Stiles v. Samainego

• Decision Date: 13 February 1889
• Docket Number: Civil 253
• Parties: T. L. STILES, Assignee, Defendant and Appellant, v. M. G. SAMANIEGO, Plaintiff and Appellee
• Court: Arizona Supreme Court

20 P. 607

3 Ariz. 48

T. L. STILES, Assignee, Defendant and Appellant, v. M. G. SAMANIEGO, Plaintiff and Appellee

Civil No. 253

Supreme Court of Arizona

February 13, 1889

APPEAL from a judgment of the District Court of the First Judicial District in and for the County of Pima. William H. Barnes Judge.

Generally affirmed.

J. A Anderson, and Haynes & Mitchell, for Appellants.

The complaint does not state facts sufficient to constitute a cause of action, nor the findings facts sufficient to warrant a decree.

Nothing is stated or found which would authorize any judgment against the assignee. An assignee may be compelled in equity to distribute the trust fund among the creditors, but in the absence of a statute providing a method of proving a debt, he cannot be sued for that purpose without joining his assignor. There is not a mere nonjoinder of a necessary party, but a total failure to state a cause of action against the party sued. The complaint shows that no indebtedness existed in favor of the plaintiff or his assignors, either immediate or remote, against Toole or Hudson at the time of the assignment by them to defendant Stiles, nor until the return of the execution against the railroad company, nulla bona, nearly three years after the assignment.

The complaint alleges that "Hudson and Toole being insolvent on the ninth day of May, 1884, made a general assignment for the benefit of their creditors." This assignment inured to the benefit of those only who were creditors, and the property and assets assigned can be applied only to the payment of debts then existing. Railroad Co. v Burnside, 5 Exch. 129; Burrill on Assessments, p. 647, sec. 427 (4th ed).

A debt is "a sum of money due by certain and express agreement." "The distinguishing and necessary feature is, that a fixed and specific quantity is owing, and no future valuation is necessary to settle it." Bouvier's Law Dictionary, title "Debt."

A subscription for railway shares does not create a debt within the meaning of the bankrupt law, or law relating to assignments, until calls are made, and the bankrupt or assignor is liable for calls made after the assignment, and the assignee is not. Railroad Co. v. Burnside, 5 Exch. 129; American File Co. v. Garrett, 110 U.S. 288, 4 S.Ct. 90; Burrill on Assessments, p. 647.

No action can be maintained against Stiles upon the subscription of Hudson or Toole to compel the payment of any part thereof, because these subscriptions did not pass to him by the assignment, and he is not the owner of them either as trustee or otherwise. Laws of Arizona 1879, p. 91, secs. 11 and 12; Midland G. W. Ry. v. Gordon, 16 Mees & W. 804.

Neither the railroad company nor its creditor, the plaintiff, have any lien upon the assets of either Hudson or Toole's estate. This proceeding is therefore not in rem, and the presence of Toole and Hudson as defendants, is essential; for if the decree in this case would not be valid against them personally, if they should return to this territory, it cannot be valid against their assignee.

Jeffords & Franklin, for Appellee.

When Toole and Hudson subscribed to the capital stock of the Tucson and Gulf of California Railroad Company they became debtors of the corporation to the amount of the subscription. $ 10.000 each. This was in 1882. On May 8, 1884, the date of their assignment to T. L. Stiles, this subscription was still unpaid. It was a debt due from them to the corporation: it was one of the debts for the payment of which they assigned their property to T. L. Stiles; for, as said by the supreme court of the United States, "by his subscription each subscriber becomes a several debtor to the company, as much so as if he had given his promissory note for the amount of his subscription." Hatch v. Dana, 101 U.S. 205-215. And again: "It cannot be doubted that one who has become bound as a subscriber to the capital stock of a corporation must pay his subscription if required to pay the obligations of the corporation. . . . After having bound himself to contribute, he cannot be discharged from the obligation he has assumed until the contribution has actually been made, or the obligation in some lawful way extinguished." Hawley v. Upton, 102 U.S. 314.

The debt of Hudson and Toole was a debt due from them to the corporation, and it was the duty of Mr. Stiles to pay that debt, as well as other debts, when called on, to extent of the assigned property.

The railroad company is indebted to the plaintiff, Samaniego, but is insolvent. Under these circumstances plaintiff could bring an action in equity to compel it to call in its unpaid subscriptions, so as to pay his debt. Or he could bring suit directly against one or more of the subscribers and directly compel payment to himself of the unpaid subscription, or as much thereof as would be necessary to pay his debt.

This has been specifically decided in Hatch v. Dana, 101 U.S. 205, and it is under the authority of that case that the present action was brought.

The court said: "The liability of a subscriber for the capital stock of a company is several, not joint. By his subscription each becomes a several debtor to the company, as much so as if he had given his promissory note for the amount of his subscription. . . . A creditor's bill merely subrogates the creditor to the place of the debtor, and garnishes the debt due to the indebted corporation. It does not change the character of the debt attached or garnished." Hatch v. Dana, 101 U.S. 205. See, also, Ogilvie v. Knox Ins. Co., 22 How. 380-392.

The record shows that the point of nonjoinder of parties in not making Hudson and Toole defendants, was not raised in the court below. It was not raised by demurrer or answer. There is no bill of exceptions to that point, nor is it assigned as error. This court cannot consider the question.

Wright, C. J. Porter, J., and Barnes, J., concur.

OPINION

The facts are stated in the opinion.

WRIGHT, C. J.

This suit was brought against the appellant. Stiles, to recover a judgment against him, as the assignee of Charles Hudson and James H. Toole, and also as assignee of the firm of Hudson &amp Co., and against certain other stockholders in the Tucson and Gulf of California Railroad Company. In 1882, in the month of January, Charles Hudson and James H. Toole each subscribed for one hundred shares of stock in the said corporation, known as the "Tucson and Gulf of California Railroad Company," of the aggregate value of $ 10,000. On the above subscription each of the above-named subscribers, Charles Hudson and James H. Toole, paid about $ 691, leaving the balance unpaid. In May, 1884, the said Hudson and Toole, being insolvent, each made an individual and general assignment to the appellant, Stiles, of all his property, for the benefit, first, of his individual creditors, and then for the general benefit of the creditors of the firm of Hudson & Co., of which firm they were the sole members. Contemporaneously with this assignment, the firm of Hudson & Co. made a general assignment, also to the said appellant, Stiles, for the benefit of their creditors. In 1886 one Lazard obtained, in the district court of Pima County, a judgment against said railroad company for the sum of $ 6,220.50, and in the same year one Parker obtained a judgment against the corporation for the sum of $ 2,206.50. In March, 1887, and after executions had been duly issued on these judgments, respectively, and returned nulla bona, they were sold and assigned to appellee herein, who now sues to subject whatever individual estate of the said Hudson or Toole there may be in the hands of said Stiles, as such assignee, to the payments of appellee's demand.

The complaint is substantially a creditors' bill in equity demanding general relief, but seeking to subject a certain fund belonging to the individual estate of the assignor Toole in the hands of the assignee to the satisfaction of complainant's judgments. The case was tried by the court sitting as a jury. The court found the facts substantially to be that Charles Hudson and James H. Toole subscribed the said amounts of stock to said railroad company at the time alleged, and had paid but said small portion thereof; that they made said individual and firm assignments to Stiles, the appellant; that the assignee accepted the trust, etc.; that Samainego, the plaintiff and appellee, is now the bona fide owner of said judgments against said railroad company, having purchased the same from said Lazard and Parker; that the said assignee, Stiles, had paid out to the creditors of the firm of Hudson & Co. funds belonging to the...