Case Name: Josiah C. Vose versus Peter Grant
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1819-06
Citations: 14 Tyng 505
Docket Number: 
Parties: Josiah C. Vose versus Peter Grant.
Judges: 
Reporter: Massachusetts Reports
Volume: 15
Pages: 450–464

Head Matter:
Josiah C. Vose versus Peter Grant.
The stockholders of an incorporated bank, after the expiration of their charter made dividends of their capital stock amongst themselves, so that there were not corporate funds left sufficient to redeem their outstanding notes or bills. It was holden that the possessor of their bills could not maintain an action as for a •tort against an individual stockholder, who had received his proportion of such dividends.
This was a special action of the case, in which the plaintiff claims lo recove? a sum of money of the defendant, in consequence of his alleged liability, as a stockholder, and as. a director of the Hallowell and Augusta Bank.
The declaration contained several counts. In the fourth of them, on which the plaintiff's counsel principally relied, are recited several sections of the Act incorporating the President, Directors, and Company, of the Hallotvell and Augusta Bank, and of an act to enable certain banks to * settle and close their concerns ; then follow averments, that the said corporation, between the passing of the said first act and the first Monday in October, 1812, issued great numbers of bills or notes of the said bank, signed by the president thereof, and countersigned by the cashier, whereby the corporation promised the bearers thereof to pay them, on demand, the sum of money in the same notes respectively mentioned ; that the plaintiff, on the 10th of September, 1812, for a valuable consideration, became the lawful owner and bearer of many of said notes, and so continues to be, the sums promised in said notes amounting to 1081 dollars; that, on the 1st of October, 1812,-there were in circulation great numbers of such notes, to the amount of 400,000 dollars, unredeemed ; that the capital stock, which had been paid in, was the fund for the payment of the said notes, and so designed and established by said act of incorporation, and so held forth and represented by the corporation ; and it was upon the faith of said capital stock’s remaining a permanent fund, as aforesaid, and upon the faith that the said corporation would not issue and have in circulation, at any one time, bills or notes to a greater amount than twice the stock actually remaining in the bank, that the corporation obtained general credit, and that their said bills were generally received and circulated ; that the plaintiff, confiding therein, on the 1st of September, 1812, paid a valuable consideration for, and then became, and has ever since continued, and still is, the owner and bearer of many of said notes, amounting to 1081 dollars; that the defendant, on the 1st of October, 1812, was, and still is, a stockholder and director ; and it was his duty, and that of every one of the stockholders and directors, to preserve the said stock as a fund, as aforesaid, and to provide means for the payment of the bills of the corporation, and to take care that they should not have in circulation more bills or notes than twice the amount of their capital, actually in their vaults, in gold and silver; that, after the said first Monday in October, 1812, the defendant and the other directors were in duty bound * gradually to settle and close the concerns of the bank, in such manner that the public, and the owners and bearers of their bills, should suffer no inconvenience thereby: — And that the defendant, and the said directors and stockholders, well knowing the premises and not regarding his and their said duty, but intending to defraud and injure the plaintiff, and all others who were or should become owners of any of said bills, did not preserve said fund ; nor provide means for the payment of the said bills; nor take care that the corporation should not have more than twice the amount of their stock in circulation ; nor adopt proper means to bring their concerns to a close without inconvenience to the public and to the holders of their bills ; but that they neglected, disregarded, and violated their duty in this behalf: — And that said directors and stockholders, at two several meetings, holden in January and October, 1813, did fraudulently and wrongfully make a division of one fourth, and of one half, of the whole original capital stock, among the stockholders, in proportion to their shares, which the several stockholders severally received; that the defendant fraudulently and wrongfully received 3000 dollars, his proportion of the said two several divisions; that, after the said two divisions, no part of the original capital stock was remaining in the bank, nor has there since been any part of said stock in the bank; that, by the said divisions of the stock, the funds of said bank were wholly dissipated and destroyed, and the corporation rendered insolvent, and deprived of all means for the payment of their bills, and hath ever since remained, and still is, wholly unable to pay any of their said bills. And the plaintiff avers that he was, on the day of the purchase of this writ, the owner and bearer of the bills and notes aforesaid, and the money therein promised to be paid amounted to the said sum of 1081 dollars; that he, on the day last mentioned, presented the said notes and bills to the said corporation, at their place of business, and during the usual banking hours, and demanded payment according to the tenor thereof, which the * corporation utterly neglected and refused ; that he also presented the same to the former and late cashier of the corporation, and demanded payment thereof, and was alike refused; that said corporation have ever since utterly refused, and then were, and ever since have been, utterly unable, to pay said bills, or any part thereof, being wholly destitute of property. And thus the said Grant so negligently, carelessly, and wrongfully, conducted himself in the premises, that, by and through his negligence, carelessness, default, and misconduct, the plaintiff hath lost the whole amount of the bills and notes of which he was the owner and bearer, as aforesaid ; and has thereby suffered great loss, trouble, and vexation, and been deceitfully injured and defrauded.
