Root v. Sinnock

Wall, J. The question presented here is as to the individual liability of a stockholder in the Union Bank of Quincy, under a charter granted by the General Assembly. Vol. 1, P. L. 1869, 219-221. The corporation thus created, while not possessing “banking powers” within the meaning of that term, as used in See. 4, Art. 10 of the Constitution, and as construed in The People v. Loewenthal, 93 Ill. 191, was authorized to borrow and loan money, and to buy and sell bills, notes, bonds and other securities, and to carry on a general exchange business. The capital stock was fixed at $500,000, to be divided into shares at $100 each, and authority was given to commence business as soon as $150,000 should have been subscribed and twenty per cent, paid thereon. Sec. 4 provided that the payment for stock should be made in such time and way as the directors should prescribe. Various provisions relating to the manner and conditions of subscription, etc., are found in the act, which are not important in this connection. The charter is declared to be a public act and as such to be liberally construed. Sec. 7 is as follows: Seo. 7. “It shall be lawful for the corporation hereby created to purchase and hold such real estate, as may be convenient and useful in the transaction of its business and to take and hold any real estate in trust or otherwise as security for or in payment of loans and debts due or to become due to said corporation, to bid for and purchase real estate at any sale made by virtue of or on account of any loan or mortgage or trust made to or held by or for said corporation, or in which it is interested, and to receive and take in satisfaction of any loan or debt, any real or personal estate and to hold, use and improve, lease and convey the same: Provided, that no real estate, beyond such as may be necessary for the transaction of its business, shall be held by said corporation for a longer period than may be necessary to enable said corporation to dispose of same to advantage, and all real estate sold by said corporation under deed of trust or other conveyance, may be redeemed by the debtor, his, her or their heirs or creditors, by the payment of the full amount of debt and costs together with ten per cent, interest on same, at any time within twelve months after such sale: Provided, also, that the stockholders in this corporation shall be individually liable to the amount of their stock for all debts of the corporation and such liability shall continue for three months after the transfer of any stock on the books of the corporation.” The language of the last proviso is the subject of the present inquiry. Appellee insists that thereby the stockholder is made liable for an amount equal to and aside from his obligation to pay for the stock by him subscribed, an additional security being thus provided for the benefit of creditors. On the other hand, the appellant urges that no such extra liability was intended, and that when the stock had been paid for at its par value, the liability of the stockholder is exhausted, and that, as there is no averment of non-payment according to the contract of subscription, no cause of action is disclosed by the declaration and, therefore, the court erred in overruling the demurrer. The view taken by appellant makes the clause under consideration practically meaningless and superfluous. The stockholder is liable without this provision for the whole amount of stock subscribed by him. This he must pay to the corporation and whatever he may owe in this respect is assets of the corporation, and as such may be reached and participa ted in by a corporation creditor, by the appropriate means. The Constitution of 1848, Sec. 2, Art. 10, provided that dues from such corporations should be secured by such individual liabilities of the corporators, or other means, as might be provided by law, and we have no doubt the Legislature intended, in this instance, pursuant to the plain mandate and policy of the organic law, to impose another liability to which creditors may resort without waiting for the collection ahd distribution of the corporate assets. Such provisions were not inserted without purpose, and in aid.of construction it is a rule to give some effect, if possible, to every word and sentence contained in the act. It being enjoined by the Constitution, that corporate dues should be secured in some such way, and the language used being wholly unnecessary and superfluous, if not so designed, the very natural inference would be that such was the object. Provisions like this have been made the basis of recovery in numerous cases which are familiar, and some of which are cited in the briefs. Among others may be noticed Arenz v. Weir, 89 Ill. 25, where the provision was, “Ho stockholder of the corporation hereby created shall be liable in his individual capacity for any debt or liability of said company beyond the amount of stock held by him.” In reply to the criticism of counsel the court said the meaning was plain that every stockholder should be liable to the extent of the stock held by him for any debt or liability of the company, and that the Legislature was but carrying into effect the constitutional requirement above referred to. Counsel contends the language here relied on is not susceptible of the construction put upon it and to give it such import there must be added the words “ equal to ” or some others indicating specially a liability aside from that for the payment of stock to the company. Such a position is' narrow and untenable. The expression in Arenz v. Weir, supra, was held sufficient and that ease is very much in point here. Similar language has been so held in other cases though it may be the precise expression has not been found elsewhere. It should be construed in the light of the object the Legislature had in view under the Constitution, and we have no difficulty in adopting the construction already stated. Morse on Banking, p. 493; Briggs v. Penniman, 8 Cow. 395; Lane’s Appeal, 105 Pa. St. 57; Bromley v. Goodwin, 95 Ill. 118; Wincock v. Turpin, 96 Ill. 135; Meisser v. Thompson, 9 Ill. App. 368; Thompson v. Meisser, 108 Ill. 359. It is urged by counsel that the expression here relied on is but a proviso, and that no case can be found where such liability has been predicated upon a mere proviso. We have quoted the section entire, so that all its provisions may be seen together, and when so read it would appear that this clause is not so much in the nature of a proviso, a qualification or modification of what precedes, as an independent provision which might well have constituted a separate section, but which, for convenience or some cause not important, was incorporated as it is in Sec. 7. We see no reason why we should nullify and disregard the language because of its position in the section. The second count differs from the first in the material respect that it is not averred the stock was held by the defendant when the default occurred. The provision fixes “liability for all debts of the corporation,” and declares that “such liability shall continue for three months after the transfer of stock on the boobs of the corporation.” Under this it would not be necessary for one about to seek relief to ascertain who held stock when the money was deposited, but be might sue those who held stock and had not transferred it within three months of the time when default occurred. When the money was deposited the inchoate liability would attach to the then stockholders, and to them for three months after transfer, and as the stock might be transferred the liability would be transferred also. -Upon the point here •involved, see generally, Thompson on Stockholders, Secs. 90, 94, 95, 210, 215, 217; McLaren v. Franciscus, 43 Mo. 452; Middleton v. Magill, 5 Conn. 28; In re Empire Bank, 18 N. Y. 223 ; Curtis v. Harbour, 12 Mich. 3. We are of opinion the court properly overruled the demurrer to the declaration. There is nothing perceived in the record to show the basis upon which the damages were assessed, and it must be presumed there was sufficient evidence to justify the assessment. The judgment will be affirmed. Judgment affirmed.