Sleeper v. Goodwin

• Decision Date: 11 January 1887
• Citation: 67 Wis. 577,31 N.W. 335
• Parties: SLEEPER v. GOODWIN, IMPLEADED, ETC.
• Court: Wisconsin Supreme Court

67 Wis. 577

31 N.W. 335

SLEEPER

v.GOODWIN, IMPLEADED, ETC.

Supreme Court of Wisconsin.

January 11, 1887.

Appeal from circuit court, Sauk county.

Action to recover wages for labor. Judgment for plaintiff. Defendant appealed.Pinney & Sanborn and J. M. Olin, for respondent, Sleeper.

Hurlbut & Robinson, for appellant, Goodwin, impleaded, etc.

TAYLOR, J.

This action was brought by the respondent, as a creditor of the Wonewoc Manufacturing Company, to enforce the liability of Ira D. Goodwin and others, who are alleged to be stockholders of said company, under the provisions of section 1769, Rev. St. 1878. Said section, so far as it has any bearing on this case, reads as follows: “The stockholders of every corporation, other than railroad corporations, shall be personally liable to an amount equal to the stock owned by them, respectively, in such corporations, for all debts which may be due and owing to its clerks, servants, and laborers for services performed for such corporation, but not exceeding six months' services in any one case.”

The action is brought by the respondent on his own behalf, as well as on the behalf of all other creditors of the said corporation having similar claims against said stockholders; and it is also brought against all the stockholders of said corporation at the time it ceased to do business as a corporation. It also alleges that the plaintiff worked for the corporation as a laborer or servant from February 5, 1878, to February 6, 1880, at which time the corporation was indebted to him in the sum of $318.74 for such labor and services, and that this sum was due and earned within a period of six months immediately preceding February 6, 1880; that on April 9, 1884, he commenced an action against the corporation to recover the debt so due to him, and that in such action he recovered judgment against said corporation for the amount of his said debt and interest, amounting in all to the sum of $412.81, together with $61.37 costs of such action; that execution was issued on said judgment, and returned wholly unsatisfied on May 2, 1884. The complaint then alleges that on February 5, 1880, the said corporation was in embarrassed financial circumstances, and was indebted in the sum of $76,000; that on February 6, 1880, said corporation duly assigned, for the benefit of its creditors, all of its property, of every kind and nature, to one Duane Mowry as assignee; that such assignment was made in conformity with the laws of this state on the subject of voluntary assignments; that said assignee took possession of all the property of said corporation, and has converted the same into money; that said corporation has no property or effects of any kind, except such as are in the hands of said assignee; and that said assignee has not yet made a final report of his proceedings. The complaint further alleges that, at the time of incurring the said indebtedness to the plaintiff, and down to the present time, and at the date of the commencement of this action, the said appellant Ira D. Goodwin was a stockholder in said corporation, holding 50 shares of stock therein, of the par value of $5,000. It also alleges that the whole capital stock of said corporation was $75,000, and that certain other persons named in the complaint were also stockholders, holding stock to the amount of $11,700; and further alleges, upon information and belief, that there was a large amount of stock issued and sold by said corporation, the names of the holders of which are unknown to the plaintiff, whom he prays may be discovered and be made parties to this action. The prayer for relief is as follows: “Wherefore the plaintiff demands judgment for the discovery of all persons who may be stockholders of said defendant corporation; and that, when so discovered, they may be made parties to this action; that the said defendants who are stockholders of the said Wonewoc Manufacturing Company may be adjudged and decreed to pay into court an amount equal to the amount of the capital stock of said corporation held by them, respectively, or so much thereof as may be necessary to discharge the sum of $474.18, with interest from the twenty–third of April, 1884, together with $2.75 costs of said execution and return; and that the plaintiff may have such further and other relief in the premises as shall be just, together with costs.”