The general issue being joined, the same was tried at the sittings here after June term, 1817, before Putnam, J.
It was admitted by the parties that the act incorporating th bank passed March 6, 1804; that the plaintiff was the owner anu bearer of bills of said bank, on the 29th of July, 1816, to the amount of 1081 dollars, and on that day demanded payment, which was refused; that the bank was then insolvent, and had ever since continued so ; that the defendant was a stockholder of fifteen shares, valued at 1500 dollars; that the stockholders in January, 1813, divided fifty per cent., and in October, 1813, twenty-five per cent more, of the capital stock; and that the defendant received his proportion of those dividends, as did all other stockholders who applied.
The plaintiff proved that the defendant was chosen a director in 1804, and afterwards, until October, 1813, excepting one or two years prior to 1812, when he was absent. But there was no proof that he had any notice of his choice, or that he accepted or declined the appointment; and he did not act as a director after the first year; nor did it appear that the other directors had any formal notice of their choice, but they acted as directors pursuant thereto. There was no evidence that the defendant was present at either of *the meetings of the stockholders, when those dividends were declared.
It was also admitted that, when those dividends were made, it was believed by the stockholders, that the debts due to the bank, with the twenty-five per cent, of the capital stock undivided, would be sufficient to pay all the debts due from the bank ; that B. J. Porter, the president, and N. Bummer, a director of the bank, were both apparently in good circumstances, and doing business as merchants in good credit, and that they have both failed since; that when those dividends were voted, the said Porter and Bummer were largely indebted to the bank, and continued to be so indebted when they failed, — and a part of their debts were not secured to the bank, according to the by-laws of the corporation ; that the stockholders were allowed to borrow to the extent of their stock, pledging the same for security, but the defendant never did so ; that he did not usually attend the meetings of the stockholders, but did attend once or twice after the first year of the incorporation.
It was also agreed that the plaintiff had applied to the president, directors, and cashier, of the bank, and had used due diligence to obtain the records and books of the directors and stockholders, or copies of them, but could not find or obtain either.
It was in evidence that the directors, in December, 1814 or January, 1815, stated to one of a committee of the legislature, appointed to examine the state of the bank, that there were between 90,000 and 100,000 dollars in circulation of the bills of this bank.
Upon this evidence, the judge directed a nonsuit; which was to stand, unless the whole Court should be of opinion that the plain tiff ought to recover; and in that event the nonsuit was to be set aside, and the defendant to be defaulted.
The cause was argued at the last June term, here, by Orr and Williams for the plaintiff, and by Mellen and Bond for the de'1 fendant.
* Arguments for the ¡plaintiff.
The decision of this action will involve principles of the first interest and importance, not merely to the parties, but to the public, and to a 1 persons, particularly, who are or may be interested in banking and other moneyed corporations in the commonwealth. The case finds that the defendant was a stockholder ; that the plaintiff was owner af bills of the bank, payment of which was demanded and refused; that the bank owes large sums of money, and is insolvent; that the stockholders have divided and received three fourths of their capital stock ; and that the defendant received his share in common with the others. If it is competent and lawful for corporators thus to divide and withdraw a part, or the whole, of their capital, while in debt, considering the number of these corporations and the immense amount of capital held by them, the public loss and mischief will be incalculable.
