Court Opinion

ID: 5552148
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:34:06.198738+00
Date Added: 2024-06-11T08:35:10.908649
License: Public Domain

Lumpkin, J.
concurring.
The Court being of one mind, as to the first three grounds of alleged error, I shall address myself to the fourth only— which is, that the presiding Judge held that the plaintiff could recover such proportion of his bills only, as the stock owned by the defendant bears to the whole capital stock of the bank.
Now, the counter proposition to this and that, which I hold to be true, is, that the plaintiff is entitled to recover the whole amount of his bills out of the defendant, provided the number of his shares and the value thereof, estimated at $100 per share, is equal to the amount of the bills sued on. And there being a diversity of. opinion among the members of the Court, upon this point, I shall proceed to state the reasons, as it is made my duty to do, in support of the view which I entertain.
This action is brought on the Xlth section of the charter of the Planter’s & Mechanic’s Bank of Columbus, which is in these words : “ the persons and property of the stockholders shall be pledged and held bound, in proportion to the amount of shares and the value thereof, that each individual or company may hold in said bank, for the ultimate redemption of the bills or notes issued by said bank, in the same manner as in common actions of debt; and no stockholder shall be re*234lievéd' froia such liability, by sale of his stock, until he shall have caused to be given sixty day’s notice, in some public gazette of this State”. (Prince’s Digest, 127.)
The case must be decided, of course, upon the proper construction of this clause in the charter, the phraseology of' which is not so explicit,- perhaps, as it might have been.
The following positions, I believe, are not denied or doubted in any quarter; at least, they are too well established to be successfully controverted:. That under this and similar provisions, in bank and other charters, the liability of the stockholders is several, not joint; that inasmuch as the measure of Jihis statutory liability may be wholly different in each case, depending upon the number of shares held respectively by the stockholders, a joint suit, at Law, would be impracticable, as there could be no joint judgment; that the Act does not intend that the stockholders should be sureties for each other— each being severally responsible for the amount of his own stock, and no further. Some of the stockholders may have removed beyond the jurisdiction of the Court, so as not to be reached by its process, or affected by its judgment: or have-become insolvent;, still, under this section, those who are liable- and solvent, cannot be made to pay more than they otherwise would, on that account. That the remedy provided by the Xlth section of the charter, is not only essentially, but exclusively a Law remedy; the liability, whatever it is, is to be enforced “ in the same manner as in common actions of debt”. That if the redress at Law should prove to be inadequate, from any cause whatever, the Superior Court, sitting in Equity, will take jurisdiction over a bill filed by one or more of the creditors, in behalf of himself and others, against all the stockholders who are solvent and suable, concurrently with a Court of Law, over separate actions, against each of them, upon his sole and separate liability. That in Equity, the rights of all concerned, on both sides, might be considered at once. It might be consideredhow much was due in the whole and to all those who should choose to adopt this remedy; and a decree might go against ••each for his share of the liability; that it is the privilege of *235the bill-holder to elect his foi’um; he may go into Chancery,. but he cannot be compelled to go there; that the Equity jurisdiction in such case, is not derived from the Statute, but is-deducible from the acknowledged powers of a Court of Chancery.
The question then, at issue, is narrowed down to a single-point; in a separate suit at Law, by action of debt, at the instance of a bill-holder against a stockholder, shall the plaintiff be entitled to recover the whole of his bills, if they do not exceed the amount of the defendant’s stock, or shall he recover a ratably portion only; that is, as the stock owned by the defendant bears to the whole capital stock of the bank ?
According to the construction heretofore put by this Court, upon this Act, while it was designed to create a personal liability on the part of the stockholders, it, at the same time, limits that liability. Had the section under which this suit is brought read, “ the persons and property of the stockholders shall be pledged and bound for the ultimate redemption of the bills or notes issued by the bank”, the only construction off such a provision could have been, that the stockholders were liable in their natural capacities, as partners, for the whole amount of the unpaid bills or notes, whatever that amount might be. But the insertion of the intermediate words, that they are to be bound “ in proportion to the amount of shares, and value thereof, held by each”, curtails the general liability, and prescribes, in the first place, not only personal and several liability — but, secondly, so restricts it that no stockholder can be made responsible, in any event, beyond the proportion which the number of shares held by him, bears to the whole number into which the capital stock of 10,000 shares is divided.
