Court Opinion

ID: 7882183
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:34:51.01443+00
Date Added: 2024-06-11T16:31:37.839592
License: Public Domain

By the Court,

Kingman, C. J.
This is an action brought by the plaintiffs against the defendants below, plaintiffs in error here setting forth that these persons were stockholders in “ The Kansas Home Insurance Co.,” and that they were such stockholders when the liability sued for was incurred; that the plaintiffs obtained a judgment against the said company for $1,050.00; that execution was issued therefor and returned no property of the company found, and the plaintiff's asked personal judgment against the defendants for the amount of the judgment obtained by them against the company.
*76The defendants set up for answer four grounds: First, a general denial; second, denying that any such organization existed as a corporation; third, denying that either of the defendants was a stockholder in such corporation; and, fourth, the statute of limitations. The testimony showed that such a company was duly incorporated; that the defendants were stockholders therein; that the company commenced issuing policies of insurance on the 1st of April, 1866, and closed up their business by a general transfer to another party of its books, papei’s, etc., on the 1st day of October, 1865; that noxxe of the defendaxits had ever paid anything oxx their stock, nor had they transferred it or were aware of what bad becoxne of it. The defexxdaxxts were all oxx the stand as witnesses, admitting that they had been stockholders froxn the organization of the corporation till it broke up, but each of them was uxiable to state exactly the amoxxxxt of his stock. Oxie of them had been president. The insuraxxce of Tucker & Bro. was xnade while the company was in existexxce axid doing bxxsiness, axxd this was the only loss of any considerable amount that the company sustained of a pecuxxiaxy character. Their insurance was effected in August, 1865, for one year, and their loss occxxrred in February, 1866. They had sued the compaxiy, recovered judgxnent, and had execution against them on which was a return of “ no goods.”
The maixi propositions involved in this case are, what are the liabilities of the defendants in the case made oxxt ? because oxi the facts shown in evidence, the coxxrt below virtually instructed the jury that as there was no evidence for the defense, the plaintiffs had made out a prima fade case, aixd were entitled to recover if the juxy believed they were stockholders, and directed them if *77they found for the plaintiffs to also, find the amount of stock held by each of the defendants. Section 14 of chapter 31, laws of 1863, p. 58, reads as follows: “ The stockholders of any company organized under this act shall, to the amount of .stock by them held, be jointly and severally liable for all debts or responsibilities of such company.
Stockholder’s Liability. The language used here is very broad, so far o o o as ^pg lja])iiity of the stockholder is involved. Wherever there is a debt, or a responsibility of the corporation, there is also an individual liability of the stockholder therefor to the amount of the stock by him held. A judgment against the corporation is at least a responsibility for which the stockholder may be held answerable. Now how is that liability to be enforced ? The decisions in other states throw no light upon this question, for it is plain from the case of Knolton v. Ackley [8 Gushing, 93] that the statute in that state (Massachusetts) prescribed the remedy in such cases, and very properly held that where a statute confers a right and prescribes a remedy, that remedy, and that only, can be pursued; while in Ohio it appears that the statute only holds the stockholder liable' “for the purpose of securing the creditors of such company,” and it is upon tins phrase that the intimation is given in 17 Ohio, 593, that the action must be in the nature of a bill in equity making all the creditors parties, because it is a fund for the “security” of all alike.
But our statute makes the stockholder primarily liable; all that is necessary in an action is to state the nature of the “ debt or responsibility,” and if the stockholder thinks he ought to have contribution he may bring the other stockholders before the court; but in this case, for aught that appears from the pleadings, the *78defendants are the only stockholders and the plaintiffs the only creditors; and were it otherwise, we cannot perceive that when a right is given jointly and severally against a number of men, that a man may not have his action against any one of them.
Evidence judgment. The next important question is, is a judgment against a corporation prima facie evidence of the claim in an action against a stockholder? This has been decided both ways so often in New York that the law on that point must be considered in a state of delightful uncertainty. In an early case it was held that the defendants were char-gable with the judgment on the principle that the trustees, as the agents of the stockholders, had contracted the debt and fixed the liability, and that the stockholders could impeach the consideration of the indebtedness upon no other ground than that of fraud or error in the litigation; nor could this be done without laying the foundation for it in the pleadings. “ 'We must regard the judgment,” says Chief Justice Spencer, “ as a solemn admission of indebtedness, but it is not binding as a res judicata upon the stockholders if it was procured by fraud or is founded in error.” Slee v. Bloom, 20 Johns., 669. And this, it seems to us, is sound doctrine that can be sustained on principle as well as by authority. A judgment against a corporation is of itself one of the “highest evidences of indebtedness known to the law;” it is a solemn admission of record that the corporation owes the amount for which judgment is rendered, and especially under a statute like ours, that is silent as to suretyship of the stockholder, but does make him liable for the debts of the corporation without prescribing any previous action or steps necessary to fix that liability. We must hold that a judgment is prima facie evidence of *79the fact that the corporation is “responsible” for that amount, and that “responsibility” is all our statute requires to make out a case against the stockholder.
These views, in our judgment, are decisive of the whole case, and include necessarily most of the points made by the learned counsel for the plaintiffs in error. It is claimed, however that the judgment is erroneous in form. The jury found that John Grund held stock in the company to the amount of $1,500, and "William Schroeder to the amount of $1,250, and Jacob Vogel to the amount of $500, and the judgment was against the first two for the amount of the verdict, $1,189.45, and against Vogel for $500. It is possible to construe the judgment by its terms as for a sum larger than the verdict by $500, but taking the recitals in the judgment, we do not think that would be a fair construction, nor that any such strained construction ought to be put upon it.
The judgment included interest on the judgment against the corporation.
If the original judgment was evidence of an ascertained debt or responsibility of the corporation, this was correctly done.
The judgment of the court below must be affirmed.
All the Justices concurring.