The provision in the late charters of banks, which makes the stockholders liable for any loss or deficiency of capital happening through the mismanagement of directors, is no security against a loss or mismanagement by the stockholders; and if they divide the capital, where is the remedy for their creditors, if they cannot follow the money into the hands of the individual stockholders ?
The stockholders at the time the charter expires are, in the charters lately granted, liable for the redemption of the bills. But nothing will be easier than to evade this provision, by dividing ninety-nine per cent, of the capital, and transferring the remnant to insolvent men.
With the present unexampled amount of banking and other capital, managed under charters of incorporation, and considering their immense responsibilities to the public, it is only necessary to suppose the corporators, or their agents, unfortunate or dishonest, to demonstrate the importance and necessity of fixing responsibility somewhere; and if these corporations can, at their own will, divide their capital, and defraud honest creditors, without rendering the individual corporators liable, it is important that it be * known, that some legislative provision may be made, or that the public may be put upon their guard.
Such being the mischiefs to which the public are exposed from these institutions, the inquiry whether the law furnishes any remedy, and if any, what that remedy is, is a very interesting one.
In the case of the Portland Bank vs. Apthorp, the Court says: “ The object of a charter is to enable the corporators in a body to conduct their business as an individual, to make contracts and to enforce them as such, avoiding the inconveniences of a copartnership. This is all that is asked for by the company, and all that is given by the charter. It is a privilege to manage their business, not an exemption from duty. Under the charter, are they exempt from any liability which would attach to them as individuals ? ”
In the case of Gray vs. The Portland Bank, Seivall, J., considers a corporation of this kind as a copartnership; and Sedgivick, J., says all the stockholders were partners. Does their incorporation excuse them from all the duties and liabilities belonging to them as partners ? Can it be the intention of the legislature, in granting these charters, to enable a company of persons to hold out false lights to the public, and finally to swindle all, who are unfortunate enough to be their creditors, out of their whole demands ? The mere name of a corporation cannot legalize a fraud. It cannot authorize the corporators to dissipate their funds by distributing the whole among themselves, and then to set their creditors at defiance. It is a reproach to the law to suppose such a mischief to be without an adequate remedy.
“ The general duties of all bodies politic, considered in their corporate capacity,” says Judge Blackstone, “ may, like those of natural persons, be reduced to this single one — that of acting up to the end or design, whatever it be, for which they were created.” The end and design of the government, in granting the charter in # question, was to enable the corporators to conduct the business of banking as a corporation, within the rules and limitations prescribed by the charter. From all the provisions of the charter, it is most manifest that it was the intention of the legislature, not only to preserve the capital, but to guard against loss beyond the capital, by restraining the corporation from owing more than double its capital at any time, by prohibiting their trading, by retaining the right to inspect their affairs, and by requiring semi-annual statements. Why should they be specially aufiioiized to divide the profits semi-annually if, without permission, they could divide, not the profits only, but the whole capital ?
If men can, by obtaining a charter for any enterprise, invest a capital upon the strength of which they gain credit with the public nazard any speculation, and enjoy the profits of it, if fortunate ; and if otherwise, withdraw their capital, and leave the public to bear the loss, without any personal responsibility, — it affords a new and safe mode for ingenious and enterprising men to make fortunes without risk, hitherto unknown.
If the stockholders of an incorporated bank are to be considered as partners, the defendant is answerable as one of the partners ; if as trustees of the capital for the payment of debts, and then for the use of the stockholders, then he is answerable for any misuse or misapplication of the fund; if as members of a corporate body, then, for any act done contrary to the design of the incorporation, the defendant is not protected by the charter, but must be respon sible to those injured by his acts.
If the corporation had no right to withdraw their capital, without first paying their debts, then the defendant is liable to the plaintiff in this action. He was a member of the corporation, a holder of fifteen shares. He assented to the doings of the corporation, or, at any rate, he ratified them by receiving his portion of the' money, and thus made their act his own.
* It avails nothing that this was done under a mistaken apprehension of the state of the bank; they had no right to divide any part of their stock until their debts were paid.
If it should be said that the corporation should reclaim from the stockholders the dividends of capital, and pay the creditors, it may be answered, that they have no motive to adopt such a course; and if they will not, the question still recurs, whether creditors are without all remedy.