If this, then, be the true meaning of this section, and in my judgment it is all that it proposes to effect, it follows, of course, that the creditor, in his action at Law, may recover the whole of his debt, and not a proportion of it only. At any rate, this will be regulated by general principles, uncontrolled by the Statute.
*236The policy of the Legislature in making this provision, which 5s a condition, in most, if not all the charters granted about this time, was to secure a sound currency to the country : and as one. of the means of accomplishing this object, they intended to give to every bill-holder a simple, direct and available remedy at Law, for coercing the stockholders to redeem the circulation of the bank.
Were the words of the Act ambiguous, and its grammatical structure doubtful, such exposition should be given to this section, as would best harmonize with its design. And every fair and reasonable intendment ought to be made, to effectuate the intention of the makers of the law, fro bono publico. (Heyden’s Case, 3 Rep. 7. Plewden’s Commentaries, 1057, b. Rex vs. The Eastern Counties Railway Company, 2 Q. B. Rep. 347. Williams vs. Pritchard, 4 T. R. 2. Lyde vs. Bernard, M. & W. 113. Pierce vs. Hopper, Str. 253. New River Company vs. Graves, 2 Vernon, 431.)
Indeed, these and numerous other authorities, ancient and modern, which might be cited, go quite beyond 9tho foregoing well settled rule of construction, and maintain that the words of a Statute may be construed in a sense different from their ordinary meaning, when the Act is designed to remedy some existing or threatened mischief. But I am not, and never have been, the advocate of an enlarged interpretation of Statutes or Constitutions. In the words of Mr. Justice Coleridge, “ I would never mould the language, in order to meet either an alleged convenience or an alleged equity”; and, I will add, or an alleged public policy. And if I felt that the construction which I am endeavoring to uphold, put any force on the meaning of the Act, I should refuse my concurrence, without the clearest and most indisputable evidence of legislative intent. But when the Xlth section of this charter declares that the stockholders shall be bound in proportion, it does not say, to the number even, but to the amount of shares, and the value thereof, they may severally hold, and that, too, as in common actions of debt, is there any straining of language to insist that they are respectively bound, according to the amount *237or extent of their stock, especially if this construction, while it imposes no additional burden upon the stockholder, will greatly add to the security of the creditors of the banks and other corporations, by making their remedy over more cheap and easy ?
What was the case of Coulter et al. vs. Robertson, (2 Cushman, 278,) that has been commended, so earnestly, to the favorable consideration of this Court ? A trustee of a dissolved bank was appointed by Statute, to sue for and collect money sufficient to pay all the debts of the bank. And what was the result of the judgment of the Mississippi Court, in that case ? Why, that the trustee might select the particular debtors to the corporation, that he would sue first; and that these had to pay, “ to the uttermost farthing,” what they owed the corporation, while all the rest went free — and this among debtors standing as these stockholders do — precisely upon the same footing. Equality of burdens was certainly wholly overlooked or disregarded, in this decision.
But suppose we have been wrong, heretofore, I maintain that the next most consistent and rational construction of which the words of the Act are susceptible, is this: That instead of the aggregate liability of the stockholders being limited to $1,000,000 only, the amount of the capital stock, they are bound for the ultimate redemption of all the unpaid bills issued by the'bank, be it one million or any other sum. And I confess there is much reason in favor of this interpretation of the charter.' It is true that the charter declares, that the stock of the company, shall consist of $1,000,000, tobe divided in shares of $100 each. But the capital is not expressly limited to that sum. It does not even say, as is usual in monied charters, that thé capital shall not exceed or be more than one million. The convenience of the intended stockholders, as well as notice to the public, required that the amount of the company’s funds should be fixed. But in this case, not only is there a departure from the common practice, in this respect, but by another fundamental rule of the corporation, they are -allowed to contract debts by bond, bill, note or other security, *238to three times the amount of the capital stock actually paid in, over and above the amount of specie actually deposited in the vaults of the bank, for safe keeping.
