Chaffin v. Cummings

Shepley, C. J. — The tenant claims title to the land demanded, by levy thereon of an execution, issued on a judgment recovered by him against the Buckfield Branch Rail Road Company. It is provided by statute, c. 76, § 18, that “in case of deficiency of attachable property or estate, the individual property, rights and credits of every stockholder thereof, shall be liable to be taken on execution, to the amount of his stock and no more, for all debts of the corporation contracted during his ownership of such stock.” The debts, upon which the judgment was recovered, appear to have been contracted by the corporation during the months of August, September and October, 1849. The first question presented is, whether the demandant was the owner of stock in the corporation, when the debts were contracted. He was one of the persons named in the Act of incorporation, approved on July 22, 1847. The Act being made a public one by statute, did not become operative until thirty days had elapsed after the close of that session of the Legislature on August 3, 1847. He would not become an owner of stock, by being named in the Act as one of the corporators. A paper entitled “ Subscription to Buckfield Branch Rail Road,” bearing date on August 21, 1847, and containing certain stipulations, was signed by the demandant. Among them was the following; — “ the undersigned hereby agree to take and fill the number of shares set against their naines respectively, in the capital stock of the Buckfield Branch Rail Road corporation, on the terms and conditions following.” There can be no doubt, that this paper had reference [83] to the corporation, whose future legal existence had been provided for. The demandant appears to have attended a meeting for the organization of the corporation, and to have taken a part in the proceedings; to have stated to one of the appraisers, when the levy was made, that he was the owner of ten shares of the stock, and that he had paid for them; to another person at another time, that he had taken a thousand dollars in the stock, and had worked more than that; to have made a settlement with the treasurer of the corporation, on May 12, 1851, allowing the amount of ten shares of its stock to be deducted from his account against the corporation. A person,' who before its organization, subscribes for stock and afterwards claims to be a stockholder’, and acts as one in meetings of the corporation, and whose claims are admitted by it, by allowing hiig. to act as such, and by receiving payment for his 1 stock, must be regarded as the owner of the stock thus subscribed for and acted upon. Chester Glass Co. v. Dewey, 16 Mass. 94; Spear v. Crawford, 14 Wend. 20; Kidweller Canal Co. v. Raby, 2 Price, Ex. R. 93; Kennebec & Portland R. R. Co. v. Palmer, 34 Maine, 366. To make him an owner, it is not necessary that he should have paid for his stock. A corporation may give credit for its stock, as well as for any other property sold by it. Nor is it necessary that certificates should have been issued. These only constitute proof of property, which may exist without them. When the corporation has agreed, that a person shall be entitled to a certain number of shares in its capital, to be paid for in a manner agreed upon, and that person has agreed to take and pay for them accordingly, he becomes their owner by a valid contract, made upon a valuable consideration. It is insisted, that parol evidence cannot be received, to prove that a person has become the owner of shares; that the records or books of the corporation are the only legal evidence of that fact, and the case of Stanley v. Stanley, 26 Maine, 191, is relied upon as having so decided. That [84] case decides, that the transfer of stock from one person to another, is by statute required to be entered upon the books of the corporation, before it can be effectual to discharge or incur certain liabilities, and that the transfer can be proved only by the books; not that a title to stock originally acquired from the corporation should be so proved. The decision upon the facts, as well as the law, being submitted, the Court cannot but conclude, that ther testimony introduced is sufficient to prove, that the demandant was an owner of ten shares of the stock, when the debts, on which the judgment was founded, were contracted by the corporation. It is further insisted, that the tenant did not acquire any title.by the levy, on account of defects in the proceedings. The first alleged defect is, that the officer does not state in his return, that the t^mandant was an owner of stock. No provision of a statute has been presented or is known, requiring that all the facts necessary to constitute a- title to real estate, should appear of record. When such titles are acquired by the enforcement of liens created by statute, they may be established without full proof from records. An officer cannot be required to state in a return of his official doings, any act not performed by him, or any fact not officially known to him, unless required by law so to do. Although the statute requires the clerks of corporations to communicate to him information respecting the ownership of stock, it does not make it his oijicial duty to ascertain and determine who are owners. He could not be held responsible for the truth of any such statement, and cannot therefore be required to make it. Another alleged defect is, that the notice required by the statute does not appear to have been given to the demand-ant as the owner of stock. The provision of the statute is, that the officer may cause the property of the stockholder to be levied upon, “ after giving him forty-eight hours previous notice of his intention, and of the amount of the debt or deficiency,” unless the [85] stockholder shall show to the creditor or officer, attachable corporate property or estate. The amount due when the notice is given is to be stated, and a payment made during the forty-eight hours, cannot destroy the effect of a notice given in strict conformity to the provisions of the statute, and deprive the creditor of the right secured to him by it, and require a new notice to be given. If such a construction were made, the corporation or a stockholder, might by payment of a very trifling sum, made once in forty-eight hours, occasion delay and expense for a long time, when the debt was large. No such construction is required to preserve the rights of the owner of stock. Any payment made after notice, will operate favorably for him. Nor will his estate be exposed for an indefinite time to be taken. The notice cannot be effectual, after the return day of the execution by virtue of which it has been made; and it is not perceived, that it can be injurious to the owner of stock to be allowed a longer time than forty-eight hours, during which he can avoid a seizure pf his by showing corporate property. Another objection made to the title of the tenant is, that the corporation appears to have had “ attachable corporate property or estate,” and that it is only in case of deficiency of such property, that the property of the owner of stock is liable to be taken. The statute does so provide and it also provides, that his liability shall continue for one year after a record of the transfer of his stock, and for six months after judgment recovered in any suit commenced within that year, “ provided, that in every such case the officer holding the execution shall first ascertain and certify upon such execution, that he cannot find corporate property or estate.” "When this clause is considered in connexion with the other provisions, there can be little doubt, that it was intended to make the creditor’s right to resort to the property of an owner of stock depend upon the officer’s return, that he could not find corporate property or estate, and not upon [86] his ability to prove by other testimony, that no snch property existed. If this were not the true construction, it would always be in the power of a corporation to protect the property of its stockholders from being taken to pay its debts, by keeping a small amount of attachable corporate property secreted, so that neither the creditor or officer could ascertain its existence. The return of an officer respecting a duty expressly required of him, must be conclusive upon other parties of the fact that no corporate property or estate was to be found» The proof of usury offered and excluded, if it had been offered by the corporation, could not have prevented the recovery of a judgment. It could only have diminished the amount recovered. This cannot be done collaterally. Demandant nonsuit. Tenney, Wells and Appleton, J. J., concurred.