“ It is a maxim of the common law, that a man specially injured by the breach of duty in another shall have his remedy by action.” The intent or design of the wrong-doer is no criterion as to the form of action; and case is the proper action for a tort not accompanied with force. The plaintiff had an interest in the preservation of the capital; the defendant has destroyed that interest, and thus has made himself liable to the plaintiff’s action; like the case of a man’s destroying a deed, in which another has an interest.
Arguments for the defendant.
The nonsuit must stand, unless it appears that the defendant was guilty of the fraudulent conduct imputed to him, and that such conduct was prejudicial to the rights of the plaintiff, at the time the alleged fraud was committed. The conduct said to be fraudulent, and a damage to the plaintiff, con sisted in the two votes of the stockholders passed in January and October, 1813, and the receipt of the dividends declared by those votes
We say, first, that the conduct of the stockholders generally was not fraudulent, and can furnish no ground for an action. In passing the votes, the stockholders were exercising the discretionary powers given them, by the statute of 1812, c. 57, to close their concerns, and gradually to divide their capital stock. A mistake in judgment, in the exercise of a power derived from the legislature, ought not to prejudice an innocent stockholder, who ordinarily has no knowledge of the situation of the bank in which he has placed his money, and no means of forming an opinion *of the propriety of any measures which may be adopted. It is as a stockholder only that the defendant is attempted to be charged in this action.
The corporation waited a reasonable time after the expiration of their charter, before they made either of the dividends. They believed that the portion -of the stock left undivided, with the debts due, would amply suffice for the redemption of all their notes outstanding ; and it would have been preposterous for them to retain their whole capital until the last bill should have been presented and paid. The statute contemplated a different course, and left it in the discretion of the corporation to make dividends, from time to time, as should be thought suitable. The final insolvency of the bank was caused solely by the sudden and unforeseen failure of two persons, debtors to the bank, a long lime after the dividends were made, who were then in good credit, extensive business, and apparently possessed of large property.
It is incumbent on the plaintiff, in support of this action, to show that he has been damaged, and this by the fraudulent conduct, or the false and deceitful assurances, or promises, of the defendant. But the case shows any thing rather than this. It does not even appear that he was present at either of the meetings at which the dividends were declared, or that he had any knowledge of the principles on which the proceedings were had. The whole extent of the matter, charged on him personally, is his receipt of the dividends when offered to him.
But let the conduct of the defendant have been even blameworthy, the plaintiff has suffered no damage in consequence thereof. The wrongs committed took place in January and October, 1813; and it is not proved, or pretended, that the plaintiff was the owner or bearer of the bills mentioned in the declaration. until July, 181G, nearly three years after the obnoxious proceedings of the stockholders. So, then, those proceedings could be no injury to him. At that time he had no rights. The wrong, if any, was done *to some former owner of the bills. If the plaintiff has, since the known insolvency of the bank, speculated in their discredited notes, and purchased them at a low rate, he may have his action against the company which issued them, and against them only. He has yet recovered no judgment against the corporation; and, although it may be insolvent, still it may be able to satisfy his claim.
If the defendant has improperly received these dividends, and they ought to be held accountable to the holders of the bills of the company, he is answerable to the corporation, and not to a stranger who may be the holder of their bills. The plaintiff has no general or special property in the capital stock of this corporation, by reason of his possessing these bills; and there is no privity of interest between him and the defendant, to enable him to support his action for any act done in relation to the stock. If one should even wilfully destroy the property of another, so that, in consequence thereof he could not pay his creditors; or should, in the same spirit, deprive a bank of its funds, so that it could not pay its bills; it seems clear that a person remotely and incidentally injured by such a trespass, and having no immediate interest in the property destroyed, could not maintain an action for damages against the wrongdoer. A different principle would subject a party to two actions for the same wrong; to one by the person immediately injured, and to another by the person remotely injured.
The defendant, at the time the dividends were made, was, and still is, a bond fide creditor of the bank, by reason of his having vested his money in the stock of the institution. He received his dividend in the right and character of a creditor. Had the officers of the bank refused to pay him those dividends, he might have compelled the payment by legal process. It is an absurdity to say that his receipt of money, which could not have been lawfully withheld from him, was fraudulent, or in any degree censurable.