Suppose that instead of $1,000,000, the unpaid circulation, ■upon the failure of the bank, had amounted to $3,000,000, may not the Legislature have intended that' the stockholders •should be personally bound for the eventual payment of the whole of this sum ? The corporation was authorized, under certain circumstances, to create this amount of indebtedness ; and the presumption is, that it was done for the benefit of the corporators. But whether this be so or not, the liability would have been incurred by the duly appointed agents of the company ; and if a total loss ensued, even to the extent of absorbing both profits and capital, ought third persons to suffer ?
If this be the true exposition of this individual liability sec-lion — the clause under consideration means this — that the ■stockholders shall be personally and severally responsible for the ultimate redemption of all the unpaid bills and notes of the bank, be the same more or less, at least up to three millions.
But the question recurs, how liable ? Still, not as unincorporated persons, but in terms of the charter, in proportion to the amount of shares held by each, and the value thereof, viz: if the circulation to be taken up amount to $200,000, and the defendant, Mr. Harris, owns 100 shares, he is liable for $2,000. If the unredeemed circulation be $1,000,000, he is bound for $10.000: if $3,000,000, for $30,000. This construction makes the measure of each stockholder’s interest and right to •dividends, the measure, also, of his responsibility. And thus forecloses the question of contribution, as between' the stockholders, themselves, because no one of them can be compelled, under any circumstances, to pay more than his proportion of the whole debt. And in this way, all real or apparent hardship is avoided.
I concede that the true constructive effect of this clause is not clear, beyond a doubt. And as I grow in years, at least, if not in wisdom, I have learnt to repose less confidence in my own, as well as in the opinion of others, however authorita*239tively expressed. And in this instance, I am not prepared to' say, with certainty, that the latter view taken of this charter, though at variance with the opinion heretofore intimated by this Court, may not be a sound one. Moreover, it has, to my mind, this additional recommendation — that it approximates more nearly to what the law of corporations ought to be, namely : that these artificial bodies, when created, should occupy precisely the same situation, as to the capacity of contracting,, as natural persons ; and that just so soon as the stockholders,, in their character as corporators, become irresponsible, take away the shield interposed by the Act of incorporation, and leave them liable, in their private capacity, for their contracts, as if no charter had been granted.
That the same individuals should be permitted to repudiate debts which they have contracted as corporators, is contrary to all the inflexible rules of law and justice, as applied to every other business transaction of life. The Legislature has already, by the Acts of 1843 and 1845, adopted this principle and made it applicable to all corporations, except banks and insurance companies. (Cobb’s Digest, 542-3.) And I am content, therefore, to administer the law as I find it settled by the sages of the science who have gone before me, “ whose shoe’s latchet I am not worthy to unloose”.
Either of the two views which I have undertaken to present of this question, stand equally opposed to the idea of a ratable liability nfon each bill.' For in the last light in which it has been contemplated, it would only be incumbent on the plaintiff to show that the proportional liability of the defendant, upon his hundred shares, for the outstanding bills, was sufficient to cover his demand; and he would be entitled, as under the first view taken of the Act, to a recovery for the whole amount of his claim. I thus yield what might, perhaps, admit of debate, to-wit: that the onus would be upon the plaintiff, to prove the amount of the unredeemed circulation. And this he could do by resorting to the books of the bank — its published reports, and by such other testimony as he might have it in his power to procure.
*240But if there be any thing in the Xlth section to warrant the construction put upon it by his Honor, the Circuit Judge, I must say, with undissembled respect for the legal .acumen of my learned brother, I have not been able, after the most careful and critical examination, to discover it. Of .one thing I am entirely sure — give to the charter this interpretation, and it ceases to afford, not only adequate protection, but any practical, working remedy, whatever, to the thousands of bill-holders scattered over the State, against the numerous stockholders of this broken and defunct corporation.
It is, indeed and in truth, as was “forcefully” urged in the finished argument of Mr. büsbet, a practical denial of the benefits of the Statute, and an utter repudiation of the legislative policy. Let this ratable liability doctrine obtain, and these personal and individual liability clauses, which have been introduced into our modern charters, will become a dead letter. To hold that every man who is unfortunately the owner of a five dollar bill of one of these insolvent corporations, shall either sacrifice it at a forced sale of ten cents in the dollar, or some other nominal sum, or institute a hundred suits at law, to get his money, or file his bill, bringing all the bill-holders and all the stockholders before the Court, at a cost of fifty times the amount of his claim, is to contravene and render nugatory this most wise and beneficent policy of the Legislature.
