Russell v. Bristol

Pardee, J. The American National Life & Trust Company of New Haven having prior to September 13th, 1871, ■received a charter giving it permission to commence business whenever capital stock to the amount of $100,000 should be subscribed, the corporators met on that day, organized, opened a book for subscriptions, received and accepted them ■to the amount of $125,000, and closed it. In it Willis ¡Bristol made two subscriptions in form as follows:— “Willis Bristol-100 shares $10,000.” “ Willis Bristol, Treas., in trust—120 shares—$12,000.” And on March' 26th, 1873, he became by purchase the owner of thirty-four additional shares upon which nothing ■ had been paid. He died in 1875, having paid nothing upon . any of them; (leaving out of view the votes concerning a ' dividend and an installment of twenty-three per cent, here-i after to be mentioned.) Prior to the close of 1876, all [271] claims presented within the time limited having been paid, his remaining estate was distributed. In November, 1878, the company having been judicially declared insolvent, the court appointed the plaintiff its receiver, ordered him to call for the entire amount due upon the shares, payment to be made to him on or before March 15th, 1879. Upon January 13th, 1879, the defendants, as executors of Willis Bristol, were duly required to pay the full amount due upon two hundred and fifty-four shares, with interest, on or before March 15th, 1879. No part of it being paid the receiver instituted this suit. The case is reserved for our advice to the Superior Court as to the judgment to be rendered. First, as to the subscription of Willis Bristol, treasurer. After subscriptions had been made and accepted by the corporators to the amount of $113,000, Mr. Bristol, in good faith, made a further and final subscription in the following form:—“Willis Bristol, Treasurer, in trust—120 shares— $12,000.” Directors were at once elected, the majority of whom were the same persons who had just been acting as corporators, and the directors at once elected Mr. Bristol treasurer. Having knowledge of this subscription and that Mr. Bristol intended it for the company itself and not as his individual subscription, they allowed it to stand during the solvency of the company as made. While he was living they called for an installment of twenty-three per cent, upon $110,000 of the capital and declared a dividend of the same per cent, upon that amount of the capital, but did not include him, so far as this stock was concerned, in either the call or the dividend; and in a vote passed while he was living they recognized the making of the subscription to have been an act done in behalf of the corporation. These acts, performed before the issuing of any policy, constituted an acknowledgment, an acceptance, of the subscription as made in its behalf; a ratification, an adoption of it as its own. If the company had no power to thus subscribe for its own stock that fact does not make it a case of want of authority on his part. He was not making himself person [272] ally liable by assuming to act with authority when he had none. The authority, as between himself and the company, if incomplete at the time of the subscription, was made complete by the ratification; and neither the company while it was solvent, nor its receiver in insolvency, could hold Mr. Bristol liable individually upon the subscription. On May 10th, 1872, the American Mutual Life Insurance Company, a corporation located at New Haven, was by the commissioner of insurance declared to be insolvent to an amount exceeding $48,000, and prohibited from issuing new policies. Its board of trustees had previously received legislative permission to “ establish a guarantee capital or fund, not to exceed the sum of $100,000 at any one time, in approved notes, and the same shall' be negotiated or assessed only for the purpose of paying claims against said company, and if it shall be necessary at any time for the board of trustees to assess, negotiate or collect any part or portion of said notes, the amount thus obtained shall be refunded and be paid out of the first surplus receipts of said company, with interest at the rate of six per cent, per annum.” On March 15th, 1873 a guarantee capital amounting to $75,000 was established in accordance with these provisions, subscriptions to which were made and received subject to the terms of the charter, and to an agreement between the company and the subscribers that “ it shall not be used or resorted to unless all the resources of said company are exhausted,” and that the assets pledged for the payment of subscriptions should be surrendered on December 15th, 1875. On March-22d, 1873, the American Mutual Life Insurance Company transferred its assets to the American National Life & Trust Company, and the latter accepted them and agreed to pay all debts due from' the former. The transfer included the subscriptions to the guarantee capital. On May 17th, 1873, the directors of the American National Life & Trust Company voted “that an installment of twenty-three per cent, on $110,000 of the capital stock of this company is hereby required to be paid to the company on or before the 5th day of June, 1873;” also [273] “ that a dividend of twenty-three per cent, from the surplus of this company be and is hereby declared to be paid to the holders of $110,000 of the capital stock, payable on the 5th day of June, 1873.” On that day the company was insolvent, unless the guarantee capital of $75,000 transferred to it by the American Mutual Life Insurance Company was an asset. This it clearly was not. In its creation by express contract it was merely a loan by shareholders to an insolvent corporation ; if the insolvency continued and proved fatal they were to lose it; if success restored solvency they were to receive it back from the first surplus earnings; and the corporation was barred from any application or use of the money borrowed except for payment of losses upon policies. The American National Life & Trust Company received it with all these limitations; if not needed and used to pay losses upon policies it was to repay; if used for losses it was to repay the moment it had sufficient surplus earnings; to neither corporation could it ever be anything but a debt; a dividend from it was alike financially and legally impossible and therefore void; and the complemental vote that this dividend should pay an installment upon the shares was equally impossible and void. Was the claim legally presented? It appears that the Superior Court in New Haven County, at its January term, 1879, upon the application of the insurance commissioner, made an order that payment of all subscriptions to the stock of the company should be made to the receiver on or before the 15th day of March, 1879, of which order the receiver was to give notice to the stockholders on or before the 15th of January, 1879; and that the receiver on the 13th of January enclosed a certified copy of this order to the executors of Willis Bristol, with a written demand for payment of the subscriptions made by the deceased on or before the day fixed by the order for payment. The statute provides that “when a right of action shall accrue after the death of the. deceased it shall be exhibited within twelve months after such right of action [274] shall accrue, and shall be paid out of the estate remaining after payment of the debts exhibited in the time limited.” Gen. Statutes, p. 388, sec. 5. The defendants claim that here no right of action had accrued, and that none could until the -15th of March, 1879, when by the order the subscriptions were to be paid, and that a presentation of the claim in January could not be within twelve months after the right of action accrued. But the notice gave definite information as to the origin, nature, amount and time of payment of the claim. It is putting altogether too narrow .a construction upon the statute to hold that the claim must, have actually matured. The presentment to an executor of an obligation before, is a presentment at maturity. The Superior Court is advised to render judgment for the plaintiff for the amount of one hundred dollars per share upon one hundred and thirty-four shares standing in the name of Willis Bristol individually, with interest. ■ In this opinion the other judges concurred.