Windsor Redrying Co. v. Gurley

• Decision Date: 10 April 1929
• Docket Number: 86.
• Citation: 147 S.E. 676,197 N.C. 56
• Parties: WINDSOR REDRYING CO. v. GURLEY et al.
• Court: North Carolina Supreme Court

147 S.E. 676

197 N.C. 56

WINDSOR REDRYING CO. v. GURLEY et al.

No. 86.

Supreme Court of North Carolina

April 10, 1929

Appeal from Superior Court, Bertie County; G. E. Midyette, Judge.

Action by the Windsor Redrying Company by its receivers, M. B Gillam and J. H. Bonner, against W. B. Gurley, J. C. Bell, J L. Pritchard, J. T. Stokes, and W. L. Powell, trading as Powell & Stokes, and others. From an adverse judgment plaintiffs appeal. Reversed.

Limitation on right of receivers of insolvent corporation to recover unpaid stock subscriptions for creditors held to run only from demand made by receivers pursuant to court order (C.S §§ 441(1), 1160, 1165; Code 1927, §§ 1156-1158).

A corporation, known as the Windsor Redrying Company, was organized under the laws of North Carolina, on February 25, 1920, to further the tobacco market in the town of Windsor, N. C., Bertie County, and that section of the state, by redrying tobacco. Numerous persons subscribed for stock in the corporation. Some of the defendant subscribers to stock have paid part of their subscription, and the balance is unpaid. The main defense relied on by the defendants was the Statute of Limitation, which each plead.

Four calls of 25 per cent. for payment of subscriptions to stock were made by order of the directors and stockholders of the corporation, on each of the defendants who are being sued, between the 1st of March and the 1st of September, 1920.

H. M. Bell, secretary of the corporation, testified:

"Q. In what installments, if any, were you directed and authorized to make the calls? A. Twenty-five per cent.

"Q. In pursuance of that order by the directors did you make all the calls? A. Made four calls.

"Q. Between what times, as near as you can tell, did you make them? A. Between the first of March and the first of September, 1920.

"Q. Did you make those calls on each of these defendants who are being sued? A. Yes, sir."

The company has become hopelessly insolvent. A judgment had been taken on November 5, 1923, against the corporation by W. T. Tadlock for $2,705.65, interest, and costs. In an action brought by W. B. Gurley against Windsor Redrying Company, M. B. Gillam and J. H. Bonner were appointed temporary receivers on January 17, 1924, and made permanent receivers on February 6, 1924, to wind up the affairs of the corporation. In November, 1924, W. T. Tadlock filed petition for permission to be made a party plaintiff, in order to require the suits to be brought against stockholders who had not paid their subscriptions. Suit was ordered to be brought against delinquent stockholders by order of the court on January 30, 1926. At February term, 1926, the court appointed H. G. Harrington referee, and giving him instructions to ascertain who the stockholders were and the names and amounts of those who had not paid their subscriptions for stock and make report to the court. In the present action no minute book of the transactions of the corporation was kept. The minutes were kept by the secretary "on a little piece of paper." The original subscription list was lost by the president, showing the names of the incorporators and amounts subscribed. $100 reward was offered to any one who "could find it." Mr Harrington's report was filed June 20, 1927. Demands on the defendants, stockholders, for their unpaid subscriptions were made shortly after June 20, 1927, by plaintiffs, receivers. This was the first and only effort made by the receivers to collect the unpaid subscriptions. The order of court was made August term, 1927, directing the receivers to bring this action. This action was instituted on February 3, 1928, to obtain necessary funds from the delinquent subscribers to stock to pay the outstanding indebtedness of the insolvent corporation.

It was admitted by all defendants that at the time the receivers were appointed the indebtedness of the corporation to creditors was in excess of its available assets, plus the amount of unpaid subscriptions to stock now being sued for.

The issue submitted to the jury was as follows: "Is plaintiff's cause of action against the defendants, and each of them, barred by the statute of limitations, as alleged in the answer?"

The court charged the jury: "If you believe the evidence and find the facts to be true as sworn to by the witnesses in this case to answer the issue Yes." To the charge plaintiff's excepted and assigned error. In apt time the plaintiffs asked the court to charge the jury "that if they believe all of the evidence and find the facts to be as testified to by the witnesses to answer the issue No." This the court refused to charge, and to such refusal the plaintiffs excepted and assigned error.

Winston & Matthews, of Windsor, for appellant.

J. B. Davenport and J. A. Pritchett, both of Windsor, and Stephen C. Bragaw, of Washington, N. C., for appellees.

CLARKSON J.

The only question we think necessary to consider: Is this action barred by the statute of limitations? We think not.

The defendants plead the three-year statute of limitations (C. S. § 441(1): "Upon a contract, obligation or liability arising out of a contract, express or implied, except those mentioned in the preceding sections."

This is a general statute, and it must be construed in pari materia with the statutes relating to corporations.

Section 1165, C. S., in part, is as follows: "The directors of a corporation may, from time to time, make assessments upon the shares of stock subscribed for, not exceeding, in the whole, the par value thereof, remaining unpaid; and the sums assessed shall be paid to the treasurer at such times and by such installments as the directors direct," etc.-- and provides for the sale of the share or shares of delinquent subscribers after notice. This provision is, substantially, sections 23, 24, and 25, Public Laws 1901, c. 2, entitled, "An Act to Revise the Corporation Law of North Carolina." It will be noted that this says the directors of a corporation.

C. S. § 1160, is as follows: "Where the capital stock of a corporation has not been paid in and the assets are insufficient to satisfy its debts and obligations, each stockholder is bound to pay on each share held by him the sum necessary to complete the amount of such share, as fixed by the charter, or such proportion of that sum as is required to satisfy such debts and obligations," etc. This is substantially the same as Public Laws 1901, c. 2, § 22. Western R. Co. v. Avery, 64 N.C. 491, is cited by defendants as authority on the plea of the statute of limitations. The gist of that case is as follows: "Where the charter of a railroad company provided, that upon the failure by subscribers to its stock to pay installments as called for, 'the directors may sell at public auction,' etc. such stock, and, in case enough were not produced thereby to satisfy the subscription, might sue for and recover the balance from such subscriber. Held, that upon a failure by a subscriber to pay installments as called for, it was optional with the company to bring suit against him without making sale as above or, to sell, and sue for the balance. Also, that the plea of the statute of limitations barred a recovery of so much of such subscription as was included in calls made more than three years before suit was commenced." In that case, the court said, at page 493: "Of course then, the statute commenced to run when the cause of action accrued, to wit: as to each installment, when it became due by the call of the company. 3 Parsons on Contr. 93. If a bill or note be payable by installments, the statute begins to run from the date of each installment respectively. Gary v. Pindar, 2 B. & P. 427."

It will be noted that the charter of the Western Railroad Company in the above case made provisions for calls similar to C. S. § 1165, by its directors. That action was brought by the corporation against the subscriber. Here C. S. § 1160, supra, makes provision for the payment of debts of the corporation by the subscribers of unpaid capital stock.

In the case of Cooper v. Security Co., 127 N.C. 219, at pages 220, 221, 37 S.E. 216, this court said: "The opinion of the court in Hatch v. Dana, 101 U.S. 205 , contains a full discussion of this question and is a direct decision on the point now before us. The syllabus of the decision, which is supported by the opinion, is in these words: 'Creditors of an incorporated company who have exhausted their remedy at law can, in order to obtain satisfaction of their judgment, proceed in equity against a stockholder to enforce his liability to the company for the amount remaining due upon his subscription, although no account is taken of the other indebtedness of the company, and the other...