Court Opinion

ID: 7893995
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:51:22.803133+00
Date Added: 2024-06-11T16:32:00.293649
License: Public Domain

Robinson, J.
delivered the opinion of the Court.
This suit is brought under the provisions of Art. 26, sec. 52 of the Code, to recover of the appellant individually as a stockholder of the Antietam Manufacturing Company, a debt due to the appellees by said company.
The company was organized under Art. 26 of the Code, and by the articles of association the capital stock was fixed at 1500 shares of the par value of $100 per share, of which, however, but 960 shares were taken.
We have heretofore decided that in regard to companies of this character, where the capital stock was fixed at a certain number of shares of a certain value per share, no action would lie against a subscriber to enforce the payment of his subscription, until the whole capital stock was taken.
*324It. appears, however, that the directors undertook to organize this company upon a partial subscription of the capital stock; and it is contended that the appellant having participated in said organization, knowing that the whole capital stock had not been taken, and having attended the meetings of the stockholders at which money was voted and contracts made for the purchase of property and materials necessary to carry on the business of the company, he is now estopped in a suit by a creditor from setting up as a defence, the partial subscription of the capital stock.
Conceding this to be true, the question then arises ás to the extent of the appellant’s liability in this action. The Code provides that the stockholders shall be severally and individually liable to the creditors of the company to an amount equal to the amount of capital stock held by them. Sec. 52, Art. 26, Code.
It appears that the appellant, originally subscribed for fifteen shares of the par value of fifteen hundred dollars, but on the 16th July, 1861, at the first meeting of the board of directors at which he attended, and before the debt due to the appellees was contracted, and in fact, so far as this record-discloses, before any debts "had been incurred by the company, the appellant made application to have his subscription reduced from fifteen tó ten shares. W. M. McDowell then and now one of the firm of the appellees, was a member of the board of directors, and was present when this application was made. It further appears, that this application was assented to without a dissenting voice, whereupon the appellant paid the first instalment due on his subscription of ten shares, and the subsequent instalments as they became due. In addition to this, th.e secretary issued to him a certificate of ten shares, and at the only meeting of the stockholders at which he voted, he was permitted, and only claimed the right as a' stockholder, to vote ten shares:
*325Now it is too clear for argument, that at the time this application was made by the appellant to reduce his original subscription from fifteen to ton shares, and assented to by the board of directors, he was not liable for one dollar on account of the subscription of fifteen shares, for the reason that the whole capital stock had not been taken, and no debts had been incurred by the company. If then he is to be held liable as stockholder solely upon the ground of having participated in the organization and business of the company, knowing that it was incurring debts for the purchase of property and materials necessary to carry on the business of the company, he cannot he liable for any greater amount than the par value of the stock held by him, and upon the basis of which he participated in the affairs and business of the company.
This being so, the extent of the appellant’s liability in this action must be limited to the ten shares of stock of the value of one thousand, dollars, after deducting therefrom such sum or sums of money as he may have been compelled to pay as a stockholder, to other creditors of the company, and the amount or amounts of such judgments as ■they may have obtained against him. There was error then in granting the plaintiffs’ first, second, fifth and sixth prayers. There was error also in granting the third prayer. The mere fact that he paid his subscription, knowing that the whole capital stock had not been paid in, and that the company was incurring debts for property and materials, were not such acts of participation as to estop him from setting up as a defence in this action the partial subscription of the capital stock. We have heretofore said, that where a stockholder attends the meetings of the company, knowing the whole capital stock had not been taken, and votes for the expenditure of money for the purchase of property and materials necessary to carry on the business of the company, he will be estopped from setting up as a defence, the fact, that the whole capital stock had not been *326taken. Hager vs. Cleveland & Bassett, 36 Md., 416. There must, however, be some act or acts, or participation on his part, upon the faith of which debts were contracted, to estop him from setting up such a defence. The facts set forth in the plaintiffs’ first prayer were sufficient in our opinion, if found by the jury, to render the defendant liable as a stockholder, and there is evidence in the record legally sufficient to submit the finding of such facts to the jury.
From what we have said, it follows that the defendant’s first prayer ought to have been granted. As to the second prayer, the defendant ought not .to complain that it was refused by the Court. It must have been presented in the alternative of the refusal by the Court to grant his first prayer. There is not a particle of evidence to prove that he ever participated in the affairs of the cornpany upon the basis of his responsibility for fifteen shares, and he was certainly conceding to the plaintiffs more than they were entitled to ask.
The third prayer was properly refused. The suit was brought upon a bond issued by the company, for a debt incurred by the directors, and this bond was not barred by the Statute of Limitations. Whether limitations would have been a bar to an action brought by the company to enforce the payment of the defendant’s subscription, three years having elapsed from the time such subscription had be.en made, is a question not presented by the pleadings in this. case.
We find no error in the refusal to grant the fourth prayer. There is no evidence to show, that the plaintiffs ever,accepted the bond upon which the suit was brought in payment of the debt due to them by the company.
'. The demurrer to the. defendant’s plea in abatement was properly sustained. The fact that another creditor had filed a bill in Equity in behalf of himself and other creditors who might come in and contribute to the expenses of *327the suit, in no manner affected the right of these plaintiffs to sue the defendant in an action at law for a debt due to them by the company.
(Decided 15th January, 1875.)
We concur with the Court in its ruling under the first bill of exceptions. The bond sued on was signed by the president, secretary and treasurer of the company, and it was admissible in evidence for the purpose of proving an acknowledgment on the part of the company of an indebtness to the appellees, and the minutes of the proceedings of the stockholders were admissible to prove the circumstances under which the bond was issued.
Judgment reversed, and new trial aioarded.