Court Opinion

ID: 7891041
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:49:01.0638+00
Date Added: 2024-06-11T16:31:54.870707
License: Public Domain

The opinion of the court was delivered by
Smith, J. :
It is claimed that the evidence does not support the judgment. There were no conclusions of fact made by the trial court. The principal ground of error assigned is that service of summons on W. O. Van Arsdale, the president of the Bank of Burrton, conferred no j urisdiction on the court to render a j udgment against the bank at the suit of the defendant in error to recover upon the defaulted certificates of deposit. This contention is based upon the claim that W. O. Van Arsdale was the agent of Rudolph Pfeiffer, the plaintiff below, and was ‘‘ vitally interested in the recovery of the judgment.” We cannot say that the evidence does not support the conclusion of the trial court.
J. H. Van Arsdale was not a stockholder in the bank, and never had been, and his only connection therewith was that of an indorser on the certificates of deposit. When his land in Illinois was attached to enforce payment from him of these certificates, it *417was but natural that he should make prominent the fact of his secondary liability and his status as a surety, and that he should at once endeavor to induce the holder of the certificates to exhaust his remedy against the bank and its stockholders before compelling him as indorser' to pay the amount. There was an obligation, both legal and moral, resting upon the bank and its stockholders to pay these debts, and not permit the surety, who was a mere accommodation indorser, to suffer. The bond of indemnity made on the 25th day of January, 1895, set out in the statement of this case, shows no unnatural course taken on the part of J. H. Van Arsdale, but an act to which any surety would have had a right to resort. The Van Arsdales suggested to Pfeiffer the names of attorneys to be employed in the cause, and they were retained. We cannot see that W. O. Van Arsdale was so far the agent of Rudolph Pfeiffer, the plaintiff below, in the prosecution of the suit as to render service upon the former as president of the bank void or even voidable.
The debt was a just one. Its consideration seems not to have been attacked seriously. The proceeds of the money obtained from Gardner T. Barker through Henry P. Ayers, his agent, went to pay off an indebtedness due from the bank to relatives of the plaintiff in error, Thompson ; and the judgment against the bank, obtained on June 3, 1895, for $13,659, was for renewals of the certificates originally given when the money was borrowed by the bank from Barker for that purpose. There is no suggestion of fraud or lack of consideration in the origin of the indebtedness. It was recognized as valid by everybody connected with the bank. The fact that W. O. Van Arsdale advanced money to pay costs and expenses of Pfeiffer’s suit out *418of funds belonging to the bank, charging the amount to Henry P. Ayers, did not show that he was the agent for the plaintiff below, Pfeiffer. This money was advanced at the request of his father.
In the case of Bank v. Milling Co., 59 Kan. 654, 54 Pac. 681, one Warkentin was a stockholder in both the Sedgwick Milling and Elevator Company and the Newton Milling and Elevator Company, corporations. The former was indebted to the latter in the sum of $2480, to recover which suit was brought. A judgment was rendered, and an application made for execution against Warkentin for the payment of a balance due upon his stock subscription to the Sedgwick Milling Company and also upon his statutory liability. Thereupon he paid over the amount of his liability as a stockholder to the Newton Milling and Elevator Company. The judgment against the Sedgwick Milling and Elevator Company was based upon service which Warkentin accepted in his capacity as vice-president for that company. He was also general manager of the Newton milling company at the time, and a director in both corporations. In passing upon the validity of the judgment, Chief Justice Poster, said :
“ In view of the fiduciary relationship of Warkentin to the two companies, counsel for plaintiff in error cites the familiar doctrine that officers common to two corporations may not act in the interests' of one as against the other. This doctrine has no applicability. Warkentin did nothing for his own company to the prejudice of the other. What he did was to the prejudice of some of the creditors of the Sedgwick company, but not to the prejudice of the company itself. He simply used his position as an officer of that company to secure an advantage to another company of which he was also an officer ; not as against the one company, but' as against some of its creditors. It could *419not be material to the Sedgwick company that Warkentin paid the amount of his liability as a stockholder to one creditor or another. He, as a debtor, chose to pay one as against others, and to that end used his power as an officer.”
