Court Opinion

ID: 9833224
Source: CourtListenerOpinion
Date Created: 2023-09-01 22:32:41.55768+00
Date Added: 2024-06-11T07:44:00.698751
License: Public Domain

On Motion for Rehearing.
In our former opinion we were in error in saying that it was held in Fourth National Bank v. Francklyn, 120 U. S. 747, 7 S. Ct. 757, 763, 30 L. Ed. 825, that there was no statute of Rhode Island making a stockholder primarily liable to the creditors of the corporation. Upon a more careful examination of that decision we find that the statute of Rhode Island (Laws R. I. 1847, p. 30), under which a stockholder of a manufacturing corporation was sought to be held liable for the debts of the corporation, did provide that:
“The members of every manufacturing company that shall be hereafter incorporated ‘shall be jointly and severally liable for all debts and contracts made and entered into by such company until the whole amount .of such capital stock fixed and limited by the charter of said company, or by vote of the company in pursuance of the charter, shall have been paid in and a certificate thereof .shall have been made, and recorded in the books kept for that purpose.’ ”
But in another statute enacted át a later date, and which was in force at the time the cause was tried (Laws 1877, c. 600), it was provided that:
“I. No person shall hereafter be imprisoned, or be continued in prison, nor shall the property of any such person be attached, upon an execution issued upon a judgment obtained against a corporation of which such person is or was a stockholder.
“II. All proceedings to enforce the liability of a stockholder for the debts of a corporation shall be either by suit in equity, conducted according to the practice and course of equity, or by an action of debt upon the judgment obtained against such corporation ; and in any such suit or action such stockholder may contest the validity of the claim upon which the judgment against such corporation was obtained, upon any ground upon which such corporation could have contested the same in the action in which such judgment was recovered.”
And in the opinion of the Supreme Court 'in that case the following is said:
“By the decisions of this court, as well as by those of the courts, both state and federal, held within ,the state and district of Rhode Island, and of the highest court of Massachusetts, where these provisions had their origin and their first judicial construction, this liability can be enforced only in the mode prescribed by the statutes of Rhode Island. The present suit, therefore, not being a bill in equity, or an action upon a judgment against the corporation, which are the only forms of remedy authorized by these statutes, but being an independent action at law upon the original liability of the stockholder, cannot be maintained, and the circuit court rightly so held.”
We make this correction in view of the criticism of counsel in their motion for rehearing, with the further observation, that that decision, and many others noted in that opinion, also support the conclusion we have reached in the case at bar, that the statutory *859remedy against the stockholder prescribed in article 1345 is the only remedy given against a stockholder for his.unpaid subscription, and, as shown in the record of this case, there was no basis for recovery under the provision of that article.
The further contention that the stockholders were sureties for the debts of the corporation to the extent of the unpaid balance of their subscription is without merit, since we are unable to conceive any basis for the determination of that principle.
The motion for rehearing is overruled.