Tuttle v. Nat'l Bank of the Republic

• Decision Date: 30 March 1896
• Citation: 161 Ill. 497,44 N.E. 984
• Parties: TUTTLE v. NATIONAL BANK OF THE REPUBLIC.
• Court: Illinois Supreme Court

161 Ill. 497

44 N.E. 984

TUTTLE

v.NATIONAL BANK OF THE REPUBLIC.¹

Supreme Court of Illinois.

March 30, 1896.

Appeal from appellate court, Third district.

Action by the National Bank of the Republic against Sidney Tuttle. There was judgment for plaintiff, which was affirmed by the appellate court (48 Ill. App. 481), and defendant appeals. Reversed.A. E. De Mange, for appellant.

Kerrick, Spencer & Bracken, for appellee.

PHILLIPS, J.

The National Bank of the Republic, of St. Louis, Mo., the appellee, recovered a judgment against Sidney Tuttle, appellant, by reason of his being a stockholder in the Edwards County Bank of Kansas, which became insolvent, owing appellee. Section 2 of article 12 of the constitution of the state of Kansas we cite: ‘Dues from corporations shall be secured by individual liability of the stockholders to an additional amount equal to the stock owned by each stockholder; and such other means as shall be provided by law, but such individual liabilities shall not apply to railroad corporations, nor corporations for religious or charitable purposes.’ A right of action against a stockholder of a corporation ordinarily exists only by virtue of some statutory enactment. It did not exist at common law. It is of importance to determine at the threshold of this case whether this provision of the constitution of the state of Kansas is self-executing. When it was declared by that instrument that ‘dues from corporations shall be secured by individual liability of stockholders to an additional amount equal to the stock owned by each stockholder, and such other means as shall be provided by law,’ it is apparent legislation was contemplated and necessary to provide a means of enforcing the liability, and determining the manner by which ‘such other means as shall be provided by law’ should be made effectual as securing dues from corporations. That provision seemed to impose on the legislature the duty of securing dues from corporations, but limited the power and discretion of that body as to the extent to which it could make stockholders liable. It is only in exceptional cases that constitutional provisions enforce themselves. Usually, they must be supplemented by legislation to become operative. The intention of the instrument must ordinarily prevail, and in its ascertainment we must look at the consequences of a particular construction. Constitutional provisions, like statutes and private instruments, must be construed, if possible, so as to give effect and some force to each of their provisions. By legal intendment, each and every clause has been inserted for some purpose which, when rightly understood, may have some practical result. There may in construction be transposition of sections, paragraphs, and sentences, and words may be restricted and enlarged. But it is an unauthorized construction to take a part of a paragraph or section, and construe that without reference to another part of the same paragraph or sentence. Where it is apparent that a particular provision of the organic law shall go into immediate effect, without ancillary legislation, and this can be determined by giving full force and effect to all its clauses relating to the same subject, and the language is free from ambiguity, then it becomes the imperative duty of judicial tribunals to declare it self-effective. And where it is ambiguous, and the purpose of the provision would be frustrated unless immediate effect be accorded its provisions, it will be held self-executing. In determining the purpose of this provision of the constitution of the state of Kansas, it is obvious the central idea and purpose were the protection of creditors of corporations other than railroad or those designated as religious or charitable corporations. To secure this, a liability was declared against stockholders to an additional amount equal to the stock owned by such stockholders and such other means as shall be provided by law. If this provision is to be treated and construed as self-operative, then the clause ‘and such other means as may be provided by law’ must be rejected as meaningless, and held without force or effect. The creditor must be confined to the security of the individual liability of stockholders to an amount equal to the stock owned by such stockholders. In the attempt to give construction to this clause of the constitution of the state of Kansas in the absence of legislation, we are at once confronted with a serious difficulty and much ambiguity: What stockholders are liable for dues to corporations? When are they liable? Is it the holder of the stock at the time the indebtedness is created, or at the time the indebtedness became due, or at the time suit is instituted to recover the dues owing by the corporation? All these propositions arise in each case, and will not down without an answer.

