Court Opinion

ID: 6961939
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:47:07.160077+00
Date Added: 2024-06-11T16:08:28.221648
License: Public Domain

Mr. Justice Scholfield delivered the opinion of the Court: The only question arising upon this record for our determination is, whether the circuit court properly excluded the defence sought to be interposed upon the trial. The language of the 9th section of the charter of the People’s bank, under which suit was brought, provides, that “whenever default shall be made in the payment of any debt or liability contracted by said corporation, the stockholders shall be held individually responsible for an amount equal to the amount of the stock held by them, respectively. ” The effect of this is simply to withdraw from the stockholders, “to an amount equal to the amount of stock held by them, respectively,” the protection of the corporation, and leave them liable-as partners. Fuller v. Ledden, 87 Ill. 310; McCarthy v. Lavasche, 89 id. 270; Wincock v. Turpin, 96 id. 143; Corning v. McCullough, 1 Comst. 47; Wiles et al. v. Suydam, 64 N. Y. 176. It is quite clear that to an action at law brought by a creditor of the corporation against a stockholder, under this section, the stockholder can not plead, as a set-off, an indebtedness of the corporation to himself, because such indebtedness is, in no sense, that of the party suing; and debts, to be set off at law, must be mutual, and between the same parties. Gregg v. James, Breese, (Beecher’s ed.) 143; Hinckley v. West, 4 Gilm. 136; Sawyer v. Hoag, 17 Wall. 610; Thompson on Liability of Stockholders, sec. 381, et seq. Undoubtedly, the recovery of a judgment by a creditor of the corporation against a stockholder, for an amount equal to the amount of stock held by him, will extinguish his liability, for this is its limit; and since a person owes a duty to pay, where liability exists, as well without as with suit, we doubt not that a voluntary payment will equally extinguish his liability, in all cases where, otherwise, the creditor may sustain an action at law against him. But Harrison & Co. could maintain no action at law upon their claim without making appellant one of the parties plaintiff therein, and it is therefore impossible that such an action could have been maintained against him, since he could not be both plaintiff and defendant in the same suit at law, however nominal his interest theréin, either on the one side or the other, may have been. Dedman v. Williams, 1 Scam. 154; Bracken v. Kennedy, 3 id. 559; Chadsey v. Harrison, 11 Ill. 151; Dicey on Parties, 176, *156; Bailey v. Bancker, 3 Hill, (N. Y.) 188; Richardson v. Abendroth, 43 Barb. 165; Thayer v. Union Tool Co. 4 Gray, 80. The debt of the corporation to Harrison & Co., therefore, was one which, at law, appellee could not have been compelled to pay, and which he was not required to pay. Whether the mere fact, per se, that a stockholder is a creditor of a corporation to an amount equal to the amount of stock held by him, at law extinguishes his liability to creditors of the corporation, it is unnecessary to now decide. No such case is before us. The indebtedness of the.corporation to the firm of Harrison & Co. was not an indebtedness to appellant, individually. Not only did this not extinguish any individual liability of his, even if .he had owed such to the corporation, but he had no authority to apply partnership effects to the extinguishment of his individual debts, without the express consent of his co-partners. Casey v. Carver, 42 Ill. 225; McNair v. Platt, 46 id. 211; Rainey v. Nance, 54 id. 29. ' All that there can be any reasonable ground for claiming that appellant acquired by the arrangement disclosed by t'he stipulation, is an equitable right against his co-stockholders for contribution, recognizable and enforcible in equity only. He thereby acquired no right which a court of law is competent to enforce or protect, and, consequently, which it will notice. The judgment of the .Appellate Court is affirmed. Judgment affirmed.