Case Name: Herrick v. Wardwell et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1898-04-19
Citations: 58 Ohio St. 294
Docket Number: 
Parties: Herrick v. Wardwell et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 58
Pages: 294–313

Head Matter:
Herrick v. Wardwell et al.
Action by corporation creditor — Enforcement of statutory liability —Other creditors not necessary parties — Liability of those named in stock book — Corporation law.
1. In an action by a creditor Of a corporation in his own behalf, and in behalf of all other creditors, against the stockholders to collect the statutory liability, it is not necessary to make the other creditors parties to the action, either in the court of common pleas, or in a higher court on appeal, or on error. In such cases the action is prosecuted by the plaintiff for the common benefit of all creditors, for the creation of a fund for pro rata distribution among them, and whatever the plaintiff does in good faith in that behalf, inures to the common benefit of all, and binds all.
2. N. entered into a written contract with a corporation to the effect following : N. agreed to sell to the corporation all the milk produced by him and amounting to twenty gallons or more per day, for a period of one year, to be delivered in cans each day at the nearest milk station 'for shipment; and the corporation agreed to pay 1ST. nine cents per gallon for all milk shipped, payments to be made once each month. N. shipped to the corporation, under the contract, all the milk produced by him, for eight and one-half months, when the corporation became insolvent, and made an assignment for the benefit of its creditors, still owing for the milk received during the last one and a half months: Held: — that at the date the contract was entered into, the corporation incurred a liability to pay for all the milk that N. should thereafter deliver to it under the contract; that after delivery of the milk by N. the corporation could not defend against its liability^on the ground that the contract created no obligation, or was void for uncertainty, or want of mutuality; and that the debt arising from the delivery of the milk under such contract, is a liability against stockholders who assigned and transferred their stock to insolvent parties before such delivery.
3. The stockholders of a corporation whose names appear on the stock book, or in the absence of such book, on stubs of stock certificates, as holders of stock, are subject to a stockholder’s liability for debts incurred by the corporation while such names are allowed to so remain. To avoid such liability, it must appear on the stock book in the one case, or on the stub of the stock certificate in the other that the stock has been transferred to some one else.
(Decided April 19, 1898.)
Error to the Circuit Court of Cuyahoga county.
The Cleveland Dairy and Transportation Company was organized and incorporated under the statutes of this state, as a corporation for profit in December, 1891, with a capital stock of twenty thousand dollars, the shares of stock being fifty dollars each. The defendants in error, J. W. Wardwell, L. G. Kies andW. W. Whitacre, became stockholders when the company was organized. J. W. Wardwell subscribed and paid for seventy shares of stock, and received a stock certificate therefor, and the stub of the certificate showed that he held the seventy shares of stock. In like manner Mr. Kies and Mr. Whitacre subscribed and paid for five shares of the stock each, and received like certificates, the stubs showing the number of shares held by each. The remainder of the stock subscribed by others was evidenced by like certificates and stubs, but no stock book, other than the stubs and stock subscriptions, was kept by the corporation.
During the months of February and March, 1892, the company made a large number of contracts with the milk producers located within convenient distances of Cleveland where the company had its place of business. The contracts were upon printed forms prepared by the company, and differed only in dates, amounts, names, etc. The following is a copy of the contract entered into with P. B. Nichols, and the others are in. legal effect the same.
“CONTRACT.
It is hereby agreed by and between The Cleveland Dairy and Transportation Company (a eorpor. ation), and P. B. Nichols, of Twinsburg, Ohio, as follows:
The said Nichols agrees to sell the above named corporation all the milk produced by him, and amounting to 20 gallons or more per day, for a period of one year from April 1, 1892. Said milk to be the natural, unadulterated product of his dairy, fresh, unskimmed and with the full amount of “strippings,” properly cooled, and delivered in cans furnished for that purpose by said corporation at the nearest milk station or platform of the C. & C. R. R. Co., in due time for transportation to the city of Cleveland by trains known as “milk trains” or trains on which milk is transported. It is further agreed that the “freight charges” on all milk so shipped to the corporation shall be paid by said Nichols.
