New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1866-10-18
THE LIABILITY or STOCKHOLDERS.
IMPORTANT TO ALL STOCKHOLDERS IN ISsoIysr
COMPANIES.

bosr of r.oltc ccssris IN the dcb,s Of The company
has been recently delivered the Supreme Court in the case Of
LEONARD D. Ijnlcy md others og Frederick W. sinono'
and Abraham Edwards.
DANIELS Justice-Ths action is brought by the
pleinfs creditors q the European rel.Ge9 ,Se rs
against defendants owners Of PARTON o. % "pdcr
stock The corporation Is alleged 10 have Deth ~
The general Law OF ths STATE pIoils 5 chemical cofo@
manufciuilg mining mcchamc1L , alt sr mich il was or
ganze uoRhce stated IN TIC .SnpaI II - ~encriy
detects relied ui2h N @ was founded under that Act and
,bst IL suniei,nt 10 warrant the conclusion that u was
81 SGe Of q, l' oc S FOR it could P be Otherwise
DHdor thai act The objects Sr Mhh S my S W.
company is formed for the ponoOn OF one on more OF saeh
O il cead not be true 1I Ta Cgssp o S san c
ny dccuiag whit mast he fairly understood and implied
fo he language usthat the Corporation was formed ior
one of tic purposes allowed and defined by the statute for
courts not allowed presume violation OF nc law even
against eciporpor-on the contrary me HeSuPo l. u''
The ncxt oiecii,n 10 HE compliant is that which arises upon
the allegation o! the demand owing fon The Corporation 70
the plaintiffs by that II is alleged that inc Corpoao io'
value received made and delivered certain promssory notes
which oerwad Endorsed TO- and at ihe time when ,ne
suit commenced were held and Owned b INC pl'iis
existence demand legally bintng upon the corporation
they stockholders when the clam Was cLea' un @
corpoYaticn legally liable for its payment Eat corpora
tos formed under this statute like others have The power OF
incurng debts and other liabilities arising out of contracts
And Incidental TO that power they may when such ha'
SSics On account Of it, Moss aet Aen Scld, "a? And
this it is alleged that the corporation executed
and delivered prOmSsOry value received may
without mpropey be assumed that 1t was done Tor legal
consideration under the powers with which was I p w ~
business and given by would be legally binding upon
IL vramed ~ he law in fSyor Of the validity Of agree
made where the contrary Is not made ann9yey to a
pear that wss made in the proper exercise Of sh power a
that exceeded its powers or violated the law Formers
Loan and Trust Company agt Curtis Sed 4oo Cha"uqa'
County Bank agt Rrlcy ~ y. Y, $40, 319|eS.
Under the allegations complaint therefore the CORPORA
ou shown to DO liable upon the notes Of which the plaintiffs
But the defendants further object that the complaint does not
@ SSr asIh me SUs in Witch they were socIho
time when the et contraetcd because II docs not
and returned upon it in whole in part unaiis
fed and this presents the more material ana dneut question
The statute declares that the stockholders in every company
Incorporated undor Sh be scyciuny individually ane 70
10 an amount equal 10 tie amount stock held by them respect
the Whole amount Of cspa stock fixed limited BY such
company shah have sen paid IN 9 Tdior aGd ma
iorv of the Trustees and recorded ia the Office Of the
Clerk Of GD eon Tc5 5s and the S co1p6t IL
this contains tie proper allegations showing ta INC eA
certificate show ing TO have been paid was ever made or re-
corded The object Of the Legislature in requiring Tie pay
meat cap td the company TO secure TO those deal
lug with the means Of satisfying the obligations II might or
dnal1y be eSSeca 70 iSi anu IN Sf' rr, 10 mrose
corresponding liability those whose default occ1soned
such failure The real contracting debtor in all snc cases IS
the corporation and the liability OF tie stockholders Is sutsd
iay incidental to that not arising out OF any contract On oD
legation entered into by them with terms the creditor pui
originating in and arising out OF their default IN moi securing
tie fun OF the corporate capitol lEoer sueh state
OF the would ordinarily ard reasonably De eApeceihi
the creditor should be required to sot 10 his mneae
demand arising oat Of h before he could be liberty
resort TO the stockholders whose liability OF seeondf
found that the general lave providing for The formation Of cor
poraons in naay explicitly require that The creditor snail
bis remedy against CORPORATION itself before he is at
liberty proceed against thockhodcs who have made dc
vidng formation Of Telegraph Companies Ocean Navi
Eatipn Companies Lake and River Navigation Companies
Stage COmPuues in the City Of New York and FLANK ana
Turnpike Road Companies Of this description X oh
3D. f40 $40 1s9 S. 40 go 49, go 5J 9 But That gs
TEN o. cesiaton has rot hcoa uniformly followed. For in
some oase giockhOde made absolutely liable ior the
against IT, That respecting subscribers to The cnsh
capital OF certain insnEaqe, eo1paes shaIgho e Ia Di
Guano Companies aad those formed fI o ing e breed OF
81. so ga gu ssj, 81.
