Conant v. Van Schaick

By the Court, Gould, J. In this case, (Conant v. Van Schaick,) and in three others argued with it, it becomes necessary to pass upon the leading questions, as to the responsibility of the stockholders of rail road corporations for the debts of the companies, under the 10th section of the act of 1850, (Laws of 1850, p. 214,) considering that section as it originally stood; and then as amended, and in fact repealed, by the law of 1854; (Laws of 1854, pp. 614, 615, § 16;) and also, taking the two together, whether the repealing clause can, constitutionally, apply to rights of action existing-prior to its enactment. And for a correct solution of all or either of these questions, it is necessary to ascertain the nature of the right; whether it be one given by statute, or whether it be a common law right which the statute has but failed to take away ; involving, to some extent, the point whether the statute is to be deemed remedial, or in the nature of one imposing a forfeiture or penalty. ■The whole ground of the construction of the statute, and the nature of this liability, is very fully and clearly stated and adjudicated in Corning v. McCullough, (1 Comst. 47.) By reading the 9th and 10th sections of the act incorporating the Bossie Galena Company, (Laws o/1837,y>. 446,) and then turning to the Session Laws of 1850, pages 214, 215, § 10, no one can fail to see that the provisions of the two acts are, to all essential purposes, identical. And the case named decides that, whereas a general act of incorporation would take away the common law liability of all parties in interest, as parties, the effect of such a section retaining that common law liability is to [97] make the act of incorporation a qualified one ; and that the responsibility (notwithstanding the statute directs the company to be sued first, &c.) is an original one, and is that of general partners ; and, like the responsibility of partners, enters into the essence of every credit given to the company, and is a part of the contract by which the debt is incurred; that the credit is given, and the creditor trusts “ as well to the personal liability of the stockholders, as to the responsibility of the corporation.” And, further, that “ this liability the stockholders voluntarily assumed, and it could not have been misunderstood by them.” (Page 55.) And, on the same page, “ When the plaintiffs sold and delivered their merchandise to the company whereof the defendant was a stockholder, they acquired a right of which nothing could divest them, to the liability of the defendant for the payment of the price of the goods; and the defendant incurred the obligation to answer and pay the debt thus incurred.” And at page 61 the action to enforce this liability is decided to be “ a common law action, and not an action on statute.” At page 58 it is decided that such a claim is “ not for a forfeiture or penalty, or any sum of money or thing taken from the defendant and given to the plaintiff by a statute ; nor upon any cause of action to which their whole and sole right or title rests upon a statutory provision entitling them thereto, but for a debt contracted by the sale,” &c. This decision manifestly covers the whole ground of the present suit; that is, as to the nature of the liability &c. under the law of 1850. (See also 7 Barb. 279.) What then is the effect of the law of 1854? The last seven lines of the 10th section, as amended, (at pages 614, 615,) are most clumsily expressed ; as if drawn to prevent the legislature from seeing the intent. But there can be no doubt that the drawer intended them to repeal the provisions of the former 10th section, which did not take away this action, and the legislature must be presumed to have intended what the lines really mean. I have no doubt, therefore, that in regard to any debt incurred after the passage of this amendment, the stockholders are corporators merely, [98] and not partners : and as to all such debts, an action like this could not be sustained. And here comes in the question, is this repealing clause if, or so far as, it applies to rights of action already accrued, (according to the law of 1850,) prior to the passage of the repealing act, constitutional ? There is no dispute that those rights were then vested rights. Then the decision, so fully quoted from above, (1 Comst. 47,) comes in, to give a decided, unequivocal answer on this point. The right is not created or given by statute, but is a common law right; and the liability. of the stockholders is a part of the contract. Such being the law of this state, and this" repealing act being, as clearly, one that takes away the right, and not merely one that affects the remedy, it is, so far as intended, or attempted, in this suit, to be applied to rights of action which accrued prior to its passage, unconstitutional, and those rights remain untouched by it. There is a minor point, which is involved in each of these eases, which is, how far the judgment which the plaintiffs, respectively, have recovered against the company, (and which, by the law of 1850 they were bound so to recover before suing the stockholders,) is evidence in such cases. There is an apparent difficulty in answering the question; from the fact that, by the act, the amount of the recovery against the stockholder must be “ the amount due on the execution” issued on the judgment against the company, and returned unsatisfied. Still it is palpable that judgments against the company may be recovered for a variety of causes not named in the section referred to. And were the mere proof that a judgment had been obtained against the company, and an execution on that judgment had been returned unsatisfied, to be held sufficient to make out the case, it is most manifest that the liability of the stockholders would, thereby, be extended to every debt of the company, no matter for what incurred. The plaintiff in such cases as these should be held to make out his case. By the statute he must prove that he has recovered judgment, against the company, and that the execution thereon has been returned unsatisfied. But this is not all; he must then go on and prove the debt for which [99] the judgment was recovered, to be of the sort named in the act; and when this is done, the amount due on the execution is the rule of damages, (a) Next there comes up, for consideration, what are the “ services performed for such corporation,” by “any of its laborers and servants,” for which such suit may be brought ? Or, who may bring such suit 1 I reply to this question, I see no middle ground, between restricting it to day laborers, and applying it to all persons employed in the service of the company who have not a different proper and distinctive appellation ; such as officers and agents of the company. The engineer, the master mechanic, the conductor, is as fully entitled to its benefits as is the man who shovels gravel. The latter is, in law, no more and no less a servant of the company than either one of the former. And (this question really applying only to the class of debts covered,) the servant who employs and pays the man who works with him, is fully entitled to the benefit of the maxim, qui facit per alium facit per se. And the company (and the stockholder) for whose benefit the work is done, (the work being of the nature named in the law,) has no right to complain that the whole question is tried in one suit, rather than in half a dozen. And these causes of action are assignable, beyond all doubt. To apply these principles to the cases before us. 1. In the case of Conant v. Van Schaick the whole of the plaintiff’s demand is good as against the defendant; provided he prove in this suit, that the services were rendered, as set forth in his complaint in the court below. But inasmuch as he rested on proving his case by the record only, a new trial must be had, to give him opportunity to prove his case. 2. In the case of Day v. Wood, the decision must be the same. 3. In the case of Day v. Townsend, the plaintiff must fail, [100] [Albany General Term, March 2, 1857. because his judgment against the company includes a claim for money paid &c. for the company. 4. In the case of McKinney v. Phillips, the decision must be the same as in the first two. Harris, Watson and Gould, Justices.] Footnotes [(a)] This point did not, and could not, arise in the case of the Rossie Galena Company; because the stockholders of that company were liable for all the debts of the company; no. matter of what description, or for what consideration.