The answer of the appellant Goodwin admits the incorporation of the Wonewoc Manufacturing Company, but with a capital stock of but $30,000; that said corporation acted as a corporation from 1877 down to the sixth of February, 1880; that on that day the corporation duly assigned to one Duane Mowry all the property of the corporation for the benefit of its creditors; that said Mowry entered into possession as such assignee, and has not yet made his final report; and that said corporation has no property or effects other than those in the possession of such assignee. This is followed by a general denial of all the other allegations in the complaint. The answer then sets up, in abatement of the plaintiff's action, facts showing that the plaintiff duly presented and filed his claim, duly verified, with the clerk of the circuit court of Juneau county, so as to entitle him to a dividend from the assets of the corporation in the hands of the assignee. He further answers, as a defense to the plaintiff's action, that the corporation has owned no property, and done no business, as a corporation, since February 6, 1880; and that the action of the plaintiff, commenced on April 19, 1884, was not commenced within the time limited by law. And, as a further defense, he sets out facts tending to show that he never was a stockholder in said corporation; and, if any stock appeared to be held by him, it was only held as collateral security for a debt due from one E. C. Gage to him.

The case was tried by the court. On the trial the appellant objected to the reception of any evidence in support of the complaint, on the ground that it did not state facts sufficient to constitute a cause of action. This was overruled, and exception taken. On the trial the court found in favor of the respondent, and against the appellant, as well as against some of the other alleged stockholders named in the complaint, and rendered judgment requiring them to pay into court a sum sufficient to satisfy the claim of the respondent, with interest and costs.

Upon the hearing of the appeal in this court the learned counsel for the appellant assigns for errors––

First, that the court erred in admitting any evidence under the complaint. Under this assignment, several reasons are presented why the complaint fails to state a cause of action. To this assignment of error the main argument of counsel was directed. The first reason, as we understand it, is that the assignment set out in the complaint, showing that all the property and assets of the company had been assigned to an assignee for the benefit of creditors, February 6, 1880, showed conclusively that the corporation was dissolved, and consequently thereafter no action could be maintained against the corporation after such dissolution, or against its stockholders,––at all events, not after the expiration of three years from the date of such assignment. See section 1764, Rev. St. 1878. We think it very evident that the mere dissolution of the corporation by its own voluntary act, or by its ceasing to act as a corporation, cannot have the effect to destroy the rights of the plaintiff against the stockholders under the section of the statute above quoted. If the mere dissolution of the corporation destroyed the rights of the creditors to pursue the stockholders for the kind of claims mentioned in said section, then, whenever the corporation ceased to exist by the expiration of its charter, or when it was dissolved by the voluntary acts of the stockholders in the manner prescribed by section 1789, all rights of the creditors under said section giving a remedy against the stockholders would be lost. It is very evident that such a construction of the statute cannot be sustained. It is in just such a condition of the corporation that the benefit of the statute is of the most importance to such class of creditors. The remedy given by the statute would not be likely to be pursued against a corporation which was carrying on its usual business affairs; and it is only when its business affairs are embarrassed by debts that it is unable to pay, and which compels a suspension of its business, that this unusual remedy is likely to be instituted, or would be beneficial to the creditors.

But it is said if the mere suspension of the business of the corporation, and an assignment of all its property for the benefit of its creditors, is not a bar to an action of this kind, yet, when such suspension has existed for more than three years, given by section 1764, Rev. St., for winding up its affairs, then no action can be maintained against such corporation, or against its stockholders, under said section 1764. We do not think the provisions of section 1764 apply to a case of the kind presented by the record in this case. That section is limited to cases where the corporation expires by its own limitation, or is dissolved voluntarily, as provided by said section 1789, or by its articles of association, or shall be annulled by forfeiture or otherwise. The section does not seem to apply to a corporation which has simply ceased to do business for want of funds, or for other causes not mentioned in said section. Section 1763, which declares that a corporation which shall have remained insolvent, or have neglected or refused to pay and discharge its notes or other evidences of debt, or shall have suspended its ordinary business for one whole year, it shall be deemed to have surrendered the rights, privileges, and franchises granted or acquired under any law, and shall be adjudged to be dissolved. Very clearly, this...