Court Opinion

ID: 3864081
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:57:41.379575+00
Date Added: 2024-06-11T14:14:54.504590
License: Public Domain

In a case at law between these parties, formerly tried, we decided that the plaintiff could not maintain his action against the defendant, as administrator of the estate of Byron Sprague, deceased, on a liability to pay certain notes of the Union Horse Shoe Company, incurred by the said Byron Sprague under Revised Statutes, chapter 128, sections 2, 3 and 13, for the reason that the liability created by those sections is a tort, and does not survive. In the same case we also decided that a liability to pay said notes, incurred by the said Byron Sprague, under the 11th and 12th sections of chapter 128, which had been made the basis of a claim against his estate, represented insolvent, and disallowed by the commissioners, could not be prosecuted at law by an action of the case, for the reason that the statute creating the liability gives different remedies, and in such case the rule is, that the prescribed remedy is the only remedy. The plaintiff has moved for a rehearing, upon the ground that the decision was erroneous. We are not, however, convinced by the arguments which have been addressed to us, that the decision ought to be either reversed or modified.
The plaintiff also has now filed a bill in equity, to charge the estate of the said Byron Sprague with the payment of the said notes, and relies for relief not only on the sections of chap. 128, above named, and on the twenty-third section, but also, and more especially, on the first section of that chapter.
We agree with the plaintiff, that the liability imposed by chapter 128, section 1, is direct and primary. We also think it in the nature of a debt. The section provides that, until the capital is paid in and a certificate thereof recorded, the members *Page 556 
of the company shall be jointly and severally liable for all debts and contracts made and entered into by the company, leaving it optional with them to incur the liability or not. There is no requirement that they shall pay in more capital and record the certificate, the neglect to observe which might be regarded as atort, entailing the liability by way of penalty.
Does it follow from this construction, that the estate of a deceased member, who has incurred the liability, is bound for its payment on the same footing as his personal debts ? If the estate is so bound, it will follow that it may be charged with all the debts of the corporation contracted before the member's decease, whether due or to become due, and whether the corporation is solvent or insolvent. The question is, therefore, one of great interest, in its relations to the settlement of the estates of persons deceased.
The statute regulating the settlement of insolvent estates of deceased persons, (Rev. St. ch. 158,) provides, in regard to any claim rejected by the commissioners or stricken from their report, that the claimant may proceed at common law in the manner therein prescribed, and specifies no other relief except by reference under a rule of court. The inference is, that any claim which cannot be prosecuted at common law, is not provable against the estate; for it is not to be supposed that it was intended that any person having a claim provable against the estate should be without relief, if the same were improperly rejected, or that any claim should be prosecuted at common law to which a common law action is inapplicable.
Of course this construction excludes all claims, which can be pursued only in equity, from proof before the commissioners. The argument against this construction, from the injustice of the exclusion, is cogent; but in view of the fact that there was a time when a claim which could only be pursued in equity necessarily failed for want of chancery jurisdiction in the courts, and that these provisions of the statute remain now substantially as they were at that time, we do not deem the argument conclusive. In fact, the defect of the statute, if it can be regarded as such, is probably owing to its having remained so long without *Page 557 
material change, notwithstanding the changes which have been made in other parts of the law of the state. We are of the opinion that a claim which cannot be prosecuted in an action at law, cannot be proved, under chapter 158, before commissioners on an insolvent estate.
The plaintiff contends, that his claim, in so far as it arises from a liability incurred under chapter 128, section 1, can be prosecuted in an action at law, upon the ground that the members of a manufacturing company are not to be considered as incorporated, whatever else may have been done, until the capital has been paid in, and a certificate thereof recorded; and that, until then, the company debts and contracts may be regarded as the personal debts and contracts of the members. He contends that, agreeably to this view, the word "members" is used in the first section, and the word "stockholders" in the other sections, as if a distinction were intended between them. We think, however, that this construction is inadmissible, and that it would be going too far to infer a distinction between members and stockholders, from the manner in which the two words are used in the statute. We think, further, that the remedies prescribed by sections 19 and 20 are applicable in respect to the liability created by the first section, as well as in respect to that created by the 11th and 12th sections of chapter 128.
But may not the plaintiff's claim, even if not provable before the commissioners, be ascertained in equity, and added by decree to the report of the commissioners? We think not. We know of no principle which would authorize a court of chancery to add to the claims allowed by the commissioners any claim which is not provable before them. The statute requires that the estate represented insolvent, subject to certain preferences, shall be applied pro rata to the payment of creditors who have proved their claims before the commissioners, and provides for no modification of their report, except by an action at law, or by a reference under a rule of court. If it be said, that to confine the payment to such claims is to allow an unjust discrimination against claims which cannot be prosecuted at law, we can only repeat in reply, that the injustice, if any, is attributable to *Page 558 
a defect in the statute; and it is not within the province of a court of chancery, in the absence of any special ground of jurisdiction, to supply a defect in the statute of the state. We therefore refuse to add the plaintiff's claim to the claims reported by the commissioners.
We think section 23, chapter 128, which has been referred to in aid of the plaintiff's claim to payment in common with other creditors, does not support that claim. The section exempts executors, administrators, guardians, trustees, and pledgees, from personal liability, and leaves the pledger and the estates in the hands of such executors, administrators, guardians, and trustees, to respond to any liability incurred under the chapter. It gives no new common law remedy, by reason of which the liability is entitled to proof against an estate which has been represented insolvent.
But although we cannot add the plaintiff's claim to the allowed claims for payment with them, we are nevertheless of the opinion, that in so far as it is a claim arising upon a member's or stockholder's liability, it is entitled to participate in the surplus, if any, remaining after the payment of allowed claims. For the liability of a member or stockholder, even if it be not of a nature to survive at law, would yet devolve on the defendant, as administrator, under chapter 128, section 23, and bind the decedent's estate in his hands, not required to meet the charges specially imposed upon it by chapter 158.
One of the notes in respect of which the plaintiff makes claim, was not given by the Union Horse Shoe Company until after the decease of Byron Sprague. We think the claim in respect of this note must stand on the same footing as the claims in respect of the others, inasmuch as it can no more be prosecuted by an action at law than the others. It is true the 23d section of chapter 128, in declaring the extent of the liability of an estate in the hands of an executor or administrator, uses very broad language; but nevertheless, the liability can only be enforced to the full extent implied by that language when the estate is solvent; where the estate has been represented insolvent, regard must be had to the chapter regulating the settlement of *Page 559 
insolvent estates, and the section construed so as not to conflict with its provisions. Indeed, the defendant being liable not only as administrator, but also as the successor of the decedent, the claim on the latest note cannot be entitled to any right of payment out of the estate which would not likewise, under section 23, accrue to the claims on the earlier notes.
We therefore decide that the plaintiff's petition for a rehearing of the action at law must be dismissed, and that his bill in equity shall be retained, according to the agreement of the parties, till the surplus, remaining after the payment of the claims payable under the report of the commissioners, if any, is ascertained.
Decree accordingly.