Schricker v. Ridings

• Decision Date: 30 April 1877
• Citation: 65 Mo. 208
• Parties: SCHRICKER ET AL. v. RIDINGS, APPELLANT.
• Court: Missouri Supreme Court

65 Mo. 208

SCHRICKER ET AL.

v.RIDINGS, APPELLANT.

Supreme Court of Missouri.

April Term, 1877.

Appeal from Johnson Circuit Court.

F. M. Cockrell and Elliott & Jetmore for appellant.

The plaintiffs claim that by a literal interpretation of the phraseology, “but in no case shall any stockholder be individually liable in any amount over or above the amount of the stock owned by him,” an individual liability is imposed on defendant, without reference to his having paid up his stock, of an amount equal to the amount of his stock; that this amendment abolished the double liability only as to any unpaid balance on the stock. Such an interpretation is more genious than sensible. The single liability of a stockholder embraces the amount of his stock; that is, its full payment, (R. S. 1855, p. 403, Sec. 39; Perry v. Turner, 55 Mo. 418,) while the double liability includes the single liability with an additional amount equal to the amount of his stock. The former exists without legislation under the common law; while the latter is a creature of statute. The object of all interpretation and construction is to ascertain the intention of the law makers, even so far as to control the literal signification of the words; verba intentione debent inservire. (1 Black. Comm. 59; 2 Kent Comm. 55; 1 Bouvier Inst. n 4419 et seq.; 2 Story Const. 1; 2 Pars. Contr. 3; Story Contr., Secs. 397-456; 1 Bishop Crim. Law, Secs, 51, 59.) The double liability is a penalty, and requires strict construction. ( Kritzer v. Woodson, 19 Mo. 327.)

That the people, in the adoption of this amendment, intended to abolish the double liability provision of the Constitution, leaving the single liability as the only and maximum penalty to which the stockholder should be subjected, there can, we think, be no doubt; and this affords us another important rule in its construction, to-wit: to give effect to the intent of the people in adopting it. (Cooley Const. Limt. 55; Broom's Leg. Max. 347; Hamilton v. St. Louis Co. Ct., 15 Mo. 3.) Contemporaneous construction of this amendment verifies the position of defendant. So far as our knowledge extends, save in the case at bar, the construction contended for by defendant has been universally acquiesced in by the bench, the bar and the people. Ochiltree v. Railroad Co., 54 Mo. 113; S. C., 21 Wall. 249; Miller v. Manion, 50 Mo. 55; Prov. Sav. Inst. v. Jackson Place S. & B. R., 52 Mo. 552; Ib. 557.

These proceedings are unsupported by any law. Section 13, p. 291 of Wag. Stat., having been enacted for the purpose of enforcing the double liability clause of the Constitution of 1865, is in direct conflict with the amendment of 1870; and no proceeding can be had under it until it is amended by the Legislature. St. Jo. &c., R. R. Co. v. Buchanan Co. Ct., 39 Mo. 485; Sanger v. Upton, 91 U. S. 56. A constitution is not self-enforcing, except when special provision is made for that purpese. The amendment of 1870 not only fails to provide for its own enforcement, but expressly provides against doing so, declaring, that, “dues from private corporations shall be secured by such means as may be prescribed by law.” The Legislature has enacted no law for the enforcement of this amendment. Granting, however, that the amended constitution is capable of self-enforcement, in that case it must be done at common law. It could not be enforced under said section 13, seeing that it was enacted in 1866, to enforce the constitution of 1865, and is repealed by the amendment. (2 Story Eq. Ju. Sec. 1252, a. & b.; Rankine v. Elliott, 16 N. Y. 377; 10 Paige 290; 26 N. Y. 233 & 239; 14 How. 368; 22 Id. 380 Black 539.Waters & Winslow for respondents.

The amendment of 1870 does not destroy the individual liability of stockholders in private corporations, but simply limits the power of the Legislature to extend such liability to an amount greater than the capital stock owned. The common law imposed no such liability. Ang. & Ames Corp, §§ 591, 594, 599 et seq. It had its origin in legislative enactment. Whatever the form of expression used in creating it, or whatever the extent to which it was carried, individual liability has a well understood and clearly defined meaning, viz: a liability in addition to the liability to pay up the stock subscription. If we show that the phrase “individual liability,” as used in the statutes and constitutions of Missouri, have this “peculiar and appropriate meaning in the law,” we shall insist that the rule of the statute shall govern “technical words and phrases having a peculiar and appropriate meaning in law shall be understood according to their technical import.” Wag. Stat. 887, § 6.

