Case ID: mass_27/html/0377-01.html
Source: Caselaw Access Project
Author: {"author": "Shaw C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William R. Ripley, Appellant, &c. versus Ruth Sampson et al.
    
    The St, 1808, c, 65, regulating manufacturing corporations, taken independently of subsequent statutes, does not render the estate of a deceased corporator liable for the debts of the corporation ; and if the property of the corporation, upon a final settlement of its affairs, is insufficient to pay the debts, and the administrator of the deceased member pays money as the intestate’s contributory share to make good the deficit, he will not be allowed to charge it in his administration account.
    Where however the intestate’s shares in a manufacturing or other corporation are valuable property, but liable to an assessment, it may be the duty of the administrator to pay the assessment.
    This was an appeal from a decree of the judge of probate of Plymouth county. The appellant was the administrator on the estate of Zabdiel Sampson. In his administration account 
      Be had charged certain sums, as the intestate’s contributory «hare, as a member of the Plympton Wool Manufacturing Company. These items were objected to by those interested in the estate, and they were disallowed by the judge of probate, and from the decree disallowing them this appeal was taken by the administrator. The facts as gathered from the reasons of appeal, so far as they are material to the questions discussed, are substantially these.
    The Plympton Wool Manufacturing Company was incorporated in 1814, and was in terms made subject to the general act regulating manufacturing corporations, St. 1808, c. 65. The statutes of 1818 and 1821 did not apply to it, being in their terms prospective and affecting only corporations thereafter to be established. The statute of 1826, modifying individual liability, was never adopted by this corporation, and therefore did not apply. The stock was divided into thirty-two shares, of which the intestate was proprietor of three shares. The intestate died in July 1828. In April 1829, the corporation voted to sell all their real and personal estate. In June of the same year, Ripley the appellant and one Virgin were appointed agents to make the sale, they .having been the agents of the company. After the application of the entire proceeds of the sales of the corporate property, there was a deficit of about $ 5500. A part of this sum was due to the appellant himself, for cash advanced, a part to himself and Virgin as agents, and a part to one Bradford, all of whom were officers of the company ; as was the intestate also in his lifetime. The sums charged in the administrator’s account were the fair contributory- share of the estate of the intestate as proprietor of three shares, if the estate in the hands of the administrator was at all chargeable for the deficit. And the general question was, whether the estate was so liable.
    . Oct. 2 7th.
    
    
      W. Thomas, for the appellant,
    suggested that the Court would consider the corporation as dissolved, and then the individual corporators would be liable for the debts of the company on the principles of partnership. Portland Bank v. Apthorp, 12 Mass. R. 257 ; Gray v. Portland Bank, 3 Mass. R. 378, 383; Slee v. Bloom, 19 Johns. R. 475 ; 2 Kent’s Comm. 250. If an assessment had been laid fiy^the corporacion and the administrator had paid it, he might have charged it m his administration account, and it would be allowed, on the ground that he had performed a moral duty. So he may pay a debt of his intestate which is barred by the statute of limitations.
    
      Eddy, for the appellee,
    cited Child v. Coffin, 17 Mass. R. 64 ; Franklin Glass Co. v. White, 14 Mass. R. 286.
    
      Oct.30th.
    
   Shaw C. J.

The Court are all of opinion that the estate of the intestate, in the hands of the administrator, was not chargeable for the deficit in the funds of the corporation.

One way to test this question is, to consider the appellant not as a member and agent of the corporation, but as an administrator called upon, either by a creditor or by the company, to pay a contributory share to make good this deficit; it seems clear that he would not be liable. The individual liability of stockholders, created by the statute of 1808, was of a particular and limited character, and could only be enforced in the manner pointed out by the statute. It did not constitute a charge upon the estate of a deceased stockholder. Child v. Coffin, 17 Mass. R. 64. It did not subject a living stockholder to a general liability for assessments, but only authorized the company to sell the share, for payment of the assessments. Franklin Glass Co. v. White, 14 Mass. R. 286. The géneral liability created by St. 1821, c. 38, cannot affect the question, because it extends only to corporations to be thereafter created. There was then not merely a want of remedy against the estate of a deceased stockholder, as suggested in argument, which the administrator might waive taking advantage of, if he saw fit, but there was no legal liability.

An administrator can be allowed to apply the assets in his hands only to the discharge of the debts and legal obligations of the estate. Where the living members of a corporation, capable of binding themselves by contract, finding the company unable to pay all its debts, agree among themselves to contribute proportionably to their stock, to make good the deficit, such an agreement is highly honorable and equitable, and it is binding upon them ; but its legal obligation results from the agreement, not from any preexisting legal liability. Into such an arrangement an administrator has no authority to enter, so as to bind the estate of" his intestate. If therefore the administrator has advanced money in the present case, in pursuance of such an agreement, he has done it without any lawful warrant therefor, and cannot charge it to the estate in his hands.

We certainly do not intend to say that an administrator may not pay assessments upon shares in banks and other incorporated companies, which are held as part of the assets of the estate under his administration, and charge such payments in his administration account. On the contrary, it may often be his duty to do so.

It not unfrequently happens, that the most important ana valuable part of an estate of a deceased person consists in stocks, and shares in incorporated companies ; and in this respect there is no distinction between manufacturing and other corporations. Such shares may be of great value, and yet liable to a small assessment. By the operation of law, the assessment is a lien upon the share. The share is in the same condition with any other pledged property. If it is of more value than the amount of the assessment, it is the duty of the administrator to pay the assessment and redeem the share for the benefit of the estate. The duty of the administrator in such case is indicated by the interest of the estate with which he- is intrusted. And even if the share should fall in value in ^is hands, after such redemption, if he shall appear to have acted with good faith and with a just regard to the best interests of the estate, he would undoubtedly be protected.

But where the shares are confessedly of no value, and will be of no value after the assessment may have been paid, an administrator is not at liberty to take money out of the general assets of the estate, to pay such assessment.

Decree of the judge of probate affirmed and proceedings remitted. 
      
       See Cutler v. Middlesex Factory Company, 14 Pick. 483.