Case ID: ohio-ca_31/html/0270-01.html
Source: Caselaw Access Project
Author: {"author": "Kunkle, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ACTION BY A RECEIVER FOR RECOVERY OF UNPAID STOCK SUBSCRIPTIONS NOT APPEALABLE.
    Court of Appeals for Hamilton County.
    The Union Savings Bank & Trust Company, Receiver, v. The Cincinnati & Columbus Traction Company et al.
    
    Decided, March 11, 1020.
    
      Corporations — Recovery of Unpaid Stock Subscriptions — Action for not an Action in Chancery and not Appealable.
    
    1. An action by a receiver of a corporation for the purpose of recover- ' ing unpaid stock subscriptions is not a chancery case and is therefore not appealable.
    2. Such action is not brought within the jurisdiction of a court of chancery by a prayer which seeks to recover only so much of the unpaid stock subscriptions as is necessary to pay the debts and obligations of the corporation and to equalize such payments among all the stockholders.
    
      O. B. Matthews for plaintiff in error.
    
      Murray Seasongood, Robert P. Goldman, Jacob Shroder and John G. Ilealy for defendants in error.
    
      
      Motion to require the Court of Appeals to certify ’its record in this case overruled by the Supreme Court, June 22, 1920.
    
   Kunkle, J.

Heard on error.

This is an action brought by the receiver of the Cincinnati & Columbus Traction Company against such company and numerous stockholders therein to recover from such stockholders certain unpaid stock subscriptions.

The petition was framed upon the theory of a bill in equity to recover such portion of the unpaid stock subscription owing by each of said defendant stockholders, as might be necessary to pay the obligations of said the Cincinnati & Columbus Traction Company, and also to equalize the payments made and to be made by the various stockholders upon such stock subscriptions.

The First National Bank of Norwood, Ohio, filed a cross petition in which it sought substantially the same relief upon behalf of itself as a creditor and upon behalf of all other creditors.

The case was submitted to the trial court upon various demurrers to the petition of plaintiff and also upon various demurrers to the cross petition of the First National Bank of Nor-wood.

The trial court rendered the following judgment upon such demurrers, namely:

“The court upon due consideration sustains the demurrers to the petition filed herein and to the cross petition of the First National Bank of Norwood upon the ground that there is a misjoinder of parties defendant and upon the ground that separate causes of action against the several defendants are improperly joined, and the plaintiff and cross-petitioner not desiring to plead further the petition and said cross petition are hereby dismissed as against all defendants demurring and judgment for costs is hereby rendered in favor of each of said defendants for costs herein.”'

The ease comes into this court upon appeal and also upon a proceeding in error from the judgment so rendered by the trial court.

We have carefully considered the authorities cited by counsel in their very exhaustive briefs. We shall not attempt to review or discuss the authorities in detail, but- will announce the conclusion at which we have arrived after a consideration of such authorities.

Regardless of what the rule may be in other jurisdictions we are of opinion that it is clearly settled in this state that an action by a receiver of a corporation for the purpose of reeovei’ing unpaid stock subscriptions is a proceeding at law and not in equity.

The rule as announced in the syllabus of the case of Smith, Receiver, v. Johnson, 57 Ohio State Reports, page 486, is as follows:

“(1) An action to collect an unpaid subscription to the capital stock of a corporation instituted by a receiver appointed under Chapter 5, Division 7 of Title 1, Revised Statutes, to wind up the affairs of the corporation is a suit at law to recover a money judgment.
“(2) It is not proper practice for such a receiver to join in one action all delinquent stockholders as defendants, those who reside out of the county where the suit is brought, as well as those who reside within such county and issue summons to another county to obtain service upon such non-residents.”

This case was approved and followed in the 94th Ohio State Reports, at page 138, and has not been disapproved nor criticised by any subsequent decision of our Supreme Court.

We think the attempt upon the part of the plaintiff to create an equitable case by asking for an equalization of payments made by stockholders upon their stock and the collection of only so much of the unpaid stock subscription as may be necessary to liquidate the obligations of the company does not change the nature of the cause of action set forth in either the petition or the cross petition of the bank. The cause of action in both the petition and the cross petition is to collect unpaid stock subscriptions.

• We can not escape the conclusion that the action is one at law in which various stockholders were improperly joined, and in which the causes of action against such stockholders were improperly joined.

We think the various demurrers to the petition and to the cross petition of the First National Bank of Norwood were properly sustained upon such grounds and the judgment of the lower court will be affirmed.

The appeal will be dismissed for the reason that the judgment rendered was in an action at law and not in a proceeding in chancery. Case of C. & C. Traction Co. v. Union Savings Bank & Trust Co. (9 Ohio Appellate Court Reports, 414; 31 O.C.A., 121), approved and followed.

Judgment affirmed. Appeal dismissed.

Allread and Ferneding, JJ. ,concur.