Sargent v. Stetson

Knowlton, J. The only question in this case is whether the finding in favor of the defendant was warranted by the evidence. There is no dispute that the defendant is liable to the plaintiff as a stockholder of the Davidson Investment Company, a Kansas corporation, unless he can maintain his defence that he is entitled to be relieved from liability by reason of his payment to Mrs. Kingman of the amount of a note and mortgage held by her as an investment and guaranteed by this corporation. The evidence well warranted a finding that he paid her the full face value of the note and mortgage, and that he took it in good faith, and was equitably entitled to have the benefit of it in some proper way as a claim against the corporation, or as representing a payment made by him of a debt for which the corporation was liable. In his pleadings he claims the benefit of his payment as an equitable defence under the laws of Kansas, and under our St. 1883, c. 223, § 14 (R. L. c. 173, § 28) ; and to meet any possible view of the evidence, he — 373 — makes two statements of his claim, in one averring his equitable ownership of the note, and in the other relying on his payment of a debt of the corporation, which to that extent should relieve him from liability as a stockholder. We think that the case of Broadway National Bank v. Baker, 176 Mass. 294, 298, and the decisions in Abbey v. Long, 44 Kans. 688, Pierce v. Security Co. 60 Kans. 164, Kendall v. Underhill, 8 Kans. App. 521, and in other Kansas cases, entirely justify the finding of the judge upon the evidence. The defence relied on is not technically a set-off against the plaintiff’s claim, but it is a condition which equitably ought to relieve, and under the decisions of Kansas does relieve, a defendant from his liability as a stockholder on debts of the corporation, either when he holds against the corporation a debt which he bought in good faith at its face value of an amount équal to or greater than his original liability, or when he has paid such a debt for the benefit of the corporation and has received nothing in reimbursement. The fact that there was no formal assignment of the note or mortgage is immaterial. It is the defendant’s equitable relation to the corporation in reference to its debts, not his right to sue in an action at law, which gives him his defence against the plaintiff. As the defence of the statute of limitations is not available to the defendant in answer to the plaintiff’s claim from him as a stockholder (Broadway National Bank v. Baker, 176 Mass. 294, 297), so the statute of limitations does not deprive the defendant of his right to set up his equitable ownership of the note, or his payment of the note, as a condition affecting "his alleged liability as a stockholder. If his right depended on the prosecution of the suit he would not be barred by lapse of time, because first, the statute of limitations in Kansas has no force here; and secondly, our statute of limitations does not run in favor of a foreign corporation which could not be sued in this Commonwealth. Rockwood v. Whiting, 118 Mass. 337. But as we have already said, his defence does not depend on his right to maintain an action at law against the corporation. It depends on facts and conditions which are to be considered from an equitable point of view, in determining whether he is now liable as a stockholder. — 374 — The. plaintiff’s contention that the amendment to the defendant’s answer could not be allowed because his plea of set-off was a final election which prevented him from afterwards averring a payment is not well founded. There is no good reason why he should not be permitted to make both averments. R. L. 173, § 34. Jewett v. Locke, 6 Gray, 233. Lyons v. Ward, 124 Mass. 364. Judgment on the findings.