The statute of 1845 (R. S. 233, § 13) imposed on the stockholder a liability for debts of the corporation in “double the amount of his stock, and no more.” This has been treated as in the nature of a penalty. Kritzer v. Woodson, 19 Mo. 327; Cable v. McCune, 26 Mo. 371. Under the statute of 1855 (R. S. 372, § 13) there was a liability “to an additional amount equal to that of the amount of his stock.” The change made by the latter statute in the measure of the individual liability is evident, but in no sense is there any change in the nature of the liability. The law remained thus until the constitution of 1865 went into operation. The limitation in that instrument, it will be noticed, is not upon the power of the Legislature to extend the individual liability of stockholders, but upon the power to reduce such liability. The substance is, that each stockholder shall be liable for not less than the amount fixed, but there is no provision that it may not be made more. The individual liability was increased by the amount of the unpaid stock. By dropping out the words, “ and any amount unpaid thereon,” the unpaid stock is withdrawn by the amendment of 1870 from the reach of the creditor's execution, but the individual liability--the thing apart from the unpaid stock--still remained just as it was by the statute of 1855. The words, “but in no case shall any stockholder be individually liable in any amount over or above the amount of stock owned by him,” are equivalent to a provision that “every stockholder may be made individually liable to the amount of the stock owned by him.” Saying that the amount shall not be over or above a certain amount is plainly saying that it may be at the most that amount.

The changes made by the amendment are: First, the individual liability is reduced by the omission of the unpaid stock from the measure of the liability; second, the limitation upon the legislative power is so changed as to prohibit an individual liability greater than the amount of the stock owned, where it was previously so limited as to prevent it from being fixed less than the amount of stock owned, and any amount unpaid thereon; and, third, the harmony of the system is restored by remitting to the corporate body and the courts all questions growing out of the corporate liabilities, leaving the Legislature to deal with the individual liability of the members. If it had been the intention to abrogate individual liability altogether, some such language as this would have been used: “The Legislature shall pass no law imposing any individual liability upon the members of private corporations, but laws must be passed subjecting unpaid stock to the claims of creditors.” The language used imports no such intent. The form of expression used in the original section is preserved, and the only change made is in the measure of the liability and the nature of the limitation. The object, to secure “dues from private corporations,” and the means, making the stockholder “individually liable” are still retained. The only purpose of the original section and the amendment, the enactments of 1845 and 1855, and the entire body of legislation on the subject in this country, is to secure the creditors of these corporations against improvidence and fraud by means of this individual liability. There could be no necessity for statutes and constitutions to secure the rights of creditors in the unpaid stock. At common law the unpaid subscriptions to the capital stock constitute a fund available to creditors who are unable to make their demands from the corporate body, and equity will lend them its aid to enforce the payment. Ward v. Manfg. Co., 16 Conn. 593; Henry v. R. R. Co., 17 Ohio 187; Mann v. Pentz, 3 N. Y. 422; Ogilvie v. Knox Ins. Co., 22 How. 380; Adler v. Manfg. Co., 13 Wis. 57; Upton, assignee v. Tribilcock, 91 U. S. 47. If we insert after the words “over and above,” the words “an amount measured by,” the whole controversy is at an end. That such is the purport of the language used, see Briggs v. Penniman, 8 Cowen 392; The matter of the Empire City Bank, 18 N. Y. 218; Bank v. Ibbottson, 24 Wend. 493; The matter of the Hollister Bank, 27 N. Y. 397; Pettibone v. McGraw, 6 Mich. 445; Ohio L. Ins. & T. Co. v. Merchants' Ins. & T. Co., 11 Humph 11.

W. P. Asbury and A. B. Logan for respondents.

It is immaterial in this proceeding whether the stock held by appellant was paid up or not; the extent of liability is not measured or affected by the amount unpaid thereon. Appellant is liable to plaintiffs in this form of proceeding. McClaren v. Franciscus, 43 Mo. 452; E. O. Pickering use of John W. Dryden v. Templeton, 2 Mo. App. 224; Curtis v. Harlow, 12 Met. 3. A subscription of stock to a corporation is a contract, and the law fixing the liability of the subscriber, as it exists at the date of the subscription, enters into and forms a part of the contract. Ireland v. Palestine, &c. Co., 19 O. St. 369.

The seeming conflict between the statutory provision under which the action is brought and the constitutional amendment, as to the measure of liability, does not, nor can it, render the remedy imposed by the statute inoperative and void. The amendment not providing a new remedy, but only restricting the extent or measure of liability imposed by the old constitution,...