Deming v. Bull

Church, J.

It is conceded, in this case, that the defendants were stockholders in the Hartford Brewing Company, as well when the plaintiff’s debt was contracted, as when this action was commenced; a fact essentially distinguishing the present from the case of The Middletown Bank v. Magill & al. 5 Conn. Rep. 28. A review of the principal doctrine of that case, therefore, is not called for. The defendants acknowledge a liability, but they deny it to be a joint one, which can be enforced at law ; and claim, that they are responsible only pro rata, each one in proportion to the amount of stock by him owned in the funds of the company.

That clause in the charter of the Hartford Brewing Company, under which the question suggested in this case arises, is thus : Resolved further, that for all debts which may at any time be due from said company, the stockholders thereof shall be liable in their private capacity ; provided said corporation shall become insolvent, or the property or estate of said corporation cannot be found, and not otherwise.” Without this pro*415vision, the defendants, as individuals, w ould not have been liable at all for the debts of the company ; the responsibility would have remained alone upon the corporation, and its creditors could have looked no where for payment but to the corporate funds. This security was insufficient; and the General Assembly, by the above recited provision in the charter, intended to supply an additional one; which was, as soon as the contingency happened, that would render the stockholders, in their capacity as corporators, irresponsible, to subject them, in their private capacity : to take away the shield interposed, by the act of incorporation, and to leave them liable for their debts as if no charter had been granted. This contingency has happened ; the corporation is insolvent; and the purpose of the legislature being manifest, no peculiarity of construction should be adopted, which will, in any degree, embarrass such purpose. Southmayd v. Russ & al. 3 Conn. Rep. 52. Allen v. Sewall &. al. 2 Wend. 327. S. C. in error, 6 Wend. 335.

The charter subjects the stockholders in their individual capacities, in this case, as distinguished from their original liability in their corporate capacities. With such a stipulation in their charter, the defendants accepted it, and thereupon assumed and agreed to abide by the responsibility imposed- There is no intimation in this charter, that the responsibility is a several, or, in any respect, a modified one. It is, then, the liability provided by the common law, that of joint debtors or co-partners. Southmayd v. Russ & al. 3 Conn. Rep. 52.

In none of the cases in which the subject of the individual liability of corporators has been discussed, either in this State or elsewhere, has the principle for which the defendants contend ever been approved or sanctioned ; although it has, several times, been brought to the notice of the courts.

It is here urged as inequitable to subject a small stockholder to the payment of the entire debts of a bankrupt corporation; from whence it is urged, that the legislature could not have intended it. The first object of the legislature was to provide a certain, as well as a simple and efficient remedy for the creditors of this company ; it has been done ; and the stockholders have acceded to it, and have thereby placed themselves under the responsibilities of the common law ; and no more of hardship or injustice is perceptible in their condition, than in the ordinary and parallel case of a co-partnership, in which the *416interests of co-partners are unequal, or in any other instance of joint obligations, in which there may be, as there often is, inequality of interest.

It is said, also, that the claim of the plaintiff, if recognized as the law, will impose ruinous burdens upon the heirs of stockholders. Such a consequence is not seen. If the stock, which is personal estate, is not exhausted in the payment of the debts of a deceased stockholder, and shall be, under the statute of distribution, distributed to the widow and next of kin, and is received by them, together with its dividends or profits, no reason exists why they should not hold it subject to the same liabilities as original stockholders : volenti non fit injuria. But such persons are not compellable to receive the stock, and thus be onerated against their will.

A pro rata contribution can be enforced only as between the stockholders themselves ; and then it is equitable, and results from the doctrine of equality of burthen and benefit.

The superior court should be advised, therefore, that judgment be rendered in favour of the plaintiff.

In this opinion the other Judges concurred, except Williams, Ch. J., who gave no opinion, being interested in the question.

Judgment to be given for the defendants.