Wheatley v. Glover
| Decision Date | 18 May 1906 |
| Citation | 54 S.E. 626,125 Ga. 710 |
| Parties | WHEATLEY v. GLOVER et al. |
| Court | Georgia Supreme Court |
On Rehearing, July 5, 1906.
Syllabus by the Court.
The act of 1838 (Code 1882, § 1496) did not have the effect to impose upon the stockholders in a bank or other corporation a liability beyond the amount of the stock owned, but merely provided a method by which a stockholder who had transferred his stock might relieve himself of an existing individual liability imposed by the charter of the corporation.
Neither was such a liability imposed by the act of 1892 (Acts 1892 p. 55), nor by the act of 1894 (Civ. Code 1895, § 1888). These acts simply provided a different manner of discharge from liability from that prescribed in the act of 1838.
Prior to 1893 there was no general law of this state declaring the individual liability of stockholders in banks, and whether such liability existed depended upon the provisions of the charter in a given case.
The provision in the charter of the Bank of Americus that "the individual property of the stockholders at the time of suits shall be liable for the ultimate payment of the debts of the company in proportion to the amount of stock owned by each stockholder" renders liable only the individual property of those who are stockholders at the time that suits are brought against the company by its creditors. Stockholders who may have transferred their stock prior to the filing of suits against the company are not individually liable to the creditors of the bank.
The additional liability of the shareholders of a bank depends on the terms of the charter; and as such a provision in the charter is in derogation of the common law, it must not be extended beyond the words used.
When a charter of a bank provides that "the individual property of the stockholders at the time of suits shall be liable for the ultimate payments of debts of the company in proportion to the amount of stock owned by each stockholder," a stockholder is not liable who has actually parted with his stock and has transferred it upon the books of the bank before any suit is brought against the bank by a creditor.
Brobston v. Downing, 22 S.E. 277, 95 Ga. 505, and Chatham Bank v. Brobston, 27 S.E. 790, 99 Ga. 801 are overruled, so far as they conflict with any ruling now made.
A judgment against a corporation by a court of competent jurisdiction, rendered after due service upon the corporation, is conclusive upon the stockholders, so far as the right of the creditor to proceed to have his debt satisfied out of the corporate assets is concerned.
Such a judgment is likewise conclusive upon the stockholder in a proceeding by a creditor against the stockholder to compel the payment of an unpaid stock subscription, when the corporate assets are not sufficient to satisfy the debts of the company.
When the charter of a corporation provides that the stockholders shall be individually liable for the debts of the corporation, or a given class of debts, a judgment against the corporation in favor of a creditor is not conclusive against a stockholder in a proceeding to enforce the individual liability under the charter, when the stockholder had no notice of the suit nor opportunity to defend.
In a proceeding against a stockholder at the instance of a creditor, to enforce the individual liability under the charter, a judgment against the corporation establishes prima facie the amount and validity of the debt. When the stockholder was not a party to the suit against the corporation, and had no opportunity to defend in that suit he may, by way of defense in the suit against him, set up not only any fact which would absolve him from liability under the charter, but also any fact which would establish that the corporation was not liable upon the debt which was the basis of the judgment.
In a suit against a stockholder to enforce ultimate liability for the debts of a corporation as prescribed in the charter, a petition which sets forth that a judgment against the corporation has been rendered, and which fully describes the character of the suit in which the judgment was rendered, and states the amount of the judgment, is not subject to a special demurrer, on the ground that the character of the debt on which the judgment was based is not set forth with sufficient particularity. If the stockholder had no notice of the suit and no opportunity to defend, he may, by a plea in the suit against him, set up any matter which would show that he was not liable for the debt upon which the judgment was based, or any matter which would have been the proper subject of a plea by the corporation in the suit against it.
Under the act of 1894 (Civ. Code 1895, § 1890), the individual liability of the stockholder under a charter imposing such liability is declared to be an asset of the corporation subject to be enforced by the assignee, receiver, or other officer, having the legal right to collect, marshal, and distribute the assets of the insolvent corporation.
The act referred to in the preceding note is remedial in its nature, does not affect any vested right of the creditor, and is applicable in a case where the liability arose prior to the enactment of the statute.
The individual liability of a stockholder for the debts of a corporation under the terms of the charter is not extinguished by the expiration of the charter of the corporation.
The amendment to the petition did not set forth a new cause of action.
While the petition as amended did not pray for the recovery of a specific sum of money against each of the defendants, there was a prayer that a recovery be had against each defendant for the par value of his stock, with interest from the date the suit was filed; and the averments of the petition were sufficient to show the exact sum for which each defendant would be rendered liable under this prayer.
The plaintiff is entitled to recover interest on the amount due by each stockholder, from the date of the filing of the present suit.
In a suit against stockholders to enforce individual liability for debts of the bank imposed by the charter, the period of limitation applicable is 20 years after the right of action accrues, the same being a suit under a statute or act of incorporation, within the meaning of Civ. Code 1895, § 3766.
When the charter of a bank declares that the stockholders of a bank shall be individually liable, "at the time of suits," for the ultimate payments of debts of the bank, in a given proportion, no cause of action arises against the stockholders until there has been a suit by a creditor against the bank, and the statute of limitations does not begin to run in favor of the stockholders until after the date of such a suit.
In a suit by the receiver to enforce the individual liability of stockholders imposed by the charter of a corporation, it is not necessary that the petition should allege that the creditors authorized the suit to be brought. All that is necessary is an allegation that the receiver was directed to sue by the court by which he was appointed.
It is not necessary in such a suit that the petition under which the receiver was appointed should be exhibited to the petition in the suit by the receiver. Allegations which fully describe the proceedings under which he was appointed are sufficient to show his authority to bring the suit.
When a charter of a bank provides that "the individual property of the stockholders" shall be liable for the ultimate payment of debts, etc., a liability is imposed upon a stockholder which may result in a personal judgment against him, binding all of his property at the date of the judgment, and any that may be thereafter acquired; and it is not necessary, in a petition seeking to enforce the liability under the charter, to allege that the stockholder had property, or of what his property consisted.
In such a suit an allegation that some of the stockholders are dead and that their estates are unrepresented, that others are corporations which are ""defunct," and that others are beyond the jurisdiction of the court, sets forth a sufficient reason for omitting them from the suit as parties defendant.
The petition as amended set forth a cause of action against the defendants who were stockholders at the time the suit against the bank was filed, and was not subject to any of the objections raised in the special demurrers filed by such parties.
Error from Superior Court, Sumter County; W. N. Spence, Judge.
Action by one Wheatley, receiver of the Bank of Americus, against G. W. Glover and others. From the judgment, both parties bring error. Judgment on the main bill in part affirmed, in part reversed. Judgment on cross-bill affirmed.
When the charter of a bank declares that the stockholders of a bank shall be individually liable, "at the time of suits," for the ultimate payments of debts of the bank in a given proportion, no cause of action arises against the stockholders until there has been a suit by a creditor against the bank, and the statute of limitations does not begin to run in favor of the stockholders until after the date of such a suit.
Wheatley as receiver of the Bank of Americus, brought an equitable petition against the bank and other defendants, alleging: The Bank of Americus was chartered by an act of the General Assembly, October 26, 1870. The capital stock was placed at $100,000, with power to increase it to $500,000, divided into shares of $100 each. The bank was duly organized, with a capital stock of $100,000 paid in. Subsequently it was increased to $150,000, which was likewise paid in. The charter contained the following provisions: "The individual property of the stockholders at the time of suits shall be liable for the ultimate payment of...
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