Bank of Kaplan v. Richards , 1927 La. App. LEXIS 653 ( 1927 )

MOUTON, J.

Edward E. Richards subscribed to ten shares of stock in the Rice-O-La Food Company, incorporated in Acadia Parish. Plaintiff bank alleges that at a receiver’s sale, through A. M. Smith, it bought all the credits and rights of the said Rice-O-La Company, in and to the subscription of stock of defendant, in said corporation. As an adjudicatee or assignee plaintiff brings this suit against Richards for $1000.00, the unpaid amount of his subscription and for attorney’s fees.

An exception of no right or cause of action was filed by defendant and was maintained.

Sections 9 and 13 of Act 267, 1914, which are pertinent to the issues involved, read as follows:

Section 9. “Be it further enacted, etc., That subscriptions to the capital stock of a corporation shall be paid at such times and in such installments as the Board of Directors may dierct, unless otherwise provided by this Act. If default be made in the payment of any installment, the Board of Directors may sue and 'recover the unpaid balance of the subscription; together with a reasonable attorney’s fee.”

. Section 13. “Be it further enacted etc., That except in case of insolvency or bankruptcy proceedings, and except as provided in Section 9 of this- Act, no action to recover an unpaid balance of stock subscriptions shall be brought against any stockholder until judgment has been recovered against the corporation and an execution returned unsatisfied in whole or in part.”

Plaintiff, it is evident, is not suing in insolvency or bankruptcy proceedings, nor in the name of the Board of Directors. It has not therefore brought its suit within either of the two exceptions provided for in Section 13 of the Act. Not having brought itself within either of these exceptions plaintiff’s suit is controlled by the provision of Section 13, which says that:

“No action to recover an unpaid balance of stock subscriptions shall be brought against any stockholder until judgment has been recovered against the corporation and an execution returned unsatisfied in whole or in part.”

No interpretation or construction of the statute is needed to ascertain the legislative purpose as its language states clearly that no action will lie against any stockholder for an unpaid balance of his subscription unless preceded by a judgment with an execution, returned unsatisfied.

Counsel for plaintiff says that an assignee of a credit acquires its accessories and the right of action , of his vendor. That is true as a general proposition. There is nothing, however, in the Act negativing that contention, as the Act concerns itself in merely regulating the manner in which the right of action shall be exercised, unless it comes within the exceptions provided for in Section 13.

The exception was properly, maintained.