Practice, Civil, Appeal. Corporation, Foreign, Statutory liability of stockholders. Pleading, Civil, Declaration. Evidence, Presumptions and burden of proof.
An appeal by a defendant from an order overruling his demurrer to the declaration in an action at law properly comes before this court with exceptions taken by him at a trial of the action occurring thereafter, since no final judgment could be entered because of the pendency of the exceptions.
A declaration in an action of contract to enforce the alleged statutory liability of a stockholder of a corporation organized in another State but having a usual place of business here alleged that the defendant was a stockholder in such corporation and that nothing had been paid on his shares, and set forth a provision of the law of the State of incorporation to the effect that each stockholder should be liable personally for the debts of the corporation to the extent of the amount which, at the time when an action to enforce the liability was commenced, was unpaid on the stock owned by him, that the plaintiff had brought an action in this Commonwealth against the corporation, had caused proper process to be served upon it, had procured a judgment and execution, had made proper demand on the execution, and had received nothing in satisfaction of it. Held, that the declaration set forth a cause of action at law.
Under a statute of South Dakota which provides that 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 stock held by him, and that a creditor may institute joint or several actions against any stockholder who has "not wholly paid the capital stock held by him," an action at law may be maintained against a stockholder here to recover the amount of a judgment against the corporation, without any preliminary proceedings having been instituted in South Dakota.
In an action of contract to enforce the liability of the defendant as a stockholder in a South Dakota corporation, a material question was whether the defendant was a stockholder when the action was commenced. The treasurer of the corporation testified that an entry on a stub of the certificate book of the corporation, which stated that a certificate was issued to the defendant, was written by him, and identified the signatures of himself and of the defendant upon a certificate, to which the stub corresponded, which was made out to the defendant. The certificate was indorsed in blank and was produced by the plaintiff at the trial, and there was no evidence to explain the plaintiff's possession of it. There was no evidence that the defendant ever had returned the certificate to the corporation. Held, that a finding, that the defendant had accepted the stock and expressly or impliedly had agreed to pay for it, was warranted.
A judge sitting without a jury is not obliged to accept evidence as true merely because it is uncontradicted.
A defendant in an action of contract to enforce the statutory liability of a stockholder of a foreign corporation for debts of the corporation cannot set up in defense the fact that the State of incorporation by proper proceedings might have dissolved the corporation or declared its stock void because of acts of the stockholders.
LORING, J.
1. We assume that there was an appeal from the order overruling the demurrer. It is so stated in the bill of exceptions. What raises a doubt upon the matter is the fact that there is no docket entry to that effect.
The appeal comes before us properly with the bill of exceptions, since by reason of the exceptions no judgment could be entered.
The declaration sets forth the statute of South Dakota under which the Newton Moulding and Lumber Company was incorporated and alleges that the defendant was a stockholder and "that nothing has been paid" on his shares. That is sufficient, at any rate on general demurrer, and it was not necessary to state in terms that the liability under the statute set forth was a contractual one, that the defendant was a subscriber to stock as well as a holder of stock, and that the courts of South Dakota had construed the liability created by the act in question to be a contractual one, or to negative by allegations in the declaration injustice to others by enforcing the liability against this defendant, whatever that may mean. We are of opinion therefore that the order overruling the demurrer must be affirmed.
2. We are of opinion that the South Dakota statute now in question is the same kind of statute as that before this court in Hancock National Bank v. Ellis, 172 Mass. 39, and consequently that the first, second, fifth, sixth and seventh rulings asked for by the defendant were properly refused.
3. We are of opinion that the evidence warranted a finding that the defendant was a stockholder, and that the third, eighth and thirteenth rulings asked for were properly denied.
It is stated on the stub of the stock certificate book that certificate number one for ten shares was "issued to" the defendant. The testimony of Bassett in connection with this entry made by him warranted a finding that the shares were issued to the defendant. In addition, the defendant signed on the back of the certificate in question a blank transfer of the ten shares, dated two and a half months after the stock was issued to him; and, finally, there was no evidence that that transfer had been accepted by the corporation or anybody else. This evidence warranted the finding made by the judge below that the defendant accepted the stock and expressly or impliedly agreed to pay for it.
This certificate was produced by the plaintiff at the trial and no evidence was given to explain the plaintiff's possession of it.
The underlying trouble with the defendant's argument on this head is that he assumes that the judge was not at liberty to disbelieve testimony which was not contradicted. That is not so. The cases are collected in Lindenbaum v. New York, New Haven, Hartford Railroad, 197 Mass. 314.
The defendant now urges, in support of the third ruling asked for, that the defendant was not a stockholder because no by-law ever was adopted authorizing the issuing of shares before they were paid for. It may be that the State could institute proceedings to avoid such stock; but the parties cannot set up their failure to comply with the statutory requirements to escape the result of what they did when they had a right to do what they did by complying with the statute.
4. The fact that, by the terms of the act under which the Newton Moulding and Lumber Company was incorporated, its corporate powers came to an end on the expiration of a year for lack of proper organization does not affect the defendant's status as a stockholder. For that reason he was a stockholder in a corporation whose charter could have been declared forfeited if the State had chosen to institute the necessary proceedings. The ninth request was properly refused.
Order overruling demurrer affirmed; exceptions overruled.