The said corporation on its part agrees to pay to the said Nichols the sum of 9 cents per gallon for all milk shipped from April 1, 1892, to and including Sept. 30, 1892, and the sum of 14 cents per gallon for all milk shipped from Oct. 1, 1892, to May 1,1893. Said rates per gallon above mentioned being understood to include the cost of transportation to the city of Cleveland paid by said Nichols as provided above. Soured or spoiled milk will not be accepted by said corporation.
The said corporation further argees that payment for all milk shipped shall be made once per month, and no later than the 15th of the month for milk shipped the previous month.
The said corporation further agrees that all cans furnished by it for transportation of said milk shall be properly washed and in fit condition and repair for the safe transportation of said milk.
Signed in duplicate this 3rd day of February, 1892, by parties hereto.
The Cleveland Dairy & Transportation Company.
Per Albert Rokusek, Sec’y and Tr.
P. B. Nichols, P. O. Address”------
On the 22nd day of August, 1892, said J. W. Wardwell sold, assigned and transferred his seventy shares of stock to his son, and a certificate was issued to the son for the stock, and the stub of the certificate to the son showed that the stock came from his father, but the stub of the certificate issued to the father did not show that the stock had been transferred to the son. On the 30th day of August, 1892, Mr. Kies and Mr. Whitacre sold, assigned and transferred their stock to one D. W. Holbrook, and certificates of stock were issued to him, and the stubs were the same as in the ease of Mr. Wardwell.
On the 15th day of December, 1892, the company made an assignment for the benefit of its creditors, and thereafter this action was commenced by Newton Herrick, a creditor, in behalf of himself and all the creditors of the company, against the stockholders of the company, including said J. W. Wardwell, W. W. Whitacre and L. G. Kies, seeking to collect the statutory double liability, for the benefit of all the creditors of the company.
J. W. Wardwell,' Mr. Whitacre and Mr. Kies answered setting up the sale and transfer of their stock at the dates above mentioned. Some, but not all of the creditors, were on their own motions, made parties defendant, and on leave of the court of common pleas, filed answers and cross-petitions setting up their claims against the company.
Deliveries of milk under said contracts continued until the date of the assignment on the 15th of December, 1892, and at that time the company owed about thirteen thousand dollars for milk delivered during the months of November and December, 1892. The milk delivered before the transfer of the stock by Mr. Wardwell, Mr. Whitacre and Mr. Kies, was all paid for before the assignment. The assignees of the Wardwell, Whit-acre and Kies stocks, conceded their liability, but as they were insolvent, and as nearly all of the other stockholders proved insolvent, it required the full amount of the statutory liability of all the solvent stockholders, including Wardwell, Whit-acre and Kies, to pay the debts and costs .of suit, and therefore the creditors insisted that they had the right to collect double liability from all who were stockholders at the time the milk contracts were entered into with the company.
A referee was appointed in the court of common pleas, and he showed in his report the names of all the creditors and the amount due to each, whether such creditors had been made parties and answered or not. Upon appeal, the case was heard in the circuit court, the parties agreeing as to who the creditors were, and the amount due to each. The circuit court in its judgment found the names of all the creditors, and the amount due to each as agreed upon, and found the amount due from each stockholder and rendered judgment therefor against such stockholder, and appointed a receiver, ana ordered that the amounts for which judgment was rendered against the several stockholders, should be paid to the receiver, and that he should pay the costs and fees out of the fund, and distribute the balance pro rata among the creditors. The circuit court held that the stockholders who had transferred their stock, were liable only for the milk delivered under the contracts before the assignments of stocks were made, and there being some debts due from the company before the transfer of said stocks, the circuit court rendered judgment against J. W. Wardwell for $347.00, against W. W. Whitacre for $21.85, and against L. G. Kies for $21.85, as the amount to be contributed by each toward the payment of said debts so due before said transfer of their respective stocks; but the circuit court refused to render judgment against said Wardwell, Whitacre and Kies, to increase the fund to be applied to the payment of the debts for milk delivered after the transfer of their said stocks.
