Hurlbut v. Tayler , 62 Wis. 607 ( 1885 )

Oetou, J.

The general principles involved in this suit have already been considered on the appeals of the defendants Marshall and Kelly. In this case the demurrer of the defendant Tayler to the complaint was sustained. It appears that all the unlawful and unearned dividends upon the stock of the respondent, received by him, were received and appropriated by him before the appellant became a creditor of the bank, and that he had received no such dividends since January 1,1888, and that he then ceased to be the owner of the stock by a transfer thereof to another, who held the same when the appellant became a creditor of the bank. As to his liability in this suit for such unlawful appropriation of the funds of the bank, sufficient has been said in the opinion on the other two appeals.

The only other question to be considered as specially affecting this defendant is whether, by such transfer of his stock to another, he also transferred his liability on account of the receipt of such unlawful dividends so received by him while he was the owner of such shares of the stock, to his transferee. Sec. 22, p. 600, R. S., provides that “the shares of such association shall be deemed personal property, and shall be transferable on the books of the association in such manner as may be agreed on in the articles of association; and every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights and be subject to all the liabilities of prior shareholders.”

Under the plain and simple language of this statute the question will scarcely admit of argument. The liabilities to which the transferee of stock becomes subject, are such as in all cases must be common to all stockholders, and proportionate. If one stockholder should, by collusion with the directors, and in fraud of all the other stockholders and of the creditors, obtain a portion of the funds of the bank under the pretext of regularly declared dividends upon his stock, when there were and could not be any earned or lawful dividends thereon, then and in that case, by a transfer of his stock thereafter, the transferee would not be subject to the liability to restore such fund to the bank, because such liability - would not be common to all of the stockholders and proportionate to the whole stock or in proportion to his shares thereof. If the transferee is subject to such a liability at all, as contended by the learned counsel of the respondent, then such a case would be clearly outside of the statute, because his liabilities would not be “in proportion to his shares.” The clear meaning of the language is that such transferee shall succeed to all the rights and be subject to all the liabilities incident to and growing out of his relation as a stockholder in common with all other stockholders “in proportion to his shares.” This must be the measure of the rights to which he succeeds, and if so, it must be also the measure of the liabilities to which he becomes subject. The wrongful conduct of a person who happens to be at the time a stockholder, by which he has secured and appropriated to himself the funds and property of the corporation without the semblance of right or authority, is strictly personal, and however much he might wish to transfer his liability therefor to another, it would be beyond the province of legislation to allow him to do so. According to the complaint, the respondent did not receive these unlawful dividends as a stockholder, for as a stockholder he was not entitled to any. It was only under the pretext that, as a stockholder, he was receiving lawful dividends, when, in truth and in fact, he was unlawfully appropriating the funds of the bank, even when insolvent,— the officers and directors being accessory thereto,— that he is in substance charged in the complaint with having obtained them. But the statute is clear enough in itself when read in the light of common reason, and any further elaboration is unnecessary.

Not intending any disrespect to the able counsel in not specially considering the points and authorities of their respective briefs which will be preserved in the case, I do not consider it necessary to say more in the construction of so plain a statute. The respondent is liable in this action, like all other persons who have- unlawfully become possessed of the funds of this insolvent bank, to return them to the bank for the benefit of its creditors.

By the Court.— The order of the' circuit court is reversed, and the cause remanded for further proceedings according to law and equity.