Court Opinion

ID: 7101154
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:15:53.429247+00
Date Added: 2024-06-11T16:13:06.043756
License: Public Domain

OPINION UPON REHEARING.
Beck, J.
Upon a rehearing allowed upon plaintiff’s petition, this cause has again been argued and submitted. Upon a patient and careful reconsideration of the question involved in the ease, we remain well satisfied with the conclusion announced in the former opinion. We will briefly state certain considerations, not presented in that opinion, which, to our minds, conclusively establish the correctness of our decision.
3. COBPOBAtion: action lioflefonacl anee due’on" rigMofaotion accrues. It will be observed that the answer assailed by the demurrer alleges that the railroad company “became totally insolvent and ceased to do business in May, 1875, and ' .ill ]ias done no business, and has not exercised nor use<^ franchise, since that date, and had not then or since any corporate property which could be reached or levied on for the payment of its debts.” This is a broad allegation, to the effect that an execution could not have reached property owned by the corporation, for it had none, and that no process or judgment of a court would have resulted in the collection of a claim against it. The record shows that this action was commenced April 11, 1881.
The Code contains the following provisions:
“’Section 1082. Neither anything in this chapter contained, nor any provisions of the articles of incorporation, shall exempt the stockholders from individual liability to the amount of the unpaid installments on the stock owned by them, or transferred by them for the purpose of defrauding creditors; and execution against the company may to that extent be levied upon the private property of any such individual.
*451“Section 1083. In none of the cases contemplated in this chapter can the private property of the stockholders be levied upon for the payment of corporate debts, while corporate property can be found with which to satisfy the same; but it will be sufficient proof that no property can be found if an execution has issued on a judgment against the corporation, and a demand has been thereon made of some one of the last acting officers of the body for property on which to levy, and he neglects to point out any such property.
“Section 1084. Before any stockholder can be charged with the payment of a judgment rendered for a corporate debt, an action shall be brought against him, in any stage of which he may point out corporate property subject to levy; and, upon his satisfying the court of the existence of such property, by affidavit or otherwise, the cause may be continued, or execution against him stayed, until the property can be levied upon and sold, and the court may subsequently render judgment for any balance which there may be after disposing of the corporate property; but, if a demand of property has been made, as contemplated in the preceding section, the costs of said action shall in any event be paid by the company or the defendant therein, but he shall not be permitted to controvert the validity of the judgment rendered against the corporation, unless it was rendered through fraud and collusion.”
What, under these provisions, fixes the liability of a stockholder? (1) The non-payment of stock subscribed by the stockholder; (2) The inability of the creditor to collect his claim from property owned by the corporation, or, more properly, the fact that the corporation has no property from which the claim may be collected. There is no dispute as to the first of these conditions, and, as to the second, there can be no dispute as to the fact; for the answer, which is admitted by the demurrer, alleges that the railroad company has had no property since 1875. Now, it cannot be doubted that, upon the meeting of these two conditions, the creditor has a right to proceed against the stockholder. Wiry has he such rights? *452Because he has a claim originally against the railroad company, which the law declares is enforceable against the stockholder, who is liable therefor. When did plaintiff’s cause of action accrue? Clearly, when his claim became the ground of proceedings against the stockholder; that is, a claim against him. At that time the plaintiff could have brought suit to enforce his claim against defendant. But plaintiff insists that a judgment against defendant could not have been recovered until an action was prosecuted against the corporation, and judgment recovered. Let that be admitted for the sake of the argument. It does not follow that the action is not barred.
The judgment against the corporation does not pertain to plaintiff’s right of action, but to the evidence required in order to establish it. The right of action arose upon the meeting of the conditions first specified. The measure of recovery is to be determined in an action against the corporation, which is simply a proceeding to provide evidence in the action to be brought by plaintiff. The action and judgment against the corporation are simply matters of preparation for the trial of the action against the stockholder. Delay in such preparation does not affect the right of action, and such preparation, when completed, does not create it. It is like the taking of evidence preparatory to trial. It could not be said that a plaintiff had no cause of action until he had secured and prepared his evidence.
The statute, Code, section 2529, limits actions within the prescribed time after “their causes accrue,” not after a time when the plaintiff has prepared his proof, and is thereby able to recover judgment. We adhere to the conclusion announced in the foregoing opinion.