The plaintiff below, plaintiff in error here, in behalf of himself and the creditors of the company, excepted to the finding and judgment of the circuit court, so far as concerned the liability of said Wardwell, Whitacre and Kies; and also in behalf of himself and said creditors, filed a motion for a new trial, which was overruled, to which said plaintiff in behalf of himself and said creditors excepted. The circuit court made a finding of facts separate from its conclusions of law, and therein set out its construction of said milk contracts, without giving a copy thereof; but a bill of exceptions was also allowed and signed and made part of the record, and therein a copy of said milk contracts appears as above shown.
Thereupon the plaintiff in error, for himself and all the creditors of said company, filed his petition in error in this court, seeking to reverse and modify the judgment of the circuit court so rendered against said J. W. Wardwell, W. W. Whitacre and L. G. Kies, claiming that said judgment is too small.
Henderson <& Quail, for plaintiff in error.
The language of the Constitution, Article XIII, section 3, is as follows: “Dues from corporations shall be secured by such individual liability of the stockholders, and other means, as may be prescribed by law; but in all cases each stockholder shall be liable over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum, at least equal in amount to such stock.”
Section 3258 of the Revised Statutes of Ohio: What are “dues,” “debts and liabilities,” and who are “creditors of the corporation” within the meaning of these provisions? Is the liability of a corporation to perform its executory contracts such a liability as is protected by this law? These questions are not new in this state. They are clearly settled by former decisions of this court. Brown v. Hitchcoch, 36 Ohio St., 667; Corning v. McCullough, 1 Const., 47; Hawthorne v. Calef\ 2 Wall., 10; OchilPree v. Raib'oad Co., 21 Wall., 249; Norris v. Wrenschall, 34 Md., 495; Hager v. Cleveland, 36 Md., 476; Rider v. Fritchey, Admr., 49 Ohio St., 285; Boice v. Hodge, 51 Ohio St., 236; Ca/rver v. Braintree Manufacturing Company, 2 Story, 432; Mill Dam Found/ry v. Hovey, 21 Pick., 455, held, under the statute of 1829, c. 53, section 6; 3 Mete. Law (Mass.), 297; Com. v. Keeper of Philadelphia Jail, 4 Serg. & R., 506; Cray v. Benedict, 3 Met., (Mass.) 522.
This court has expressly decided in State v. Medberry, 7 Ohio St., 522, that a contract of the character of those before the court creates a debt from, the time the contract is entered into. See Century, Standard and Webster Dictionaries for word “debt.”
Numerous decisions of courts other than our own sustain the position taken by the plaintiff in error. Byers v. The Franklin Coal Company, 106 Mass., 131; Colemans. White, 14 Wis., 700; Moss v. Oakley, 2 Hill, 265; Harger v. MeCollough, 2 Denio, 119; Coxv. Could, 4 Blackford, 341; White v. Creen, 70 N. W., 182, Iowa, 1897; Railway. Company v. Clark, 29 Pa. St., 146; 91 Pa. St., 398, the Appeal of the City of Erie; Niles Waterworks v. Mayor, 59 Mich., 311; Coidson v. City of Portland, Deady, 481; Prince v. The City of Quincy, 165 111., 138; Sackett v. City of New Albany, 88 Ind., 473; City of Valparaiso v. Gardner, 97 Ind., 1; 2 Bigelow on Fraud, chapter six; 8 Encycl. of Law, page 751, note 2, and Bump on Fraudulent Conveyances, 492 and 496; Wait on Fraudulent Conveyances and Creditors’ Bills, section 90; Rider v. Fritchey, Adm'r, 49 Ohio St., 285; 17 N. Y., 458; Merchants' Bank v. Bliss, 35 N. Y., 412; Easterly v. Barber, 65 N. Y., 252; Feeder v. Baker, 83 N. Y., 156 ; Stokes v. Stickney, 96 N. Y., 323.
