Bank of Kaplan v. Richards

BRUNOT, J. E. E. Richards, the defendant, subscribed for the purchase of 10 shares of stock, of the par value of $100 per share, of the Rice-O-La Food Company, Inc. No part of the purchase price of the stock was paid: The corporation went into the hands of a receiver, and the receiver, pursuant to an order of court, sold the unpaid stock subscriptions, all of which was then due and payable by the defendant, at public auction, and plaintiff, béing the last and highest bidder therefor, acquired the subscription, and, as assignee, it brought this suit to enforce the payment thereof. The suit was met by the exception of no cause of action. The exception was sustained and the suit dismissed. An appeal was taken to the Court of Appeal, and that court affirmed the judgment. Two of the judges concurred in the decree, but each assigned different reasons, and one dissented therefrom. An application was made to this court for certiorari or writ of review. The writ issued, the record has been sent up, and the case is before us. Relator contends that all claims and choses in action sounding ex contractu are assignable, and that the assignee of a credit acquires its accessories and the right of action of his vendor. As a general rule this contention is correct, but where, in a particular-case, a statute limits the right of action to certain specific persons, the exception thus created by the statute is. not governed by the *661 general rule. ' Such an exception is created by sections 9 and 13 of Act 267 of 1914. The pertinent part of section 9 of the act follows: “If default be made in the payment of any installment, the board of directors may sue and recover the unpaid balance of the subscription.” The board of directors of a corporation had authority to compel the officers of the corporation to sue a delinquent stock subscriber for the amount of his past-due and unpaid stock subscription prior to the passage of Act 267 of 1914, and the quoted part of section 9 of the act conferred no other righ't upon the board than to permit the board itself to institute and prosecute such a suit. Section 13 of the act is as follows: “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.” We concede that Judge Leche, in his dissenting opinion, correctly says: “Admittedly under the clear ’language of the statute, the board Of directors could have brought the present suit, and the only way to hold effective, the words ‘except in insolvency or bankruptcy proceedings’ is to hold that the receiver could also have brought the suit. * * * “The question then in its final analysis is whether the power to sue for unpaid stock subscriptions is transferable by sale.” It is our opinion that, the two sections of Act 267 of 1914 quoted, supra, regulate the manner in which the right of action, in cases such as the one before us, may be exercised. The corporation itself, or its board of directors, so long as the corporation is a going concern, or the receiver of the. corporation, may sue and recover judgment upon a past-due stock subscription and may assign the judgment, hut section 13 of the act inhibits others from bringing such an action, unless it comes within the exceptions mentioned in that section. We think this was the manifest intention of the Legislature, and it is so clearly expressed that we must give it effect. The judgment sustaining defendant’s exception of no cause of action and dismissing plaintiff’s suit is correct, and it is therefore affirmed at relator’s cost. O’NIELL, O. J., concurs and hands down a concurring opinion. OVERTON, J., concurs in decree for the reasons assigned by the CHIEF JUSTICE. ST. PAUL and THOMPSON, JJ., concur in decree.