Bank of Kaplan v. Richards

There is a good reason why a receiver appointed to liquidate the affairs of a corporation has no right to sell or assign to third parties the corporation's claims against its stock subscribers for the unpaid part of their subscriptions, instead of suing the subscribers for the amounts. The right of a receiver to sue a subscriber for an unpaid subscription is dependent upon the necessity for collecting the subscription; that is to say, upon the necessity for paying debts of the corporation or for equalizing the losses sustained by the stock subscribers who have paid their subscriptions. Belknap, Receiver, v. Adams Rice, 49 La. Ann. 1350, 22 So. 382; Jackson Fire Marine Insurance Co. v. Walle, 105 La. 89, 20 So. 503. When a receiver obtains a judgment against a stock subscriber for the amount due on his subscription, it is with the limitation and under the obligation on the part of the receiver to return to the subscriber any excess that may remain after paying the debts of the corporation and equalizing the losses sustained by the subscribers who have paid the amounts of their subscriptions for capital stock. That obligation, of course, could not be fulfilled by a third person as assignee of the receiver's right to sue for and collect an unpaid subscription. And the fundamental reason for that is that a receiver of a corporation occupies *Page 663 a fiduciary relation to the stockholders, as well as to the creditors of the corporation; and the receiver cannot transfer to an assignee of an unpaid stock subscription the duties and obligations which are imposed upon the receiver and in favor of the cestui que trust.

In one of the cases which I have cited, Jackson Fire Marine Insurance Co. v. Walle, the receivers of the insolvent corporation sued Walle for $5,000, on an unpaid subscription for 500 shares of stock at $10 per share. The suit was dismissed on an exception of no cause of action, but, on a motion for a new trial, the receivers were allowed to amend their petition, which they did by alleging that the corporation was insolvent and that it was necessary to collect all of the unpaid subscriptions in order to pay the debts of the corporation and to equalize the losses sustained by the subscribers who had paid for their stock. Judgment was rendered against the defendant for the full amount of his subscription. On appeal, this court first amended the judgment, saying:

"The judgment rendered by the district court against the defendant herein is an absolute judgment presently enforceable for its full amount against the defendant, without reference to the condition and situation of the corporation as to other stockholders and as to creditors. We think the judgment appealed from is correct, and we affirm it so far as it adjudges and decrees defendant to have become a stockholder in the plaintiff corporation for an amount of $5,000 on the subscription declared upon in plaintiff's petition, and in so far as it decrees that defendant is legally liable upon the same. Payment of the judgment, recognizing said liability, should, however, be enforced only to the extent necessary to pay the corporation debts, the costs and expenses of the liquidation of the corporation, the same to be hereafter shown and proved in the district court, and the judgment against him should be decreed to be satisfied upon payment of said amount."

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A rehearing was granted on the application of the receivers in the case cited, and, on rehearing, because of the showing that the corporation was insolvent, the court amended its former decree, and said:

"The liquidation and settlement of the affairs of the corporation is about all that remains to be done. As the debts must be paid, and an equalization of the losses among the stockholders arrived at, we think, under the circumstances, that the stockholders who have not paid their subscriptions to the stock should pay. If there should remain a balance after the payment of the debts and the equalizing of the losses among the stockholders, it can be returned to the one entitled to it. From all appearances there will not be any thus left to return, and for that reason we conclude that, without further delay, payment should be made of stock the subscription to which has not been paid"

The plaintiff in the present case, as assignee of the amount due on the defendant's stock subscription, does not allege that the corporation was insolvent when the receiver sold the corporation's claim against the defendant represented by his stock subscription; nor does the plaintiff allege that it was necessary for the receiver to collect the amount of the subscription, or to sell the claim, in order to equalize the losses sustained by the stockholders. Even if such allegations had been made, they would not have shown a cause or right of action on the part of the Bank of Kaplan, as assignee of the corporation's claim against Richards on account of his stock subscription, because, as I have said, the receiver of the corporation had nothing to assign to the bank except a contingent claim — contingent upon and subject to the obligations on the part of the receiver which he could not convey to or impose upon the bank.

For these reasons I concur in the decree affirming the judgment of the district court, sustaining the exception of no cause or right of action. *Page 665