It is an established principle of law, that a party concerned * in a fraudulent transaction is responsible for all its consequences, although, individually, he may derive small advantage from it; and one wrongdoer cannot call upon another for contribution. Now, to infer fraud from the facts in the present case, would produce "most manifest injustice. The receipt of a dividend upon a single share of the stock would oblige the receiver, although perhaps the treasurer of a pious or charitable corporation, or a poor widow, whose whole means of living de pended on this little peculium, to the payment of all the bills, now in simulation, which have been issued by this unfortunate corporation. Many other results, equally to be avoided, might be brought to view; a principle, however, involving such consequences, can never be considered as a sound one.
The action was continued for advisement; and now, at this term Putnam, J., read the following opinion of the Court, which had been prepared in the vacation by
Stat. 1803, c. 110.
Vide 8 Mass. Rep. 472, Bond vs. Appleton.
12 Mass. Rep. 252.
4 Mass. Rep. 364.
1 Comm. 479
7 Mass. Rep. 187.
Chitty on Pleading, 84, 129,134,138
3 D. & E. 51, Pasley vs. Freeman.— 1 East, 318, Eyre vs. Dunsford. — 2 East 108, Haycraft vs. Creasy. —10 Mass. Rep 199, Emerson vs. Brigham.
3 Co. 83.— Cro. Eliz. 444.-3 Salk. 174.
Mitford’s Chancery Pleadings, 129. — 3 Brown’s Cha. Ca. 624. — 1 Vez. 105. - 2 Atk. 212. —2 Saund. 47 d, note 1. — 2 D. & E. 750. — Chitty on Pleading, 151.

Opinion:
Jackson, J.
This is not an action of assumpsit, but an action of trespass upon the case, founded on a supposed wrong committed by the proprietors of the bank, of whom the defendant was one. The acts complained of took place in the year 1813 ; and the plaintiff does not appear to have possessed any bills of the bank, or to have had any interest in their proceedings, until the year 1816. This was urged, on the argument, as decisive against the plaintiff's right to recover in this action; and we do not see why it is not so.
This right of action, if there were any, accrued to those who held the bills at the time of the misconduct complained of; and such a right could not be assigned to the plaintiff. No injury was done to him by any misconduct of the stockholders of the bank; and he must have voluntarily incurred a risk when he took the bills. The holders of the bills at that time had their election to bring this action, if by law such an action could be maintained; or to sell the bills for as much as they were worth in the then state of the bank, after the value of the bills had been reduced by the conduct of the stockholders. In adopting the latter coursé, * they bear all the loss sustained by the supposed misconduct of the bank; and it would be contrary to equity, as well as to the settled principles of law, if the purchaser, in such a case, could recover on account of that misconduct. If the plaintiff was deceived in his purchase of these bills, he must resort, for recompense, to the person of whom he bought them. If he bought them fairly, we must suppose that he was informed of all the circumstances, or that he waived such information, or relied on his own knowledge of the facts; and that he paid no more than he thought them worth, considering the legal responsibility of the bank, and their means of making payment. This seems to have been a fair subject of speculation; and the plaintiff must abide by the result, wnether he gains or loses by the bargain. But if, in making the purchase, he intended to buy also a right of action against the stockholders, for a tort previously committed by them, his purpose was unlawful, and no such right of action was, or could have been. Assigned to him.
Although the opinion which has been expressed is decisive of the present action, yet we have been led to consider the more general question presented in the case; and, considering the great number of persons interested in it, on the one side and the other, and the great amount of property involved in the issue, we have thought it proper to state our impressions on the general question. If these suggestions should lead to the adoption of any adequate remedy for the plaintiff, and those who are situated like him ; or, on the other hand, should show that our law furnishes no remedy, and thus prevent further trouble and expense to all parties concerned,— the result, in either case, will be useful to the community.
At the time when the capital stock of this bank was divided among the stockholders, it is obvious that the holders of their bills had a better right to the money. The stockholders owned nothing but the residue of the capital, after payment of all the debts of the bank. As honest men, they could not claim any more ; and we find, accordingly, * that they did not claim any more. At the time of those dividends, they left in the bank what they believed to be sufficient to discharge all its debts. But the event proved that they were mistaken in that opinion ; and the plaintiff contends that it was gross negligence and misconduct in them to divide any part of their capital, until it was made cer tain that none of their creditors would suffer by it.
