Tasker v. Wallace

Vah Hoesen, J. [dissenting],

I cannot agree to that portion of the opinion of the Chief Justice which holds that the amendment of the summons, complaint, judgment roll and execution, without an amendment of the return, in the suit in the Supreme Court, in which Tasker was the plaintiff, and the Elevated Railway Company the defendant, gave to Tasker the right of action against Wallace.

With great deference I say that the cases cited do not seem *370to me to cover the question in the case. There is no doubt of the power of the court to order amendments. There is no doubt that the amendment referred to merely cured a defect in the name of the Elevated Railroad Company ; and perhaps it is venturing but little to say that Wallace is quite as well off pecuniarily as he would have been if the proceedings against the railroad company had from the outset designated the corporation by its right name.

We have n o right, however, to take judicial notice of the financial embarrassments of the West Side & Yonkers Elevated Railway Company, and to assume without proof, that an execution, if one had been issued against that company under its real name, would have been returned unsatisfied, by the sheriff. Tasker’s right of action against Wallace is purely statutory. The statute provides that an action shall not lie against a stockholder until an execution against the corporation shall have been returned unsatisfied. Of course, the execution should run against the corporation by its right name. If, for instance, the statute should provide that the stockholders of the Wheeler and Wilson Company should be liable for the debts of that corporate body, in case an execution against the company should be returned unsatisfied, would it be seriously contended that a corporator’s liability would be fixed by showing the return of a writ against the Wheeler Company or the Wilson Company ?

Ag'ain, in this case, though the execution was amended, the return was not. It doubtless was in the power of the court to allow the sheriff to amend the return ; and it is probable that if the sheriff had obtained, and had exercised, the privilege of amending the return, Wallace might, in this very action, have been bound.

But the fact is that the return stands as it stood when it was made, and it certifies, in effect, that the West Side Elevated Railroad Company had no property. That was not, in my opinion, such an exhaustion of the remedy against the West Side & Yonkers E. R. R. Co., as to give Tasker a right of action against Wallace.

It seems strange to me that an order for the amendment *371of an execution, which did not mention the return, should ex joroprio vigore amend a return made long prior to the order; that the court should assume the duties of its sheriff, and itself make or amend the return of process ; that it should so amend the return as to make it appear that the sheriff falsely certified that the West Side and Yonkers Elevated Railroad Company had no property, when all that he certified was, that he could find no property of the West Side Elevated Railway Company. A return may be amended, in accordance with the facts, but not in defiance of them. I think the nonsuit was right.

After the delivery of the foregoing dissenting opinion, the ■following additional opinion was delivered by

Charles P. Daly, Ch. J.

No amendment of the return was necessary. The return was indorsed upon the execution merely in these words: No personal property. M. T. Brennan, sheriff.” The defect in the defendant’s corporate name in the execution having been amended, it applied to the whole execution, and to everything official indorsed upon it, and as the cases cited show, the execution after the amendment is to be regarded as if it had originally been issued in the amended form. If the sheriff had returned “ no personal or real property of the West Side Elevated Railroad Company,” there might have been some question, but the defect in the corporate name having been cured by the amendment, the return is to be used as indorsed upon;an execution issued against the West Side and Y^onlaers Elevated Railroad Co. The material matter in all the cases is that the suit or proceeding was instituted in good faith against the party to whom the judgment applies by the amendment, which is allowed to supply something omitted by inadvertence or mistake. Where the defect arises under such circumstances, the whole policy of the law has been to supply it by amendment, in furtherance of justice, and to give it, by amendment, all the validity and force that would follow, if the defect had never existed. This has been the uniform policy of the law ever since the enactment of the first statute of jeofails, in the reign of Edward III. At the common law no difficulty *372arose in respect to amendments, for all pleas were ore temes at the bar, and if any error was discovered it was amended on the spot (Rush v. Seymour, 10 Mod. 88). The difficulty was first created by statute, the ordinance of Edward I, which required all pleas and judgments to be recorded, and the judges were forbidden to erase their rolls, or amend them, or record contrary to the-enrollment (Britton, ch. I, & §§ 9-11), which was so rigidly enforced that one of the justices, Hengham, was heavily fined for altering a record, although it was in furtherance of justice (4 Inst. 255). It was to relieve against the injustice that arose from this strict course of procedure, that the first and subsequent statutes of jeofails and amendments were passed. The Norman French words from which the name of the statute was derived, express exactly what was intended, jeofaile or fai faille—I have omitted—and these statutes were passed to relieve against the omission, by empowering the court either to overlook it, or remedy it by amendment; and were so numerous and so comprehensive in their provisions, as to empower the court to supply every omission that was essential in support of the process, proceedings, or judgments (Diamond v. The Williamsburgh Ins.. Co. 4 Daly, 494 ; 3 Bl. Com. 406-412; Rex v. Llandoff, 2 Str. 1011, Amendment; 3 Salk. 29; The King v. The Mayor, &c., of Grampond, 7 T. R. 703). And by our own statutes, and especially by the Revised Statutes and the Code, this authority of the court in the exercise of its discretion, to remedy all such defects, either before or after judgment and execution, in furtherance of justice,|was meant to be as extensile as it was in the power of words to make it. Nothing was better settled in the exercise of this authority under the statutes of jeofails and of amendments, than the power of the court to allow an amendment where there had been a mistake in the name of a party.

