Northern National Bank v. Maumee Rolling Mill Co.

2 Ohio N.P. 260
CourtLucas County Court of Common Pleas
DecidedDecember 15, 1894
StatusPublished

This text of 2 Ohio N.P. 260 (Northern National Bank v. Maumee Rolling Mill Co.) is published on Counsel Stack Legal Research, covering Lucas County Court of Common Pleas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northern National Bank v. Maumee Rolling Mill Co., 2 Ohio N.P. 260 (Ohio Super. Ct. 1894).

Opinion

PUGSLEY, J.

This case is before the court upon a motion by the defendant, Henry Worthington, to discharge an attachment. The action was brought by the plaintiff as a creditor cf The Maumee Rolling Mill Co., an insolvent coproration, against the corporation and. its stockholders, to subject the statutory liability of the stockholders to the payment of its debts. The petition was filed upon the 26th day of May, 1894. Upon the 11th day of July, 1894, an affidavit for an attachment was filed by the plaintiff against the defendant Worthington, upon the ground of non-residence. Upon the same day an order of attachment wag issued, and on the following day the attachment was levied by the sheriff upon a large amount of real estate situated in this county, as the property of the defendant. The defendant has filed amotion to discharge the attachment upon two grounds: 1. That the plaintiff is not entitled to an attachment, for the reason that the action is not for a debt or demand arising upon contract; and 2, That the affidavit for the attachment is defective, for the reason that it does not show the nature of the plaintiff’s claim. I will read the affidavit omitting the caption:

“G. W .Kinney being first duly sworn deposes and says: That he is one of the attorneys for the plaintiff herein; that the defendant The Maumee Rolling Mill Co., is a corporation organized and existing under the laws of the state oí Ohio, and that the defendant, Plenry Worthington, is a stockholder of said corporation, and is the owner and holder of 154 shares of the capital stock of said corporation, of the par value of $154,000; that this action is brought to enforce the liability of the stockholders of said corporation under the constitution and laws of the state of Ohio, for the payment of the debts of said defendant corporation, and that the claim sued on against said defendant, Henry Worthington is his liability as such stockholder fur the debts of the said defendant corporation; and that said claim is just. Affiant believes that the said plaintiff ought to recover from the said defendant, Henry Worthington, the sum of $65,000, with interest. The defendant, Henry Worthington, is a nonresident of the state of Ohio. ”

Section 5521, Rev. Stat., as amended March 2, 189.1, and now in force, reads as follows:

“Tn a civil action for the recovery of money, the plaintiff may, at or after the commencement thereof, have an attachment against the property of the defendant, upon the grounds herein stated:
“1. When the defendant, or one of several defendants, is a foreign corporation, or a non-resident of this state.”

Eight other grounds for attachment are specified, which need not be referred to. Then follows this provision:

“But an attachment shall not be granted on the ground that the defendant is a foreign corporation or a non-resident of this state for any other claim other than a debt or demand arising upon contract, judgment or decree, or for causing death or a personal injury by a negligent or wrongful act.”

While the language of this provision is not in all respects as clearly expressed as it might be, yet, under that clause which is applicable here, the question to be determined is fairly presented; and that is, whether this action is one for a debt or demand arising upon contract.

It must be conceded that it is a civil action for the recovery of money; but to warrant an attachment on the ground of non-residence, it must be for a debt or demand arising upon contract.

It is contended by the defendant that the word “contract” in the statute is not used in a broad and general sense as including all obliga[262]*262tions of a contractual nature, but that it must be construed as meaning only what is commonly understood by that term, namely, an agreement expressed or implied, arising directly from the dealings of the parties with each other, and creating a right of action at common law , without the aid of any statute. On the other hand, it is contended by the plaintiff that there is no good reason for limiting the word “contract” to any particular kind of contract obligation; but that, under the liberal interpretation given to this statute by former decisions of the Supreme Court, it must - be held to include all obligations which embrace the elements of a contract and exclude no obligations or liabilities excepting torts and such as are clearly not contractual in their nature.

As to the nature of this action, under our siatutes and decisions, there can be very little controversy. By sec. 3258, Rev. Stat., “The stockholders of a corporation which may lie hereafter formed, and such stockholders as are now liable under former statutes, shall be deemed and held liable, in addition to their stock, in an amount equal to the stock by them subscribed, or otherwise acquired, to the creditors of the corporation, to secure the payment of the debts and liabilities of the corporation.” By sec. 3260, “A stockholder or creditor may enforce such liability by action jointly against all the holders or owners of stock, which action shall be for the benefit of all the creditors of the corporation, and against all persons liable as stockholders; and in such action there shall be found and determined the amount payable by each persons liable as stockholder on all the indebtedness of the corporation.” This latter section, which first appeared in the revision of 1880, merely incorporated into the statute what had before that been decided by the Supreme Court, with the addition that a stockholder as well as a creditor may bring the action to enforce the liability.

It is an equitable action under the statute for the common and equal benefit of all the creditors. No creditor can acquire a priority or institute a separate suit in bis own behalf. As between the stockholders and the creditors, each stockholder is severally liable to all the creditors, and as among the stockholders, each stockholder is bound to pay in proportion to his stock. It is further held that Ihe liability of the stockholders is not a primary fund for the payment of the debts of the corporation, but is collateral and conditional to the principal obligation which rests upon the corporation, and is to be resorted to by creditors only in case of ihe insolvency of the corporation, or when payment cannot be enforced against it by ordinary process, and that this conditional liability has reference only to the condition to which its enforcement by creditors is subject; and that its taking effect as an obligation in favor of creditors is not conditional or contingent.

In the ease of Hawkins v. Furnace Co., 40 Ohio St. 507, it was held that the action of a creditor to enforce the stockholder’s liability is an action upon a liability created by statute, and is barred in six years; but the court say that it also embraces the elements of an implied contract, and that the bar of the statute as to -actions upon implied contracts would be applied, if the implied contract only could furnish a bar; and that while the statute creates the obligation, a contract or promise is raised by implication, which runs with the statute liability.

In the case of Brown v. Hitchocck, 36 Ohio St. 667, it was held that the stockholders’ liability attaches in favor of creditors at the time the debt is" contracted by the corporation. I will read from the opinion in that case, on page 678-

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Bluebook (online)
2 Ohio N.P. 260, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northern-national-bank-v-maumee-rolling-mill-co-ohctcompllucas-1894.