Howard v. Glenn

11 S.E. 610, 85 Ga. 238

• Court: Supreme Court of Georgia
• Decided: April 21, 1890
• Status: Published

Opinion

Blandford, Justice.

At the appearance term the defendant filed a motion to dismiss the plaintiff’s declaration, on the ground that he failed to annex a copy of the written terms of subscription, and copies of the proceedings referred to in his declaration, with a copy of the call for the enforcement of which this action was brought. Subject to this motion the defendant pleaded (1) that the National Express and Transportation Company was not, on the 14th day of December, 1880, a body politic and coi'porate as alleged in the plaintiff’s declaration; (2) that the plaintiff is not a legally appointed trustee and authorized to institute this action by virtue of his appointment; (8) that if the defendant ever subscribed to stock, it was to the National Express Company, whose charter was amended without the knowledge or sanction of this defendant; (4, 5 and 6) the statute of limitations. When this dase came on to be tried, the court ordered these pleas stricken, and overruled the motion to dismiss the plaintiff’s declaration.

1. In our opinion, the plaintiff’s declaration set forth a cause of action against the defendant. The declaration substantially alleged that Howard was a subscriber to the National Express and Transportation Company for fifteen shares of its capital stock, amounting to the sum of $1,500.00 ; that this company, having become insolvent, made an assignment to certain persons as trustees ; that certain creditors of this company filed a bill in the city court of Richmond, upon which there was a decree rendered, praying that the defendant in error, Glenn, should be appointed a trustee with authority to sue and collect from the corporators of the National Express and Transportation Company a certain assessment and call made upon them by the decree of that court. The officers or persons representing the National Express and Transportation Company were made parties defendant to that bill. We think, so far as Howard had any interest in this company, that he was represented by the corporation in that ease, and that he was bound by the decree rendered in the same (it being rendered by a court of competent jurisdiction), notwithstanding that Howard may at the time have been a citizen of Georgia, and may not have been served with ■any process in that case. So we think the court did right to overrule the demurrer of defendant to the plaintiff’s declaration. We think, also, that the pleas 1st, 2d and 3d, and 4th, 5th and 6th, were properly dismissed on demurrer by the court. We think that Glenn was duly appointed a trustee, and as such had a right to bring this suit; and that if the defendant subscribed to stock in the National Express Company, although the charter may have been amended without, his knowledge or sanction so as to make it the National'Express and Transportation Company, this did not relieve the defendant from any liability to. pay up his unpaid stock, this not being such a material alteration of the charter as would relieve the defendant, Howard. And this court held in 81 Ga. 383, in this same case, that the statute of limitations did not apply to the same.

2. We think there was no error of the court in holding that the first plea of the defendant in this case was insufficient, in that it .alleged that the action brought by the plaintiff did not set forth the outstanding creditors for whose benefit the same was instituted, the decree of the court in Virginia having set forth such creditors; and we hold that that decree was binding on the defendant, Howard, as to all matters therein contained, if he was a corporator in the National Express and Transportation Company.

3. It is alleged as error that the court erred in striking the second plea of defendant, that the decree of the chancery court of the city of iiichmond of December 14, 1880, set forth in the petition, was not such a contract of record as was binding upon him personally for any purpose, in that the court was without jurisdiction over him as a resident citizen of the State of Georgia, who was never served with process therein, who never appeared, or had notice thereof until the institution of this suit. We think that when the corporation was sued at the instance of creditors, and was duly served, Howard was bound as a corporator by any proceedings in that case, and that there was no error in striking the second plea.

4. We think the third plea was also properly stricken by the' court, inasmuch as we think that whatever fraud may have been committed by the corporation would not ojaerate to defeat an action by the creditors of the corporation, however it might be as between the corporation and a corporator. Persons who gave credit to this corporation would not be bound by any fraud between the corporation and the corporators. As between the corporation and a corporator, such defence may or may not have been good; but as between a trustee appointed by a court to bring suit and collect the unpaid subscriptions of a corporator, no such defence could be made.

5. Wo think the fourth plea was properly stricken on demurrer, in this: that while it alleged the decree of the court in this case in Virginia, to the effect that if the stockholders should pay a certain per cent, upon their subscriptions within a certain time, this would be sufficient to pay off the indebtedness of the company, the plea did not allege that there was any tender or offer on the part of defendant to pay under that decree, within the time therein prescribed, the amount prescribed to be paid. To avail himself of that decree, the defendant should have paid, or have offered to pay, the amounts specified in the decree. No such allegation appears in this plea,' and therefore it was properly stricken.

6. It is complained that the court erred iu striking the fifth plea, or so much thereof as alleged that the subscription was induced by fraud, and is void for false and fraudulent representations made, and for the fraudulent suppression of material facts concerning said company j the court allowing the words to stand in said plea: that defendant at no time became a subscriber to the National Express and Transportation Company ; that he did sign a paper subscribing to the National Express Company for fifteen shares of the capital stock. "Whether Howard became a stockholder in this company by subscription which was induced by fraud practiced upon him, or not, if he did become a stockholder in said company, he is liable to the creditors of the company for so much of his unpaid stock as might be necessary to pay the company’s debts, taken in connection with the other corporators of the company. And whether fraud was practiced upon him or not, would make no difference as to the creditors; it would be a question between him and the corporation, with which the creditors had nothing to do. So we think the court committed no error in striking that portion of the fifth plea complained of. We think the sixth plea was properly stricken for the reasons stated in justification of the court in striking a portion of the fifth plea.

