Court Opinion

ID: 4929221
Source: CourtListenerOpinion
Date Created: 2021-09-24 01:05:01.770955+00
Date Added: 2024-06-11T08:14:24.276904
License: Public Domain

Shepley, C. J.
— The right of the plaintiffs to recover will depend upon their being creditors of the Georges Canal Company, while the defendant was an owner of its stock. He subscribed for six shares on July 23, 1846. These were informally transferred to Caleb Levinsaler on December 7, 1847. No transfer of them was made upon the books of the corporation until December 12, 1848. The defendant, as it respects a creditor of the corporation, must be considered as their owner until that time.
He was charged on the stock book of the corporation with twelve shares under date of August 1, 1846, and he is there credited for cash $300, and lor six shares of stock. There is no other evidence, that he was the owner of more than six shares. It does not appear, that the charge for twelve shares was at any time admitted by him to have been correctly made; or that he ever paid any assessment on more than six shares ; or that he claimed to be the owner of a greater number.
The charge with the credit of six shares made during the following year would rather indicate, that he never consented to become the owner of more than six shares. The charge made by the corporation cannot make him the owner of more, without some evidence that it was admitted or sanctioned by him. The by-laws of the corporation required, that the stock *460book should be subscribed by the members of the corporation. He must therefore be regarded as the owner of six shares only, until they were transferred on December 12, 1848.
To prove that they were creditors of the corporation before that time, the plaintiffs introduced the record of a judgment founded, as they allege, partly or wholly upon a contract made between them and the corporation during the month of February, 1847, with testimony to show, that they had performed the services required and completed them in the month of November, 1848; and that the orders presented in the case were drawn for work performed under that contract.
On December 13, 1848, three orders, drawn by the president on the treasurer of the corporation, payable to the plaintiffs or their order, were received by them for labor performed under the contract. There were counts in the declaration upon the contract and upon these orders.
On January 10, 1849, another order was drawn by the president upon the treasurer for the same purpose, payable to one of the plaintiffs or his order, and it was received by them.
On March 2, 1849, a settlement was made between the plaintiffs and the president of the corporation, when another order payable to the plaintiffs or their order was drawn in like manner and received by them. The plaintiffs signed a receipt for the bills presented for services performed under the contract as settled; and received from the president a statement, that they then held the orders named, with an assent by him as one of the directors, that a default should be entered in their action then pending against the corporation.
In this and in some of the other States of the Union an existing debt is presumed to haye been paid by the reception of a negotiable promissory note for it.
In the case of Varner v. Nobleborough, 2 Greenl. 121, it was decided, that the same presumption would arise from the reception of a negotiable order drawn by the selectmen of a town upon its treasurer. That decision is in principle applicable to the present case.
This presumption may be rebutted by proof of the circum*461stances, under which the negotiable paper was received, showing that it was not intended to operate as payment.
Some of the circumstances, which might have such an effect, have been noticed in the decided cases. If the negotiable paper was accepted in ignorance of the facts or under a misapprehension of the rights of the parties, it has been held, that the presumption might be considered as rebutted. French v. Price, 24 Pick. 13. So if the paper accepted is not binding upon all the parties previously liable, or if the paper of a third person be received not expressly in payment, the presumption may be considered as repelled. Melledge v. Boston Iron Company, cited by the counsel.
In this case the insolvent corporation-would remain equally liable, whether the original debt arising out of a performance of the contract was or was not extinguished by an acceptance of the orders in payment. No party liable in the first instance would be discharged by an acceptance of the orders in payment. The defendant and perhaps others, who were liable in case the corporation should fail to pay, would be discharged. It does not appear, that any stockholder except the defendant would be thus discharged; or that the person, to whom the defendant had transferred his shares, was not of equal ability to pay. When by an extinguishment of a debt some persons collaterally liable will be discharged, and others will become liable to pay the paper accepted in payment, no serious change of the ability of those liable to pay can be inferred without some proof of it. If responsible persons could not be expected to become purchasers of the stock of an insolvent corporation, it may be a fair inference, that no great change of stockholders would take place.
The testimony does not prove, that the orders were accepted in ignorance of the actual state of facts. The plaintiffs must have been aware, that stockholders of corporations may be constantly changing, while their stock is considered to be of any value. When it becomes apparent, that their share holders may suffer loss, no great changes can be expected Avithout the imputation of fraud, and that cannot be imputed without proof.
*462The plaintiffs may have received the orders without knowing what the effect would be upon their lights. A misapprehension of rights, which would rebut the presumption of payment, must be something more than this. It should be a misapprehension of rights arising out of a want of full knowledge of the facts.
The suit might be defeated, it is said, if the parties intended to extinguish the original debt; and it is obvious, that the intention was to allow it to proceed to judgment. The suit as commenced might have been maintained for a large amount consistently with an extinguishment of the original debt; and for the full amount with an assent to a default. As between the parties with such an assent the judgment may be valid, although it included an amount not due, when the suit was commenced.
If the judgment may be considered as rendered in whole or in part upon the original contract, the defendant not having been a party or privy to it may prove any fact showing, that the plaintiffs had no legal claim upon him.
The receipt of the plaintiffs, in discharge of their claims arising under the contract may be explained by parol testimony ; but the testimony of the president of the corporation, who assisted to make the settlement, tends to support rather than to repel the presumption of payment.
The acceptance of negotiable papei; for their debt; their receipt given in discharge of it; the memorandum of the settlement received by them; and the testimony of the president ; present strong proofs of an extinguishment of the original debt due to the plaintiffs.
The facts relied upon to repel and overcome the presumption of payment and the corroborative testimony are not deemed sufficient to authorize the Court to determine, that the orders were not received in payment.
The result is, that the defendant is not liable to pay any portion of the debt due from the corporation to the plaintiffs.

Plaintiffs nonsuit.

Tenney, Wells, Howard and Appleton, J. J. concurred.