Court Opinion

ID: 4928467
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:00:20.887781+00
Date Added: 2024-06-11T08:13:58.053144
License: Public Domain

Wells, J.
— The defendant conveyed to the plaintiff two shares in the South Paris Manufacturing Company, by a deed of warranty, containing the usual covenants. It is alleged, that at the time of the conveyance, the assets of the company were not equal to its liabilities. And the parties have submitted to the decision of the Court the qustion, whether this fact would constitute a breach of the covenant, that the shares were free from all incumbrances, at the time of the conveyance. In order to decide this question, we must, in the first place, determine whether the shares are liable for the debts of the corporation.
The act of Feb. 16,1836, making the shares of stockholders liable for the debts of the corporation, took effect on the day of its passage, by its own provisions. It was operative on all corporations aftérwards created.
By the act of March 12, 1834, all public acts were to take effect in thirty days from the recess of the Legislature, unless the provisions of any law should otherwise order.
By the act- of March 8, 1821, c. 137, § 6, it is provided, that all acts incorporating manufacturing companies, shall be deemed and taken to be public acts.
The act incorporating the South Paris Manufacturing Company was passed Feb’y 6, 1836, but being made by statute a public act, did not take effect, until thirty days after the recess of the Legislature, and was therefore subject to the provisions of the act of Feb’y 16, which made the shares liable for the corporate debts.
*151The shares, conveyed by the defendant to the plaintiff, were by law liable for the debts of the corporation, at the time of the conveyance.
It is altogether contingent whether the shares will ever be taken for the debts of the company, and as the assets may rise in value, it may be able to pay all its debts. The stockholders, at the time of the conveyance, may be holden for the debts of the company and be compelled to pay them, and a resort to the shares of the plaintiff may never be had.
In the case of Spring v. Tongue, 9 Mass. 28, the pew, at the time of the sale, in which the defendant had covenanted, that it was free from all incumbrances, was liable by the act of incorporation, for any assessment, which might be necessary to pay for building the meeting-house. An assessment was made for expenses, which accrued before the purchase by the plaintiff, in building the house, and which were paid by the plaintiff to prevent a sale of the pew. It was decided that this was not an incumbrance, for which the defendant was liable in damages, that the damage to the plaintiff arose from the diminished value of the pews in the general estimation.
It does not appear in the case cited, but that the pews, at the time of the sale to the plaintiff, were equal in value to the amount of the expenses. But in the present case it is stated, that the assets were not equal to the liabilities, at the time of the conveyance.
An incumbrance may exist, although it is uncertain whether it will ever ripen into actual damages, they may be altogether contingent, while the incumbrance is certain and existing.
In Porter v. Noyes, 2 Greenl. 22, it was held, that an inchoate right of dower was an incumbrance on land, and not a mere possibility or contingency. So also an outstanding mortgage is an incumbrance upon tie land, and though undischarged, it is a breach of the covenant against incumbrances. Sprague v. Baker, 17 Mass. 586.
In the present case, as the shares are liable for the debts of the corporation, which at the time of the conveyance, had not *152assets sufficient to discharge them, such liability would be an actual incumbrance upon the shares. But the damages would be but nominal. No actual damage could arise, until the purchaser was disturbed, in the enjoyment of his shares.
According to the agreement of the parties, the action is to stand for trial.