M. D. Wells & Co. v. Robb

The opinion of the court was delivered by Horton, C. J.: M. H. Wells & Company on the 20th of November, 1884, obtained a judgment for $1,500 in the district court of Lyon county, against the Lyon County Cooperative Association, a corporation organized under the laws of the state. On the 27th of October, 1884, W. L. McLaughlin & Company and Samuel Bliss each obtained a separate judgment against the same corporation, before a justice of the peace in the county of Lyon, for the sum of $47.75 and $85.25, respectively. In all these cases executions were issued against the property of the corporation _ and returned unsatisfied. Subsequently, these creditors of the insolvent corporation attempted to obtain payment of their judgments from certain stockholders of the corporation to the extent of their statutory liability. The Ivy Grange, an unincorporated [207] society, organized for social purposes, owned in 1884 twenty shares of the capital stock of the corporation, of the face value of $5 per share. The defendants were members of the grange. F. H. Lyon was its master, or presiding officer. The principal question presented in this case is, whether W. L. McLaughlin & Company and Samuel Bliss have acquired prior liens against the defendants as stockholders of the Cobperative Association. Involved in this question, two others arise. These are: 1. Did the plaintiffs, by the notice served upon the presiding officer of the Ivy Grange in the fall of 1884, and the order for an execution against such grange made by the district court at the March, 1885, term, create a lien upon this liability ? 2. Did the proceedings of W. L. McLaughlin & Company and Samuel Bliss before Justice Evans, in April, 1887, in any way attach or create a lien upon this liability against the members of Ivy Grange? The first question must be answered in the negative, and the last question in the affirmative. “Neither at law, nor in equity are stockholders contributing to the capital of an incorporated company individually liable for the payment of the debts of the corporation. The liability arises solely by constitutional or statutory provision. As a consequence the matter here is wholly governed by the statute, and the rights of the party claiming under the statute must be ascertained by it.” (Hentig v. James, 22 Kas. 326; Gen. Stat. 1889, ch. 23, §32.) The statute prescribes that — “No execution shall issue against any stockholder except upon an order of the court in which the action, suit or other proceeding shall have been brought or instituted, made upon motion in open court, after reasonable notice in writing to the person or persons sought to be charged; and upon such motion, such court may order execution to issue accordingly, or the plaintiff in the execution may proceed by action to charge the stockholders with the amount of his judgment.” (Gen. Stat. 1889, ch. 23, §32.) The notice of M. D. Wells & Company to F. H. Lyon, [208] the master or president of the grange, was not a notice “in writing to the persons sought to be charged;” that is, it was not a notice to the defendants in this action. F. H. Lyon is not a defendant, although he is the only person who was served with a notice by the plaintiffs. Again, the execution ordered to be issued under the notice of plaintiffs was against the Ivy Grange. The notices served upon the stockholders of the Cooperative Association at the instance of W. L. McLaughlin & Company and Samuel Bliss in April, 1887, were not as precise as they might have been, and the proceedings before the justice are a little irregular. An execution, however, was ordered to be issued by the justice of the peace against the stockholders to the extent of their liability. At most, the notices and proceedings are irregular— not void. The stockholders are not complaining of the notices or of the order of the justice of the peace. In this action, we do not think the errors, if any, of the justice, can be revised or corrected. The service of the notices b}- W. L. McLaughlin & Company and Samuel Bliss and the order entered thereon, give them as creditors prior liens and claims against the stockholders. (Cole v. Butler, 43 Me. 401; Ingalls v. Cole, 47 id. 541; Jones v. Wiltberger, 42 Ga. 575; Marsh v. Burroughs, 1 Woods C. C. 463.) As this action was not brought until after the notices of McLaughlin & Company and Bliss were served and orders had been entered thereon, this action was brought too late to interfere with the prior liens or claims. As the notices and orders referred to are fully set forth in the statement of facts, we do not repeat them. The judgment of the district court will be affirmed. All the Justices concurring.