If it be conceded that the liability of the corporation accrues only when the time of performance arrives, then the recent decision of this court in Peter v. Union Manufacturing Company, 56 Ohio St., 181, leaves the stockholder at liberty to relieve himself by transferring his stock to an irresponsible person, without the .receipt of any consideration.
Another question presented by the record arises out of the failure of the defendants to cause proper entries to be made upon the books of the company showing transfers of their stock.
We do not think that the memoranda on these stubs constitute such a record or notice of transfer as is contemplated by sections 3254 and 3259 of the Revised Statutes. llarpold v. Stobart, 46 Ohio St., 397. .
The attorneys for defendant J. W. Wardwell suggest that there is not a sufficient number of stockholders before this court to enable the court to determine and adjudge the liability of those stockholders who have been made defendants in error. 45 Ohio St., 318.
The claim is made by the attorneys for the defendants in error that the contracts in question are not valid, for the reason that they did not require the creditors to produce any particular quantity of milk. It will be observed that these contracts were made by using a printed form, in which was inserted in each instance the names, amount to be delivered, the dates and the price. In every instance a particular quantity of milk was fixed upon for daily delivery, but some confusion arose from the inaccurate use of words in attempting to supplement the amount named by the words more or less. It is perfectly evident that in every instance the contract was intended to read so many gallons, more or less, per day. In 48 Cal., 239, it was held that where the intention is apparent, a clerical error in the use of a word is of no consequence. The following are a few of the cases which hold that contracts of this character are perfectly valid and enforceable: Brawley v.. United States, 96 U. S., 168; Smiths. Morse, 20 La. An., 220; Wells v. Alexander, 130 N. Y., 642; Parkers. Pettit, 43 N. J. Law, 512; Miller v. Kendig, 55 Iowa, 174; Guillim v. Daniel, 2 C. M. and R., 61; Clark on Contracts, pages 170, 171 and 64.
M. W. Beacon, for defendants in error, Kies and Whitaere.
The creditors seek to hold defendants in error under their statutory liability as stockholders on the following grounds:
1. That while defendants in error undoubtedly made, in the latter part of August, 1892, bona fide transfers of their stock, notice of such transfers was never given to the creditors by making proper entries of transfer on the books of the company.
2. That the so-called “milk contracts” became on the day they were signed such a “liability incurred” that all stockholders holding stock at that date did then and there become liable, upon default of the company, for debts arising for milk delivered at any time before the expiration of the time fixed for the termination of the contracts.
3. Defendants in error claim by way of affirmative defense that the “milk contracts” were invalid for indefiniteness and want of mutuality.
Defendants in error cite no authority touching upon the first question of law above stated. Morgan v. Lewis, 46 Ohio St., 1. “The slightest inquiry would have revealed the fact that Wardwell, Kies and Whitaere did not sustain the relation of stockholders, at the time these debts were contracted.”
Plaintiff in error says that even though. said transfers of stock were properly evidenced on the books of the corporation, still, the holders of the so-called “milk contracts” are entitled to look to defendants in error as stockholders, for the reason that at time of signing the contracts, that is, in March, 1892, “the debt was contracted” and the “liability was incurred.” BrovmY. Hitchcock, 36 Ohio St., 667; Article 13, section 3; Revised Statutes, section 3258; Corning v. Me Cxdloiogh, 1 Const. ^ 47; Wheeler v. Faurot, 37 Ohio St., 28; Bonexoitz v. Bank, 41 Ohio St., 8.
We pass now to those cases directly in point and which defendants claim to be conclusive in their favor; they are: Qa/rrison v. Iloioe, 17 N. Y., 458;
Leggett v. Bank, 24 N. Y., 283; Arms Co. v. Barloxo, 58 N. Y., 34; Cold v. CVyne, 134 N. Y., 262; Wing v. Slater, 35 At. R. (R. I.), 302; Cook on Stockholders, section 214; 27 la., 228; 15 Cal., 429.
