Steffins v. Gurney

• Decision Date: 06 January 1900
• Docket Number: 11,175,11,174
• Parties: JOHN STEFFINS, CHARLES LOVELACE, et al., v. DAVID E. GURNEY. JOHN STEFFINS v. DAVID E. GURNEY
• Court: Kansas Supreme Court

59 P. 725

61 Kan. 292

JOHN STEFFINS, CHARLES LOVELACE, et al., v. DAVID E. GURNEY.

JOHN STEFFINS v. DAVID E. GURNEY

Nos. 11,174, 11,175

Supreme Court of Kansas

January 6, 1900

Decided January, 1900.

Errors from Wyandotte district court; H. L. ALDEN, judge.

Judgment affirmed.

SYLLABUS

1. CORPORATIONS -- Liability of Stockholders. The individual liability of a stockholder arises after a judgment has been rendered against the corporation and when an execution thereon has been returned nulla bona; and in the absence of fraud on the part of the officers, such return is conclusive, as against the stockholder, that the corporation property has been exhausted.

2. CORPORATIONS -- Insufficient Defenses by Stockholders. Informality in the notes evidencing the debt against the corporation, the absence of express authority from the directors to the president to execute notes given for money used in the business and for the benefit of the corporation, as well as an objection that the plaintiff in the judgment did not have a complete title to the notes, are not available to the stockholder as defenses nor can the judgment be impeached except for fraud or want of jurisdiction.

3. CORPORATIONS -- Deposit by Guarantor not Payment. A deposit made by a guarantor of the notes intended as a security for the ultimate payment of the debt, and which, it was stipulated should not operate as a payment of the debt, cannot be regarded as a payment of the judgment.

4. CORPORATIONS -- Limitation of Action on Judgment. Where proceedings to enforce stockholders' liabilities and obtain executions against them are brought before the judgment becomes dormant, and are diligently prosecuted, no statute of limitations will run against the judgment creditor pending the litigation, and his right to proceed to the end will not be barred because more than six years have elapsed since the last execution on the judgment was issued.

McGrew, Watson & Watson, for plaintiffs in error.

Hutchings & Keplinger, for defendant in error.

OPINION

JOHNSTON, J.:

These proceedings involve the same facts, and therefore they may be considered together and disposed of in a single opinion.

On April 11, 1891, David E. Gurney obtained a judgment in the district court of Wyandotte county against the Kansas City Radiator and Iron Foundry Company for $ 25,743.77. Afterward an execution was issued, which was returned May 12, 1891, wholly unsatisfied, for the reason that no property of the corporation could be found by the sheriff whereon to levy it. On June 12, 1891, Gurney filed separate motions against John Steffins and thirteen others to enforce their individual liabilities as stockholders. That they were stockholders was not denied, but they set up other defenses, among which was an attack on the validity of the judgment.

At the same time and for the same reasons, but in a separate action, they obtained from the probate court a temporary injunction restraining further proceedings against them as stockholders. Soon afterward the injunction was dissolved by the district court, and to reverse that ruling they brought the case to this court. It was reached on October 6, 1896, and dismissed, which in effect affirmed the order dissolving the injunction. While that case was pending here, the district court declined to proceed further with the motions or to try the merits of the injunction suit. After the decision in this court, the proceedings in the district court were renewed and continued until June, 1897, when Gurney was awarded judgments against the stockholders in both of the cases.

The first point made here is that the court erred in not striking the motions from the files because they were not filed in or treated as a part of the original action against the corporation. In this ruling there was no error. It has already been determined that a proceeding to enforce a stockholder's liability "is independent of the action in which the judgment was rendered -- not a continuation of it, nor interlocutory or auxiliary to it." (Schnack v. Boyd, 59 Kan. 275, 52 P. 874; Howell v. Manglesdorf, 33 id. 196, 5 P. 759.)

Objection is made to a ruling refusing to exclude the testimony of a witness that...