It is said in 1 Bolle’s Abr. 199, 1. 35, that if the mistake^ in the name of a defendant is where he is first named, it is-matter of substance, and not amendable. In subsequent cases,, however, where the mistake in the defendant’s name occurred in the original writ, it was allowed to be amended, where the attorney had given the correct name to the curator, but the mistake was in the issuing of the writ; though at first, in one. *373of these cases it was doubted, being matter of substance (Westby,s Case, 2 Vent. 152; Turner v. Palmer, Cro. Car. 74; Pelham v. Hemming, Id. 594; Wheston v. Packham, 3 Wils. 49). But even this distinction was swept away by the Bevised Statutes, which declared that no judgment should be impaired, or in any way affected, “for any mistake in the name of any party or person ” (2 Rev. Stat. 424, §§ 4,7); and by the Oode it is expressly provided that the court may, after judgment, correct a mistake in the name of any party, which was all that was done in this case.

The meaning and intent of the provisions of the statute, that an execution shall have been returned unsatisfied, in whole or in part, against the corporation (3 Edm. Rev. Stat. 446, § 10) has been fully carried out. An execution was issued, and returned against this corporation, though in the execution, and in the previous proceeding, a part of its name was omitted by mistake, and that technical omission was cured by the power of the court to supply all such defects by amendment. It was shown to the court that ordered the amendment, that the claim in the suit was against this corporation, that the summons was served upon its president, that the misnomer of the defendants arose from the inadvertence of plaintiff, and the judgment was for a debt due by the corporation. If the amendment is then to have any effect at all, it must be an effect ab initio, making the whole proceeding an action, judgment, and execution, against this corporation in form, as it was in substance, and not from the time when the amendment was allowed, but from the service of the summons, and in every stage of the proceedings, the court having power and control over it.

A motion for a reargument was thereafter made and argued by

Charles Tracy, for the motion.

Edwcurd Patterson, opposed.

*374Charles P. Daly, Chief Justice.

The question in this case was not a question between the defendant and the corporation, or between the corporation and an original subscriber to its stock, but between a creditor of a corporation and a stockholder, who under the provisions of the 11th section of the act of 1850 (3d Edm. Rev. Stat. p. 646), is. individually liable to the creditors, to the extent of the amount unpaid upon th& stock held by him.

The statute is general in its terms, and does not, in a case where the capital has been subscribed for, and has been issued to a subscriber without the payment of the 10 per cent., limit the creditor’s remedy to an action against the original subscriber. It declares that each stockholder of any company formed under the act shall be individually liable to the creditors of such company,, to an amount equal to the amount unpaid upon the stock held by him; so that the only question that arises under this provision is whether the party sued is a stockholder ; whether any amount remains unpaid upon the stock held by him, and the extent of that amount.

It is a liability incurred by any one who becomes a stockholder of the corporation which is organized under the act, and as between a stockholder and a creditor, it is wholly immaterial whether he was a bona fide and. innocent purchaser of stock, which the vendor assured him had been paid, or which he had every reason to suppose had been paid. His remedy, if he has. been inveigled into the purchase of unpaid stock, is against the vendor (N. Y. & N. H. R. R. Co. v. Schuyler et al., 34 N. Y. 49, 50, and the cases there cited; Holbrook v. N. J. Zinc Co. 57 Id. 616).

In the present case the corporation issued the stock which the defendant held to an original subscriber, without the payment by him of the 10 per cent, in money, which the statute requires (L. 1850, p. 213, § 4). The company received in payment as the 10 per cent, a transfer of certain patent rights, which were at the time of no appreciable or known value, though supposed then to be valuable, but which afterwardsproved to be worth nothing. We held this not to he a payment of money, as the statute requires; so that the original *375subscriber, Harvey, was a holder of stock upon which nothing was paid. This unpaid stock he afterwards returned, or, as it is claimed, loaned to the company, that it might be used by them to enable them to sell their bonds. The defendant was a purchaser of these bonds at 80 per cent. The company sold the defendant $500 of this unpaid stock and $1,000 of bonds for every $800 paid by him in cash; and before the stock was delivered to him, it had been transferred on the company’s books. This, the defendant claims, made him a purchaser of the stock for value, which may have been so as between him and the company, but as between him and the creditor, he was the holder of stock which had been issued without the payment of the 10 per cent, as required by law, which the company had no right originally to issue to Harvey, or when returned to them by Harvey, had no right to transfer to the defendant as valid stock, which it was not. It is said, however, that although the stock was loaned by Harvey to the company to enable them to sell their bonds, that it was reissued by the company to the plaintiff, he paying a valuable consideration therefor. He may, therefore, present the question, whether this was a case within the meaning of the statute, in which a stockholder is liable to a creditor of the company to the extent of unpaid stock held by him, and I think that it is better that the motion for a reargument should be granted, that this question may be fully considered and deliberately passed upon.

Robinson, J.

My impressions are that the plaintiffs, as creditors, are only entitled to be subrogated to the rights of the corporation to make claim for any amount due from a subscriber for its stock upon,his subscription or contract to pay for the stock its par amount; that a purchaser from, or assignee of, one to whom the stock has been issued conditionally, who has not assumed to pay what was due upon the subscription price, is not, within the intendment of the statute, the stockholder against whom any claim can be made for non-payment of the subscription; that the responsibilities accruing under sections 4 and 11, of chapter 140, of the Laws of 1850, are distinct in their *376character, and infractions of the positive terms of section 4 cannot be made available by creditors; that the company having accepted payment in property at an agreed value instead of money, for stock actually issued, the holder of the stock is exempt from further reclamation on the part of a creditor. Entertaining the doubts referred to by the chief justice, I concur with him in the opinion that the case, under such circumstances, should be reargued.

Reargument granted.*

On- the reargument the court adhered to the opinion that the judgment ought to be reversed, and so ordered.