, which reads, "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...