Court Opinion

ID: 5465171
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:48:24.114474+00
Date Added: 2024-06-11T08:33:04.434055
License: Public Domain

By the Court, Bronson, Ch. J.
We are referred to Williams v. Hance, (7 Paige, 581,) as an authority .to prove the bill void *122for usury. But in that case one half of the expenses of the creditor’s journey were included in the mortgage, when the journey had not been made at the request of the debtor, nor upon any promise to pay the expenses; while here the journey Was made at the request of the company, and upon its express undertaking to pay the expenses. The $7,50 might have been recov ered from the company although no arrangement in relation to the original debt had been made. It was so much money paid, laid out and expended for the company upon request; and was as much a debt as was the original demand. There was no usury.
Shepard paid the plaintiffs and took up the bill as endorser. Clearly that did not extinguish the bill as against thé drawers, or against Gilbert, who was a prior endorser. Shepard might have sued either of those parties on the bill. But as a judgment had already been recovered against the company on the bill, Shepard took an assignment of the judgment, with authority to use the names of the plaintiffs for his own benefit. There was nothing objectionable in the transaction. It was a sale, and not a satisfaction of the judgment; and I see no reason why Shepard, or Storm, the last assignee, should not be allowed to use the plaintiffs’ names, with their consent, for enforcing payment,. either against the company or the stockholders.
Those stockholders only are liable who were such at the time the debt was contracted. (Moss v. Oakley, 2 Hill, 265.) In this case the original debt was contracted on the 22d of January, 1839, when the provisions were sold to- the company; and it does not expressly appear that the defendant was a stockholder until the making of his proxy, which was six days after the sale. But it will be seen from the charter that the annual election for directors of the company is held on the first Monday of February ; and that the stockholders can only vote upon shares which they have held for thirty days preceding the election. (Stat. 1837, p. 445, § 3.) The power which the defendant gave to Hansom to vote on his stock at the February election, afforded presumptive evidence that the defendant had either then held the stock for thirty days, or that he would have held it for that period by the time the day for the election arrived. It is not to *123be presumed that the defendant intended to do a wrong to the other stockholders, by voting when he had no right to do so. And if we go back thirty days from the time of the election, it will carry us to a date anterior to the contracting of this debt. The plaintiffs made out a prima facie case for charging the defendant as a stockholder, and the motion for a nonsuit upon that point was properly overruled.
The charter makes the stockholders “ jointly and severally, personally liable for the payment of all debts or demands contracted by the said corporation.” (§ 9.) But they cannot be sued until a judgment has been recovered against the corporation, and an execution has been returned unsatisfied. (§ 10.) As between themselves, we have regarded the stockholders as standing in the character of partners. (Moss v. Oakley, 2 Hill, 265; Bailey v. Bancker, 3 id. 188.) But in reference to creditors, they have been spoken of as guarantors or sureties of the company. (Moss v. McCullough, 5 Hill, 131.) If they are to be regarded in all respects as suretiesthen it is quite clear that the defendant has been discharged by the acts of the plaintiffs, who have twice given time to the company without his consent. But I think the stockholders in their individual, as well as their corporate capacity, are principal debtors. Although they have been incorporated with many of the privileges usually granted to men associated in that form, yet the privilege of. exemption from personal liability for the debts of the company has been denied to them, and their personal liability has been expressly declared. They are thus placed, in relation to the creditors of the company, upon the same footing as though they were an unincorporated association, or partnership'. That is the view which was taken of the question under a charter of the same nature in Allen v. Sewall, (2 Wend. 327,) and although that judgment was reversed, (6 id. 335,) yet upon this point the members of the court of errors who delivered opinions agreed, substantially, in the doctrine which had been laid down by this court. And in Moss v. Oakley we considered the stockholders liable in the same manner as though they had gone on with the business *124as ¡an unincorporated' association, which is nothing but-a partnership. And this doctrine was practically applied- in Bailey v. Bancker, where we. held that one. member of the .association or partnership could¡not sue another for. a debt, due from the company. I consider the legislature as. saying. to.- those' who applied for the. charter, “ you may. have a corporate, capacity for the convenience of transacting business,- and the. facility of: transferring .your respective interests.in- the ..joint concern; but you,¡shall remain-liable to the creditors, of. the... association, in-the same manner, substantially,, as though you, had not,been incorporated.” In, one respect - the,, burden. was., made. more onerous.-than it would .have been in.going on without a charter; for¡the copartners.are severally,, as;well -as jointly, liable. But that-does, not affect the principle. No.r is it-affected by another provision, which lightens the.burden, by saving the stockholders from an action until the creditor has., attempted to-collect the money from the. corporation. by proceeding, to a judgment and execution. The stockholders are debtors from the beginning, although the creditor has no remedy against them until-be has first tried to collect from the company. This. is ,no more than .applying.an equitable principle, which-requires. that the.debts.should b,e-paid-from the joint funds of, the - associates, rather than from the separate property of any one of-them. I think the defendant was.answerable to- the. plaintiffs, as a principal debtor; and consequently that he, was. notdischargedhy giving time to the company.
As the defendant-is not to.be regarded as, a surety, itfollowsthat-the-offer to. .prove-that the; debt ¡might have been collected' from- the- company.- was- properly overruled. Indeed, if the. defendant- had be,en strictly a surety, the offer amounted to nothing, without coupling with it an offer to show that, the plaintiffs had been requested to proceed' against the company. '
In Pierce v. Kearney, (5 Hill, 82.). Gilbert, a stockholder, was called- by ¡the -plaintiff -in a suit against another stockholder;. and we held him incompetent: on the authority of Marquand v. Webb, (16 John. 89.) Gilbert has now been called by. the. defendant, and been rejected, as also incompetent-on that side. *125It is hardly possible that "both of-these decisions should be right But ! am glad to find that- it is not'now; necessary to enter upon the discussion- of this vexed question. Gilbert was called for the sole purpose of showing by him that the value of certain lead ought to be applied in part satisfaction of this debt; and if he was improperly rejected, the error was subsequently cured by allowing the lead in part payment of the debt.
New trial denied.