In Russell et al. vs. The Men dwelling in the County of Devon (2 D. & E. 667) where the question was, whether an action would lie against the inhabitants of a county, for an injury sustained by an individual, in consequence of one of the public bridges being out of repair, Mr. Justice Ashurst said, “if separate actions have to be brought against each individual of the county for his proportion of the damages, it is better that the plaintiff should be without remedy” — and so we say hero.
But it is said that the mischiefs to be apprehended from this decision of Judge Starlce, are too highly colored. It is suggested that the stockholders will, in most cases, upon the mere presentation of each bill, promptly pay their respective quotas; and that recourse need not be had to the Courts to compel *241them to account for their share of the debt. I must say, the experience of the past negatives this assumption. And let it be remembered, that any exposition of the charter, based upon this hypothesis, is necessarily fallacious, inasmuch as the Xlth section was inserted in the Act, upon the supposition that voluntary payment would be refused. And it provides a remedy by suit, in direct reference to this contingency. The stockholders are to be forced — not coaxed to respond, “ in the same manner as in common actions of debt”. This clause evidently looks to forcible, and not peaceable redress. It is a war measure.
However the fact may be, therefore, the section must be construed as intended to supply a -coercive proceeding — and we must, of course, spell out the meaning and will of the Legislature, in that aspect of the Statute.
But were it otherwise, the inconvenience to the small bill-holders (and nine-tenths are of this description) of seeking satisfaction in this way, even could they succeed, by getting a modicum contributed by each stockholder, on whom they might successively call, would be little less than would be incurred by every bill-holder dragging every stock-holder to Court, to collect out of him his ratable proportion.
It may be contended, that this is the only sort of liability-which takes an equitable view of the rights of all the bill-holders, as well as the liability of all the stockholders. That the former have equal rights as creditors, to demand and receive payment of the latter, and that to allow one or more to collect the whole of their money out of one or more of the solvent stockholders, by means whereof a portion of the rest may be entirely excluded, is unjust, and consequently, ought not to be sanctioned. This objection, so far as it in reality exists, arises not from any defect in the law, but from the imperfection of all human institutions. Each stockholder owes to a bill-holder the amount of the value of his shares. It is a statutory debt, quasi ex contractu. The bill-holders are in the position of a number of creditors of a common debtor, who is bound only to pay a given amount. They stand primarily equal in their right. *242A.ny one or more may be bona fide preferred and paid. And in this case, as in all others of like character, he who is vigilant, and sues and gets judgment, acquires precedence under the law. And this does no wrong to any body. This is a familiar principle, and one which is constantly recognized and enforced in all the Courts. Thus, in McDermutt vs. Strong, (4 John. Ch. Rep. 691) it was said by the Chancellor, “ though it was the favorite policy of the Court to distribute the assets among creditors pari passu, yet where a preference had been established by the superior legal diligence of any creditor, that preference should be observed in the distribution”.
So in Corning vs. White, (2 Paige 567) it was held that the filing of a creditor’s bill, gave to the vigilant creditor the right to priority; and that there was nothing in the principle of equal distribution among all the creditors, pro rata, which has been considered powerful enough to set aside the priority already acquired by a vigilant creditor. Hubbard et al. vs. Hamilton Bank (7 Metcalf's R. 340.)
Favored as rent is in England, a landlord could not there, until the Statute of Ann, destrain goods taken under execution, and which were, as it is called, in custody of the law. That Act gave him a remedy for one year’s rent, but no more. The industrious creditor seized and appropriated the rest. Is not the whole doctrine of the Statute of Limitations founded upon the maxim, vigilantibus non dormientibus jura subveniunt ? The law regards those who watch, and not those who sleep— the law is only for the protection of those who use diligence to protect themselves. In popular actions to recover penalties, the right to which is given to all the people in common, he who brings his suit, and can obtain the first judgment, secures a title, to the exclusion of every body else.
