Gallaghar v. Ashby

By the Court, E. Darwin Smith, J. The plaintiff was a laborer, under the 12th section of the general rad road act, of the Lake Ontario, Auburn and New York Rail Road Company, and had duly given notice of his claim for work done for a contractor, under that section, and had sued and recovered judgment in due form against the company, and issued execution thereon, and the same had been duly returned unsatisfied. All this is stated in the complaint. The defendant is a stockholder in said rail road company, and has paid, for his stock, in full. The point raised by this demurrer is, whether as such stockholder the defendant is liable for this judgment, under section 10 of said rail road act. Section 10 of the act of 1850 is as follows: “Each stockholder of any company formed under this act shall be individually liable to the creditors of such company, to an amount equal to the amount unpaid on the stock held by him, for all debts and liabilities of such company, until the whole amount of [146] the capital, stock so held by him shall have been paid to the company. And all stockholders of every company shall be jointly and severally liable, for all the debts dne and owing to any of its laborers and servants, for services performed for such corporation, but shall not be liable to an action therefor before an execution shall be returned unsatisfied in whole or in part, against the corporation,' and then the amount due on such execution shall be the amount recoverable, with costs, against such stockholders/’ The plaintiff is a creditor of the Lake Ontario, Auburn and Hew York Bail Boad Company, and could obviously recover the amount of his judgment against any stockholder' of such company who had not paid up his stock in full, provided an amount sufficient to cover said judgment remains unpaid upon his subscription to the capital stock of said company. But the defendant having paid up his stock in full, is not hable to pay the plaintiff’s judgment, under the first branch of the section. His liability depends upon the construction of the latter branch of the section. This part of the section makes the stockholders of every company jointly and severally liable for all debts due and owing to any of its laborers and servants for services performed for such corporation. Was the plaintiff such a laborer or servant ? I think not. This part of section 10 I tbink was designed to provide for the payment of the immediate servants, laborers and employees of the company itself, in contradistinction to the laborers employed by contractors in the construction of the rail road, or of any part of the work. Section 12 makes provision for this latter class of laborers. The provisions of section 12 are precise and •definite in respect to this class of laborers. , The rail road company is only liable for 30 days labor by any laborer, and that upon condition that notice is given to the company of such indebtedness, within 20 days after the performance of the labor, and that suit be commenced therefor within 30 days thereafter. Hone of these provisions apply to the laborers or servants [147] for services performed for the corporation under section 10. Taking the two sections together, it seems to me quite clear that a distinction was intended by the legislature, between the class of laborers and servants directly employed by the rail road company and those employed by contractors, in the construction of the rail road of any company. For debts due to the first class of laborers and servants-—those mentioned in section 10—the stockholders of every rail road company are made jointly and severally responsible, but not for those mentioned in section 12. The latter class have the responsibility of the corporation itself, and also that of each stockholder who has not paid up his subscription in full; but they have no right of action against an individual stockholder who has paid up for his stock in full. Such is the case with the defendant in this action, and he is not liable for the plaintiff's debt. The demurrer is well taken, and the judgment of the special term overruling the same should be reversed. [Monroe General Term, December 7, 1857. Johnson, Welles and Smith, Justices.]