Court Opinion

ID: 6502908
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:15:29.686144+00
Date Added: 2024-06-11T15:54:39.496432
License: Public Domain

ORMOND, J.
The only question presented -upon the record, is the validity of the resolution of the board of directors, authorizing the members of the company to relinquish a portion of their stock, on condition of paying all the calls the company might subsequently make upon the residue.
! Considering this resolution in itself, we entertain no doubt whatever, that it was such an act as the company might lawfully do. It is a contract entered into by the corporation, with its members, which does not carry on its face any marks of illegality, or impropriety. It may have been, and probably was, eminently judicious and proper. It appears that when it was adopted, the company was struggling with difficulties, in consequence of the great pressure upon the com*742munity for money, and it was apprehended that many of the subscribers would not pay, but would forfeit their stock. To prevent this, and to enable the company to go on, was "the avowed, and doubtless the real motive, for the proposition; which originated with the directory, and was ■ af terwards sanctioned by the stockholders.
The argument principally urged, does not deny the right of the company under any circumstancés, to pass such a resolution, but that the stock is the fund for the payment of the debts of the corporation, and the relinquishment a fraud upon the creditors of the corporation. We need not inquire what would be the effect of the facts supposed, as it does not appear that by the reduction of the stock, the rights of creditors were at all affected. As to this particular debt, it is not shown when it was created, whether before or after the passage of this resolution. Conceding that the stockholders would be individually responsible to the creditors of the corporation, in proportion to their stock, as appears to have been held in Wood v. Dummer, 3 Mason C. C. 308, it could only be by a proceeding in equity, no such liability exists at law, [Vose v. Grant, 15 Mass. 506,) even after the corporation is extinct.
This was a proceeding under our general law of garnishment, as appears from the affidavit made, to obtain the garnishee process, in which it is stated that the garnishee and others, are indebted to the said defendant, or have effects of the said defendant in their hands, he therefore prays that they be summoned, <fcc.
The defendant in error, by his answer, denies any indebtedness. He admits he subscribed originally for twenty shares of stock, ten of which he relinquished to the company, under the order of the board previously spoken of, and has paid all thé calls of the company on the remaining ten. This is a denial of indebtedness to the corporation. Such indebtedness'did not-arise under the charter, from the fact of his being a subscriber, but upon his refusing to meet the calls of the company. [Bingham v. Rushing, 5 Ala. 403.] See the third section of the charter, providing for the mode and manner of making calls, for the amount subscribed.
By the act of December 31, 1841, [Sess. Acts, 15,] it is pro*743vided, that “the stockholders of any incorporate company, or body corporate, shall be liable respectively to the creditors of such company, for the amount of stock subscribed by them, and unpaid, in character of debtors to such corporation, and such liability may be enforced by garnishment, as above provided for in this bill.” The affidavit which by this act is required to be made is, “that certain persons, (naming them,) are indebted to such company as stockholders, or otherwise,” and the garnishee is required to answer, what he is indebted, “as stockholder, or otherwise.” The design of this act appears to have been, to reach the stockholder as a debtor of the corporation, through his stock, and without ;any call of the company. Under this act, then, it would seem, (if the enactment itself is of constitutional validity,) that a judgment should have been rendered against the garnishee, for the amount of the ten shares unpaid, which he admitted he held in the company. But as already observed, the garnishment was not sued out upon this statute,. but under the general law of garnishment, and the necessary affidavit not being made, the court had not jurisdiction to render a judgment for the amount due from the stockholder to the corporation, upon which no call had been made.
The 4th section of the charter, authorizes the company to organize, when $500,000 is subscribed, what effect the resolution of the hoard heretofore spoken of, had upon the franchise, or whether it reduced the stock below the amount necessary to the corporate existence of the company, the record affords no information. Whether the act of 1841 applies to the stockholders of a corporation, whose franchise has been lost by non user, or has been dissolved by any act equivalent to a surrender of its privileges, is one of very great moment, and upon which it is improper that we should express an opinion.
Let the judgment be affirmed.