Court Opinion

ID: 8006552
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:53:51.350314+00
Date Added: 2024-06-11T16:35:54.461036
License: Public Domain

Norton, J.,
Dissenting. — Plaintiff, who is a judgment creditor of the Memphis, Carthage & Northwestern Rail-i’oad Company, and obtained execution on his judgment which was returned nulla bona, is in this proceeding seeking to make the defendants, Seligmans, liable as stockholders in said company under section 736, Revised Statutes 1879, which is as follows : “ If any execution shall have been issued against any corporation and there cannot be found any property or effects whereon to levy the same, then such execution may be issued against any of the stockholders to the extent of the amount of the unpaid balance of such stock.”
I think it clear that before an execution can issue under the above section against a stockholder, it must be shown that the stockholder proceeded against is the owner of stock on which there is an unpaid balance. Ownership of stock may be acquired either by subscription of a person on the stock books and the issue of stock to him, as the charter may provide, or by transfer on the books of the company, with its consent, by one person, the owner of stock, to another.
The evidence shows that the Seligmans, who are sought to be charged hi this proceeding as the owners of 60,000 shares of unpaid-up stock, never subscribed for said stock oil the books of the company, and that said shares were never transferred to them by another person, the owner thereof, on the books of the company and with its consent. It does show that the stock in question was issued to the Seligmans, not in virtue of any subscription made by them or any transfer made to them, but in virtue of a contract between the corporation and the Seligmans in 1872, under which defendants agreed as financial agents of the company to make certain advances of money .to the company to enable it to complete its road, and in consideration of the advances made and to be made the company agreed to execute and deposit with the Seligmans its entire issue of *127first-mortgage bonds, and to deposit with them a majority of the capital stock authorized to be issued, the stock to remain in the control of the Seligmans for one year. It appears that in pursuance of this contract, on the 22nd day of May, 1872, the board of directors of the company passed a resolution as follows : “ That in making negotiations for money with J. & W. Seligman & Co., certificates of a majority of stock be issued to J. & W. Seligman & Co. to hold in trust for the period of twelve months, and that such certificates be signed by the president and secret tary with the corporate seal of the company affixed.” On the books of the company also appears the following entry: “J. & W. Seligman; residence New York: shares 60,000, (held in escrow ;) amount of dollars, $6,000,000. May 20th, 1872.” This evidence, while it fails to establish that Seligmans were the owners of such stock, does, on the contrary establish the fact that they were not the owners but simply the custodians of it as trustees. This the contract, the resolution of the board of directors and the entry on the stock books, all indicate and nothing more, and by nó process of reasoning known to me, can an inference even be drawn from these facts that it was the purpose of either the Seligmans or the company to fasten upon the Seligmans a liability to the company for $6,000,000, when it is apparent that the object of the transaction between the parties was to secure through the Seligmans advancements of money to complete the road, for which they were to be made secure by the deposit with them of first-mortgage bonds and a majority of the capital stock.
That the legislature did not intend by the section quoted above, and which gives origin to the proceeding, to make a mere holder of stock who was not the owner liable, is manifested by section 771, Revised Statutes 1879, which declares that “ no person holding stock in any such company, as executor, administrator, guardian or trustee, and no person holding such stock as collateral security, shall be personally subject to any liability as stockholder *128of such company; but the person pledging such stock shall be considered as holding the same, and shall be liable as a stockholder accordingly; and the estates and funds in the hands of such executor, administrator, guardian or trustee, shall be liable in like manner, and to the same extent as the testator or intestate, or the ward or person interested in such fund would have been if he had been living and competent to act, and held the same stock in his own name.” This section clearly exempts from liability all persons holding stock in a fiduciary capacity. The exemption is absolute, and is not dependent on the fact that there is no cestui que trust to answer the liability under the last clause of the section. A section of the statute of Maryland, of which section 771, supra, of our statutes is a literal copy, has been construed in the case of Matthews v. Albert, 24 Md. 527, and the construction therein given sustains the view above expressed. In that case the corporation itself issued the stock as collateral security, and the holder of the stock was sought to be made liable, and it was held that by virtue of said section he was exempt from liability. The stock in that case had been deposited with one Tiernan, who had loaned the company $2,000, as collateral security for the loan, and it was contended that the statute did not apply to a case when the company itself pledged the stock, but the court held otherwise, and observed : “ That in our opinion his (Tiernan’s) claim was for money loaned and the stock transferred to him was held as collateral security for his loan, and so holding it he is not personally subject to any liability as stockholder, but is protected by the provisions of the act of 1852, chapter 338.”
It appears from the evidence that the Seligmans voted the stock held by them at one or more elections for directors, and it is claimed that having so acted they are estopped both as to the company and its creditors from disputing the fact that they were the owners of the stock. I think that the doctrine of estoppel does not apply in this case. *129To create an estoppel in pais something more is required than the mere assertion (if voting the stock was an assertion by Seligmans) that they were the owners of the stock. To establish an estoppel in pais, it must usually appear, first, that one party has made an admission or assertion inconsistent with the evidence proposed to be given, or the claim offered to be set up ; second, that the other party has acted upon such admission or assertion; and third, that such other party would be injured by allowing such admission or assertion to be disproved. Taylor v. Zepp, 14 Mo. 482; Newman v. Hook, 37 Mo. 207. The doctrine of estoppel cannot be invoked by the company, because the ■evidence shows that the Seligmans, in voting this stock, did so with the consent of the company and with full knowledge on its part that they were not in fact stockholders or owners of the stock, and it does not show that in consequence of said act of Seligmans the company took any action which altered its condition. Nor can the doctrine be invoked in this suit in favor of the creditor prosecuting it because it does not appear that the debt of the company upon which his judgment was obtained, was contracted on the faith of said act or even subsequent to the voting of the stock by Seligmans. Eor these reasons I do not concur in the opinion rendered.