There is no evidence to support a charge of fraudulent or dis honest intentions on the part of the defendant and the other stockholders ; and the plaintiff's counsel, on the argument, did not attempt to put the cause on that ground. But they contended that the money, thus received by the defendant by mistake, and by a mistake of his own too, ought not to be retained whilst the plaintiff's debt remained unpaid.
It is impossible not to see and admit the justice of this claim, at least as between the stockholders, who received the dividend, and those who then held their bills.
On the other hand, it is evident that the stockholders are not liable to an action on account of a mistaken opinion, or vote, expressed or given at a legal meeting. If they are liable at all, it is for having received money which did not properly belong to them, and which, therefore, they ought, in justice and equity, to refund. If there is any one of the stockholders who has not yet received his dividend, it will not be pretended that he is liable to any action, — even if it should be proved that he was present at the meetings, and voted for the dividends, upon a mistaken opinion that the stockholders had a right to divide the capital, and that no person would suffer from it. To support such an action against an individual, on account of his vote, or other like act done by him as a member of a corporation, it is not enough to show that he acted erroneously or by mistake, but it must appear that he acted wilfully and maliciously, or fraudulently, with intent to injure the plaintiff. This was the point decided in the case of Harman vs. Tappenden. If the stockholders of a bank, whilst their charter is in * force, and their bills in free circulation, should suddenly determine to divide and withdraw their capital; and if the funds left in the bank should be insufficient to pay their debts ; it would appear impossible to reconcile their conduct with honesty and good faith; and if so, the stockholders would probably be liable to all persons injured by the measure, upon the principle of the case cited. If any number of persons combine, with intent to injure and defraud another, they cannot defend themselves against an action by showing that they did the act in the character of corporators, under any charter whatever.
In the case at bar, the original charter of the bank had expired, three months before the first, and twelve months before the second dividend. The corporation was, indeed, continued in existence, with other banks alike circumstanced, for four years longer, by the statute of 1812, c. 57. But they were prohibited, under severe penalties, from transacting any business from which they could derive a profit; their capital was to be wholly unproductive, so long as it remained in the bank; and the express purpose, for which their existence was continued, was to enable them to settle and close their concerns, and to divide their stock. Under these circumstances, it could not have been intended, or expected, that they should keep their capital thus unemployed longer than should appear absolutely necessary. Every holder of their bills must have known, or was bound to know, this state of facts. No new bills could be issued ; and the bank was open merely for the purpose of paying all that were in circulation. A prudent, man would probably have demanded his payment before the expiration of the original charter; but every one must have known, from the terms of the additional act referred to, that the bills were no longer intended as a currency in the country ; and that, after the passing of that act, there was no time to lose in presenting them for payment. It would even have been unjust in a holder of their bills, if he could have done it, to keep them in circulation, and thus compel the stockholders to * leave their capital unemployed for four years, in order to ascertain whether they could divide it without loss to the community. There is then, perhaps, as much reason to impute negligence or misconduct to the holders of the bills as to the stockholders. If the former had presented the bills for payment in proper season, the stockholders could not have been misled as to their right to make a dividend ; because the money in their vaults would have been exhausted in paying the bills, and nothing would have been left but the outstanding debts, which afterwards proved to be of little or no value.
This state of things has probably arisen from the opinion, which ;las been too prevalent in the community, that bank notes are money. They have been considered as the coin and common currency of the country, issued under the authority of the government; and it seems to have been thought that the government had taken sufficient care, in permitting their circulation, to prevent any injury or ass to the people. The government has, indeed, repeatedly adopted measures for this purpose, and probably has done all that was pas sible for the security of the public. But it is not possible, by any act of legislation, to make the directors of forty or fifty banks all equally skilful and prudent, and to make all their officers honest, and all their debtors solvent. It -is upon circumstances like these that the value of a bank note depends ; and if the affairs of any bank are unskilfully or dishonestly conducted, the best, if not the only, security that the people can have, is to refuse to accept their bills. Every holder of a bank note ought to understand that he holds only the promise of an individual to pay him the sum expressed in it. That individual is a corporation ; a creature of the legislature. It may die, or become insolvent, like any other person. The time of its dissolution is, indeed, known beforehand, and this is an advantage to its creditors, if they would avail themselves of it. But those creditors ought to know that, under all these circumstances, they must rely upon their own judgments as to the banks * to which they shall trust, and upon their own vigilance in obtaining payment of their debts, as they io in their negotiations with other individuals.
