Alphin v. Wade

Wood, J., (after stating the facts.) The jury, upon sufficient evidence, having found the facts in favor of appellee, the only question left for our consideration is whether or not a married woman who is a stockholder and president of a corporation engaged in mercantile business is liable on a note which she signed in her individual capacity as surety, the note having been executed by the -corporation for borrowed money which went into its business? Section 5214 provides that “a married woman may bargain, sell, assign and transfer her separate personal property, and^ carry on any trade or business, and perform any la-bor or services on her sole and separate account; and the earnings of any married woman from her trade, business, labor or service shall be her sole and separate property, and may be used and invested by her in her own name; and she may alone sue or be sued in the courts of this State, on account of the said property, business or services.” We have held that the effect of this statute “is to invest her with all the rights, powers and privileges of a feme sole in respect to her separate business and the property invested therein, and to subject her to the liabilities she would be subject to in respect thereto if she were unmarried.” In other words, her contracts with reference to her separate business create a personal liability against her. Sidway v. Nichol, 62 Ark. 146; Hickey v. Thompson, 52 Ark. 234, 238; Trieber v. Stover, 30 Ark. 727. This statute does not give her power to contract generally, and therefore she has no power to sign notes as surety for the debts of another. Sidway v. Nichol, supra. But it does give her power to sign notes for debts of her own contracted with reference to her separate business. Hickey v. Thompson, supra. When a married woman invests her separate estate in the stock of a' mercantile corporation, she becomes, to the extent of her investment — the shares of her stock —interested in the business of that corporation on her own account. To that extent she shares in its dividends, and to the extent she is interested is engaged in her own separate business. Chief Justice Shaw in defining a share of stock says: “The right is, strictly speaking, a right to participate, in a certain proportion, in the immunities and benefits of the corporation; to vote in the choice of their officers, and the management of their concerns; to share in the dividends of profits; and to receive an aliquot part of the proceeds of the capital on winding up and terminating the active existence and operations of the corporations.” Fisher v. Essex Bank, 71 Mass. 373, 378. See also Neiler v. Kelley, 69 Pa. St. 403, 407; Bridgman v. Keokuk, 72 Ia. 42; 1 Cook on Corporations, § 12. If a married woman have her entire separate estate, for instance, invested in the shares of a corporation and becomes the president of the corporation, can it be said that she is not engaged in her separate business simply because the corporation for certain purposes in law has a separate entity from the individuals who own its stock? I think not. Therefore, when she signs a note as surety for the corporation in which she has purchased stock on her own account with funds of her separate estate, she becomes liable, in case of default of the corporation, for the debt which she has made her own. We are aware that a different view obtains by an eminent authority (Judge Cooley) in Michigan. See Russel v. People’s Saving Bank, 39 Mich. 671, and cases cited. But the views we have expressed, we believe, are in accord with the better reason, and they are certainly more in harmony with the trend of our own decisions based upon the peculiar language of our statute. In Crenshaw v. Collier, 70 Ark. 5, a husband had a policy of life insurance payable to his wife and daughter in equal parts. He and his wife executed a note to one who paid the dues on the policy to sefcure him for the money thus advanced, and this court held that the note was valid against the wife, so far as it was for the benefit of her separate estate. It was the husband’s investment in the policy, but for her benefit. She had the right to preserve her interest in it b3r executing her note to one who advanced the money to keep the policy alive. So here appellee had the right to secure one who advanced money to promote the profits of a -corporation in which she owned stock and was a beneficiary of any profits to that extent. We have held that a married woman under the above statute can form a partnership as a sole trader with a third person, and become liable for all the contracts of the firm as effectually and to the same extent as if she were a man. Abbott v. Jackson, 43 Ark. 212, 216, 217. By analogy the same principle applies here, although a corporation differs radically from a partnership. In Arkansas Stables v. Samstag, 78 Ark. 520, we said: “In virtue of their stockholding, they are eligible to corporate office, which is always desired for its emolument or to protect, care for and watoh over the interest in the corporation owned by the officer or for both reasons. It follows that she is acting in behalf of her separate estate or earning a separate income, and in these respects she is freed of her coverture.” The judgment 'is affirmed.