St. Louis Ry. Supplies Mfg. Co. v. Harbine

• Decision Date: 25 April 1876
• Citation: 2 Mo.App. 134
• Parties: ST. LOUIS RAILWAY SUPPLIES MANUFACTURING COMPANY, Respondent, v. THOMAS HARBINE, Appellant. ST. LOUIS RAILWAY SUPPLIES MANUFACTURING COMPANY, Respondent, v. RICHARD E. TURNER, Appellant.
• Court: Missouri Court of Appeals

2 Mo.App. 134

ST. LOUIS RAILWAY SUPPLIES MANUFACTURING COMPANY, Respondent,

v.THOMAS HARBINE, Appellant.

ST. LOUIS RAILWAY SUPPLIES MANUFACTURING COMPANY, Respondent,

v.RICHARD E. TURNER, Appellant.

St. Louis Court of Appeals, Missouri.

Apr. 25, 1876.

1. From July 4, 1865, to November 1, 1870, no corporation could be created in Missouri, the stockholders of which were not liable for the debts of the corporation so far as those debts did not exceed the full par value of the stock by them respectively held.

2. The constitutional amendment adopted in November, 1870, did not have the effect of impairing an obligation incurred by a stockholder prior to that date.

APPEAL from St. Louis Circuit Court.

Affirmed.

Jas. O. Broadhead and Broadhead & Overall, for appellant, cited: Wag. Stat. 293, 875; Kritzer v. Woodson, 19 Mo. 327; Ochiltree v. Iowa R. R. Const. Co., 54 Mo. 117; St. Jo. & Denver City R. R. Co. v. Buchanan County Court, 39 Mo. 489; Hawthorne v. Baliff, 2 Wall. 10.

Chandler & Young, for respondent, cited: Ochiltree v. Iowa Const. R. R. Co., 21 Wall. 249; Hawthorne v. Balef, 2 Wall. 10; Provident Savings Institution v. Jackson S. Rink, 52 Mo. 552; State Savings Institution v. Kellogg, 52 Mo. 583; Franciscus' Case, 43 Mo. 463; Corning v. McCullough, 1 Comst. 56; Wag. Stat. (1872) 291, sec. 13.

GANTT, P. J., delivered the opinion of the court.

These two cases may be considered together.

The petition in the first showed that the St. Louis and St. Joseph Railroad Company was a corporation created and organized under the laws of Missouri, in 1868, for the construction of a railroad between St. Louis and St. Joseph; that plaintiff sold and delivered to it, during the year ending September, 1870, goods, wares, and merchandise to the amount of $6,624.26, which the railroad company never paid; that on September 29, 1870, the railroad company was dissolved, and was adjudged a bankrupt on December 24, 1870; that plaintiff presented its claim against the assignee in bankruptcy, and received a small dividend, leaving a balance unpaid, including interest, of $7,010.62; that at the time the goods were so sold and delivered the defendant was stockholder, having $5,000 of the stock of the railroad company, and so continued up to the dissolution of the corporation, and plaintiff thereupon asked judgment against Harbine for $5,000, pursuant to the Constitution and laws of Missouri.

The defendant, after a formal denial of the indebtedness of the railroad company to the plaintiff, alleged that plaintiff had instituted suit against R. E. Turner, who was also a stockholder of the railroad company, to the amount of $5,000, for the same cause of action, and had got judgment against Turner for $5,000.

At the trial the court found the issue joined in favor of the plaintiff, and gave judgment against Harbine for $2,381, the balance of its claim over and above the judgment against Turner, and refused an instruction, asked by defendant, that defendant is not liable to the plaintiff in this action if it appears that he has fully paid for his stock to the railroad company.

In the case of Turner the facts are the same, mutatis mutandis. The point urged by appellant in each case is that the liability of the defendants, as it stood when the goods, wares, and merchandise were furnished to the railroad company prior to September, 1870, was in the nature of a penalty, and was discharged by the change of the Constitution and the repeal of the laws creating and enforcing the penalty before the commencement of these actions.

The actions were commenced on August 18, 1874, and October 23, 1874, respectively.

The respondents, on the other hand, contend that the stockholder was bound by a contract to answer to the creditors of the corporation to the amount of his stock, and that the obligation of this contract was not liable to be discharged or impaired by any act of the State of Missouri, organic or otherwise.

1. We are of opinion that the defendant in each case is liable to the creditors of the corporation at least to the amount of his stock, notwithstanding that it has been fully paid for.

The 6th section of the 8th Article of the Constitution of Missouri, adopted in 1865, and in force until November, 1870, was in the following words: “Dues from private corporations shall be secured by such means as may be prescribed by law; but in all cases each stockholder shall be individually liable, over and above the stock by him or her owned, and any amount unpaid thereon, in a further sum at least equal in amount to such stock.” Of course, before the adoption of this constitutional provision, it was competent for the General Assembly, in every special charter granted, to declare that the rights of the creditors of the corporation should be still more effectually guarded than they were from 1865 to 1870. What was novel and peculiar about the provision of the Constitution of 1865 was the insertion of this protection to creditors in the Constitution. So long as it remained there, no corporation could be created after July 4, 1865, the stockholders of which were not in the position of limited partners; that is to say, they were liable, necessarily, to pay the debts of their association, at least as far as these debts did not exceed the full par value of the stock by them respectively held; and, if such stock had not been paid for in full, the stockholder was further liable to the amount of anything unpaid on his stock subscription. But this was the inferior limit of the liability of the stockholder. The General Assembly had full power by statute to declare that each stockholder should be liable, in solido, for the debts of...