Felker v. Sullivan

Mr. Justice Bailey delivered the opinion of the court. It will be observed that the order of the federal court does not assume to set aside the contract between the corporation and the defendant; neither does it find the amount of the indebtedness for the payment of which recovery must be had upon this ' trust fund. The complaint in this action does not allege the amount of the indebtedness, and the amount was not proven. It is incumbent upon the trustee in bankruptcy in a case like this to show the amount which was actually required to- discharge the obligations of the delinquent stockholder to the corporation creditors, because the stockholder does not owe the corporation any money, and he- is only indebted to the trustee in bankruptcy, if at all, which we do not decide, in a sum sufficient to discharge the- obligations of the- corporation. Until the amount of these obligations is determined no judgment could be rendered against the stockholder. In Scovill v. Thayer, 105 U. S. 143, the proceedings were substantially as they are herein. A contract similar to- the- one involved here was made between the corporation and the stockholders. The [217] court, speaking through Mr. Justice Woods, announced the following doctrine: “The doctrine of this court is, that such a contract, though binding on the company, is a fraud in law on its creditors, which they can set aside; that when their rights intervene and their claims are to be satisfied, the stockholders can be required to pay their stock in full. ‘ ‘ The reason is, that the stock subscribed is considered in equity as a trust fund for the payment of creditors. It is so held out h> the public, who have no means of knowing the private contracts mad© between the corporation and its stockholders. The creditor has, therefore, the right to presume that the stock subscribed has been or will be paid up, and if it is not a court of equity will at his instance require it to be paid. “In this case, the managers and agents of the bankrupt company had-in effect represented to the public that all its capital stock had been subscribed for, and had been or would be paid in full. Considered, therefore', in the view of a court of equity, the contract between the company and its stockholders was this, namely, that the stockholders should pay, say, for example, twenty dollars per share on their stock and no more, unless it became neeessary' to pay more to satisfy the creditors of the company, and when the necessity arose and the amount required was ascertained, then to make such additional payment on the stock as the satisfaction of the claims of creditors required. “When the company was adjudicated a bankrupt the assignees were bound by this contract, thus equitably construed. Their duty was to collect a sufficient sum upon the unpaid stock which, with the other assets of the company, would be sufficient to satisfy the company’s creditors. They were author [218] ized to collect no¡ more. If it should turn out that the other assets were sufficient, no action would lie against the stockholder for the balance due on his stock. For if in a bankruptcy proceeding any surplus remained after payment of debts, it would go to the company and not to the stockholders. And we have seen that the company in this case would have no right to any surplus. * * * “In this case there was no obligation resting on the stockholder to pay at all until some authorized demand in behalf of the creditors was made for payment. The defendant owed the creditors nothing, and he owed the company nothing save such unpaid portions of his stock as might be necessary to satisfy the claims of the creditors. Upon the bankruptcy of the company his obligation was to pay to the assignees, upon demand, such an amount upon his unpaid stock as would be sufficient, with the other assets of the company, to pay its debts. He was under no obligation to pay any more, and he was under no obligation to pay anything until the amount necessary for him to pay was at least approximately ascertained. Until then his obligation to pay did not become complete. “But not only was it necessary that the amount required to< satisfy creditors should be ascertained, but that the agreement between the company and the stockholder to the effect that the latter should not be required to make any further payments on his stock should be set aside, as in fraud of creditors. No action at law would lie to recover the unpaid balance due on the stock until this was done.” We consider the foregoing to be the law of this case. The judgment of the district court must therefore be affirmed. Affirmed. Chief Justice Gabbert and Mr. Justice Gunter concur.