Topeka Paper Co. v. Oklahoma Publishing Co. , 7 Okla. 220 ( 1898 )

Opinion of the court by

McAtee, J.:

Motion for a new trial having been made and overruled, the case is argued in the briefs up'ou the liability of the directors, Whit M. Grant and others, under section 958 of the Statutes of Oklahoma of 1893, which provides that:

“Sec. 958. The directors of corporations must not make dividends except from the surplus profits arising from the business, nor must they divide, withdraw or pay to the stockholders, or any of them, any part of the capital stock, nor must they create debts beyond their subscribed capital stock, except as especially provided by law. For a violation of the provisions of this section, the directors under whose administration the same may have happened * * are, in their individual and private capacity, jointly and severally liable to the corporation and to the creditors thereof, in the event of its dissolution, to the full amount of the capital stock so divided, paid out or reduced, or debts contracted.” * *

It is not contended that the indivdual defendants “created debts beyond the amount of the capital stock.” The contention is that by the attempted consolidation of the defendant corporation with the Press-Gazette corporation, and the attempted formation of á new company, the defendants violated the inhibition of the statute, that they must not. “divide, withdraw or pay to the stockholders, or any of them, any part of the capital stock.” The liability, if one exists, exists in consequence of this statutory provision, and does not exist at all unless the thing which was done was plainly within the prohibition against “dividing, withdrawing or paying to the stock holders, or any of them, any part of the capital stock.” The consolidation attempted is not authorized by any provision of the statutes. The defendant corporation was not thereby dissolved. Its legal existence remained after the attempted consolidation just the same as before. There can be no dissolution of a corporation, under our statutes, except by the judgment of a court. (Statutes Oklahoma, 1893, sec. 968.)

There is no showing that any of the capital stock of the defendant corporation was “divided, or withdrawn or paid out” to the stockholders, or that any change whatever was made in its status. The stock was not said to have been destroyed, and it may be presumed therefore ill at even the paper evidences of the stock still remain in existence. It is not shown that the property of the corporation was by tl Le act of the stockholders destro yed or impaired or lessened in value. In the absence of any statute authorizing the consolidation which was attempted, the legal rights of the creditors of the defendant corporation and its legal liabilities and those of the directors remain the same.

The act by which the defendant corporation undertook to associate itself with the Press-G-azette corporation, and to form a new corporation, and receive stock therein in fixed proportions, is not, in our view, a “division, withdrawal or payment” to the stockholders of the defendant corporation of any part of its capital stock. And. if it were, the liability would not accrue until, in the terms of the statute, “in the event of its dissolution.” Therefore, before any liability could be claimed or set up, or could have accrued, so that an action could be brought against the defendants for the debts of the corporation, the event of its dissolution must have already occurred, wbicb, as is expressly provided in section 968, Statutes 1893, could only have taken place upon tbe “expiration of tbe time” limited by its articles of corporation, or by tbe judgment of a competent court. And we cannot therefore, sustain tbe contention of tbe plaintiff that by tbe attempted act of consolidation tbe defendants bave violated tbe provisions of section 958, by wbicb tbe directors under whose administration tbe same may bave happened, could be held liable in their individual and private capacity. Whether or not tbe attempted consolidation was such an act as would bave en titled tbe plaintiff to a judgment of dissolution of tbe defendant corporation is not before us. It is declared in tbe brief of tbe plaintiff in error that “tbe only question in this case is as to the liability of said directors under said section 958 of tbe statute.” Some authorities are, however, alleged to support tbe contention that the at: tempted consolidation effected a dissolution of tbe defendant corporation. We bave examined them. They do not support tbe contention. They show adjudications made upon tbe question of dissolution, wbicb arose out of tbe consolidation of railroad companies, authorized by some statutory provision, and do not bear upon tbe question of consolidation of corporations attempted, as here, without such statutory provision. Tbe judgment of tbe lower court is therefore affirmed.

All of tbe Justices concurring.