Sumrall v. Sun Mut. Ins. Co.

• Decision Date: 31 March 1867
• Citation: 40 Mo. 27
• Parties: JOSEPH K. SUMRALL, Respondent, v. SUN MUTUAL INSURANCE COMPANY, Appellant.
• Court: Missouri Supreme Court

40 Mo. 27

JOSEPH K. SUMRALL, Respondent,

v.SUN MUTUAL INSURANCE COMPANY, Appellant.

Supreme Court of Missouri.

March Term, 1867.

Appeal from St. Louis Court of Common Pleas.

The following declarations of law were asked by defendant and refused:

1. The writing read in evidence purporting to be an assignment made by Edward Dobyns to plaintiff, dated July 23, 1863, is not sufficient in law to vest in the plaintiff the right to claim or recover of the defendant the amount of interest sued for in this case.

2. If the court finds from the evidence that certain persons were members of the Sun Mutual Insurance Company at the time of the passage of the act of the General Assembly approved January 16, 1860, read in evidence by the plaintiff; and if the court also finds from the evidence that a large number of the same persons continued to be members of the defendant until this suit was begun, and since then, the plaintiff cannot recover in this action unless he has shown in evidence to the satisfaction of the court that the said persons, who were and who continued to be members of the defendant as aforesaid, either assented to the passage of said act, or that they accepted its provisions.

3. There is no evidence in this case to show that the persons who were members of the company at the time of the passage of the act of January 16, 1860, ever assented to the passage of said act or accepted its provisions.

4. The plaintiff cannot recover against defendant for any interest that has accrued on the $16,500 subscription in question since the assignment was made by Dobyns to plaintiff.

The court rendered a verdict and judgment for the plaintiff for $2,200.

Krum & Decker, for appellant.

1. The original shareholders of a private corporation are not bound to accept the amendments passed by the Legislature which increases their liability and divests them of rights acquired under the original compact.

The charter under which they organized is a contract, and while the right of the Legislature “to repeal, alter or suspend” is not denied, yet it is denied that they can impose upon original shareholders a liability to pay $5,000 annually to subscribers to a so called “guaranty fund,” and destroy the vested rights of members by introducing into the corporation new members with one thousand votes, to overpower the others having only one vote each.

Never having accepted or approved this amendment, the defendant and its members are not bound by it. The directors exceeded their authority, and, like other agents acting beyond the scope of their power, are individually liable-- Ang. & Am. on Corp., § 31, and cases; Id. § 537, and cases.

It is not denied that every charter under the 7th sec. of corporation act of 1855 is “subject to alteration, suspension, and repeal”; but there must be some limit to this power. Under this reservation, a Legislature cannot divest rights acquired even as against a public corporation (City of St. Louis v. Russell, 9 Mo. 512), much less against a private corporation (Commonwealth v. Essex Co., 13 Gray, 239, 253). In Sage v. Dillard, 15 B. Mon. 340, it was held that the power to alter, suspend and repeal did not authorize the Legislature to add new members to a corporation. This amendment adds new members with one thousand votes at the mere whim of directors, and thus puts the corporation, its property and franchises, out of the original corporators.

It will be observed that the case at bar is clearly distinguishable from Pacific R. R. v. Renshaw, 18 Mo. 210.

II. The contract between Dobyns and the defendant under the amendment sued on was a personal one, and could not be assigned so as to relieve the assignee from the failure of Dobyns, before or after assignment, from paying assessments. Therefore the failure on the part of Dobyns to pay the assessment made in January, 1863, for $2,400, of which he had due notice and demand, was a complete bar to the action.

Casselberry, for respondent.

FAGG, Judge, delivered the opinion of the court.

The questions for consideration in this case all arise upon the instructions which were asked by the appellant at the trial in the court below and refused. The plaintiff below (respondent here) commenced an action in the St. Louis Court of Common Pleas to recover the interest alleged to be due by said company on a subscription to its guaranty fund (so called) made by one Edward Dobyns, the said interest having been assigned to the said Joseph K. Sumrall as averred in the petition. The company was chartered by an act of the Legislature approved March 14, 1859; there was no provision in this act exempting it from alteration, suspension, or appeal, in the discretion of the Legislature, as provided by the general laws concerning corporations--R. C. 1855, p. 571, § 7.

On the 16th of January, 1860, an amendatory act was approved providing for a guaranty fund of not less than...