Case Name: STOLZ'S APPEAL
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1885-03-16
Citations: 2 Walk. 282
Docket Number: No. 9
Parties: STOLZ’S APPEAL.
Judges: 
Reporter: Reports of cases decided by the supreme court of pennsylvania which have been omitted from the regular reports
Volume: 2
Pages: 282–284

Head Matter:
STOLZ’S APPEAL.
An officer of a corporation covenanted with its creditor that it should not. create any lien; he afterwards obtained a judgment against the corporation;, held that this was a breach of his covenant, and his judgment was postponed to the olaim of the creditor.
' Appeal from Common Pleas of Berks County. No. 9 January Term, 1885. .
This was an appeal by Christian Stolz from a decree of the Court awarding a fund realized by a Sheriff’s sale of the property of the Union Foundry and Manufacturing Co. to Keppelman to use of Wanner & Streng. The agreement of sale of the Union Foundry and Manufacturing Oo. stock contained the following clause: “The parties to this agreement covenant with each other in manner following, (the said corporation covenanting for itself, its successors and assigns, and the other parties for themselves, their heirs, executors and administrators)’’ &c. The facts of the case are contained in an opinion awarding the fund to Keppelman to use of Wanner & Streng, which was delivered August 9, 1884 per:
Hagenman, P. J.
The defendant company was a corporation with a capital of $20,000, divided into 200 shares of the par value of $100 each. John Id. Keppelman was the owner of 100 shares, and Christian Stolz and Id. C. L. Crecelius were the owners of the other 100 shares.
There were two mortgages against the real estate of the defendant company, one of $10,000 and the other of $2,500. On the first day of October, 1881, said Keppelman sold his 100 shares to the defendant company by an agreement with said defendant company and the other two stockholders, Stolz and (Creceliiis for $10,000, payable in notes as follows: One note-payable Oct. 1, 1888, for $1,000. One note payable April 1,, 1884, for $1,000. One note payable April 1, 1885, for $2,000. One note payable April 1,1886, for $2,000. One note payable April 1,1887, for $2,000. One note payable April 1, 1888., for $2,000, said notes were all dated Oct. 1,1881,' with interest payable quarterly. It was further provided that in case of the default of the payment of the interest, or of any of the said notes for the space of two months after such interest or notes became due, then the whole amount shall be due and payable, and a judgment for the same was then authorized to be entered against said defendant company. The first note due Oct. 1, 1883, was. not paid, and on December 4, 1883, a judgment was entered against said defendant company for $10,250 in favor of .John Keppelman, for use of said Wanner and Streng, the holders of the notes.
On the 3rd of Nov.,-1883, said Christian Stolz brought suit-against said defendant, and on the 24th of Nov., 1883, recovered judgment for $6,016.14 on notes which were principally given since October, 1881.
The agreement of sale further provided that the parties of the second part, to wit: the defendant company, Christian Stolz and H. O. L. Crecelius, agree that the Union Foundry and Manufacturing Company shall and will not during the continuance-of the indebtedness hereby created, (the said note of $10,000) nor until all the notes aforesaid shall have been paid with interest, make, execute or issue any bond or mortgage, nor confess, any judgment nor create any lien in any form upon the property of the company beyond the amount of lien indebtedness ' now existing, to wit: the amount of a first mortgage of $10,000, and of a second mortgage of $2,500, as aforesaid. As Keppelman was taking notes without a judgment or mortgage to secure them,, it is obvious he was stipulating against any other liens against the defendant company’s property until his notes were paid. Whilst this agreement would not prevent any stranger from obtaining a judgment against, the defendant company for any indebtedness then existing or thereafter created, yet Stolz or Crecelius, the only other stockholders, could not in any manner take or acquire a lien of any kind against the defendant company’s property to the prejudice of Keppelman. It would be a-fraud on him to permit Stolz,.as President of defendant com-pany, sign anote in favor of himself, obtain a judgment on it to-the injury of Keppelman, after he, Stolz, had covenanted with Keppelman against it. The j udgment of Stqlz against the defendant company may be good as to all others, but it cannot take precedence of Keppelman-in this distribution. The rule in favor of Keppelman for the use of Warmer and Streng is made absolute, and the rule on behalf of Stolz is discharged.
A rule was also taken by Chas. H. Schaeffer, Henry Grim and two sons, Sigmund Schwante, Frank Reeser, William Langner, William Moser, Valentine Rickenbach, William Foreman, Charles Wertz and Ezra Schmohl, laborers, why the sum of $5240-100 should not be distributed to them. There was no evidence submitted to’establish their claim, ■or what either one of them was entitled to receive for.any work-which they had performed.
The rule is discharged.
Stolz then appealed to the Supreme Court complaining of the the action of the Court helow in not awarding the fund to him.
C. G. Derr, and H. A. Yundt, Esqs., for appellant
argued that it was not the intention to covenant that suit should not be "brought and judgment obtained; but that the company should ■not voluntarily increase its indebtedness. A stockholder can sue the corporation for his debt; Brinham vs. Wellersburg Coal Co., 47 Pa. 49; Twinlick Oil Company vs. Marbury, 1 Otto 587.
R. L. Jones, Esq., contra
argued, that Stolz having for a valuable consideration covenanted that the company should not create any lien prior to the Keppelman claim, cannot complain of the action of the Court in postponing the judgment which lie, Stolz, obtained in violation of his agreement.

Opinion:
The Supreme Court affirmed the decree of the Common Pleas on March 16, 1885, in following opinion:
Per Curiam.
This is the case of the distribution of a fund produced by a Sheriff's sale. The appellent seeks to claim in direct antagonism to his agreement with the appllee. He signed that agreement not only as an officer of the Union Foundry and Manufacturing •Company but also bound himself personally, and "his heirs, executors and administrators." We therefore concur with the learned judge, in holding that the appellant cannot set up the judgment he afterwards obtained, to the injury of the appellee.
Decree affirmed and appeal dismissed at the costs of the appellant.