Court Opinion

ID: 8315534
Source: CourtListenerOpinion
Date Created: 2022-10-17 20:00:49.219063+00
Date Added: 2024-06-11T16:44:55.406873
License: Public Domain

The CouRT (Ckanch, C. J., contra,) were of opinion that the defendants were personally and individually liable.
CRanch, C. J.
The 1st question is, Has the plaintiff made out a case for equitable relief, either against the joint funds of the association, or against the individual stockholders ?
The plaintiff does not say that he is interested in the notes which he holds, nor that he paid any value for them ; but simply says they regularly came to his possession, and have not been paid. Does this bare possession entitle him to relief in equity ? Would it entitle him to recover at law ? I am inclined to think it would. If he has a legal right to recover judgment at law, and, by reason of the partnership, or of the deed of assignment of the joint funds to the trustees, he cannot obtain the fruit of his judgment, has he a right to resort to a court of equity in the first instance, or should he not proceed to judgment at law ? If it be apparent that he cannot get satisfaction at law, and that he may in equity, I think he may resort to equity first. If it were clear that the plaintiff had a complete remedy at law against the individual members of the association, without regard to the disposition made of the joint funds, I should say he had no remedy in equity. But if there be joint funds, a court of equity would, perhaps, under the circumstances of this case, restrain the plaintiff from proceeding at law against the individual property of the stockholders, until it is ascertained that the joint funds were exhausted. By “ the circumstances of this case ” I mean the declaration by the copartners that the joint funds only should be liable for the joint debts. If that declaration were published, in such a manner as to render it probable that the dealers with the bank, and all who should receive its notes, would have notice of it, I think the stockholders have a right, in equity, to require that the plaintiff should, at least, look to the joint funds first. If such be their rights, and the plaintiff chooses to resort to a court of equity, I think it does not become the defendants to object to his resorting to that forum, in the first instance. There was apparently a trust-fund, of which the plaintiff could not avail himself at law; but in equity he may compel the trustees to execute the trust. This alone would be a good ground to support the jurisdiction of the court of equity.
But is the plaintiff entitled to relief, in equity, against the individual persons and property of the stockholders ?
*190If the court has jurisdiction of the cause on one ground, it must proceed to give the plaintiff all the relief to which he is entitled, although the ultimate relief be such as he might, perhaps, have obtained at law. The plaintiff had a right to call on the trustees to account for the joint funds. They have done so by their reports, which appear to have been received as then answer; and it appears that all the funds have been exhausted by the expenses of the trust.
The question then occurs, Is the plaintiff entitled to a personal decree against the individual stockholders ?
In the ordinary case of a general partnership, he would be. But it is said that the publication of the 15th article of association makes this case an exception to the general rule; and that the publication was made in such a manner that the plaintiff must be presumed to have known the article at the time of his receiving the notes; and, if he did know it, he is bound by it, because it then became part of the agreement between him and the stockholders.
This principle appears to me to be correct; and I think the publication of the articles was such as to raise the presumption that the plaintiff had notice of them when he received the notes, especially as he has produced these articles and made them part of his bill; and that by receiving them with that notice he agreed to look only to the joint funds. The creditors of the bank, by those articles, were not, “ on any pretence whatever, to have recourse against the separate property of any present or future member of the company, or against their persons, further than might be necessary to secure the faithful application of the funds thereof to the purposes; to which,- by those articles, they were liable.” Of what were those funds to consist ? Of the joint stock which was actually raised, and of its profits, and of the debts due to the bank.
What amount of stock was raised ? By the 1st article of the association it is said that “ The' capital stock of said company may consist of one million of dollars, divided into shares of 100 dollars each, to be paid as follows : ten dollars on each share at the time of subscribing; the president and directors may call for ten dollars more upon each share in sixty days thereafter, giving thirty days notice thereof; the remainder at such times and in such sums as the president and directors may order,” upon thirty days’ notice, and not exceeding five dollars at any one time.
