Court Opinion

ID: 4930766
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:07:16.326931+00
Date Added: 2024-06-11T08:14:28.038282
License: Public Domain

The opinion of the Court was drawn up by
Kent, J.
This action was not commenced within six months after judgment against the corporation. The first objection made by the defendant rests upon this fact. He contends that the suit - was barred by limitation when it was commenced.
We understand, from the case, that, for the purposes of determining this point, it is assumed that the corporation is one within § 18 of c. 76 of R. S. of 1841; that the plaintiff recovered judgment against the corporation in May, 1851; that he placed an execution in an officer’s hands,. who made a return that he could not find corporate estate, and afterwards returned that he gave the notice to the defendant as required by statute; that this action was commenced in less than a month after the action and return of the officer, but more than six months after the recovery of the judgment, in pursuance of the provisions of § 20. In § 18, is found the provision, which renders the property of a stockholder liable to be taken on an execution against the corporation for the debts of the corporation contracted during his ownership of such stock. This is the general liability. There is in the section a limitation in these words;; — “and such liability shall continue, notwithstanding any subsequent transfer of such stock, for the term of one year after the record of the transfer thereof, on the books of the corporation, and for the term of six months after judgment recovered against such corporation in any suit commenced within the year aforesaid.”
*539The defendant contends that this is a limitation of six months applicable to all cases where a levy may be made; and that the same limitation is extended to the provisions in § 20, for an action on the case. The plaintiff insists that the provision applies only to a case where a stockholder has transferred his stock, leaving all other cases to the general law of limitations.
The intention of the Legislature in inserting this parenthetical limitation is obvious, when we look to the history of the Acts in relation to the liability of stockholders.
As early as the year 1808, the Legislature of our parent State passed an Act, authorizing a levy of an execution against a corporation, on the body or property of a member, without limit as to amount or time, in case of deficiency of attachable estate of the company. It was decided that, under that statute, the person must be a member of the corporation at the time of the levy. Leland v. Marsh, 16 Mass., 389; Marcy v. Clark, 17 Mass., 330.
The practical difficulty, that was soon made apparent, was, that stockholders of ability, when they found the corporation in danger of bankruptcy, divested themselves of their membership by transfer of their stock, before an execution could be obtained. This led to subsequent statutes by which this liability for debts contracted during the ownership of the stock, was continued for a term beyond the time of the transfer. In fixing a specific time, however, it was seen that the year named might expire after the failure of a corporation before a judgment could be obtained, and, therefore, the liability was continued, in case a suit was commenced within the year after a recorded transfer, until judgment was obtained, and for six months after such judgment, to give the creditor reasonable time to levy his execution.
But this provision has no reference to the case of stockholders who have never parted with their stock. It is impossible to give the construction contended for by defendant, if we give any effect to the words, “ in any suit commenced within the year aforesaid.” These words refer to the *540transfer of the stock, and would be senseless if applied to a case of a stockholder who has never parted with his stock. No judgment answering to the description of a judgment recovered against a corporation, on a suit commenced within a year from the transfer of his stock, could be obtained against a man who had never transferred his stock.
The argument drawn from the provisions of the law of 1844, in relation to manufacturing corporations, cannot control the plain provisions of the statute. Indeed, we do not understand that the Legislature intended in that Act to change at all the provisions and limitations of § 18. The same limitation applies as to cases of the transfer of stock under the law of 1844, as under the laws of 1841, but it is not changed or extended to embrace stockholders who have not transferred their stock. In this respect, we see no difference in the two statutes. We may also say, that, in our judgment, it would be a very unsafe rule of construction, to take the inferences drawn from the w.ords of a statute of a subsequent Legislature, to determine the intention and meaning of the law of a former year. We must take the law as we find it, and construe it according to its plain import. We cannot go beyond this, and base our decision upon arguments drawn from expediency, or from what we might deem inconveniences or even hardships.'
We do not see how the limitation of six months, in § 18, can be applied to § 20. But, even if the same limitation is to be applied to the bringing of an action under § 20, as to the levy of an execution under § 18, the limitation of six months can only be applied in favor of a stockholder who has transferred his stock.
The defendant contends that the preliminary steps, required before a right to commence an action occurs, have not been taken. He contends that no such action can be sustained until a distinct notice has been given of an intention to commence a suit at law.
The right of action, by suit, is given in § 20, “ after demand and notice as mentioned in § 19.” By the latter sec*541tion,. it is provided, that the officer shall give the stockholder notice of his intention to levy the execution on his property, and the amount of the debt or deficiency. This appears to have been done in the present, case. The defendant, however, insists that the creditor, or officer, should give a further and distinct notice of an intention to commence an action, before he can legally institute a suit at law.
The statute does not, in terms, require this. The Legislature probably thought that a notice of an intent to levy, unless sufficient property was disclosed and shown to the officer, was a distinct intimation to the stockholder that the creditor intended to enforce his judgment on him, if he did not prevent it by showing property of the company.
As a general rule, when a right of action is given by statute, no prior notice of an intention to commence such suit is necessary, unless distinctly required by the Act. When a notice is required by statute, that which is specifically set out is to.be given. The Court cannot add to or diminish the nature or extent of the notice. In this case, all that the statute requires has been done, and that is sufficient.
An additional count was filed by permission of the presiding Judge, subject to the opinion of the whole Court.
The objection, made by the defendant, that this new count places the action on the 30th section of chapter 76, instead of sections 18 and 20, does not appear to be well founded in fact. The new count, as well as the old, alleges that the corporation was created after Feb. 16, 1836. We do not see that the new count changes the nature of the action, or affects the question of limitation, or any other question in the case. It was properly allowed.
Certain alleged facts in relation to the proceedings of prior creditors of this corporation, as set forth in the 6th, 7th, and 8th specifications, have been referred to the Court, to determine whether, if those facts are fully proved, they will constitute a good defence to the action, in whole or in part.
This Court has decided, in the case of Cole v. Butler, 48 Maine, 401, that the creditor who first moves in conformity *542to law acquires a priority of right, which cannot be defeated by the stockholder or other creditors who may first obtain judgment and execution.
The intention of the statute is, that a stockholder shall be held to pay the amount of his stock, but shall not be held beyond that amount, or be subject to pay more, after he has paid bona fide that sum to a creditor of the corporation, who has acquired a right to it.
We do not think it is enough for a stockholder, when he is sued, to show that other creditors had moved against him before the plaintiff in that suit, and others had laid the foundation for his liability to them. Those claims may never be .prosecuted to final judgment. Nor is it enough to show that suits have been instituted and are pending on such prior claims; for those suits may not be sustained or may be abandoned. The liability must be legally established and fixed to an amount which exhausts it, and this must be bona fide, and not colorable or fraudulent.
The fund belongs to the first creditors who establish their right to it by proceedings which terminate in fixing the liability. We do not say that a stockholder may not pay to the first or a prior creditor the amount of his stock, if he can show that the proceedings had fixed his liability, and the amount was sufficient to absorb the fund, and the payment was made in good faith, to avoid useless costs.
It may be necessary to continue actions, to await the result of other cases, which may or • may not establish prior rights; and it is a duty of the stockholder to see that no unnecessary delay is allowed in bringing such cases to final judgment, if he would avail himself of such proceedings in defence. '
According to agreement of the parties, the case must stand for trial.
Tenney, G. J., and Rice, Appleton, Goodenow, and Davis, JJ., concurred.