The opinion of the Court was delivered by
Mr. Justice Wallace.The exceptions to the circuit decree are numerous. To consider them in detail would unnecessarily •extend this opinion. The issues made by the pleadings depend upon a few decisive questions, in the discussion of which all the material points made in the exceptions will be embraced.
The Wando Mining and Manufacturing Company accepted a charter, and organized and proceeded to do business under it which contained the following provision, to wit:
“ Section 4. That every shareholder of said company shall be individually liable for the debts contracted during the time he or she shall be a shareholder in said company to the extent •of the par value of his or her shares in the same: provided, that no person holding stock as an executor, administrator, guardian or trustee, and no person holding such stock as collateral security shall be personally subject to any liability as stockholder of such company, but the person pledging such stock shall be considered as holding the same, and shall be-liable as a stockholder accordingly, and the estate and funds in the hands of such executor, guardian or trustee shall be liable in like manner, and to the same extent as the testator or in*358testate or ward or person interested in such trust fund would have been, if he had been living and competent to act and hold the said stock in his own name. And provided fv/rther, that no stockholder shall bo personally liable for the payment of any debt contracted by the said company, which is not to be paid within one year from the time the debt is contracted, nor unless a suit for the collection of such debt shall be brought against said company within one year after the debt shall become due, and no suits shall be brought against any stockholder in said company for any debt so contracted unless the same shall be commenced within two years from the time he shall have ceased to be a stockholder in said company, nor until an> execution against the company shall have been returned unsatisfied in whole or in part.”
After a prosperous business career of several years, the company became embarrassed, and on June 25,1877, by a unanimous vote of the stockholders passed the following resolution, to wit:
“ Resolved, That the President and directors of the company be authorized to sell the mines and works on Ashley River, the material now on hand and the good will of the business of the present company to a new company that may be formed to-carry on the business, for the sum of $75,000, the new company assuming through its officers the expense of collecting in the assets of the old company.”
The sale contemplated by this resolution was effected on the-same day and upon the terms set out in the resolution. Mr. George E. Gibbon, the President of the old company, and Mr. Francis B. Hacker, its Secretary and Treasurer, being immediately elected President, Secretary and Treasurer of the new company respectively. The amount realized from the sale was-applied to the reduction of the indebtedness of the company. Subsequently, by authority of the shareholders, the Board of Directors sold the company’s wharf. Out of all its available-assets, the company was not able to pay its debts, and suits were-brought against it by its creditors, and judgments obtained which in the aggregate amount to a large sum. Executions-upon these judgments having been returned unsatisfied, this-*359action is brought to establish the individual liability of the stockholders upon the unsatisfied demands against the company. The issues arise mainly under the section of the charter above quoted, the creditors claiming that suits were brought upon their demands within one year from the maturity of the debts, and that their debts were contracted to be paid within one year from the time they were made, and that therefore the individual stockholders became liable upon the return of the executions unsatisfied. All of this is denied by the defendants.
Before proceeding to the examination of this controversy, it will be convenient to consider the issue made upon the notes held by the Union Bank, and upon which judgments have been obtained against the company. There can be no doubt of the rights of the stockholders in this action to set up any available defence that goes to the question of their liability upon the note upon which judgment has been obtained against the company. The defendants in this action were not as individuals parties to the action in which judgment was recovered. That suit was against the corporation which in law is a distinct person from the individual members which compose it. The ground of the liability of the company may not prevail against the stockholders. For it is only when a judgment is obtained against the company upon debts of a certain description, and upon which suits have been brought within a specified time, that the stockholders are liable. In this action it is therefore necessary to establish that the conditions of the liability of the stockholders exist. To do this necessarily involves an inquiry in this action into the grounds of the stockholders’ liability. Of course, then, it is competent for these defendants to interpose any defence that goes to the question of their liability upon the notes upon which the judgments were obtained. In AVbotts’ Digest of the Lem of Corporations, 2 rol., p. 299, pp. 22, 23, the following language occurs: “ In New York the liability of the individual members of a joint stock company, after judgment and execution against the company unsatisfied is that of partners, and consists in the original demand against the company, not in the judgment against it. Therefore a *360complaint to enforce the liability must show all the facts necessary to constitute a subsisting cause of action against the company on the original demand.”
Now as to the notes held by the plaintiff in this action, the defendants allege that they are not liable thereon, because they were made by Geo. E. Gibbon and F. B. Haclcer, after the company had ceased to do business, and Gibbon and Hacker had no longer authority to bind them by new obligations. The notes referred to were drawn by Gibbon and Flacker as President and Secretary and Treasurer of the "Wando Mining and Manufacturing Company, at sixty days, and dated in February and March, 1878, and endorsed by Gibbon to the bank. The money raised upon them was applied to past due notes of the company. It is conceded in the argument that the President of the company, as such, was authorized to contract debts for the company, and that his contracts would bind the stockholders if the debts were within the description of such as could be set up against them. This power manifestly had its source in his relation as agent ex-offioio to the company, and of course was limited by the scope of his agency. He was agent to carry out the objects of the company. These objects were the manufacture and sale of fertilizers. Any transaction of his in relatioil to these objects or that was necessary or incidental in their prosecution, was within the scope of his agency and binding upon the company.