Defendants claim by way of affirmative defense that the so-called “milk contracts” were not contracts at all; that they did not bind the corporation, for the reason that they did not bind the producer to furnish any certain quantity of milk, and he might sell his cows and his farm and quit within a week after the contract was made, and would not be in the position of one who had broken a contract. Since these contracts did not bind the farmer, they did not bind the corporation, being invalid because of their indefiniteness and want of mutuality.
Squire, Sanders cfe Dempsey, for defendant in error, J. W. Wardwell.
Assuming the contracts to be valid, when did the indebtedness under the milk contracts accrue?
The whole argument of plaintiff in error upon this question seems based upon a confusion in the mind of the writer of the brief as to the distinction which must be drawn between debts, existing or contracted, and obligations, which may ripen into debts.
The debts for milk furnished under the contracts referred to in the record arise under contracts— if this -court hold them to be valid — which belong to the latter of the two classes above mentioned, namely: Obligations which may ultimately ripen into debts. It has been almost uniformly held throughout the courts of the various states that there is a wide and well-defined distinction between what is meant by the word “debt” and that which may ultimately become a debt. Ovicttt v. Hughes, 41 Barb., 541; City of Valparaiso et al. v. Gcvrdner, 97 Ind., 1; Weston v. City of Syracuse, 17 N. Y., 110; Ca/rrison v. Hotoe, 17 N. Y., 458; Wentworth v. Whittemore, 1 Mass., 471; 37 Cal., 524; East St. Louis v. East St. Loiris, etc. Co., 98 111., 415; Dively v. City of Cedar Falls, 27 la., 227; Grant v. City of Davenport, 36 la., 396; French v. City of Burlington, 42 la., 614; Burlington Water Co. v. Woodward, 49 la., 58. Nor have the courts of Ohio been inclined to hold otherwise upon this question. Sicote ex rel. Frost v. Forran, 24 Ohio St., 536.

Opinion:
Burket, J.
The Cleveland Dairy and Transportation Company had many creditors, and the action below was brought for and in behalf of all of them, and the exceptions were taken and error prosecuted in the same manner. The defendants in error now claim that as only one creditor, Newton Herrick, has filed a petition in error in this court, all the other creditors are content with the judgments below, and that in case of a reversal, such reversal can correct only the injury which Newton Herrick has sustained, and that no relief can be extended by this court to the other creditors.
This claim is not tenable. Newton Herrick commenced the action in behalf of all the creditors, to collect a fund for the common benefit of all, and the action taken by him in their behalf inures to their benefit, whether taken in the court of common pleas upon his pleadings in that court, or in the circuit court on appeal or error, or in this court. Throughout the whole proceedings in all the courts, the action is for the benefit of all the creditors, and in the absence of fraud or collusion they are all concluded by the final judgment as to the recovery of the fund. Wright v. McCormick, 17 Ohio St., 86; Umsted v. Buskirk, 17 Ohio St., 113; section 3260, Revised Statutes.
The circuit court finds the amount due to each creditor from the company, but renders no judgment in favor of any creditor. The order of distribution of the fund is not a judgment in favor of creditors, but an order upon the receiver to distribute the fund in his hands, whatever the fund may be. The judgment against the stockholders for the amount due from each, is the judgment to be affirmed or reversed in this proceeding in error, and the action as to the amount, is between the plaintiff in his own' behalf, and in behalf of all the creditors, on the one side, and the several stockholders, each for himself, on the other. In this contest the amount of the fund for final distribution may be increased or diminished, but the finding of the court as to who are creditors, and the amount due to each, will not thereby be affected, and therefore the several creditors are neither necessary, or proper parties to such proceedings in error. Whatever the final fund for distribution may be, the order of the court for its distribution among the creditors pro rata, will stand unaffected by the result of the proceedings in error. If the plaintiff in error should succeed, and increase the fund, the rate per cent, to each creditor would be increased, and in case of failure it might be diminished, or remain the same; but the order to distribute the fund, whether increased, diminished or remaining the same, would stand unreversed and unaffected by the result of this proceeding in error. The reversal here sought is only as to the amounts to be paid by the three stockholders, Wardwell, Whitacre and Kies, and to reverse or modify the judgment of the circuit court as to them, does not in the least affect any judgment rendered for or against creditors, and therefore the creditors should not be made parties to this petition in error.