To attempt an answer, the instrument itself gives no light to determine the question. Different tribunals of that state would doubtless be in a maze of doubt on attempting to answer the question, and doubtless would reach different conclusions. To treat the provision as self-operating would do violence to two leading principles of construction, by rejecting a clause of the instrument, and giving it no force and effect, and holding an ambiguous clause self-executing when that clause is of the most doubtful construction. It is apparent from a consideration of the provision itself that legislation was contemplated and necessary to carry into effect and enable the remedy to be applied, and give the intended security to the creditor; and the clause cannot be treated or construed as self-operative. Groves v. Slaughter, 15 Pet. 449;Morly v. Thayer, 3 Fed. 737;May v. Black, 77 Wis. 101, 45 N. W. 949;Fusz v. Spaunhorst, 67 Mo. 256;French v. Teschemacher, 24 Cal. 518;Larabee v. Baldwin, 35 Cal. 155;Marshall v. Sherman (N. Y. App.) 42 N. E. 419. In the case last cited, the identical provision of the constitution of the state of Kansas and the legislation thereunder were before that court for consideration, and the provision of the constitution was held not self-operative, and it was also held that the special remedies provided by the legislature of the state of Kansas could not be applied in another jurisdiction; but, when resort was had to the courts of another state, the remedy there provided and the practice and procedure of its courts must be resorted to. That case is directly in point on the question presented on this record. We are referred to no case in which it has been held self-executing by the highest court of that state, and, in the absence of such decision by such courts, any other method of interpretation would do violence to recognized rules of construction adopted by this court. Where the courts of that state have not construed the provisions of their constitution, when the question is presented to us we have the right to adopt our own methods of construction. The legislature of the state of Kansas has not adopted any statute declaratory of this question as to the extent of the security of dues from corporations, and at what time a stockholder is liable with reference to the time of contracting the indebtedness, or the time it became due, or whether at the time suit is brought by the creditor. The legislature of that state, by such legislation as has been enacted, have only attempted to declare the remedy, and have adopted two statutory provisions, the first of which is as follows: ‘If any corporations created under any statute of the state of Kansas, except railroad and charitable or religious corporations, be dissolved, leaving debts unpaid, suits may be brought against any person or persons who were stockholders at the time of such dissolution without joining the corporation in such suit; and if judgment be rendered and execution satisfied, the defendant or defendants may sue all who were stockholders at the time of the dissolution for the recovery of the portion of such debt for which they were liable; and the execution upon the judgment shall direct the collection to be made from the property of such stockholders, respectively, and if any number of the stockholders, defendants in the case, shall not have property enough to satisfy his or their portion of the execution, then the amount of the deficiency shall be divided equally among all the remaining stockholders, and collections made accordingly, deducting from the amount a sum in proportion to the amount owned by the plaintiff at the time the corporation dissolved.’ And the other of said statutes reads thus: ‘If any execution shall have been issued against the property or effects of a corporation except a railway or a religious or charitable corporation, and there cannot be found any property whereon to levy such execution, then execution may be issued against any of the stockholders, to an extent equal in amount to the amount of stock by him or her owned, together with any amount unpaid thereon; but no execution shall issue against any stockholder except upon an order of the court, in which the action, suit or other proceeding shall have been brought or instituted, made upon motion in open court, after reasonable notice in writing to the person or persons sought to be charged; and upon such motion, such court may order execution to issue accordingly; or the plaintiff in the execution may proceed by action to charge the stockholders with the amount of his judgment.’ In determining the construction of these provisions of the statute of the state of Kansas, and considering the remedies provided, and bearingng in mind that there is neither a constitutional nor statutory liability effectively declared in that state, we must construe these statutes with reference to the remedy, with the light of such rules and upon such principles as the courts of this stat construe such enactments. The remedy provided by the second clause of the first section quoted, and by the...