Bank of Poughkeepsie v. Ibbotson , 24 Wend. 472 ( 1840 )

By the Court,

Nelson, Ch. J.

The principal question sought to be presented in this case is, whether an action at law will lie to charge the stockholder personally under the act.

The seventh section provides, that for all debts due and owing by. the company at the time of its dissolution, the persons then composing it shall be individually responsible to the extent of their respective shares of stock. 3 R. S. 222. It has been repeatedly held that the dissolution here spoken of, in order to subject the shareholder, may be shown short of judicial proceedings for that purpose. Having ceased to act, and being withont funds and indebted, it is to be deemed dissolved so far as to give the remedy to the creditor. 19 Johns. R. 456. Hopk. 300. 8 Cowen, 387. This dissolution sub modo being proved, the liability of the stockholder, as declared by the act, becomes absolute; and I see no valid objection to the enforcement of it in a court of law. There can be no greater difficulty in establisting or resisting the demand there, than in a court of equity, as the ground and extent of the liability are distinctly given. It is true, the stockholder may be subjected to several suits ; but he can be charged only to the extent of his stock. Beyond this, his defence is as perfect at law as in equity. On payment of debts, or a personal charge in respect to them to this amount, there is an end of further liability. It was made a question in the several cases above referred to, whether the suit in equity could be maintained, on the ground of a remedy at law ; the answer given confirms the view we have taken—it is, that the creditor is entitled to contribution from all the stockholders, if requisite to the satisfaction of his debt, and that numerous suits might become necessary. To avoid this, he may resort to that court. The creditors, if more than one, may also, it seems, if they apprehend a deficiency, in the fund, enforce in equity a pro rata distribution. 8 Cowen, 392. But this must be at their election. Any difficul- [ *480 ] ty that may exist on the part of the *stockholder, in protecting himself beyond the statute liability, has never been suggested as a ground for proceedings in equity. Indeed, it is clear, that as to him the defence is as perfect, if not as simple, in the one court as in the other. This question has been before the chancellor in an analogous case, in which he held, inasmuch as the creditors had a concurrent remedy at law, the statute of limitations, applicable to the proceedings there, equally governed in equity. 3 Paige, 409. See also Angel Ames on Corp. 369.

, It is supposed, the pleader should have set out in the declaration the grounds upon which a dissolution is predicated. We think not. The fact, upon which the statute liability, depends in this respect, to wit, the dissolution, is averred—and the decisions point out the nature of the proof required to establish it.

There can be no doubt, that the liability of the stockholders is several and not joint. The measure of it may be wholly different in each case, depending upon the shares held. A joint suit would be impracticable, as there could be no joint judgment. Besides the act did not intend they should be sureties for each other. Each is severally responsible to the amount of his own stock.

The plaintiffs, I think, are entitled to judgment on the demurrer.