A most striking illustration of this principle is to be found in the lair, prescribing the order in which the debts of an insolvent testator or intestate are to be paid, by the executor or-administrator. The Statute directs, peremptorily, that the legal representative shall pay first, funeral and other expenses of the last sickness, and so on. Besides, it is u'ell settled that *243no creditor, by obtaining judgment, elevates his demand in the scale of priority. And yet, in the face of all this, a creditor of inferior dignity, by suing at law, and obtaining judgment, may exhaust the whole of the assets of the estate, to the exclusion of claims of a superior grade. True, the representative may make himself personally responsible, by not pleading these outstanding debts, provided he have notice of them. But he may be utterly insolvent; and whether this be so or not, the conclusion to be drawn in favor of the doctrine involved in [this discussion, is equally pertinent. Indeed, in England, the rule is, that among debts of equal degree, the creditor who gets a judgment, is allowed a preference; and the reason assigned is, “because the executor ought to pay that creditor first, who uses the first diligence.” . (2 Wms. Ex’rs, 258.)
So in Ashley vs. Pocock, (3 Atkins. 209) Lord Sardwicke said, “ Suppose two creditors at large of the first testator, Barnsley, and one brings a bill before the other, and obtains a final decree and a report of the master, and that report has been confirmed; and then the other brings a bill, and obtains a final decree, and his demand is affirmed, to be sure the executor ought to have paid the first who used the first diligence. So in case of an action at law, the creditor who obtains the first judgment, should be preferred”.
The very motto of the law is, “the race is to the swift.” Why the priority given by law to first judgments, first attachments, first deeds, first mortgages, the first entry of public lands — the first every thing ? The universal response is, non leges vigilantibus, non dormientibus subveniimt. Even the miller’s rule is, “first come, first served”, which is a strong, though homely translation of this fundamental maxim. It was recognized and enforced by this Court, in the case of a Sheriff’s bond. Bothwell vs. Sheffield, (8 Ga. Rep. 569.)
The Sheriff of Dooly County had given his bond, in terms of .the law, in the sum of $5000. It was to indemnify all persons aggrieved by the official misconduct of himself and his deputies. Moneys were collected by them on executions, far exceeding in amount the penalty of the bond, and which they failed to *244pay over. Suits were commenced, and others threatened, by the plaintiffs in fi. fa. for an amount much larger than the penalty of the bond. And the securities filed their bill, and prayed the Court so to direct the judgments to be recovered, that the creditors first entitled should be satisfied to the extent of their •obligation; and that they might be restrained from further prosecuting their suits.
On the demurrer, the Court below dismissed the bill, upon the ground that the complainants had a complete Common Law remedy. And this Court affirmed the judgment, and held that whenever, by previous recovery, the penalty of the Sheriff’s bond has been exhausted, the sureties may, even at law, plead this fact and protect themselves from further liability — • and this being the case, it would be unjust to more vigilant suitors, who had been injured by the official misconduct of the Sheriff, to restrain them from prosecuting their rights at law.
We say of a case eurrit quartuor pedibus, or that it goes upon all fours, when it is exactly similar in its circumstances to the case in support of which it is quoted, or when it is exactly in point. Bothwell vs. Sheffield is all that and more. Eor in this case, every one of the execution creditors whose money was collected and withheld, was equally entitled to participate in the security, provided by the Sheriff’s bond, as was every other person aggrieved by the misconduct of that officer, whether a judgment creditor or not. And yet a Court of Chancery refused to entertain an injunction upon the application of the securities, to restrain the creditors who had first sued, upon .the ground, that the liability of the securities was limited by their bond; and that they might protect themselves by a plea to that effect, as well at Law as in Equity. And that this being so, the vigilantibus doctrine should not be disturbed.
I have said that this case covers the one at bar, and that it does more; and it is true in this, namely: that the creditors of the Sheriff have but a single fund to which they can look: whereas, in the case before us, every other stockholder besides the ones sued, is also liable to every other bill-holder for the amount of his shares. And unless some of them are bankrupt, *245or Have left the State, the recoveries, as well as the rights or liabilities would be pretty much equalized. And he may very well imagine that this was in the eye of the Legislature, in providing this remedy — that each bill-holder might look for payment to some stockholder who was in his neighborhood.
