Spiro v. Shapleigh Hardware Co.
| Decision Date | 01 October 1928 |
| Docket Number | 27049 |
| Citation | 118 So. 429,153 Miss. 81 |
| Court | Mississippi Supreme Court |
| Parties | SPIRO v. SHAPLEIGH HARDWARE CO. [*] |
Suggestion of Error Overruled Nov. 12, 1928.
APPEAL from circuit court of Lauderdale county, HON. J. D. FATHEREE Judge.
Action by the Shapleigh Hardware Company against Jonas Spiro. Judgment for plaintiff, and defendant appeals. Affirmed.
Affirmed.
Victor W. Gilbert and Jacobson & Brooks, for appellant.
We respectfully submit that when it affirmatively appeared from the testimony of the plaintiff that no demand was made for payment of the note within six years of its date, the note was barred by the statute and the defendant should have been given a peremptory instruction. The leading case on the question is Palmer v. Palmer, 36 Mich. 487, 24 Am. Rep. 605. See, also, Freeman v. Ingerson, 106 N.W. 278; Wrigley v. Bank, 108 N.W. 132; Boyd v. Buchanan, 162 S.W. 1075; Landis v. Saxon, 105 Mo. 486, 16 S.W. 912, 24 A. S. R. 403; Little v. Blunt, 9 Pick. 491; Campbell v. Whorisky, 170 Mass. 67, 48 N.E. 1070; High v. Board of Com., 92 Ind. 580; Keithler v. Foster, 22 Ohio St. 27; Railroad v. Burlingame, 36 Kan. 624, 14 P. 271; Codman v. Rogers, 10 Pick. (Mass.), 119; Hitchcock v. Cosper, 73 N.E. 264. Turning to the cases of our own state the earliest of these is Miller v. Board of Supervisors, 68 Miss. 88, 8 So. 269; Mitts v. Price, 129 Miss. 554, 92 So. 163; Butt v. Railroad Co., 63 Miss. 462; Shapleigh Hardware Company v. Spiro, 141 Miss. 38, 106 So. 209; Wilson v. Stark, 146 Miss. 498, 112 So. 390; Minor v. McDowell, 113 So. 576; Sec. 2665, Hem. Code, 1927.
From the inspection of the note, and as shown by the pleadings and proof, all the certificates of the capital stock issued by the Spiro Hardware Company, except perhaps one or two shares, was pledged to the Shapleigh Hardware Company as collateral security of the note. The pledging of these stock certificates conveyed at least an equitable title thereto to the Shapleigh Hardware Company. 22 A. & E. Ency. of Law (2. Ed.), 907; 32 Am. St. Rep. 715; Jones on Collateral Securities (3 Ed.), 719.
In effect the testimony of Shapleigh Hardware Company demonstrates that even wasting away the stock as they did through their agents and employees, and selling it at a lump sum it did in that way bring enough money, with the accounts payable collected, to pay them a dividend of sixty-four and twenty-five hundredths per cent, and this was the dividend paid to all creditors, very near paying them in whole, but under this arrangement of the Shapleigh Hardware Company, through their negligence, left this note unpaid. "So, though nothing has been realized from the collateral, yet, if the failure to realize has arisen from such want of diligence that the holder is answerable for the face value of the collateral, or to any other extent, he can recover on the principal debt only so much thereof as remains unpaid after charging him with the amount of the collateral for which he has become answerable through his negligence or want of diligence." Reeves v. Plough, 41 Ind. 204, 32 Am. St. Rep. 727. The plaintiff has the right to recoup this loss, if a jury decides that he sustained such loss. Hoover Chemical Co. v. Humphrey, 107 Miss. 810, 66 So. 214; Amory Telephone Co. v. Cox, 103 Miss. 514, 66 So. 641; Hayes v. Liquor Co., 99 Miss. 583, 55 So. 356; Fowler v. Payne, 2 Miss. 210.
George B. Neville, for appellee.
The appellant now contends for the first time, after the case has been tried in the circuit court and once in this court, that this cause of action is barred by the six-year statute of limitations because the proof does not show that a demand was made on the appellant by appellee for the payment of the note within six years from its date.
There are several answers to this contention:
1. That no plea filed presented any such issue, but on the contrary plea filed by appellant alleged that demand was made more than six years before suit was brought and less than one year after the date of the note.
2. That if it be true, as now contended by appellant, that demand should be made within a period of the statute of limitations, that the statute of limitations of Missouri where the note was payable, should govern, and not the statute of Mississippi.
