Murfey, Blossom & Co. v. State ex rel. Fulton

31 N.E.2d 134, 31 N.E. 134, 20 Ohio Law. Abs. 176, 4 Ohio Op. 443, 1935 Ohio Misc. LEXIS 994
CourtOhio Court of Appeals
DecidedDecember 23, 1935
DocketNo 14796
StatusPublished
Cited by2 cases

This text of 31 N.E.2d 134 (Murfey, Blossom & Co. v. State ex rel. Fulton) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Murfey, Blossom & Co. v. State ex rel. Fulton, 31 N.E.2d 134, 31 N.E. 134, 20 Ohio Law. Abs. 176, 4 Ohio Op. 443, 1935 Ohio Misc. LEXIS 994 (Ohio Ct. App. 1935).

Opinion

[179]*179OPINION

By TERRELL, J.

The Superintendent of Banks in this action had named as defendants several hundred stockholders among whom was Murfey, Blossom and Company. At the outset of the trial and as pertaining to the claim against Murfey, Blossom and Company, a jury trial was demanded by it. The court denied this request on the ground that an action of this kind to enforce a double liability of stockholders was a special proceeding under the statute and in the nature of an action in equity and therefore defendant had no right to a trial by jury.

The majority of t-his court is of the opinion that the trial court was in error in this ruling. This is an action for money only. The liability of the defendant, if any, is individual. An issue of fact as to whether or not the defendant was a stockholder within the purview of the statute creating the liability is a question that should have been presented to a jury.

Sec '11379 GC reads as follows: “Issues of • law must be tried by the court, unless referred as hereinafter provided. Issues of fact arising in action for money only, or ■specific real or personal property, shall be determined by a jury, unless a jury trial be •waived, or a reference be ordered as hereinafter provided.”

There is no ground for the invocation of the jurisdiction of a court of equity in this case. It is purely and simply an action .for money only. There was a one hundred percent assessment made against all stockholders in said bank. If the defendant was a stockholder within the purview of the statute it was liable for the full one hundred percent assessment. The jury trial was not waived but was in fact demanded.

. As to the right of trial by' jury in this class of cases in Ohio the question has not been before our courts many times. In a :late case, however-,.of Baumgartner v Fulton, 48 Oh Ap page 5, (16 Abs 71) it is suggested that defendant had the right of trial by jury. In Kennedy v Gibson, 8 Wallace, 498, at page 505, as mentioned in the .Baumgartner case, -it was held:

“The liability of the stockholders is several and not joint. The limit of their liability is the par of the stock held by each one. Where the whole amount is sought to be recovered the proceeding must be at law. Where less is required the proceeding .may be in equity * * *.”

. It is contended by counsel for the Superintendent that the only right of trial byt jury that is held inviolate under the terms of the Constitution is the right to have such cases tried by a jury as were in contemplation as jury cases at the time of the .adoption of the Constitution. Counsel further contends that a cause of action similar to the one of this suit, was not known 'at the time of the adoption of the Constitution of Ohio in 1802. It first appears in the Constitution of 1851, which was amended in September of 1912.

It may be true that stockholders’ double .liability was not known in 1802 at the time of the adoption of the Constitution. There are, however, hundreds of new and different kinds of causes of action at this time that were not directly existing at the time of the adoption of the Constitution which are triable to a jury. However, in its fundamental form this cause of action was .known at the time of the .adoption of the Constitution. The. relation of a stockholder to his company, his associate stockholders .and the creditors of the Company, is a relation that arises out of contract. The stockholders’ double liability is created by the Constitution and by- statute and by the force thereof attaches itself to every stockholder’s contract when he becomes a stockholder. So it can be logically stated that this iiability of a stockholder arises out of the stockholder’s contract. It will not be denied that an action for money only, on contract, existed and was tryable to a jury at the time of the adoption of the Constitution.

Nor are we without the benefit of decided cases upon this very subject:

The case of Hawkins v Furnace Company, 40 Oh St 514, was an action to enforce stockholders’ liability. The court 'therein -says this liability, “embraces the elements of contract.”

In this Hawkins case, above, is cited the case of Carrol v Green, 92 U. S. 509, which was also an action on stockholders’ liability. The court held- that the statute of limitations as for implied assumpsit applied as to the liability, clearly recognizing it arose under contract. -

In Brown v Hitchcock, 30 Oh St 678, which was a case concerning stockholders’ liability, the court quoted .with apparent approval from the case of Coming v Me[180]*180Cullough as follows: “It is virtually and in effect a liability on contract and the mutual agreement of the parties; not indeed in form an express personal contract, but an agreement of equally binding obligation.”

The same principle is laid down by the Supreme Court of the United States in Hawthorne v Calef, 2 Wall, 10, wherein it was held that a statute impairing the right of existing creditors to resort to such liability of stockholders for payment was void as impairing the obligation of contract. See also Cohiltree v Railroad, 21 Wall, 249, 252.

In Norris v Wrenschall, 34 Md. 496, and in Hager v Cleveland, 36 Md. 476, the stockholders’ liability to creditors is held to be in the nature of a contract. The court says: “It is a debt under the statute due from the stockholders to the creditors, springing out of and co-existent with the contract between the corporation and the creditors.”

It was held in Wisconsin under statutes imposing superadded liability on bank stockholders “equally and ratably, not one for another,” the stockholders’ liability is several, not joint, and they may be proceeded against in separate actions. Schwenker v Bekkedal, 204 Wis. 546; 236 NW 581, and under this case the right of trial by jury was accorded to the defendant, although the suit was permitted against all of the stockholders in the same action.

If courts extend the rule of procedure and allow the Superintendent to bring one action against all of the stockholders for the purpose of convenience and the avoidance of a multiplicity of suits and the saving of expense, it is no reason that the right of trial by jury should be denied to the defendants.

The statutes of the State of Ohio imposing stockholders’ double liability pertaining to banks is patterned after the United States statute. Under the United States statute the question of actual ownership . of the stock is one for the jury. Rankin v Fidelity, 189 U. S. 242.

It is well recognized by our own Supreme Court that “where plaintiff prays a personal judgment anil foreclosure of a conditional land contract, the defendant is entitled to have the issue of personal judgment, if such issue is joined submitted to the determination of a jury, and a denial of that right by the trial court is error. MacKenzie et v Stuber, 119 Oh St 588.

Counsel for the Superintendent contends that to allow each of the hundreds of defendants the right of trial by jury would make his task extremely difficult. The • difficulty of the situation is no reason for denying one a constitutional right. Counsel for the Superintendent over-estimates ■the difficulty that would be encountered in identifying the stockholders.

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Bluebook (online)
31 N.E.2d 134, 31 N.E. 134, 20 Ohio Law. Abs. 176, 4 Ohio Op. 443, 1935 Ohio Misc. LEXIS 994, Counsel Stack Legal Research, https://law.counselstack.com/opinion/murfey-blossom-co-v-state-ex-rel-fulton-ohioctapp-1935.