Nichols v. Stevens

123 Mo. 96, 1894 Mo. LEXIS 222

• Court: Supreme Court of Missouri
• Decided: June 18, 1894
• Status: Published

Opinion

Sherwood, J.

— This proceeding is grounded upon section 736, Revised Statutes, 1879, now section 2517, Revised Statutes, 1889, and section 940, Revised Statutes, 1879, now section 2782, Revised Statutes, 1889, which sections are respectively as follows.

“Sec. 736. If any execution shall have been issued against any corporation, and there can not be found any property or effects whereon to levy the same, then such execution may be issued against any of the stockholders to the extent of the amount of the unpaid balance of such stock by him or her owned; provided, always, that no execution shall issue against any stockholder, except upon an order of the court in which the action, suit or other proceedings shall have been brought or instituted, made upon motion in open court after sufficient notice, in writing, to the person sought to be charged; and, upon such motion, such court may order execution to issue accordingly, and provided further, that no stockholder shall be individually liable in any amount over and above the amount of stock owned.”

“Sec. 940. No stockholder shall be personally liable for the payment of any debt contracte4 by any corporation created under this article, .which is not to be paid within one year from the time the debt is contracted, nor unless a suit for the collection of such debt shall be brought against such corporation within one year after the debt shall become due; and no suit shall be brought against any stockholder who shall cease to be a stockholder in any such corporation for any debt so contracted, unless the same shall be commenced within two years from the time he shall cease to be a stockholder in such corporation, nor until an execution shall have been returned unsatisfied, in whole*or in part.”

1. Whatever may have been thought at a former period, and in some jurisdictions, as to the effect upon a stockholder of a judgment rendered against his corporation, at the present time, the execution and organization of a corporation having been established, a judgment against such corporation, being proved, is conclusive evidence of debt against its stockholders, where the plaintiff in the original and the primary and auxiliary actions is the same, in the absence of collusion, fraud, etc., and not upon original grounds. 1 Freeman on Judgments [4 Ed.] sec. 177, and cases cited. And a judgment by default against a corporation equals, in conclusiveness as to a stockholder, one obtained after contest. Authorities supra. Except on the grounds before mentioned, it is out of the power of a stockholder to go back into the original consideration of the judgment against the corporation, that the indebtedness for which the judgment was rendered, was the debt of the president and not of the corporation. Thompson’s Liabilities of Stockholders, secs. 329, 337, and case,s cited; Donworth v. Coolbaugh, 5 Iowa, 300.

Such judgment against the corporation is valid against a stockholder, until reversed by him in some direct proceeding for that purpose, and can not be attacked collaterally. See authorities supra.

The rule thus announced in the foregoing authorities eliminates the defenses relied on by defendant, that Nichols was not the owner of the notes that were-merged in the judgment against the corporation; that such notes had been paid, or that the transactions which gave origin to the notes were fraudulent. At any rate, there was no fraud proved at the trial, nor does the second defense in the answer show that the judgment, against the corporation was concocted in fraud; that fraud was practiced in the very act of obtaining the judgment. The fraud in such case must be actual fraud as contradistinguished from a judgment obtained on. false evidence or a forged instrument on the trial. 1 Bigelow on Fraud, pp. 86, 87; United States v. Throckmorton, 98 U. S. 61; Ward v. Southfield, 102 N. T. 287; 2 Story’s Equity Jurisprudence, sec. 1579.

The principle, of course, would be the same were a. party defendant to resort to a collateral attack on the-judgment alleged to have been fraudulently obtained, instead of a direct attack. And there is abundant-authority to sustain the view that in modern adjudication there is no longer any distinction made between the two methods of .attack. 1 Bigelow on Fraud, p. 94,. and cases cited; Mandeville v. Reynolds, 68 N. Y. 528; Rogers v. Gwinn, 21 Iowa, 58; Davis v. Headley, 22 N. J. Eq. 115; Dobson v. Pearce, 12 N. Y. 165; Ward v. Quinliven, 57 Mo. loc. cit. 427; 2 Freeman on Judgments [4 Ed.], sec. 576, p. 996; 2 Black on Judgments, sec. 973; Spencer v. Vigneaux, 20 Cal. 442. So that, should we treat the answer as a collateral attack on the corporation judgment, the result would not be at all variant from a direct attack, since in the former, as well as in the latter, the substance of the pleading would have to be the same.

As to the third defense of defendant’s answer, it is bad on grounds already stated, and also on the additional ground that a simple conclusion of law is pleaded. That it is necessary to set forth in a petition the facts constituting the fraud pleaded, no one has ever doubted or denied. Logical and legal consistency, therefore, require that an answer should as necessarily state the constitutive facts of the fraud relied on, as that a petition should do so. This is the view taken by Judge Bliss in his work on pleading, where he says: “In alleging fraud, it will not suffice to say that the party fraudulently procured, or fraudulently induced, or fraudulently did this or that, or that he committed or was guilty of fraud; the facts which constitute the fraud must be stated. Fraud is a conclusion of law. A statement that defendants, in concert, did by connivance, conspiracy and combination, beat and defraud the plaintiff out of, etc., does not state the facts that constituted the cause of action. It does not appear what they did; the legal conclusion — an epithet only — is applied to their acts without knowing what they were.” Code Pleading [2 Ed.], sec. 211; see, also, Ibid. sec. 339, and note.

Several authorities in this state support a similar view as to a petition. Smith v. Sims, 77 Mo. 269; Reed v. Bott, 100 Mo. 62; Hoester v. Sammelmann, 101 ; Mateer v. Railroad, 105 Mo. 320; Williams v. Railroad, 112 Mo. loc. cit. 496, No reason is perceived why the same rule should not as well apply to an answer as to a petition.

