Case Name: Protection Insurance Company vs. William A. Ward
Court: Connecticut Supreme Court
Jurisdiction: Connecticut
Decision Date: 1859-09
Citations: 28 Conn. 409
Docket Number: 
Parties: *Protection Insurance Company vs. William A. Ward.
Judges: 
Reporter: Connecticut Reports
Volume: 28
Pages: 334–335

Head Matter:
*Protection Insurance Company vs. William A. Ward.
A corporation, by its directors, assigned one of its stock notes to certain pf its directors, as security for advances, who afterwards brought suit upon it in the name of the corporation for their own benefit. The corporation was at the time, and had ever since remained, insolvent. The defendant, at-the time of the assignment and of the bringing of the suit, was a stockholder. Held that he could not avail himself, by way of defense to th« suit, of the fact that the note had been so assigned, even if such assignmeD1*would be regarded as a fraud upon the corporation.
Assumpsit upon the following note:
“ ¡81,250.
Hartford, May 4th, 1853.
For value received I promise to pay to the Protection Insur anee Company or their order, my second installment on fifty shares of the stock of said company, being twelve hundred and fifty dollars, and the same shall be paid in whole, or from time to time in part, as the same shall be required, within thirty days after demand, or upon a notification of thirty days in any ■newspaper printed in Hartford. Wm. A. Ward.”
The note had been assigned, by a vote of the directors of the insurance company, to certain of the directors of the company, to secure them for certain indorsements made by them for the company, which they had since been compelled to pay, and the amount of which exceeded the amount of the security which they held. The suit was brought by these directors in the name of the insurance company for their own benefit. The company at the time of the assignment of the note was insolvent and soon after made an assignment in insolvency. The defendant had remained a stockholder ever since the giving of the note.
The defendant pleaded the general issue, which was closed to the court, with notice of the above facts, and claimed that, as a matter of law, the assignment of the note to parties who were at the time directors of the company was a fraud, and that the facts constituted a good defense to the action. The court however ruled the evidence to be inadmissible for this [ *410 ] '^purpose, and rendered judgment for the plaintiffs. The defendant thereupon moved for a new trial.
Hubbard, in support of the motion.
F. Fellowes, contra.

Opinion:
Hinman, J.
This is an action upon one of the stock notes, as they are called, of the Protection Insurance Company, against one of its stockholders. It was given for the second installment on fifty shares of the company stock, held by the defendant, and was to be paid as required, within thirty days after demand.
The plaintiffs are entitled to judgment unless there is something set up in the notice and found by the court which amounts to a defense to the claim. The promise is admitted to be valid, and there is no claim that it has been discharged or in any way satisfied. But the defendant insists that the suit was brought and is prosecuted for the benefit of third persons, to whom the claim has been improperly assigned, and that, as a stockholder in the corporation, he has an interest in the effects, to see that they are properly applied for its benefit, which entitles him to make this defense. He does not attempt to do this by wav of a dilatory plea, in which case a judgment in his favor would not bar another suit upon the claim, but he insists upon the facts set up in his notice as a full defense to the suit. If he could succeed in thus defeating the suit, it is quite obvious that he would cause himself to be forever discharged from a valid obligation to pay a large sum of money, without any consideration whatever. This of course can not be done. The facts on which he relies are irrelevant to the issue. If, as a stockholder, the defendant wishes to prevent the misappropriation of the company funds, his remedy is in chancery, if any where. His right, if he has any, is common to all the stockholders, and should be enforced for the benefit of all. The plaintiffs are entitled to the money due them, and whether they shall retain it, or pay it over to the persons to *whom it is said they have [ *411 ] assigned the claim, is not material on the question whether it is due or not. And the only question here is, does the defendant owe the amount claimed or any part of it, not what will be done with the money when paid. The authorities cited by the defendant's counsel, therefore, have no application to the case, and the superior court having ruled in conformity to these views, a new trial is not advised.
In this opinion the other judges concurred.
New trial not advised.