Court Opinion

ID: 7985238
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:24:47.429835+00
Date Added: 2024-06-11T16:35:10.931213
License: Public Domain

Chalmers, J.,
delivered the opinion of the court.
The bill was filed by two judgment-creditors of the Vicksburg aud Memphis Railroad Company, suing for themselves and all others who might come in. It alleged the insolvency of the corporation, and sought to reach the amount due by three stockholders on their subscriptions to the capital stock. The corporation and these three stockholders only were made de*684fendants, upon an allegation that they were the only solvent stockholders within the jurisdiction. The prayer was for an account, and for an appropriation of the amount due by the stockholders to the judgments of complainants, and of such others as might come in. The answer disclosed the fact that there were other solvent stockholders within the jurisdiction, and that, owing to an arrangement which had been perfected among the stockholders, some of those not joined had, as among themselves, become primarily liable in exoneration of the defendants.
This disclosure rendered a further prosecution of the bill as a general creditors’ bill to subject and distribute the assets of the corporation impracticable without amendment, since in such a proceeding, where the attempt is to reach the liability of the shareholders on their subscriptions to capital stock, all the solvent stockholders within the jurisdiction must be joined, except where this will be excused upon an allegation that the number is too great. Umsted v. Buskirk, 17 Ohio St. 113; Wright v. McCormick, 17 Ohio St. 86; Mann v. Pentz, 3 Comst. 416; Smith v. Huckabee, 53 Ala. 191; Wood v. Dummer, 3 Mason, 308.
Instead of amending, complainant’s solicitor dismissed his bill as to one of the complainants, and, thei'eupon, without any change in the pleadings, was granted a decree in personam and in solido against each one of the three defendant stockholders for the amount of the judgment held by the remaining complainant against the corporation. The result was, that a creditors’ bill filed by two, for the benefit of themselves and all others, against an insolvent corporation and its shareholders, was, without amendment, converted into an individual proceeding by one creditor against three shareholders only, and a personal decree obtained as upon an individual indebtedness between the parties.
This result, whereby a relief not contemplated nor asked by the bill was granted, is sought to be justified under sect. 2413 of the Code, which provides that “ in all joint-stock *685corporations each stockholder shall be individually liable for the debts of the corporation, contracted during his ownership of stock, for the amount or balance that may remain due or unpaid for the stock so subscribed for by him, and may be sued by any creditor of the corporation, and such liability shall continue for one year after the sale or transfer of the stock.”
Undoubtedly this section established an individual liability between each delinquent shareholder and eack creditor of the corporation who has reduced his demand to judgment. The statute seems to contemplate an action at law as the means of enforcing this liability, though we will not say that a bill in equity would not lie. But it is a several, and not a joint, liability. Each shareholder is subject to suit by each creditor, and some exceptional circumstances must be shown to justify the institution of a suit by one against many, or many against one or against all. The necessity for discovery, and the avoidance of a multiplicity of suits, and perhaps other considerations, might justify a resort to chancery and the joinder of several or of all the delinquent shareholders in one litigation, though upon this we express no opinion.
No such exceptional circumstances are here shown, nor is any thing suggested which warranted the wide departure between the pleadings and the decree.
Decree reversed and bill dismissed without prejudice.