Court Opinion

ID: 6413068
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:54:08.155343+00
Date Added: 2024-06-11T15:51:26.277443
License: Public Domain

Bigelow, C. J.
This demurrer is well taken and must be sustained. The corporation named in the bill was, by the act creating'it, made subject to the provisions of Rev. Sts. c. 38, relating to manufacturing corporations. By § 32 of that chapter, it was competent for any member of a manufacturing corporation, who had voluntarily paid a debt of the company, to maintain a bill in equity for contribution against the other stockholders who were jointly and severally liable with him for its payment. But this provision is repealed by the General Statutes ; and the only remedy expressly given to a stockholder who *500makes such payment is by an action of contract against the company, under c. 60, § 35. This change in the statutes was probably occasioned by the alteration made by St. 1851, c. 315, in the mode in which creditors can seek their remedy against stockholders of a manufacturing corporation who are liable for the payment of its debts. Under the provisions of the Revised Statutes, the property of a stockholder was directly liable to any creditor, who might seize it on execution without previous demand on the corporation or its officers, or any attempt to levy it on the corporate property. The liability of the stockholder was direct and immediate to the creditor of the corporation. But this remedy was essentially modified by St. 1851, c. 315, the provisions of which act are embodied in Gen. Sts. c. 60, §§ 33-34. The creditor cannot now levy his execution immediately on the property of the stockholder. He must first demand payment of the corporation, and if he fails to obtain satisfaction of the execution, he must then levy it on the property of the officers of the corporation. It is only upon failure to satisfy the execution from their property that the judgment creditor can resort to the person or property of the stockholders. Denny v. Richardson, 4 Gray, 274. Under these provisions, a stockholder, instead of being subjected to a primary and immediate liability to a judgment creditor, as under the Revised Statutes, is only contingently and secondarily liable.
It appears to us that it would essentially contravene these provisions and defeat the manifest policy of the law, as declared and established by them, to permit a stockholder to enforce a contribution against other members of a company for money voluntarily paid by him in discharge of a corporate debt, in cases where no previous demand had been made on the corporation, and it did not appear that there was no property of the officers from which satisfaction of the debt could be obtained. The statute liability of stockholders ought not to be extended by implication beyond the limit fixed by the legislature. Such would be the effect of holding that a voluntary payment of a corporate debt by a stockholder would give him an immediate right to a contribution. It would not only enable him to *501convert a contingent and incidental liability on the part of his associates to the creditors of the corporation into a direct, immediate and absolute one to himself, but it would enlarge the liability of stockholders, by conferring a right to enforce contribution for the payment of corporate debts in cases where there had been no failure or omission by the corporation or its officers to pay them on due process of law. If the voluntary payment of a debt is of itself sufficient to support a claim for contribution, it is obvious that a stockholder may compel his fellow-members to contribute to the payment of debts of the corporation for which he might never be held liable, and which would never be enforced against them. The right to enforce a contribution should be limited to cases where debts have been paid in pursuance of the statute liability, or where it is shown that a judgment and execution against the corporation and its officers would be ineffectual to obtain payment. It cannot be justly said that any claim for contribution exists, unless a debt has been paid under circumstances, which would render all the stockholders equally liable for the debts of the corporation. We do not mean to be understood as saying that a judgment and execution against a corporation, and an inability to obtain satisfaction of it out of corporate property or from the officers are essential prerequisites, in order to establish a right to contribution in behalf of a stockholder who has voluntarily paid a debt of the corporation. It is sufficient for the decision of the present case to determine that it must appear that a demand on the corporation for the payment of the debt would have been unavailing, and that no property of an officer could be found on which to levy an execution, if one had been obtained. There is no allegation in the bill that any demand was ever made on the corporation for the debt which the plaintiff has paid, or that the officers have no property which could be taken on an execution to satisfy it, if judgment had been rendered for the amount against the corporation.

Demurrer sustained