In such cases against stockholders the names of the creditors and the amount due to each from the corporation, are usually ascertained by a reference to a master or referee, notice being published by order of the court for creditors to present their claims. In case of a contested claim, an issue should be ordered to be made up and tried to ascertain and fix the amount due to the creditor from the corporation. While the issue and trial as to such contested claim is a proceeding in the case, it is distinct from the proceedings against the stockholders, the one being to establish the validity of a creditor's claim against the company, and the other to collect a fund from the stockholders for the common benefit of all the creditors.
In the next place it is claimed by defendants in error, that the milk contracts were not binding obligations, were so indefinite as to be void, and lack the element of mutuality.
The producer of milk agreed to sell to the corporation all the milk which he should produce, and the corporation agreed to pay him for all the milk shipped from April 1, 1892, to May 1, 1893, at the prices named in the contract.
While the producer is not bound to produce any certain quantity of milk, unless it may be twenty gallons per day, the corporation is bound to pay for all the milk shipped, the prices named in the contract. After performance by the producer, the corporation cannot avoid its obligation by pleading that the producer was not bound to perform the contract. The option to produce milk and thereby perform his contract was for the benefit of the producer, and when milk was produced and shipped, the obligation of the corporation to pay for it was binding, and the contract between the parties was then both definite and mutual.
The production and shipment of milk continued until the corporation made an assignment, December 15, 1892, and thereafter for the first time an attempt was made to take advantage of the weakness of these milk contracts. It was then too late. Performance by the producers without objection by the corporation, or its officers or stockholders, had then cured whatever weakness there may have been in the contracts. Fishmonger's Company v. Robertson, 5 Man. & G., 131; Phelps v. Townsend, 8 Pick., 392; Commercial Bank v. Nolan, 7 How. (Miss.), 518; 1 Parsons on Contracts, 451; Stahl v. Van Vleck, 53 Ohio St., 136; Himrod Furnace Co. v. Cleveland & Mahoning R. R. Co., 22 Ohio St., 451.
Next it is urged by defendants in error that the debts for milk delivered under the contracts, accrued, not at the date of the execution of contracts but at the time of the delivery of the milk.
The language of the Constitution, Article XIII, section 3, is as follows: "Dues from the corpora tion shall be secured by such individual liability of the stockholders, and other means, as may be prescribed by law; but in all cases each stockholder shall be liable over and above the stock by him or her owned, and any amount unpaid thereon, to a further sum, at least equal in amount to such stock."
Section 3258 of the Revised Statutes of Ohio reads as follows: "The stockholders of a corporation which may be hereafter formed, and such stockholders as are now liable under former statutes, shall be deemed and held liable, in addition to their stock, in an amount equal to the stock by them subscribed, or otherwise acquired, to the creditors of the corporation, to secure the payment of the debts and liabilities of the corporation."
Stockholders are liable to secure the payment of the "dues" from corporations, as well as the "debts and liabilities" thereof. The liabilities mentioned in the statute are to the "creditors" of the corporation, but in the constitution "creditors" are not named. The word ' 'creditor" cannot have the effect to limit, or narrow the words "dues, debts and liabilities." Whoever has a claim against a corporation which falls within the terms, "dues, debts or liabilities," is a creditor of such corporation within the .meaning of the constitution and statute under consideration.
When the corporation executed these milk contracts, it thereby incurred a liability to pay for all the milk which should be shipped under said contracts. Whether an end could have been put to this liability by the corporation before the expiration of the time limited in such contracts, we need not now inquire. It is enough to say that no attempt was made to avoid the contracts, and that the shipment of milk continued under the contracts until the corporation made an assignment. The liability on the contracts for the debts arising from the delivery of milk thereunder, therefore accrued at the time of the signing of the contracts, and under the authority of Brown v. Hitchcock, 36 Ohio St., 667, the defendants in error remained liable on their stock for the milk shipped after they assigned their stock to insolvent persons. But the defendants in error are liable also upon another ground, even though, it be conceded that the debts or liabilities for milk did not accrue until the delivery of the milk. It is conceded that they were stockholders when the milk contracts were made, that they continued to hold their stock until late in August, 1892, that no stock book showing transfers was kept, that the only record kept of the issuing of stock was the entry on the stubs left after removing' the stock certificates, and that while the stubs of the new certificates issued to the purchasers of this stock showed from whom the stock was received, the stubs of the certificates issued to the defendants in error did not show that said stock had been sold or transferred.
