The Lamar Ins. Co. v. Moore

• Decision Date: 31 January 1877
• Citation: 1877 WL 9437,84 Ill. 575
• Parties: THE LAMAR INSURANCE COMPANY, for use, etc.v.JOHN D. MOORE.
• Court: Illinois Supreme Court

84 Ill. 575

1877 WL 9437 (Ill.)

THE LAMAR INSURANCE COMPANY, for use, etc.

v.JOHN D. MOORE.

Supreme Court of Illinois.

January Term, 1877.

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county; the Hon. JOSEPH E. GARY, Judge, presiding.

Messrs. SHUFELDT & WESTOVER, for the appellant.

Mr. F. C. INGALLS, for the appellee.

Mr. JUSTICE BREESE delivered the opinion of the Court:

In view of the averments in both counts of the plaintiff's declaration, we do not deem it necessary to determine the character of the instrument sued on-- whether it be a negotiable promissory note, due on demand, or otherwise.

We are satisfied the organization of the corporation, and the subscription by the defendant for five shares of the capital stock, created a liability on his part to pay to the company the amount of his subscription. Such subscriptions make up the capital stock of such companies, and is a trust fund for the security of the creditors of the company. The true question is, to what extent, under the averments in the declaration, can this liability be enforced, the corporation being insolvent, and its assets in the hands of a receiver? Appellant's counsel insist it can be enforced to the extent of the undertaking. He says the company is an insolvent corporation, and a receiver has been appointed; that this suit is for his use, and the proceeds are to be applied by him in payment of the debts of the corporation; that the note is an asset of the corporation. And, again, the defendant is a stockholder in the company; the note was given for capital stock, and represented it; the capital stock is pledged to those who deal with the corporation, for their security; the unpaid balance upon stock notes are as subject to collection as any other debts due the company, and he asks why they should not be collected and the creditors paid. The answer to all this is, such is not the contract the defendant entered into. He engaged to pay the eighty per cent of his subscription remaining unpaid, “on the call of the directors, as they might be instructed by the majority of the stockholders represented at any regular meeting.” This action is not brought by the receiver, but by the Lamar Insurance Company--the corporation with whom defendant contracted, and before a recovery can be had the plaintiff must show the required call was made. Banet v. Alton and Sangamon Railroad Co. 13 Ill. 504.

Where an insurance corporation becomes insolvent, and its effects placed under the control of a receiver, stock notes are nothing more than instruments, to be used in the same manner and for the same purpose as the capital stock could be used, and that would be as an indemnity, to be applied to the discharge of the liabilities of the corporation. A stockholder in a...