By the 13th article, “ If any stockholder should fail to pay up the several instalments on his stock as the same may become due, his dividend upon all such instalments as he shall have previously paid shall cease as to him,” and shall remain to the use *191of the company. And by the 11th article the shares were transferable, and every stockholder, whether by original subscription or transfer, was to be considered a member of the association, and, upon ceasing to be a stockholder, should cease to be a member.
The amount of stock actually called for, including what was paid at the time of subscribing, was $250,000, being $25 on each share. Of that sum $183,550 have been paid either in money, or stock-notes discounted for that purpose ; and there remain due from the stockholders, $68,775. These delinquent stockholders were the debtors of the bank to that extent; and the right of the bank to compel payment was assigned to the trustees with the other effects of the bank.
Are the other stockholders bound to make good this delinquency to the creditors of the bank ? I think not. By the articles of association, it is evident that they did not engage to do more than pay their subscriptions when called for, and to see that the actual and available funds of the bank were faithfully applied. By these articles the plaintiff is bound in consequence of his presumed notice of them, at the time of receiving the notes; and he cannot call upon the stockholders to do more than, by those articles, they engaged to do.
The available funds have all been assigned to the trustees, and they have accounted for them. I am therefore of opinion,
1. That the plaintiff would have a right in equity to proceed against the joint funds, if there were any.
2. That there are no joint funds in the hands of the defendants.
3. That the individual stockholders are not liable beyond their subscriptions.
4. Nor beyond the instalments called for.
5. Nor to make good the delinquencies of the other stockholders.
6. And that the bill ought to be dismissed with costs.
. The bill had been regularly taken for confessed, against such of the defendants as had been served with process to appear, and who had not answered; but no order of publication had been taken against the absent defendants. Some of the original defendants had died, and the proceedings were not revived against their representatives.
On the 5th of December, 1827, the CouRT, (Ceanch, C. J., contrd) made the following decree:
“ This cause coming on to be heard upon the bill, answers, depositions and reports, and the arguments of counsel being heard, it is thereupon considered by the Court, and by the *192authority thereof ordered, adjudged, and decreed, this 5th day of December, a. d. 1827.
That inasmuch as it appears to the Court, from the reports and evidence in the cause, that there are no funds, in the hands of the trustees, Thomas Swann, Edmund J. Lee, and Colin Auld, mentioned in the said bill, arising from the sales made under the former order of the Court in this cause to be paid or distributed to the complainant or other creditors, as to the said defendants, the said trustees, the bill of the complainant should be dismissed, and it is accordingly hereby so decreed.
And it is hereby further ordered and decreed, that the following named defendants, Joseph Mandeville, John Jackson, Daniel Somers, James S. Scott, Alexander Moore, Thomas Semmes, Thomas Mount, Hugh Carolin, James R. Riddle, and Benjamin Baden, pay to the complainant, the sum of $20,000 with interest thereon, from the 1st January, 1818 and costs.
And it appearing to the Court that, of the sum reported to be due to the complainant, the notes of the said Merchants Bank to the extent of $1990 only had been issued during the time the said Carolin continued to be .a member; and $1145 only had been issued during the time the said Benjamin Baden was a member, -the above decree as to them, may be discharged by their respective payments of the said sums of money and costs.
And as to all the other defendants in the said bill of complaint named, it appearing to the Court that they are, either not served with process to appear in said cause, or, where served with process, not charged by any evidence on the part of said complainant, the bill of the complainant is hereby decreed to be dismissed with their costs.”
Upon an appeal to the Supreme Court of the U. S., this decree was reversed, for error in dismissing the bill against the defendants, upon whom process was not served, and also against the defendants, against whom the bill was taken for confessed; and in not requiring the suit to be revived against the personal representatives of those parties who were served with process, and died during the pendency of the said suit, who were known and might have been brought before the Court. 2 Peters, 482.