As there was no regular stock book showing transfers kept by the company, the stock certificate book and stubs were made to take its place, and upon these stubs and upon the stock subscription book, the names of these defendants in error stood as stockholders; and it is well settled that all whose names so stand upon the stock book, are liable as stockholders to those dealing with the corporation, until the stock book shows that such stock has been transferred, or disposed of in some other way.
It, is urged in behalf of defendants in error that as the stubs of the stock issued to the purchasers thereof showed that the stock was received from the defendants in error, such stubs were notice to the world that, such defendants were no longer stockholders, even though the stubs of the original issue of the stock to them still showed defendants in error to be stockholders, and nothing appeared on those stubs to show a transfer of their stock. This claim is not sound.
By section 3254, Revised Statutes, it is provided that a book shall be kept by the corporation for the purpose of registering therein all subscriptions and transfers of stock, and it is made the duty of the directors to keep such record, and of the secretary to register in such book all subscriptions and transfers of stock; and it is further provided that whenever any certificates of stock are assigned and delivered by a stockholder, the assignee thereof shall be entitled to have the stock transferred to him upon the books and to have his name enrolled as a stockholder.
It is not the assignment and delivery of the certificates of stock, that relieves the stockholder trom liability for the debts of the corporation, under this section, but the transfer of the stock on the books; because after such transfer the old stockholder no longer stands as a stockholder on the books of the company. The stock book is notice to the world as to who are the stockholders of the corporation, and the statute has provided how the book and transfers shall be kept, and this provision is for the protection of the public, and to inform stockholders as to their liability, and how and when an end may be put to such liability.
If this corporation had kept a stock book show ing transfers, and these defendants in error had caused their stock to be transferred on such book, they could not be held liable for debts thereafter incurred. Instead of obeying the statute in this regard, they resorted to the practice of keeping the stock account and tranfers on the stubs, supposing that to be as good as a regular stock book. In this they were mistaken. A stock book would have shown the subscription and transfer in the same account, but the stubs of the old certificates showed only that the stock had been issued, and failed to show that it had been transferred. True, the stub of the new certificate showed from whom the stock came, but the stub of the old certificate failed to show where the stock had gone, or that it had been transferred at all. The whole stub book taken together might have shown the transfer of this stock, but the public cannot be put off with less than the statute gives them. An ordinary man, like a producer of milk, would not likely look further than to find the names of these defendants in error upon the stock subscription list and old stubs, and would not carefully go through the book, and check up the stock to see whether any of the stock appearing on the stubs had been transferred, and he should not be required to do so. If the old stubs had shown that the stock had been transferred, there would be something to support the claims of the defendants in error, but as it is, they clearly stand on the old stubs and subscription list as stockholders, and therefore liable for the debts arising from the delivery of milk, up to the date of the assignment made by the corporation.
The statute having prescribed the manner of keeping the record of the subscription and transfer of stock, a different'method will not be upheld, un less it is shown to be equally as good and convenient as the one provided by statute. Stockholders cannot escape liability by pursuing a course different from that provided by statute, and which imposes additional burdens upon the public, or makes it more difficult to ascertain who the stockholders are. The public has a right to rely upon the statute, and are entitled to its provisions, or its full equivalent.
It follows that the circuit court erred in not rendering judgment against the defendants in error for an amount equal to the amount of their stock. The judgment of the circuit court will be modified by rendering judgment against the defendants in error for the remainder of their liability.
Judgment acoordingl/y.