While the liability stockholders gasg and building
Which used 70 define the liability Of socoders In manu-
relate TO this liability no presumption can be entertained that
Che Legislature intended 10 adopt uniform general system
Tor The regulation and government Of it, in most the
liability OF the sockhodcr is made to depend upon similar
cnstanees but in many others arises out Of circumstances
therefore b. searched for in the objects OF the and the
terms employ Cd 20 expSss that intention aiAT tnai IN any
adopted this subject extending alike rou similarly formed
corporations
The only section general law under the corpora
ton question formed which bens directly the solution
Of The present question I, tast which acegss t b si1gH t
year from the tine the deb Is contracted nor unless suit
for the collection Of such debt she be 3ropgt against such
within the debt shall become And
suit shall be brought against my sockholdr who shan
cease khOr in sneh Company for sny debt
60 contracted the sh be commenced within two
years the time nc shall have ceased TO be stakeholder in
such Company And until an execution against the Company
shall have returned unsafed In whole in part r. y
5h I'd Coz 7 The literal reading of this section OF the statute
against the construction caI1cd for II by the defendants But
statutes always 10 be construed according their literal
reading Ordinarily that wiz secure very safe gnidc by which
legislative inentay be asccftancd But where that in
tent doubtful the gsoerg policy md seops 9f tse staIa
and when that intent is discovered must be followed
though may fail to harmonic entirely With the literal reading
Of the law for whatever within the spirit or intent OF the
law within the law itself although not within the letter
while which within the letter. and no. within the spirit
intent is not within tho law
The general policy and object Of these provisions Of The law
the creditors adequate and efficient remedies
for the payment Of the debts incurred BIZ the Cooperation which
against stOckhOer dependent upon the ure 70 acquire
satisfaction from the corporation by ordinary means Of
legal proceedings For stockholders
the first instance many cases would arse where the secondary
suaTy debtor would b. compelled 10 pay the debts where
the corporation would lie entirely solvent and able mako pay
ment Of them itself which could not fail to Introduce
tanfy and confusion IN the affairs of these institutions These
considerations extent indicate the probability that the
Legislature did intend that the stockholders should BE- sued
until the legal remedy Of The creditor again the company had
been Intellectually exhausted and tie general frame and scope
of this section seems 20 warrant the same cOncnsion
for according its literal reading IL requires indg
returned IL whole or ia par uDtsd upon it, before person
who ceased to b. stockhoder leT he contracting the
debt be sued for H. and good DO imagined for
requiring suit in that that does apply with equal co
gency 10 the OF person continuing 70 be stakeholder
No object be accomplished by the judgment and execution
against the COMPANY ia the case, tint Justice does
equally require IA the other Bot this section it will be seen,
against Company before action Dc brought against
the stockhOdeTs and it Is aycred IN She complaint that such
suit commenced IN this But smt against the
Company prosecuted TO Judgment and execution be Of
benefit whatever 10 the stOckhoder and 1t would DO
dOn 10 night maintain action against the stock.
holder If that all that intended for init alone would
the expressly requires H. The only object the Legislature
could have had IN requiring such suit was TO compel