Had all the bill-holders severally sued the corporation before its dissolution, would not the first judgments have been first satisfied ? And yet all could not have been paid had the corporate property been limited in value. And this. would have been a parallel case to that of the Sheriff’s bond, why should a different rule prevail, when proceedings are instituted against the corporators to charge them personally, instead of against the corporation ? a rule which is contrary to all the analogies ■of the law, and in conflict with the maxim and motto to which I have referred; and which are indelibly inscribed over the ■door-way of every Court-house ? It is certainly not for the benefit of the bill-holder, whatever other interest it may sub-serve.
I am sufficiently conscious that the opinion in Bothwell and Sheffield is more than questioned by the decision of Judge Starke. It is virtually over-ruled, and with it, in effect, though unintentionally, of course, the Act of the General Assembly, passed in 1847, and approved December 30th of that year. (Colb 502.) Eor, on examination, it will be found that the opinion of this Court is in literal conformity to the provisions of that Act. Indeed, it was based upon it, and was so under.stood by the author of the New Digest, -as will be seen by his marginal reference. And although that Statute was passed for a different purpose, it is nevertheless a plain and palpable legislative recognition of an old Common Law principle.
This Act is directory of the mode of entering up judgment on official or voluntary bonds.
And it not only repeals the rule as laid down by this Court, in Stephens and others vs. Crawford, Gov. (3 Kelly’s Rep. 499) that there can be but one recovery on a bond at Common Law, but it affirms, by clear and irresistible implication, the •doctrine that, primarily, all persons injured by the misconduct *246of the Sheriff, have an equal right to demand and have indemnity out of his official bond: but that those who sue and obtain the first judgments, are to be first satisfied, until the whole penalty of the bond is exhausted; and that then these previous recoveries may be pleaded in bar of all subsequent suits.
While this Statute stands in the Book, it is in vain to talk of the unreasonableness of the rule about to be established in these bank cases. Both are in strict accordance with the whole logic of the law; and are, I had almost' said, indissolubly interwoven with the- whole frame-work and superstructure of the science.
When the inquiry is made then, who is the promisee, under this quasi contract, and which bill-holder shall have the preference ? shall he who is sharpest and who has outstripped the rest in the race, receive payment, while others who are more modest, though equally, if not more meritorious, are postponed ? we answer, should even this result follow, which can hardly be anticipated, “ so the law is written”.
The State, in permitting a paper currency, has evinced great care to prevent any injury or loss to the people. It has adopted this measure, amongst others, for this purpose. No legislation can absolutely protect the community against the possibility of loss, because no legislation can, as was said by the Court in another case, “make the directors of all the banks equally skilful and prudent — all their officers honest and all their debtors solvent”. Still, in construing these Acts, we should steadily keep in sight the end for which they were passed. And in case of doubt, that interpretation should be preferred which, while it saves a multiplicity of suits and consequent accumulation of costs, will, at the same time, afford the best safeguard against the evils of adventurous banking. Acting under proper restrictions, and honestly and faithfully performing the duties assigned them by their charters, these monied institutions will always prove valuable instruments of public utility and convenience. But relax these legislative checks, and the grossest management, not to use any harsher terms, must and will be the natural and inevitable consequence.
*247Before quitting this case, I am constrained to say, that upon further reflection, I am not content with the assent which I gave to one point in the judgment; and that is, as to the effect of the return of nulla bona made by the Sheriff of Muscogee County, on the execution against the bank or its assignee. It was held to be prima facie evidence only, of insolvency, in this action against the stockholder.
I am not satisfied that the return of the Sheriff can be controverted in this suit, especially as the return was made in the county, where the bank was located, and where, it is reasonable to suppose, it had property subject to the fi. fa. if any where. No case was adduced to authorize it. Goodall vs. Stuart, (2 Hen. &. Mang. 105,) is a precedent directly against it. And I find it very difficult to answer, satisfactorily to my own mind, the reasoning upon which that decision was made. Such a practice would be attended with difficulties which would seem to be almost insuperable. Besides, the general principle is indisputable, that a return by the Sheriff is conclusive between the parties, and can be impeached only in an action, ■against the officer, for a false return. It required a special Statute to authorize the impromptu answers made by Sheriffs, to rules and orders taken even against] Mm, to be traversed. (Cobb, 579.)
And suppose it be true, that there are assets belonging to the bank, as the plea alleges, these very assets belong to and are the property of the stockholders, which distinguishes this case from that of principal and security, to which it has been likened. But I forbear to discuss this assignment.