Court Opinion

ID: 7942372
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:16:22.342924+00
Date Added: 2024-06-11T16:33:46.841667
License: Public Domain

Grant, J.
{after stating the facts). 1. The court erred in sustaining the demurrer in part and overruling it in part. When a bill in chancery contains any ground of equitable relief, a general demurrer must be overruled as to the whole bill. The complainant is entitled to an answer, and all the questions will arise upon the final hearing upon pleadings and proofs. Williams v. Hubbard, Walk. Ch. 28; Clark v. Davis, Har. Ch. 227; Thayer v. Lane, Id. 247; Hawkins v. Clermont, 15 Mich. 511. However, inasmuch as both parties have appealed, have fully argued the question involved, and are evidently desirous of its adjudication, we determine the question.
2. The defendant corporation was organized under Act No. 12, Laws 1869, entitled “An act to authorize and encourage the formation of corporations to establish rural cemeteries, and provide for the care and maintenance thereof.” 3 Comp. Laws, §§ 8399-8412. Section 2 (3 Comp. Laws, § 8400) of the act provides for articles of incorporation, which shall state the amount of land which it is proposed to purchase, the amount of capital required to make such purchase and to fence and improve the grounds, the number of shares, and the names of the subscribers to the stock, with the number of shares subscribed by each, etc. Section 3 (3 Comp. Laws, § 8401) provides that, at *252the time of the subscription to said capital stock, 20 per cent, of the amount subscribed by each must be paid into the treasury, and when the whole amount of the capital stock is subscribed, and said 20 per cent, actually paid in, a copy of the articles of association, together with the affidavit of the treasurer that 20 per cent, has actually been paid in, may be filed in the office of the county clerk.
Chapter 269 of the Compiled Laws relates to proceedings against corporations in chancery. It provides, among other things, that circuit courts in chancery shall have jurisdiction over directors and other officers of said corporations, to compel an accounting of their official conduct-, etc. It provides, also, for sequestering the property of a corporation where a judgment at law or decree in chancery shall be obtained, and an execution returned unsatisfied. Section 9780, 3 Comp. Laws, reads:
“ The provisions of this chapter shall not extend to any incorporated library or lyceum society; to any religious corporation, or any incorporated academy or select school; nor to the proprietors of any burying ground incorporated under the laws of this State.”
It is the contention of the defendants that the bill in this case is filed under chapter 269, and that the section above quoted prohibits the maintenance of the bill in this case. If this contention be maintained, it follows that there is no liability imposed upon the stockholders of the corporations enumerated in section 9780 to pay for their stock which they have subscribed and own. A corporation for cemetery purposes may buy land, issue its obligation to the purchaser, due at a future time, and may contract for building the necessary house or houses thereon, the erection of fences, etc.; but, when these creditors ask for payment, the corporation may, through its directors and stockholders, say to them: “We have no tangible property which you can reach upon execution. We have not paid for our subscriptions, and you cannot compel us to, because the statute prohibits it.” Such a proposition is shocking to the moral sense of every honest man. It is *253not reasonable to suppose that the legislature intended the statute to relieve stockholders in these corporations from all liability for payment-of their stock. Courts will not so construe the statute if any other construction is reasonably possible. The statute, upon its face, is not susceptible of this construction. It contemplates that the capital stock of the corporation shall be paid into its treasury to meet its legal obligations. It expressly provides that 20 per cent, shall be paid in as a prerequisite tó the filing of its articles of association. Until this amount is paid, it is doubtful whether there is any legal incorporation. The stockholders of the corporation are not the proprietors of a cemetery; the corporation is the proprietor.
Aside from the remedies and proceedings provided by chapter 269, courts of equity have jurisdiction in many cases. The remedies therein provided are not exclusive. If there were no statute upon the subject, equity would have jurisdiction to compel stockholders to pay the amount of the capital stock into the treasury of the corporation for the payment of its debts. In Brown v. Mining Co., 105 Mich. 653 (63 N. W. 1000), the bill was filed to wind up the affairs and distribute the assets of the corporation. The bill was dismissed. We held that “the court had jurisdiction of the subject-matter independently of the statute.” So, in this case, the remedy provided by the statute is merely cumulative. See, also, Jordan v. Everett, 93 Tenn. 390 (24 S. W. 1128); Jones v. Boston Mill Corp., 4 Pick. 507 (16 Am. Dec. 358); Biddle v. Moore, 3 Pa. St. 161. The bill in this case is in form the same as would be filed if no statute existed. It does not refer to the statute. It is the common-law duty of a creditor in such cases to proceed first against the property of the corporation, to ascertain if any can be found to satisfy his debt, before proceeding against the stockholders. The proceeding against the stockholders would be entirely unnecessary if there were tangible assets subject to the payment of creditors. But, as already stated, this act upon which the defendants rely does not exempt them from *254proceedings to compel the payment of their subscriptions. It will not be doubted that the directors might make an assessment and sue the stockholders for the purpose of paying the debts of the corporation, and that it would be their duty, both morally and legally, to do so. What they have the power to do, and what, in good conscience and law, they ought to do, courts of equity have the jurisdiction to compel them to do.
The case is remanded for further proceedings in accordance with this opinion. The complainant will recover the costs of this court.
Moore, Carpenter, and Montgomery, JJ., concurred. Hooker, C. J., took no part in the decision.