Stull v. Bellefonte Stone Products Corp.

Opinion by Ervin, J., • This appeal is concerned with the right of a president of a corporation to recover unpaid salary from stockholders of the corporation. The court below, by its order, entered judgment for Harold R. Stull, president of Bellefonte Stone Products Corporation, against the defendants, E. R. Seheuner and Joseph Mills, two stockholders of the corporation, in the respective amounts of $2,574.00 and $3,332.00, with interest, for unpaid salary due to Stull as president of the corporation. The two stockholders have appealed. The Act of May 5, 1933, P. L. 364, 15 PS §2852-514, provides: “A. A shareholder of a business corporation shall not be personally liable for any debt or liability of the corporation, except salaries and wages due and owing to its laborers and employes, for services rendered to the corporation. In such event, every shareholder shall be personally liable in an amount equal to the value of the shares of the corporation owned by him. . . .” The appellants argue that the above provision does not “apply to the chief executive officer who has complete control of the corporation.” The Act of June 25, 1864, P. L. 947, §7, provided for individual liability of the stockholders “for debts [42] due mechanics, workmen and laborers employed” by the company. By the Act of April 29, 1874, P. L. 73, §14, the liability of shareholders was limited to “all work or labor done ... to carry on the operations of each of said corporations.” Section 514 of the Business Corporation Law of 1933, above quoted, enlarged the language theretofore used by the use of the phrase “salaries and wages due and owing to its laborers and employes.” (Emphasis supplied) The word “wages” is commonly used with reference to pay of laborers and workmen, whereas the word “salary” may be used with reference to the pay of any employe, no matter how big his position or how large his pay. We are of the opinion that the legislature intended, by the 1933 law, to include any employe of the company, whether he be president or common laborer.1 While the 1933 act does not expressly include officers, we believe their inclusion is implicit from the words “salaries” and “employes.” Construing the words in their popular sense, the inference to be made is that salaried employes include officers of the corporation. The 1904 Quebec case of Fee v. Turner, 13 B.R. 435, is not in point because the section involved covered only “clerks, laborers, servants and apprentices.” The New York cases of Bristor v. Smith, 158 N.Y. 157, 53 N.E. 42, and Harris v. Lederfine, 196 Misc. 410, 92 N.Y.S. 2d 645 (N.Y. S. Ct. 1949), are not in point because the New York statute did not include the word “salaries.” It is also argued by the appellants that Stull should not be entitled to recover his unpaid salary [43] from the shareholders because he used funds of the corporation to repay a loan to himself instead of paying his own salary and other creditors. Unpaid salary in the amount of $17,400.00 was due to Stull. If the payments of $11,350.00 applied against loans which he had made to the company, had been applied against salary, the amount of salary owed would still have been $6,050.00, or an amount greater than the aggregate of the judgments against the two appellants. While it is true that in Taylor v. Penrose Motor Co., 101 Pa. Superior Ct. 486, we held that an officer or director of an insolvent corporation may not satisfy his claims against the corporation in preference to those of other creditors similarly situated, we do not believe that this case presents such a situation. At the time of the foreclosure of the mortgage against the corporation, it had current liabilities of approximately $10,000.00, most of which was the company’s indebtedness to the appellee. In addition to the mortgage, there was indebtedness on long term notes which did not mature until sometime later on. There is nothing in the record to indicate that any corporate indebtedness on a parity with the debt to the appellee went unpaid. Judgment affirmed. Footnotes [1] The lower court opinions which our search has revealed are in accord: See McCaskell v. Purity Fibre Products Corporation, 22 Pa. D. & C. 1; McDowell v. C. H. Boley Co., 34 Pa. D. & C. 307; Harris v. McLaughlin, 79 Pa. D. & C. 232; Bernstein v. Cosmopolitan Food Plan, Inc., 14 Pa. D. & C. 2d 197.