The case of Montgomery v. Tipton, 1 Mo. 446, holds a general averment of fraud good in an answer, and cites Chitty’s Pleading as authority, and Pemberton v. Staples, 6 Mo. 59, follows in its wake; and the same .may be said of Edgell v. Sigerson, 20 Mo. 494. The cases in 1 and 6 Mo. were correctly decided, because we were then practicing under the common law; not so, however, when EdgelVs case was determined, because that was in 1855, and we had adopted in substance the New York Code in 1849, and with its adoption, we took with it the construction put upon it by the courts of that state, which construction is contrary to the views expressed in EdgelVs case. Pierson v. Cooley, 1 Code Reporter, 91; Beers v. Squire (1848), Ibid. 84; McMurray v. Gifford, 5 How. Pr., 14, and cases cited. See, also, Lefler v. Field, 52 N. Y. 621. This view is also taken in other code states. See note to section 339, Bliss on Code Pleading.

And there is as little reason for making any dis- . tinction in this regard between petitions and answers, as there is for saying that a petition is not good, in equity unsles it sets forth the facts constituting the fraud; but that it may be good at law, because we have in this state but one form of action. If fraud is necessary to be pleaded at all, it is just as necessary to plead the constitutive facts when asking for legal relief, as there is when asking for eqiiitable relief. See Clough v. Holden, 115 Mo. loc. cit. 353, 354.

In Little v. Harrington, 71 Mo. 390, obeying the behests of the code, we disapproved Fordyce v. Hathorn, 57 Mo. 120 and earlier cases, which asserted that matters in abatement and in bar could not be united in the same answer. Little’s case has frequently been followed since. Byler v. Jones, 79 Mo. 261; May v. Burk, 80 Mo. 675; Young Men’s Christian Association v. Dubach, 82 Mo. 475; Cohn v. Lehman, 93. Mo. 574.

For these reasons the answer should be held insufficient both in its second and third defenses, and if so, the evidence offered in support of those defenses, need not be set out at large.

2. The evidence shows that defendant Stevens subscribed for fifty shares of stock in the company. This being the case, his liability was commensurate with that number of shares, and that liability could not be diminished by a release from tbe president, of which there was no proof. Even the directors of the corporation could not release a stockholder to the prejudice of creditors. Upton v. Tribilcock, 91 Mo. U. S. 45; 1 Beach on Private Corporation, section 109; Plank Road Co. v. Menefee, 25 Mo. 547, and other cases.

3. The original motion to obtain execution against Stevens and Mirrick not having been preserved, we can only conjecture as to what it was, and, in the absence of the original, we shall presume that the trial court ruled correctly in permitting the amendment to be made which was made; because there was no exception saved as to the amendment being permitted, or if there were, it was abandoned by not being preserved in the bill of exceptions, the only repository known to the law where matters of mere exception can be preserved. A recitation in the record of matters not properly belonging thereto, of matters belonging solely to the bill of exceptions, can not be noticed in an appellate court. Matters which are not in fact a part of the record can not be made such by the mere recital of the clerk. Parkinson v. People, 24 N. E. Rep. 772 and cases cited. Gould v. Howe, 127 Ill. 251, and cases cited.

4. It will have been noticed that section 736 of the statute requires a motion to be made in order to have execution issued against a stockholder; that section is found under the title corporations, and under the special head of “General Powers, Duties and Liabilities,” while section 940, supra, of the same chapter is found ranged under the head of “Manufacturing and Business Companies,” and requires a suit to be brought, etc., etc.

The motion in this case is sufficiently comprehensive to constitute a petition and is a petition in all essential particulars, and is to be so treated. Wilson v. Railroad, 108 Mo. 588 and cases cited. So that no'objection can be raised to the form of the pleading, and, no exceptions having been saved to the amendment of the motion in the trial court, and the defendant having pleaded to it and gone to trial, he can not raise the point of a change of cause of action, even if such amendment could be regarded as such change, which is not admitted.

V. It is urged, in regard to the removal of\the cause to the federal court, that error occurred. Several authorities establish the proposition that when a cause has been removed to a federal court and has been remanded because the petition for removal does not set up the diverse citizenship of the parties at the commencement of the suit, etc., there a second removal on the same ground is not allowable. Johnston v. Donvan, 30 Fed. Rep. 395; Railroad v. McLean, 108 U. S. 212, and cases cited. And even if this obstacle had not arisen in this case, one equally fatal is apparent of record, and that is that Stevens did not file his petition for removal until several terms of the Pettis circuit court had lapsed. Woolf v. Chisolm, 30 Fed. Rep. 881; Austin v. Gagan, 39 Fed. Rep. 626; Dixon v. Telegraph Co., 38 Fed. Rep. 377. And it has also been held by the federal courts, that an extension of time to the next term could not be granted even by stipulation of parties. Car Co. v. Speck, 113 U. S. 84, et seq. This was the ruling under the removal act of 1875, and that of 1887 is much more strict. Refusal of the trial court to permit defendant Stevens to amend his petition for removal was, therefore, proper.

VI. The declarations of law asked by defendant need not be discussed in detail as the principles they involve have been sufficiently touched upon already; there was no error in refusing them.

Therefore judgment affirmed.

Burgess, J., concurs. Gantt, P. J., not sitting.

IN BANC.

Per Curiam.

— The foregoing opinion delivered in division number two is adopted and approved in lane.

Gantt, J., not sitting. Barclay, J., concurs in the result.