In the case at bar we can find no fraud in the acts of W. O. Van Arsdale connected with the rendition of the judgment of Pfeiffer, executor, against the Bank of Burrton. Whatever W. O. Van Arsdale did, showing any interest, was chiefly as the representative of his father. But we cannot say that J. H. Van Arsdale was the agent of Pfeiffer. He was interested of course in protecting himself from liability as a surety, but we cannot conclude from the evidence, in opposition to the general finding made by the court below, that either he or his son was the agent of the defendant in error. It is only in cases where the officer of the corporation upon whom service is had is pecuniarily interested in the claim sued on, or when he acts as agent or attorney in fact for the person suing, that service upon the officer is adjudged to be void. The trial judge, who heard all the evidence, found that W. O. Van Arsdale did not, as charged, assume a questionable position in his relation to the suit; and while some of his acts might savor of hostility to the company whose chief office he held, and his zeal to promote his father’s interests might have impelled him to unusual activity in carrying out his wish that Thompson might be forced, as a stockholder, to pay, yet all inferences being in favor of the judgment below, to disturb it would be violative of a well-established rule forbidding this court to review disputed, questions of fact.
In the case of George v. American Ginning Co., 46 S. C. 1, 24 S. E. 41, cited by plaintiff in error, it dis*420tinctly appeared that one Brown was acting as attorney in fact for the plaintiff in the suit, and had summons served on himself as treasurer of the corporation. The court said that Brown was pro hac vice the plaintiff. He commenced the action under a power of attorney from George, being fully authorized to prosecute an action and attach the property of the defendant. Also in Buck v. Manufacturing Co., 4 Allen, 357, Buck was plaintiff in the 'action and caused a summons to be served on himself as president of the corporation. The judgment founded thereon was held void. These authorities are not applicable to the case at bar. Here it was an issue whether the Van Arsdales were agents of the defendant in error, Pfeiffer, and this issue, after the hearing of much evidence, was decided against the plaintiff in error at the trial. If the judgment against the Bank of Burrton was not void for fraud, then it was conclusive against the stockholders. (Ball v. Reese, 58 Kan. 614, 50 Pac. 875.) The plaintiff in error, with great persistence, urges us to review the evidence and to reach a different conclusion from that reached by the district court. In Beaubien v. Hindman, 37 Kan. 227, 15 Pac. 184, it is said:
“ It has always been held by this court that a finding of fact by the court is equivalent to a verdict by a jury; and, further, that this court will not disturb the finding if there is sufficient evidence to justify it; and this is the case, although the finding of the court be contrary to the judgment of the appellate court. (Ruth v. Ford, 9 Kan. 17; Walker v. Eagle Works Manufg. Co., 8 id. 397; K. P. Rly. Co. v. Kunkel, 17 id. 145; Beal v. Codding, 32 id. 107, 4 Pac. 180.) ”
The plaintiff in error insists that the summons in the suit against the Bank of Burrton was void, and that the district court obtained no jurisdiction to ren*421der the judgment, for the reason that the requirements of section 54, chapter 95, General Statutes of 1897, were not observed. This section reads :
“ . . . Where the action is on contract for the recovery of money only, there shall be indorsed on the writ the amount for which, with interest;, judgment will be taken if the defendant fail to answer. If the defendant fail to appear, judgment shall not be rendered for a larger amount and the costs.” (Gen. Stat. 1889, ¶ 4138.)
