Court Opinion

ID: 7987686
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:27:27.433553+00
Date Added: 2024-06-11T16:35:15.010674
License: Public Domain

Cooper, C. J.,
delivered the opinion of the court.
The peremptory instruction was properly given.
1. The appellant, according to his own testimony, was a subscriber to the capital stock of the Delta Waterworks, Sewerage & Light Company. He did not, it is true, subscribe the stock book, but he authorized Robertshaw to procure a part of the stock for him, and recognized and' ratified his act in so doing,' and paid a call upon the stock, and afterwards assigned it to Wether bee. In the face of these conceded facts, it avails nothing for the appellant to vaguely suggest that he expected to have the stock delivered to. him as a condition on which he was to be bound. Nothing .was ever said by him or to him indicating that he or the company so understood his contract of subscription; nor is it shown that he ever demanded the stock. Cook on Liability of Stockholders, § 192.
2. The attempted transfer of the stock by the appellant to Wetherbee does not relieve him from liability to the demand of the appellees. By the code of 1880, § 1037, it was declared that inall joint-stock corporations hereafter created, whether under this chapter or otherwise, each stockholder shall *468be individually liable for the debts of the corporation, contracted during his ownership of stock, for the amount of balance that may remain due or unpaid for the stock so subscribed for by him, and may be sued by any creditor of the corporation, and such liability shall continue for one year after the sale or transfer of the stock. The stock in all such companies shall be transferable by the indorsement and delivery of the stock certificate and the registry of such transfer in the books of the company. ’ ’
The debt of the Delta Waterworks, Sewerage & Light Company was contracted on the eighteenth day of July, 1891; the defendant claims to have transferred his stock to Wetherbee on the twenty-first of May, 1892; the present suit was commenced on the twenty-seventh of January, A.D. 1894.
Accepting as true the testimony of the appellant as to what was done when he disposed of his stock to Wetherbee (in which he is contradicted by the secretary of the company), this is what transpired: Kriger executed the transfer, and took it to the secretary, asking him to make an entry thereof on the books of the company. This the secretary agreed to do, but said the books were at another house. Kriger heard nothing-more of it, and did not know that the transfer, was ever entered on the books. In fact, no entry of the transfer was at any time made.
In some of the states, under statutes making stockholders liable for the debts of the company, the property of a stockholder was held to be leviable under execution on a judgment against the company, but that the person on whose property the levy was made must be a stockholder at the time of the levy. Leland v. Marsh, 16 Mass., 389; Marcy v. Clark, 17 Ib., 329. To avoid liability, the practice was for the solvent stockholders to transfer to insolvents their stock in insolvent companies. Stanley v. Stanley, 26 Me., 191; Ingalls v. Cole, 47 Ib., 530. To meet this device, it was provided that the liability should continue for a certain time after the transfer of the stock.
*469We have not access to the original statutes of Maine. In the revision of 1883, ch. 46, § 37, it is distinctly provided that the liability of the stockholder shall continue for one year after the ‘ ‘ transfer is recorded on the corporation books, ’ ’ and such is the provision in statutes of other states. Kev. St. of Wisconsin of 1878, §§ 1751, 1756.
In Stanley v. Stanley, 13 Me., 191, in a case involving the liability of a stockholder for a debt contracted on the 27th of July, it was shown that his stock was transferred by an entry on the books of July 31. He contended that he was not liable, because, in fact, he had disposed of his stock before July 27, and offered evidence to prove the fact. The statute did not, in express language, provide that entry on the books of the company should be required. On this the court held that, as to creditors, the books of the company must show the transfer, or they would not be bound.
Our statute, in the section fixing and defining the liability of stockholders to creditors, after declaring that such liability “ shall continue for one year after the sale or transfer,” proceeds immediately to declare how transfers of the stock may be made, viz.: “by the indorsement and delivery of the stock certificate and the registry of such transfer on the books of the company. ’ ’
How are creditors of the company to inform themselves who are stockholders thereof? The answer, we think, is to be found in the statute, which continues the liability for one year after the sale or transfer, and then proceeds to define how the transfer may be made, viz.: by entry thereof on the books of the company. As to creditors, whose rights are in this section the subject of consideration, one, and only one, method of transferring his stock is permitted to the stockholder. Whatever may be the effect of a transfer otherwise made, as between the transferee and transferer, or between these and the company, nothing else can avail to discharge the liability of the stockholder to creditors than the transfer and the entry thereof *470on the books of the company and the lapse thereafter of the time named in the statute. As the appellant was a stockholder when the debt due to the appellee was contracted by the company, and has never caused an entry of the transfer of -his stock to Wether bee to be made on the books of the company, he is liable to the demand of the creditor to the extent of his unpaid subscription, and the judgment is

Affirmed.