7. In the seventh plea, which was also .stricken by the court, it is alleged that the plaintiff" had settled with and released from liability several stockholders under said decree, and defendant contends that this is equivalent to a release of himself. "We think the court properly struck this plea. The defendant is bound to the creditors upon his subscription to the capital stock of this company, and whether other stockholders were released or not, is a matter with which he has no concern, unless this action on the part of the ci-editors or their agent increased his liability.

8. For the same reason we think the court was right in striking the eighth plea, which is complained of; and also the niuth plea. "When the plaintiff below showed that he had been duly appointed a trustee, by a court having competent jurisdiction, to recover of the stockholders of this company their unpaid subscriptions, for the purpose of paying off the creditors of the corporation ; and when the plaintiff showed that defendant was a stockholder and had subscribed so many shares to the capital stock of this company, and that the court had' made an assessment upon the stockholders for a certain per cent, upon the stock subscribed, and authorized him to sue and collect the same, we think he made out a case which entitled him to recover, notwithstanding any fraud which might have been practiced upon the. stockholder to procure his subscription to the capital stock of this company by the corporation or its agents. Fraud thus practiced upon the subscriber was a matter ’ which did not affect the creditors of the corporation.

The great question in this case is whether the defendant, Howard, who is now the plaintiff in error, was a corporator and a subscriber to the capital stock of this company. He admits by his plea that he did subscribe to fifteen shares of the capital stock of the National Express Company; and it was shown by the evidence introduced by the plaintiff in the court below that the National Express Company and the National Express and Transportation Company were one and the same. A mere change in the name of a corporation we do not think makes any material difference, clearly not such a difference as would relieve a subscriber from liability to pay for stock subscribed by him.

9. It is insisted that the court erred in allowing the books of the corporation to be put in evidence for the purpose of showing that the defendant did subscribe to fifteen shares of stock, and to show also certain other things therein contained. When it was shown that the defendant was a stockholder in the company, then the books of the company were admissible in evidence against him. But when this fact is not shown, we are of the opinion that the books of the company would not be admissible in evidence against him. In this case, however, it was admitted by the plaintiff in error that he did subscribe to so many shares of stock in the National Express Company; so when it was proved that the National Express Company and the National Express and Transportation Company were one and the same corporation, we think the books were admissible in evidence, not only to show that Howard was a stockholder, the number of shares and the value thereof he subscribed for, but to show any other transaction that had taken place between him and this company. We are aware that it has been held that the books of a corporation are admissible to show prima facie that the defendant was a subscriber to the stock of the company) and was a stockholder therein; but while we do not think this ruling is correct upon any reason or principle known to us, yet, under the facts of this case, we think the books were properly admitted in evidence. "We know of no decision, however, which shows upon principle that such books are admissible without some special circumstance. We do not think that the case of Turnbull v. Payson, 95 U. S. 418, a decision by Judge Clifford to the effect that the books of a corporation are admissible in evidence to show that a person is a stockholder, is correct. No reason is assigned in that decision, and none has been assigned in any decision which we have been able to find in either North Carolina or Alabama. But we think under the facts of this case, where the defendant admitted that he was a- subscriber to the stock of the National Express Company, and where it was shown that the National Express Company and the National Express and Transportation Company were one and the same thing, that the books were properly admitted. We think, furthermore, that when the subscription list was tendered, and admitted in evidence by the court below, the plaintiff' in error had a right to show that he did not subscribe to this list; and therefore think the court committed error in refusing to allow him to make such proof. Yet we do not think this is reversible error, inasmuch as it appears from the record, Avithout more, that the plaintiff had a right to recover in this case. So, upon considering this case, we are of the opinion that there was no material error committed by the court below, and that the finding of the jury was right under the facts in proof.

10. It is contended by the plaintiff' in error that the admission in the fifth plea, to the effect that he had never subscribed to - the National Express and Transportation Company, but that he did subscribe fifteen shares to the National Express Company, could not be used as an admission against him upon the trial of any other plea than that; and the case of Glenn v. Sumner, 132 U. S. 156, is cited as authority to sustain this position. In the present ease the main issue was, Avhether the plaintiff in error was a subscriber to the stock of the National Express and Transportation Company. It was affirmatively alleged in the declaration that he Avas; and if he Avas such subscriber, his liability under the facts of the case was clear and unmistakable. We think this allegation in the plaintiff’s declaration, that he was such subscriber, called forth from him a clear and explicit denial of the same by a plea of non est factum, as was strongly hinted at by the Supreme Court of this State in the case of Thornton v. Lane, 11 Ga. 489. This was the main issue in the case, and without a determination of the same against the plaintiff, the plaintiff was entitled to judgment. So we think that a plea which denies that the defendant was a subscriber to this company, but which at the same time admits that he was a subscriber to another company (which two companies were one and the same), was evidence against the defendant (now plaintiff' in error) and might be so used as an admission. While- we admit that under the laws of this State a defendant may file as many contradictory pleas as he thinks proper, yet if one of those pleas bears on the main issue in the case, and there be an admission in the same by the defendant which is calculated to damage his cause, that admission may be used in evidence against him. In fact, the only issue to he determined by the jury in this case was whether Howard became a subscriber and stockholder in this company, and any plea which bore upon that issue, and which contained admissions by thé defendant, could be used against him. So we think that in the case of Glenn v. Sumner, supra, what was' said by the judge in delivering the opinion therein, to the effect that statements made for the purpose of presenting the issue to which they relate are not evidence upon any other issue in the same record, does not apply td this case. Judgment affirmed.