In June, 1877, many months before the notes now held by plaintiff were drawn, the company had sold all of its property that was used in the manufacture of fertilizers, and thus had deprived itself of the present means of carrying on its former business; had sold the good will of the business to another company, and thus bound itself in law not to further continue the business; had appointed the new company its agents to collect its assets. Thus there was no longer any business for the officers to conduct. By the force of these transactions, the reason and foundation of official agency was dissolved. "With the disappearance of the reason upon which alone it rested, the power of agency was destx-oyed. As if in recognition of this result these same officers assumed, before the execution of the *361notes under consideration, the same official relations to the new company, that they had sustained to the old, with the same powei’s of agency, and for the same reasons, and in reference to the same subject matter, and to conduct the same business.
By the force of these facts the former president and secretary of the company were deprived of all power to create new obligations as between the stockholders and all persons having notice of the facts. The outstanding indebtedness was a matter for the attention of the company, its former officers being deprived of such means as the company had for its payment by the withdrawal of the assets from their hands. Mr. Mowry was president of the Union Bank, and a directer of the Wando Mining and Manufacturing Company, during all the time of the occurrences which had the effect to deprive the president and secretary of the company of all powers of agency, and was present at the meetings of the company at which they took place, and was president of the bank at the times when these notes were discounted. His knowledge was therefore official, and the bank is bound by the legal effect of his knowledge. These notes of the plaintiff therefore are not obligations upon the individual shareholders of the Wando Mining and Manufacturing Company.
The next question relates to notes that were made by agents of the company before the sale of its property. Actions have been brought upon all the notes against the company, and judgments obtained. It is conceded, that all these notes can be and have been traced back through successive notes to their original debt, and that no action has been brought upon any such original debt within one year, after such debt became due. This statement discloses the grounds of controversy between the parties. The suing creditors of the company claim that the notes upon which they have obtained judgments constitute in each ease the debt of the company, the former notes in each case having been paid successively by subsequent notes, and that therefore each new note represented a new debt; and that the notes sued upon were new debts that were to be- paid within a year, and were sued upon within a year after maturity. Defendants claim that the maturity of the first notes given for *362the original consideration was the time the debt, for which they were liable, became due; and that suit was not brought within one year from maturity on any of those notes; that when one note was taken up and another given, it was not payment, but renewal only ; that the debt thus having longer than a year to run the conditions of personal liability of stockholders do not exist.
Under the common law no individual liability attached to members of a corporation for the payment of its debts. The liability of the shareholders of this company is created by the charter, and only exists upon the conditions therein stated. If a person who proposed to become a creditor of the company desired to increase the safety of his debt by securing the personal liability of the shareholders, he could do so by making a contract that his debt should be paid within a year. Upon such a debt the shareholders were personally liable. If not paid within the year then to preserve his right to resort to the stockholders, he must bring his action within a year from the maturity of his demand.
Are the suing creditors within these requirements ? It appears that the notes they are now seeking to set up were given for previously existing notes, and they for others that existed before them, the original debt in each instance being more than two years old before suit brought, no suit being brought within a year from the maturity of the original debt. Whether the suing creditors, then, are within the requirements of the charter depends upon the question whether these last notes were payments of the previous notes or not. A debt is a legal obligation to pay money. This contract can only be discharged by the payment of money, or by a new contract in relation to the same subject matter by which it is agreed that something else than money will be given and received in discharge of the contract. See Costelo v. Cave, 2 Hill, 528; Chastain v. Johnson, 2 Bail. 574; Bryce v. Bowers, 11 Rich. Eq. 47. The burden of proving this new contract is upon him who affirms it. Johnson v. Clarke, 15 S. C. 72. It is not proved by the mere fact that one note is given for another. There must be additional proof of an agreement between the parties *363that one note shall be given and accepted in satisfaction of the other.
The only direct testimony upon that point in this case is that given by Mr. Inglesby, who testifies that his understanding was that the new notes were received in payment of the old. But other parties to these transactions do not testify to such an understanding upon their part, and the writing upon the notes that were taken up and preserved by the company does not indicate that such was the understanding of the officers of the company. We on the whole agree with the Master, before whom the testimony was taken, that “ The proof, therefore, of an express special agreement is not sufficient. Mr. Inglesby’s testimony is without doubt an honest and strong expression of his understanding in relation to the renewals and their legal effect, but is not such evidence as is required to establish an express contract between all the parties concerned.”
Suppose for the sake of the argument that there had been an express agreement between the officers of the company and its creditors that each new note should be given and accepted in full satisfaction and payment of the preceding note. The charter provides that the shareholders shall not be liable upon a debt of the company unless it is contracted to be paid within a year, and if not paid, sued within a year from maturity. Upon the supposition that a new note is accepted as payment of the old at maturity, and at the maturity of the second note another is received in payment of it, and so on indefinitely, would each new note create a new obligation against the company, and binding upon the shareholders under the charter ?
There is no actual, only technical payment. Only an agreement between the officers of the company and its creditors that something shall be considered payment, which as matter of fact is not payment. The intent of the statute manifestly is to limit the liability of stockholders to debt,s to be paid within a year. By this supposed understanding between the creditors and officers of the company, it is attempted to extend the liability of shareholders for an indefinite length of time. A construction of a statute that thus plainly defeats its intent cannot be sound.
*364Nor would tlie fact that this was done by the agents of the company give it any binding force against the stockholders. For that they are not authorized as agents of the shareholders to do that is plain from the charter, of which all persons dealing with them as agents must take notice. We must therefore conclude that the debts of the company which it is sought to establish against the shareholders are not obligations upon which they are liable.
This conclusion renders the consideration of the special defences of particular shareholders unnecessary. The judgment of this court is that the judgment of the Circuit Court be reversed, and that the complaint be dismissed.