3. If the rule be as announced by some of the cases cited in appellant's brief that demand must be made within a reasonable time under the circumstances, then I submit that what is a reasonable time is a question of law for the court and that the facts in this case clearly demonstrate that in view of the conduct of the makers of the note in paying semi-annual interest up to and including September, 1916, and in view of other circumstances connected with the giving of the note in controversy, that demand was made within a reasonable time.
4. I next contend that the testimony shows that a demand that satisfies the law was made in 1918 when the Birmingham attorneys wrote to appellant and demanded payment of the note and instituted suit against him.
5. I next contend that under the statute of limitations of Mississippi, and under the former decision of this court in this case, that the statute of limitations did not begin to run until the cause of action accrued, and that the cause of action did not accrue until demand was made on appellant. It is stated in appellant's brief that the leading case in support of its proposition is the case of Palmer v. Palmer, 36 Mich. 487. The supreme court of Michigan held in this case that the statute of limitations began to run thirty days after the date of the note. The note was payable thirty days after demand. The court held that no demand was necessary. The suit was brought more than six years and thirty days after the date of the note.
The authorities cited in the opinion show that the English courts and many of the American courts hold that where a demand is necessary, as this court has held in the case at bar, that the statute of limitations does not begin to run until after demand, it matters not how long demand was delayed; and now let it be noted carefully that no demand was necessary.
Appellant relies on sec. 2665, Hem. Code 1927. The complete reply to their question with reference to this section is that there is no effort here to change the statute of limitations by contract. I now refer the court to some of the cases holding that the statute of limitations does not begin to run until actual demand is made. Vickery v. Maier, 129 P. 273; Dougherty v. Wheeler, 25 N.E. 542; Longhofer v. Herbel, 111 P. 483. There is a very illuminating note beginning on page 486 of 32 L. R. A. (N. S.) . See, also, 8 C. J. 104, par. 181; New England Fire Insurance Company v. Haynes, 71 Vt. 306, 76 A. S. R. 771.
If the Shapleigh Hardware Company did injure the Spiro Hardware Company, suit would have to be brought against it by the Spiro Hardware Company, and whatever the corporation recovered would first be used to pay the debts of the Spiro Hardware Company and what was left would go to the stockholders. Under the law, if a corporation has a cause of action, before a stockholder can bring a suit in his own name against the party who is indebted to the corporation, he must first demand of the corporation that it bring suit, and if it then refuses to bring suit, he must join the corporation as a party defendant. 14 C. J. 924, sec. 1444.
This court held in the case of Williams v. Neville, 53 So. 594, that stockholders of an insolvent corporation in suing directors for ultra-vires acts must allege that there will be something left for the stockholders after paying all the creditors of the corporation. As stated before, the testimony utterly failed to show the amount of debts owed by the corporation at the time the assignment was made.
From a judgment on a note for ten thousand dollars in favor of Shapleigh Hardware Company, Jonas Spiro appeals here. The court gave a peremptory instruction on the issue raised by appellant by his plea of recoupment. The case was submitted to the jury on the plea of six years' statute of limitations as to whether demand had been made by appellee more than six years before suit filed. On this issue, the verdict of the jury was for the appellee, and judgment of the court was entered accordingly against Spiro for the amount of his note and interest.
This is the second appearance of this case in this court, the former appeal being reported in Shapleigh Hardware Co. v. Spiro, 141 Miss. 38, 106 So. 209, 44 A. L. R. 393.
The note sued on is set forth in the former report, together with other facts not necessary to be restated here. Besides the question of the statute of limitations again raised on this appeal, it is now urged that the court erred in not submitting for the defendant, Jonas Spiro, the question of recoupment set up by the pleadings and proof. The essential facts of the recoupment are as follows: That the note for ten thousand dollars executed by the defendant, Jonas Spiro, in favor of the Shapleigh Hardware Company, dated March 27, 1914, was given for money advanced by said Shapleigh Hardware Company to purchase stock in the Spiro Hardware Company, a majority of which was held by one Simon Spiro, and to put said Jonas Spiro, Beasley, and Gilbert, in control of the Spiro Hardware Company; this being suggested by the Shapleigh Hardware Company, who advanced the money therefor, taking the stock, and certain insurance policies, as collateral for said loan. That said Shapleigh Hardware Company afterwards demanded that Jonas Spiro cease to draw a salary, and he, thereupon, retired from business and removed from Birmingham, Alabama, to Meridian, Mississippi. Thereafter, in March, 1927, the Spiro Hardware Company...
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