Tyer v. Cole

1926 OK 623, 248 P. 601, 118 Okla. 279, 1926 Okla. LEXIS 914
CourtSupreme Court of Oklahoma
DecidedJuly 13, 1926
Docket16736
StatusPublished
Cited by5 cases

This text of 1926 OK 623 (Tyer v. Cole) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tyer v. Cole, 1926 OK 623, 248 P. 601, 118 Okla. 279, 1926 Okla. LEXIS 914 (Okla. 1926).

Opinion

Opinion by

LOGSDON, C.-

Defendant presents his argument for reversal of the judgment under three propositions, as follows:

“(1) Is the default judgment rendered against the; Michorn Oil Company conclusive against this defendant as to the correctness of the amount claimed by plaintiff?
“ (2) That plaintiff’s original action *281 against tlie oil company, being to establish and foreclose a mechanic’s lien, an exhaustion of the assets of that company impressed wich the lien is a prerequisite to plaintiff’s right to maintain the instant action.
“ (3) That there is no legal authority for including in the instant judgment the sum of $100 for attorney’s fees allowed in the original judgment against the oil company.”

In the arguments under the first proposition the brief of neither party has cited any prior decision of this court to support the contentions made by each respectively. Numerous decisions from other jurisdictions are cited and quoted from freely, but by reason of their diverse holdings, and the variance of statutory language considered in rendering them, they cannot be otherwise than inconclusive.

It is unquestionably the generally accepted rule, that in actions or proceedings to enrorce a stockholder’s statutory liability for the general debts of the corporation, a prior judgment against the .corporation is conclusive as to the validity and amount of the claim. This is upon the theory that the statutory liability of the stockholder is primary up to the par value of his stock, and that he1 has had due notice of che action through representation by the corporation. (Thompson on Corporations [2nd Ed.] vol. 4, sec. 4970, et seq.) This rule would be applicable here if the instant action were based on Comp. Stat. 1921, sec. 5345. Does it apply to actions based on see lion 5463, Id.? In comparing these two sections for the purposes of this discussion, only the first sentence of section 5345, and section 5463 down to its first proviso, are materia). This is rhat language:

“5345. Individual Liability oi’ Stockholders. Each stockholder of a corporation is individually and personally liable for the debts of the corporation to the extent of the amount that is unpaid upon the stock held by him.
“5463. Stockholders Liable to Laborers and Mechanics. The stockholders of any corporation formed for the purposes mentioned in this article shall be jointly and^ severally liable, in their individual capacities, for all debts due to mechanics, workmen and laborers employed by such corporation, which said liability may be enforced against any stockholder by an action at .any time after an execution against such corporation shall be returned not satisfied.”

Under the above quoted language of section 5345. the liability is absolute \to the amount that is unpaid on the stock, and it is of no moment to the stockholder whether the debt is just, true, correct, and due. Ilis liability can be neither increased nor diminished by the existence or nonexisience of either or .all of these elements of the debt of any individual creditor. When he has paid the amount which he has obligated himself to pay by his subscription his liability ceases whether the debt be paid or not. No such limitation exists on, nor does any such element of contract enter into-, the stockhuhh er’s liability under sec. 5463. His stock may be fully paid, yet his 'liability continues.

The liability of the stockholders to mechanics, workmen, and laborers under section 5463 is analogous to the liability of the owner to a subcontractor under section 7463, Id. Both are the ultimate paymasters. Under section 7463 the owner must be served with a copy of the lien statement, so that he may inform himself as to its, correctness, and no lien can be fixed upon the owner’s property for labor or material in excess of the amount which the contractor agreed to pay the subcontractor. Steger Lumber Co. v. Haynes et al., 42 Oírla. 716, 142 Pac. 1031. If the owner, whose properly is benefited by the labor or material of a subcontractor, is required tu- be notified and furnished a copy of the itemized lien statement it would seem that equitable principles and the right of due process would require notice ro and an opportunity for investigation and intervention by a stockholder before the amount of his liability under section 5463 could be conclusively established by a judgment against the corporation. He is not in priviiy with the corporation or its officers as to this extraordinary personal liability, nor can he be correctly said to be represented by them. It can, work no hardship on the mechanic, workman, or laborer claiming the benefit of this statute to require him either to notify the stockholder of his action against the corporation, or to make proof of the correctness of his claim in his action against the stockholder. In the instant case the judgment against the corporation, relied on by plaintiff to conclusively show the amount of the stockholder’s 'liability, was entered on default. In this situation the language of the court in Assets Realization Co. v. Howard (N. Y.) 105 N. E. 680. seems peculiarly apposite:

“It seems to be conceded that iliis theory of conclusive effect on a stockholder of a judgment against the corporation opens up to allow proof that the judgment was secured by fraud or collusion. But why coniine the exceptions to this class? It is r>’ no material consequence to the stockholder who is 'asked to pay an unjustified judgment whether it resulted from fraud or whether, *282 as alleged in this case, it was negligently or ignorantly allowed to be entered by default on claims wlricli either never existed or had been fully paid. What he desires, and as it seems to me plainly ought to have, is an opportunity to compel proof of the existence of a claim before he is compelled to pay it."

Four elements must concur to establish res adjudlcata: (a) Identity of subject-matter; (b) identity of causes of action; (c) identity of parties to the action; (d) identity of quality in the persons for or against whom the claim is made. The subject matter of the first action was a lien claim; of the instant action, a statutory liability. The cause of action in the first case was for failure or refusal of the corporation to make payment; in the instant case, alleged insufficiency of corporate assets to satisfy _Uie first judgment. The party defendant 'in the first action was a corporate entity ; in the instant case, an individual stockholder. The party plaintiff was a lien claimant in the first action and a statutory beneficiary in the instant action, while1 the party against whom the claim was made in the first action was an artificial person; in the instant action, a natural person.

It is therefore concluded upon the first proposition, that the trial court erred as a matter of law in holding that the judgment in cause No. 11892 was res adjudicata of the amount for which defendant is liable under section 54G3, and in excluding- on motion defendant’s evidence tending to- impeach the correctness of plaintiff’s claim.

Defendant’s second proposition, and the contrary contention of plaintiff thereon, raises the question of the sufficiency of the general execution issued on the first judgment to fix liability on plaintiff in the instant action.

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Cite This Page — Counsel Stack

Bluebook (online)
1926 OK 623, 248 P. 601, 118 Okla. 279, 1926 Okla. LEXIS 914, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tyer-v-cole-okla-1926.