Watkins v. Cotton

• Decision Date: 04 May 1937
• Docket Number: 27112.
• Parties: WATKINS et al. v. COTTON et al.
• Court: Oklahoma Supreme Court

67 P.2d 957

180 Okla. 73, 1937 OK 295

WATKINS et al. v. COTTON et al.

No. 27112.

Supreme Court of Oklahoma

May 4, 1937

Syllabus by the Court.

1. An unliquidated claim for damages is not a debt within the meaning of section 9763, O.S.1931 (18 Okl.St.Ann. § 106) forbidding the directors of corporations to create debts in excess of the capital stock of the corporation.

2. The directors, officers, and stockholders of a corporation are not jointly liable with the corporation for the performance of the obligations of the corporation's contracts, unless they join in the making thereof or thereafter contract to assume such liability.

Appeal from District Court, Tulsa County; Harry L. S. Halley, Judge.

Action by A. B. Watkins and others against Fred Cotton and others. From an adverse judgment the named plaintiff appealed, and on his death, Janie Moody, as administratrix, revived and prosecuted the appeal in his behalf.

Affirmed.

Preston S. Davis, of Tulsa, and Forrester Brewster, of Muskogee, for plaintiffs in error.

Malcolm E. Rosser and Malcolm E. Rosser, Jr., both of Muskogee, for defendants in error.

BAYLESS Vice Chief Justice.

A. B Watkins, J. H. Barham, and P.J. Burford instituted an action in the district court of Tulsa county, Okl., against Fred Cotton, Margery M. Cotton, French Rayburn, and Mrs. C. F Rayburn, as individuals, Woodland Oil Company, a corporation and Addie Hayden, administratrix of the estate of Dr. E. Forest Hayden, deceased. No judgment was sought against the administratrix, for she occupied the same general position the plaintiffs did, but was unwilling to bring the action as plaintiff, and, therefore, was joined as a defendant. A judgment was sought against the other defendants for damages. The cause was tried to the court without a jury, and the court rendered a judgment against the defendant corporation, and in favor of the other defendants.

When we speak of the defendants collectively hereinafter we do not include the administratrix therein. Plaintiff Watkins died, but the appeal has been revived and is prosecuted by his representative in his behalf.

At this point we can eliminate the defendants Margery M. Cotton, French Rayburn, and Mrs. C. F. Rayburn, by stating that the trial court did not commit error in rendering judgment in their favor. For judgment against them the plaintiffs rely upon the fact that they were stockholders in the Woodland Oil Company and therefore jointly liable with it in the venture. There is no testimony to show that these individual defendants joined in the action of the company in making the contract with the plaintiffs; nor is there any evidence from which an inference can be drawn that they may have done so. The plaintiffs further rely for judgment against Margery M. Cotton and French Rayburn upon the fact that they, with Fred Cotton, were directors of the Woodland Oil Company and permitted its debts to exceed its capital stock and permitted said company to forfeit or loose its charter for noncompliance with the laws of Oklahoma. The cause of action sued upon by the plaintiffs is not a debt in the sense spoken of in our statutes and as contended by plaintiffs. Therefore, this did not constitute grounds for judgment against these defendants, and the court did not err in so holding.

The remainder of our opinion will be directed to the question of the liability of Woodland Oil Company and Fred Cotton, its president, for the breaches of the contracts made with plaintiffs. The first...