This delay, or negligence, on the part of the creditors of the banks, although it may, in some measure, excuse the negligence or mistakes of the stockholders, is not, however, such as ought to bar the just and legal claims of the creditors. But, in attempting to do justice to them, we must not forget the rights of the stockholders. If the present action could be maintained, as for a tort, several consequences would follow which every one would admit to be highly unreasonable and unjust. In the first place, any one of the stockholders might be sued alone ; because, in an action founded on tort, it is not necessary to join all the wrongdoers ; and the defendant cannot, in such a case, plead the omission of the others in ibatement. Secondly, the individual who was sued would be liable to the whole extent of the injury complained of, without regard to the amount which he had received on the division of the stock. If a man has done me an injury, for which I bring an action of this kind, it is no defence for him to say that he has not been enriched by it. The same stockholder would, therefore, be liable to successive actions of the same kind, by all the different holders of the bank notes; and the defendant in the case at bar, although he received less than 1200 dollars on the division of the capital stock, might be compelled, if he has estate sufficient, to pay the whole of the notes, for 90,000 dollars and upwards, which ose said to be still unpaid. Thirdly, if any thing could make this more strikingly unjust, it is the circumstance that the defendant, after paying all that money, could have no"remedy for contribution against the other stockholders. No such action will lie by one trespasser or wrongdoer against his companions ; but either one may, at the election of the injured party, be made liable for the whole.
If these views are correct, as to the rights of the creditors of the bank, and the obligation of the stockholders, it * follows that the creditors ought to be paid out of the funds which were withdrawn from the bank in 1813; and, on the other hand, that no stockholder ought to pay more than he received on that occasion.
This is one of the numerous cases, which are constantly occurring, which show the necessity of a court of chancery for the complete distribution of justice among the people. It is the boast of the common law, that it permits no wrong without furnishing a remedy ; but this is true only when there are courts competent to exercise all the judicial powers which that law requires for its due administration. A court of chancery exercises a most important part of those judicial powers. Its duty is, not to establish new rules, unknown to the common law, for the conduct of the people, or the regulation of their property; but to apply and enforce those principles of the common law which cannot be enforced by the other courts.
In the case of this bank, a court of chancery would probably sustain a bill, by one or more of the creditors of the bank, in behalf of all who should choose to come in, against all the stockholders. In such a process, new plaintiffs and new defendants might be added after the commencement of the suit, as might be found necessary ; and the rights of all concerned on both sides might be considered at once. It could then be ascertained how much was due, in the whole, to all who should choose to adopt this remedy, and what had been received by each stockholder. The latter might then be compelled to pay each one his proportion of the vt hole debt, provided it did not exceed the amount of his dividend; and the money thus paid might be divided among the plaintiffs, in proportion to their respective claims. If any of the stockholders had become insolvent, it would be determined, upon the same principles as in a like case in a court of common law, whether the loss arising from that circumstance should be borne by the stockholders or by
by
the creditors ; and this point being settled, the court of chancery would proceed to apportion the *loss, accordingly, among the respective parties. It might also be ascertained, whether any of the present holders of the bills had purchased them at a great discount, and at a late period: and if this circumstance ought to have any influence in estimating the amount of the debt, or in distributing the money to be paid by the defendants, that court would be competent to make the distribution accordingly. This appears to be the appropriate remedy, if not the only one, which the law furnishes in the present case.
If the creditors of the bank can devise any action by which this Court can arrive at a similar result, and can do justice to them without injustice to the stockholders, it will be our duty, and no unpleasant exercise of our authority, to do so. If no such mode can be de vised, the loss which the plaintiff will sustain is not perhaps to be attributed to any defect in the principles of our jurisprudence, but to the want of a tribunal competent to give effect to those nrinciples.
Per Curiam. The motion to set aside the nonsuit is overruled
1 East, 555.