The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1880-12-06

The following opinion Oh tue heleIee
covers the whole.case and gives his reasons
for rendering decision in favor oil TIE
creditors:
BRIEF OPINION OF J. r. DAToN, REPEREE.
l think it due to the counsel In this
case who have so ably presented the ques-
tons involved, to briefly state my reasons
for disposing OF two questions that were
so strenuously contested, in the manner
that have. -.
First-As to Alexander Laughlin, in
whose name, on the books OF the company
appears 50. 500 OF stock. 1t is claimed by
the counsel for the creditors that because
he was at meeting OF the stockholders;
because he gave Mason W. Burt his proxy
10 vote his stock at the annual meeting
for the election Of directors; because the
stock stood in his name for nine years,
that therefore he is to be held liable for
the full amount OF his stock, and this, not.
yithstauding 1t is conceded that in 1871
he and his brother, who were partners,
charged the price Of one'hali OF the origi'
nal stock to their separable accounts
That the transaction between the brothers
is bona fide Is unquestioned.
What then is the legal effect OF the STOCK
being registered in the name OF Alexander
LaHghlin as TO creditors, it being so regis
tered without his actual knowledge? Are
the books conclusive?
By the statute under which the corpora
ton is organized the books are open to
the inspection OF the stockholders and not
the creditors. ,ooo
Section $3.50, q new statute OF 1850, Is
cited to show that the books determine
who are the stockholders. II this were so
the statute Is retroactive in it's effect on
liability OF the stakeholder. Statutes are
not generally retroactive in character, and
| do not think that the books are conclu.
siye as to who are stockholders. In sup
port OF this view cite Wehrman vs. Rea-
kert ct al, decided at the April term,
1871, OF the Superior Court OF Cincinnati,
| in which Judge Taft, in reviewing the re-
port OF the Referee involving the question
as TO who we're stockholders, interentiaiiy
holds that the sound test is as to whether
the transfer OF stock or the holding Is falr
and honest.
The next question presented is as to
whether or not the stockholders shall be
held for their statutory liability to the
amount OF So, 900 on stock dividend dis.
closed in 1872 in addition to their original
stock, This Is very important question.
| It ia claimed that this stock is absolutely
void so far as any liability can be predi'
Gated against stakeholder who holds IT..
| II is claimed that the corporate organiza'
ton having issued So, 900 OF stock in pur.
suance Of u resolution by the stockhold.
ers, and the same having been accepted by
the stockholders, that it is nevertheless
void, because the corporation Issued
IS 900 more stock than their certificate oil
corporation authorized, to.wit: $3.50 OOO.
The proposition contended for is that the
creditors may sue for an amount equal to
the stock the stockholders owned original
", which was Sl70, 900, hut cannot recover
for the stock dividend upon $lS5.00O.
Tohold that this Canot be done, Is taking
away from the creditors $685. 900, and 1t is
commended for because the act OF the cor
poration issuing the stock is beyond Its
corporate powers-is ultra wires. The
English authorities have been gradually
overrulsd in America on the subject OF
ultra wires, or modified in their strict con.
tluctions OF the powers Of corporations,
especially where the rights OF creditors
intervene. And think in the language
OF Bigelow on estoppel that the sound
Iule on the subject is "That private cor.
poration will be estopped to set up the de-
fence oil ultra wires in respect to all acts
and contracts within the opponent scope
OF Its powers"
l therefore hold that the stockholders
who are served in this action are liable to
the creditors for an amount equal to the
amount OF their dividend stock.
W. P. Hayes, Martin & Richards, Nc
Causlen ( McCauslen, Dunbar & kith.
cart, John H. Miller, aud Trainer & Big.
ger, Of this city, and Asbury J. Clark, Of
Wheeling, and Rees & Gallsher, Of Bell.
aire, appeared as attorneys for the credit
ors, and Walden & Elliott, OF this city, for
the stockholders.
Notes.-The furnace was sold on the
Goth Of November, 1878, to A. J. Clark
and Daniel MCGary, trustees OF the first
mortgage bondhoders, for SCI. 900, which
sale wiped out the liabilities oil the first
mortgage bonds, with the exception OF
S, 007. This latter amount was placed
along with the whole Indebtedness, and
stands sgainst the stockholders.
Stock is held by parties in West Virgin
ia to the amount Of about 5000, which
cannot be reached by suit in Jefferson
county, Ohio, Courts, and the Circuit
Court OF that State will be appealed to by
the creditors at an early day.
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