The amount for which judgment would be taken in case the defendant failed to appear was stated on the face of the summons and at the bottom thereof. The only complaint is that it was not indorsed on the back. The argument against the validity of the process is wholly without merit. The purpose of the statute is to require notice to be given the defendant of the amount for which judgment will be taken if he fail to appear. The -paper served contained this notice. The information as to the amount for which suit was brought was in fact more conspicuous on the face than on the back of the summons, and more likely to be read by the person served. 'A person may be an indorser of a promissory note who signs his name on the face of the paper. (Story, Notes, § 121; Chitty, Bills, 141; Richards v. Warring, 39 Barb. 45; Powell v. Commonwealth, 11 Gratt. 830.)
Again, we can see no merit in the fourth assignment of error, to the effect that no bona fide effort was made by the sheriff while the execution was in his hands to find property of the bank upon which to levy the same. His return is entitled to that credit due to the acts of a sworn officer. The bank was evidently insolvent. It could not pay its debts. The return on the execution, “no property found,” was sufficient under the statute. In Hoyt v. Bunker, 50 Kan. 574, *42232 Pac. 126, it is held that when the record of the judgment against the corporation show's an execution returned nulla bona, indicating that the corporate property has been exhausted, an execution may then be ordered against the stockholders. (Sleeper v. Norris, 59 Kan. 555, 53 Pac. 757.) This question has been passed upon by other states having statutes substantially like ours. In Baines v. Babcock, 95 Cal. 581, 27 Pac. 674, and 30 Pac. 776, it is said :
“The return of the execution issued upon the judgment as unsatisfied is conclusive, in the equitable action against the stockholders, that the creditor has exhausted his legal remedy upon the judgment; and evidence offered by the defendants for the purpose of showing that the corporation was the owner and in the possession of a large amount of property, which might have been levied upon is properly rejected by the trial court.”
Bagley v. Tyler, 43 Mo. App. 195, was a suit against a Missouri stockholder in a Kansas corporation. Speaking of our statute, the court said :
“The words of the statute are, 'if any execution shall have been issued ’ against the corporation and no property found, then the contingency has arisen whereby the stockholder may be charged. It is not, surely, required that the creditor, before resorting to the stockholders’ liability, should take a roving execution and go about the country, wherever the corporation may have had business, and should, too, go into the courts of other states and secure judgment against the corporation, with executions in all, and returns of ‘ no property found.’ The stockholder contracted in view of this law, and he agi’eed that if a judgment should be rendered against the corporation, and an execution returned thereon of 'no property found,’ then he would pay the debt to the extent of this double liability.”
*423In Jones v. Green, 1 Wall. 330, this language is used :
“ The execution shows that the remedy afforded at law has been pursued, and, of course, is the highest evidence of the fact. The return shows whether the remedy has proved effectual or not, and from the embarrassments which would attend any other rule, the return is held conclusive. The court will not entertain inquiries as to the diligence of the officer in endeavoring to find property on which to levy.”
In the absence of fraud on the part of the sheriff, we think that the truth of a return of “no property found” on an execution cannot be contested in an action brought to charge a stockholder of a corporation with the statutory liability.
The contention of plaintiff in error that the plaintiff below was mistaken in his remedy cannot be considered. The position taken is that the corporation having ceased to do business since March, 1893, no judgment after that could be obtained against it, so that the only remedy of a creditor seeking to charge a stockholder was to sue him directly, under section 45, of chapter 66, General Statutes of 1897 (Gen. Stat. 1889, ¶ 1200). The question raised was set at rest by this court in Sleeper v. Norris, 59 Kan. 555, 53 Pac. 757. The precise point was there decided against the position taken by the plaintiff in error.
We have examined into the application of the defendant below for a continuance, and cannot see how he was prejudiced by its refusal.. Pie seems to have been able to get before the court all that was material of tlm records of the bank, and sufficient of W. O. Van Arsdale’s correspondence to show his relations to Pfeiffer and to his father in this matter. Thompson, the plaintiff in error, is in no worse situation than any other stockholder. If he pays more than his' *424share of the debts of the bank, he can compel contribution from his associates.
We think the case was fairly and carefully tried in the court below, and its judgment will be affirmed.