Court Opinion

ID: 5436635
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:55:21.940225+00
Date Added: 2024-06-11T08:31:51.757706
License: Public Domain

Crockett, J., dissenting:
I dissent from the opinion of my associates on the important question involved in this case. The order granting • a rehearing confined the argument of counsel to the questions relating to the liability of the defendants as stockholders in a mining corporation, under section sixteen of the Act concerning mining corporations, as amended in 1863. (Stats. 1863, p. 736.)
The question to be considered is one of great practical importance in this State, and is accurately stated in brief of defendant’s counsel, as follows:
“Can a creditor of a mining corporation recover from any individual shareholder the proportion due from the latter of the aggregate debts and liabilities of the corporation, or so much thereof, as will satisfy the creditor’s debt? or is the recovery to be limited to the proportionate share of the. debt sued for due from the stockholder ?”
The solution of this question will depend upon the proper construction of section thirty-two of the general Incorporation Act as amended in 1863, (Stats. 1863, p. 766,) and the sixteenth section of the Act concerning mining corporations, as amended in 1863. (Stats. 1863, p. 736.) Both these amendments were passed and took effect on the same day, and must be construed together, so as to harmonize their *180provisions if practicable. Section thirty-two is in the following words:
“Bach stockholder of any corporation shall be severally, individually, and personally liable for such proportion of all its debts and liabilities as the amount of stock owned by him in such corporation bears to the whole of the capital stock of the corporation, for the recovery of which, joint or several actions may be instituted and prosecuted; and in any such action against any of the stockholders of a corporation, the Court shall ascertain and determine the proportion of the debt which is the subject of the suit for which each of the stockholders who are defendants in the action are severally liable, and judgment shall be given severally in conformity therewith. If any stockholder in a corporation shall pay his proportion of any debt due by such corporation, he shall be released and discharged from any further individual or personal liability for such debt.”
Section sixteen is as follows: “ Bach stockholder shall be individually and personally liable for his proportion of all the debts and liabilities of the company contracted or incurred during the time that he was a stockholder, for the recovery of which joint or several actions may be instituted and prosecuted. In any such actions, whether joint or several, it shall be competent for the defendant or defendants, or any or either of them, on the trial of the same, to offer evidence of the payment by him, or them, or any or either of them, of any debts or liabilities of such corporations, and upon proof of such payment, the same shall be taken into account and credited to the party or parties making such payment, and judgment shall not be rendered against the party or parties defendant proving such payment for a sum exceeding the amount of his or their proportion of the debts and liabilities of such incorporation after deducting therefrom the sums proven to have been paid by him, them, or any or either of them, on account thereof.”
*181If the question rested for its solution on section thirty-two alone, it would present but little difficulty. That section requires the Court to “ ascertain and determine the proportion of the debt, which is the subject of the suit for which each of the stockholders, who are defendants in the action, are severally liable, and judgment should be given severally in conformity therewith.” It follows, as a necessary implication from this language, that each stockholder shall be liable only for his proportion “ of the debt, which is the subject of the suit,” and not for the whole debt. The remainder of the section renders it still more clear: “ If any stockholder in a corporation shall pay his proportion of any debt due by such corporation, he shall be released and discharged from any further individual or personal liability for such debt.” It is plain from these provisions that each stockholder is liable only for his proportion of each debt, and not for the whole debt.
It will be borne in mind that this section is a part of the general Act, applicable to all corporations, except mining and other corporations organized under the Act of 1853; whereas, section sixteen, already quoted, is a portion of the Act relating especially to mining and certain other specified corporations. It is insisted by counsel that the Legislature, in enacting the sixteenth section, intended to establish a system of liability in respect to stockholders in these particular corporations different from that which applies to stockholders in corporations generally; and that the liability of a stockholder in a mining corporation is to be governed exclusively by that section. Whilst there is much force in this suggestion, it is a well established rule in construing statutes that the Court will look into cotemporaneous legislation on the same or kindred subjects, in order the better to comprehend the meaning of doubtful clauses in the particular statute under discussion. But if the question we are considering be tested by the sixteenth section alone, it is by no means free from doubt. This section manifestly authorizes a stockholder in a mining corporation to elect to which *182of the creditors of the corporation he will pay the whole or any part of the amount of his proportion of the aggregate corporate debts. It expressly provides that on the trial, “ upon the proof of such payment, the same shall be taken into account and credited to the party or parties making such payment, and judgment shall not be rendered against the party or parties defendant proving such payment for a sum exceeding his or their proportion of the debts and liabilities of such incorporation, after deducting therefrom the sums proven to have been paid by him, them, or any or either of them, on account thereof.”
The majority of the Court holds that the right which this section confers upon the stockholder, to elect to which of the creditors he will pay the whole or any part of his proportion of the aggregate debt of the corporation, necessarily implies that each creditor has a correlative right to collect his entire debt from any one of the stockholders whose proportion of liability for the entire debts of the corporation is equal to the sum due to that particular creditor. If the creditor has this right, it is only by implication, for it is not expressly given; and inasmuch as it is a right which does not appertain to creditors of corporations generally, it is for those who maintain the proposition to establish that in this particular class of corporations the creditor has a different and more plenary remedy 'against the stockholder than is provided for creditors of corporations generally. I do not perceive that there is any necessary or even reasonable connection between the two propositions, or that one is the correlate of the other. Bor reasons satisfactory to the Legislature, it has seen fit to authorize a stockholder of mining, ■or certain other specified corporations to elect to which one of the creditors he will pay his proportion of the corporate indebtedness. It is not for us to attempt to explain or justify the motives or policy which led to this enactment. It is enough for our purpose that “ita est scripta lex.”
It does not follow, however, as a logical or reasonable sequence, in the absence of any provision to that effect, that *183a creditor may, by compulsory process, appropriate the whole, or as much as is necessary, of the entire liability of a stockholder for the aggregate corporate debts to the payment of his own debt, to the exclusion of other creditors. The sixteenth section does not admit of such an interpretation. To so construe it would lead to perplexing and embarrassing results. The creditor who obtained the first judgment might appropriate to his own debt the entire liability of the only solvent stockholders, to the exclusion of all other creditors; and creditors whose demands were not due would be wholly powerless, whilst other creditors were appropriating the entire proceeds of the liabilities of the only solvent stockholders. This appears to me to be a perversion of the whole theory of our legislation on this subject, and is a proposition which ought not to be established by the Courts by mere implication, nor without an explicit declaration of the legislative will to that effect.
The genera] policy of our legislation on this subject, has been to secure to each creditor of the corporation his proportionate part of whatever was due from each stockholder on account of his liability for the entire corporate indebtedness. The sixteenth section, it is true, departs from this policy, in so far as it permits a stockholder to pay to any one or more creditors the whole or any part of the sum due from such stockholders; but this is a personal privilege accorded to the stockholder, for reasons satisfactory to the Legislature, and with which we have no concern. I am unwilling, however, by mere implication to establish the proposition that any creditor, by compulsory process, may compel the application to his own debt of the entire sum due from one or more stockholders, on account of the corporate indebtedness, whilst there are other debts of the corporation unpaid. I am unable to perceive any valid reason for such a discrimination in favor of mining, and a few other specific corporations; and in the absence of legislation to that effect, it should not be established by mere implication.
In my opinion, the judgment should be reversed.