Court Opinion

ID: 8068090
Source: CourtListenerOpinion
Date Created: 2022-09-09 11:09:18.296782+00
Date Added: 2024-06-11T16:38:13.173532
License: Public Domain

SMITH, J.
(dissenting). The reasoning of Justice KELLOGG, to my mind, disregards one material fact. This devastavit has been made good to the corporation by an assessment paid by the stockholders. Generally, for a devastavit of the assets of a corporation, the corporation, only, has a right of recovery. If the corporation refuses to sue, an action may be brought by a stockholder for the benefit of the corporation. But is this action brought for the benefit of the corporation? If stockholders, to make good a devastavit of the directors, have been compelled to pay an assessment upon their stock, does the corporation still have a right to recover for that devastavit? Are not the stockholders, to the extent to which they have made up the loss, subrogated in equity to the rights of the corporation as against the directors? No right would then be taken from the corporation or from its creditors, and the injury done, to the individual stockholder could thus be directly compensated. Where an insurance company makes good to the owner a loss by fire occasioned by the negligence' of a common carrier, that company is subrogated to the rights of the insured as against the common carrier for its negligence. In 2 May, Ins. (4th Ed.) § 454, the right is thus stated:
*521“And the right is based upon the equitable doctrine that where one has been obliged to pay money to another by the nonfeasance or misfeasance of a third, who, being at fault, ought to bear the loss, the party so paying, as by his direct obligation towards the party suffering the loss he may be compelled to do, shall be allowed, indirectly and through the right which the injured party had, to compel the wrongdoer to bear the burden which was imposed by his fault, although between him and the wrongdoer there is no direct relation upon which to found a cause of action. In other words, the party injured being so situated that he may call, by his right at law, upon the party who is responsible for the injury, or, by his contract, upon the one who is not at fault, for his indemnity, if he elects the latter, then the latter shall be allowed to do in his name what in the first instance the injured party might have done, and justice, as between all the parties, decrees ought to be done. * * * The insurer stands practically in the position of a surety, and whenever he has indemnified the owner for the loss he is entitled to all the means of indemnity which the satisfied owner held against the carrier. This right depends not upon privity of contract, but is worked out through the right of the creditor or owner, and in his name, and exists although the insurer was not legally bound to indemnify the insured for the loss he sustained.”
See, also, Commercial Ins. Co. v. The C. D. Jr., 1 Woods, 72, 13 Fed. Cas. 65; Connecticut Fire Ins. Co. v. Erie Ry. Co., 73 N. Y. 399, 29 Am. Rep. 171; Fayerweather v. Insurance Co., 118 N. Y. 327, 23 N. E. 192, 6 L. R. A. 805; Hall v. Railroad Co., 13 Wall. 369, 20 L. Ed. 594.
If this subrogation be allowed to an insurance company which has no privity whatever with the wrongdoer, a fortiori, should it be allowed to a stockholder to whom the wrongdoer owes the duty of diligence. Primarily, the devastavit of the assets of a corporation constitutes an injury to the corporation alone, in which the stockholders are only indirectly interested. Where, however, they are required to make good to the corporation that loss, their interest then becomes direct; and I can see no reason why the injury to the corporation,, which they have repaired, does not become an injury to them, for which they can recover.
The argument thus far proceeds upon the rights of a stockholder who has paid his assessment. If, however, his stock has been sold in default of payment of that assessment, the purchaser upon that sale obtains the stock at its depreciated value. He has therefore suffered nothing by the wrong of the directors. The stockholder, however, who has lost his stock by reason of the assessment to make good the loss caused by the devastavit, is the one who has suffered, and to whom the right of action should belong. I agree that one who has sold his stock has no such interest that he can bring an action to make good to the corporation this loss, but where the corporation is made whole by a compulsory assessment, to collect which the stock has been sold, the right of a stockholder who has thus lost his-stock is not a representative, but an individual, right, for a direct injury to himself.
And such an action, I think, must be one in equity. To the extent to which the loss is made good by an assessment, the stockholder is-subrogated to the right of the corporation, but to that extent only. Beyond that, the loss- is still the loss of the corporation, for which it may sue. In an action brought by a stockholder, then, who has-*522paid an assessment, or by a former stockholder who has lost his stock through failure to pay the assessment, the corporation is a necessary party defendant, in which action must be determined how far the assessment has made good the loss caused by the devastavit; and to what extent the stockholder should be subrogated to the rights of the corporation as against the directors.
This is not the theory upon which the case was decided, nor is it the theory upon which it was tried. In the complaint, however, the devastavit is alleged, the assessment of the stock to pay therefor, and the sale of the stock to pay that assessment. The bank is made a party defendant, together with the delinquent directors. The defendants have answered, and the plaintiff is entitled to any relief justified by the facts alleged and the proof given. The judgment has not, I think, transgressed any of these rules, and should not be reversed because a wrong reason has been given therefor.