Court Opinion

ID: 9812951
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:52:30.762796+00
Date Added: 2024-06-11T15:27:20.245366
License: Public Domain

Douglas, J.,
concurring: I concur in the judgment of the Court, but not in the opinion, which is based upon principles some of which have apparently no application to the facts, and may be confusing to us in other cases.
1 do not think this case involves any equitable principles, but is simply a plain question of legal set-off, or counterclaim, as all such matters are now designated under The Code. Neither does it come within the principles governing the rights of creditors to the assets of an insolvent corporation, for the simple reason that there are no creditors, as is expressly alleged in the complaint, and admitted in the answer. Strictly speaking the bank is not insolvent, because it owes no debts, but has gone into voluntary liquidation because its capital has become impaired to such an extent as to prevent its carrying on a profitable business. It is true that all corporations in their statements place their capital stock among their liabilities, but this is necessary to off-set the asset representing the money paid in on the stock. Paid up stock may in one sense be a liability of the corporation, but in no sense can it be a debt. It represents a certain share or part of the corporation, and for that reason, in England, the holders of such shares are called shareholders instead of stockholders. Such holders can not withdraw their stock at will, but only upon the dissolution of the corporation, and then they are entitled, not to any particular sum, but to such a proportion of its assets as their respective shares bear to the entire stock. This can not be definitely ascertained until the assets are all collected or reduced to a certainty. They *538are, of course, entitled to reasonable dividends, but suck dividends should come only from profits, and should never impair the capital. As a stockholder is entitled only to his distributive share, he can not demand it in advance of a general distribution. By this is not meant a final .distribution, but such a distribution in whole or in part as applies equally to all the stockholders. In other words, if one stockholder is given ten per cent., all can demand ten per cent. As the defendant’s share was not demandable at the bringing of this action or at any time before judgment, it was not the subject of set-off, which at common law applied only to mutual debts upon which independent actions could have been brought. The counter claim is the creature of The Code, and is an extension of the set-off, enlarging the class of claims that may be pleaded, aud enabling the defendant to obtain judgment for the excess; but The Code (Section 244) specifically provides that “The counter-claim. . .must be one existing in favor of a defendant and against a plaintiff, between whom a several judgment might be had in the action.” This question is discussed in Electric Co. v. Williams, 123 N. C., 51. If the stock itself and the money due in payment therefor were mutual debts, capable of mutual set-off, then no stock subscription could ever be collected; and if the stockholders could individually withdraw their shares at their option, the very purpose of incorporation would be defeated. As the defendant could not have brought suit for his individual stock, then he can not set it off against the debt due the plaintiff. The note sued on is clearly a, debt, although given in part payment of a stock subscription. The defendant subscribed for twenty shares of the capital stock of the plaintiff bank, and apparently paid $700 in cash and gave his note for the balance with the stock itself as collateral security. It appears that by consent the capita] of the bank was reduced *539one-half on account of losses, but as tbe reduction was uniform, tbe actual value of tbe stock remained tbe same, as it represented tbe same relative proportion of ownership in tbe same amount of assets. It therefore makes no difference in tli is suit.
It is tbe duty of those winding up tbe affairs of a corporation to do so with tbe least possible expense and inconvenience to tbe stockholders, but in tbe absence of any allegation of fraud or oppression we should not interfere with their reasonable discretion, even in a proper action. We certainly can not do so on a mere plea of set-off or counter-claim.
Eor tbe reasons herein stated I concur in tbe judgment of tbe Court.