Van Pelt v. Gardner

• Decision Date: 21 April 1898
• Parties: VAN PELT ET AL. v. GARDNER ET AL.
• Court: Nebraska Supreme Court

74 N.W. 1083

VAN PELT ET AL.

v.GARDNER ET AL.

Supreme Court of Nebraska.

April 21, 1898.

Syllabus by the Court.

1. A corporation creditor's cause of action against the stockholders thereof to subject their unpaid stock subscriptions to the payment of his debt accrues when the exact amount justly due the creditors from the corporation has been ascertained, and the corporate property exhausted. Const. 1875, art. 11 (“Miscellaneous Corporations”) § 4.

2. Within the meaning of said section of the constitution, the exact amount justly due has been ascertained when the creditor's claim against the corporation has been reduced to judgment; and the corporate property has been exhausted when execution issued on such judgment has been duly returned unsatisfied.

3. To such a suit the corporation is not a necessary party.

4. A provision in the charter of a corporation organized under the laws of this state, which provides that the private property of a stockholder shall not be liable for the debts of the corporation, is void in so far as it attempts to exempt the stockholder from liability for his unpaid stock subscription for the payment of corporate debts.

5. Section 2 of an act passed February 18, 1873, entitled “Homestead Associations,”--being section 146, c. 16, Comp. St. 1897,--was repealed by the adoption of section 4, art. 11 (“Miscellaneous Corporations”) Const. 1875.

6. The present constitution not only determines what the liability of a stockholder in a corporation for the corporate debts thereof shall be, but it limits this liability; and it is not within the power of the legislature to extend it.

7. The liability of a stock subscriber for corporate debts--except he be a stock subscriber of a banking corporation--is limited to the amount of his unpaid stock subscription.

8. As between the stock subscribers and the creditors of a corporation, each stock subscriber is liable to the extent of his unpaid stock subscription. As between themselves, each stock subscriber is liable for his proportionate share of the corporate debts; and one stock subscriber, who has been compelled to pay more than his proportionate share, may sue his co-subscribers for contribution.

9. One creditor of a corporation cannot maintain an action in his own name and for his own benefit against the debtor stock subscribers of a corporation; but, to subject unpaid stock subscriptions to the payment of corporate debts, all debtor stock subscribers and all creditors of the corporation within the jurisdiction of the court should be made parties.

Appeal from district court, Douglas county; Ambrose, Judge.

Action by Van Pelt Bros. against William A. Gardner and others. Decree for plaintiffs, and defendants appeal. Modified.Saunders, Macfarland & Dickey, for appellants.

Estabrook & Davis, for appellees.

RAGAN, C.

In 1887 there was organized in the city of Omaha, Neb., a corporation known as the Metropolitan Building & Loan Association. The general nature of the business which this corporation was organized to transact was to sell and buy real estate, build, rent, and sell houses, to lease its property, and borrow and loan money. The capital stock was fixed at $50,000, divided into shares of $1,000 each; the shares to be paid for in monthly installments of $12.50 each. In the district court of Douglas county, in 1890, John A. Van Pelt and others recovered a judgment against said corporation. An execution was issued on this judgment, and returned wholly unsatisfied. Van Pelt and others then brought this action to the district court of Douglas county against William A. Gardner and others, the stockholders of said corporation, claiming, among other things, that they were largely indebted to the corporation for subscriptions of stock made by them, and which subscriptions they had not paid. In other words, the object of this action was, in effect, to compel each of the said stock subscribers to pay into court such a part of his unpaid stock subscription as would be sufficient to satisfy Van Pelt's judgment, interest, and costs. The plaintiffs below had a decree as prayed, and the parties made defendants below have appealed.

1. The first argument is that the action when brought was barred by the statute of limitations. The suit was commenced on the 18th of November, 1893, and the appellants allege that the corporation was duly dissolved by a two-thirds vote of its stockholders on the 5th of February, 1889; that plaintiffs' cause of action accrued at that date, and was barred within four years thereafter. When did the appellees' cause of action accrue? Section 4, art. 11 (“Miscellaneous Corporations”) of the constitution, provides that: “In all cases of claims against corporations and joint stock associations the exact amount justly due shall be first ascertained; and, after the corporate property shall have been exhausted, the original subscribers thereof shall be individually liable to the extent of their unpaid subscriptions; and the liability for the unpaid subscriptions shall follow the stock.” The claim of the appellees here was a debt of the corporation. The exact amount due from the corporation to appellees has been ascertained and determined by the judgment in favor of the appellees; and, since an execution against the corporation has been issued, and returned wholly unsatisfied, the presumption is that the corporate property has been exhausted, and the liability of the stock subscribers on their unpaid stock subscriptions for this debt of the corporation has attached. The liability of the stock subscribers attached when the corporate property was exhausted,--in this case, on the return of the execution unsatisfied,--and the cause of action of the appellees accrued at that time. This was in 1890, or less than four years prior to the bringing of this suit. Globe Pub. Co. v. State Bank of Nebraska, 41 Neb. 175, 59 N. W. 683;Gilkie & Anson Co. v. Dawson Town & Gas Co., 46 Neb. 333, 64 N. W. 978, 1097;Ball v. Wicks, 45 Neb. 367, 63 N. W. 806;State v. German Sav. Bank, 50 Neb. 734, 70 N. W. 221;Wyman v. Williams (Neb.) 74 N. W. 48; Cook, Attachm. § 225.

2. A second argument is that the findings of the district court as to the amount that the appellants were indebted on their unpaid stock subscriptions are not sustained by sufficient evidence. There is no merit whatever in this contention.

3. A further argument is that the corporation was a necessary party to this action. But the appellees in this suit are not claiming anything against the corporation. They are not seeking to take its property, to devest it of any right it has, or to hold it liable in any manner whatever. The liability of the corporation to the appellees has already been determined by the judgment which the appellees hold, and they have exhausted their remedies against the corporation. We do not see that the making of the corporation a party to this action would have subserved any useful purpose whatever. Nolan v. Hazen (Minn.) 47 N. W. 155. This is an action,--for we are now considering only that feature of it which seeks to hold the stock subscribers liable for their unpaid stock subscriptions,--not based upon any statute, penal or otherwise, but is one for the recovery of a liability imposed by the constitution of the state upon every subscriber to the stock of every corporation organized under the laws of this state. The constitution declares that after the amount justly due from a corporation to its creditors shall have been ascertained, and after the corporate property shall have been exhausted, the stock subscribers shall be individually liable to the extent of their unpaid stock subscriptions. This is a liability which the legislature can neither take away nor impair. Unpaid stock subscriptions, the constitution declares, in effect, shall constitute a fund out of which shall be paid the debts due the creditors of the corporation, when the exact amount justly due such creditors has been ascertained, and the corporate property has been exhausted; and the liability of the stock subscribers for these unpaid subscriptions is not to the defunct corporation, not, technically speaking, to its creditors, but for the corporate debts. State v. German Sav. Bank, 50 Neb. 734, 70 N. W. 221;Wyman v. Williams (Neb.) 74 N. W. 48.

4. A provision of the articles of association of this corporation provided that “in no event shall the private property of the members of this corporation be liable for the indebtedness of this association.” A final argument, as we understand it, is that the appellants are not liable to the...