Arno v. Wayne Circuit Judge

Cooley, J. Stripped of all -the circumstances not necessary to an understanding of the legal questions involved, the facts in this1 case are the following: — 363 — The Marquette & Pacific Bolling Mill Company is a manufacturing corporation, having its field of operations- and its principal office in Marquette county. Its president resides in the county of Wayne. The relator claims to have a demand against the company for labor performed for it. The Constitution makes the stockholders individually liable for all such debts. Article 15, § 7. By the law, as it existed when the debt was contracted, suit to enforce the liability against the stockholders could only be brought after judgment and execution returned unsatisfied against the corporation (Comp. L., § 2852); but this was so changed by the amendatory act of 1877 as to permit the company and any of its stockholders to be jointly sued, but the act provides that no levy shall be made upon the property of stockholders, under an execution issued upon the joint judgment, until the property of the corporation shall have been exhausted. The same act, while limiting suits against the corporation to six years from the time the right accrued, declares that the liability against the stockholders must be enforced within two years from the time when payment for the labor becam'e due, and not afterwards. Public Acts 1877, p. 95, § 35. It also provides that personal actions against the corporation shall only be commenced in the county where the works of the corporation are situated, or where its business office is located. Id. p. 96, § 37. The relator brought' his suit in the county of Wayne just as the two years from the time his demand accrued was about to expire, and joined as defendant with the corporation Mr. Luther Beecher, who was a principal stockholder, and who is said to be the only stockholder pecuniarily responsible. It is manifest from the papers before us that the suit was brought in Wayne county by either the express or the tacit consent of the corporate officers. The reasons for this are not given, but there were ample reasons of convenience, since not only did the plaintiff’s attorneys reside in Wayne county, and the president of the corporation, but so did Messrs. Med — 364 — daugh & Driggs, who had long been the standing counsel for the corporation, and who were relied upon to take charge of its litigation. So it seems did Mr. Beecher and his attorneys. After service of process had been made upon the president, Messrs. Meddaugh & Driggs notified the plaintiff’s attorneys verbally of their retainer to defend, and this notice was accepted as sufficient. After declaration was filed, however, Messrs. Atkinson, who had been employed by Mr. Beecher to defend him, filed and served in the name of the corporation, by themselves as- its attorneys, a plea to the jurisdiction of the court. It is conceded that these gentlemen were never employed by the corporation, and that they had no authority whatever to make use of its name, unless their employment for the other defendant would authorize it. It was said, however, that as they actually did assume to appear for the corporation before there was any valid appearance by written notice served by the regular counsel for the corporation, we are bound to treat their appearance as authorized, and to hold it valid. I deem it necessary to spend no time upon this argument. There are cases in which, where third parties have acquired rights in consequence of the unauthorized appearance of attorneys in a cause, the parties, for the protection of these rights, have been held bound by the appearance, and have been turned over to the attorneys for their remedy. But this is the first instance, I presume, in which it was ever claimed that an attorney might appear without authority, take charge of a party’s defense against his remonstrance, and, while admitting that he was never employed, insist that the court must conclusively presume that he was. The mere statement of the proposition seems to me sufficient to demonstrate how unfounded it is. Messrs. Meddaugh & Driggs afterwards filed a plea of the general issue in the case, but the Messrs. Atkinson, taking no notice of the issue thus formed on the merits, entered the default of the plaintiff for want of reply to the plea in abatement. A motion being made to the — 365 — court to set aside this default, it was granted on the terms of paying costs. * The plaintiff insists that he was entitled to it as a matter of right, and instead of paying costs, applies for the writ of mandamus. In support of the action of the circuit judge, it is urged that the oral notice of appearance given by Meddaugh & Driggs was wholly inoperative, because the rules of court require all notices to be in writing. The question whether that notice was good or bad is a question exclusively between the attorneys giving and receiving it, and is wholly foreign, so far as I can perceive, to any question now before us. An ineffectual notice by an authorized attorney could give an unemployed attoiv ney no right. When Meddaugh & Driggs filed a plea they were properly in court as attorneys for the corporation, and no one else was, because no one else was employed. This application is to compel the striking of an unauthorized paper from the files, and it is no more and no less unauthorized because other proceedings were irregular or ineffectual. And I trust it is not necessary to show that an unauthorized appearance cannot entitle the party appearing to demand costs. If it were essential to Mr. Beecher’s defense on the merits that he should have a right to make use of the company’s name, something might be said in favor of the action of the circuit court. But this is not pretended, and indeed, was denied by this court when this motion was first presented. Mr. Beecher insists on making use of the name of the corporation to abate the suit against it, thereby compelling the plaintiff to bring suits *and obtain judgments at the two extremes of the State, and postponing to a future and wholly uncertain period any resort to the property of the stockholder. The merits of the suit may obviously be tried in one suit as well as two, and their investigation can in no manner be aided by defeating the present suit against the corporation. It is urged, however, as a very strange and suspicious — 366 — circumstance, that the corporate officers should object to Mr. Beecher defeating the suit by the plea in abatement, and this objection is thought, with other facts, to prove an understanding between the officers of the corporation and the plaintiff to establish a corporate liability against Mr. Beecher. If this plaintiff is endeavoring to establish an unfounded claim, and the corporate officers are aiding him to do so, there is a dishonest combination which should be defeated; but we have no means of trying on this motion whether there is or is not such a dishonest understanding, for the very obvious reason that we cannot investigate the bona Jides of the claim. The question arising upon that is one for a jury in the circuit court. If we could look into it here, I am at a loss to understand how the consent of a corporation to be sued in Wayne county is to be deemed by itself a suspicious circumstance. It is, in fact, a circumstance consistent either with honest or dishonest motjve. It indeed saves to the plaintiff the necessity of bringing two suits; but it certainly ought not to be corporate honesty that the officers should have made a creditor all the trouble and costs possible. They ought, on the other hand, if they believe his claim honest and fair, to recognize it; and if they dispute its fairness, they should on their own account, as well as on that of the claimant, facilitate a convenient and inexpensive trial. And there may well be cases in which the corporate officers ought to aid, rather than obstruct a suit against a stockholder. Suppose the stockholder to be ,one who, discovering the venture a losing speculation, undertakes to escape his due proportion of the losses which others have borne, and by dilatory pleas and expensive litigation seeks to defeat a laborer in the recovery of a demand honestly incurred, and how can it be said that the corporate officers are not morally bound to aid the laborer in enforcing the liability which the stockholder voluntarily assumed in taking his stock? It is true that on the papers before us we have no right to infer that the case supposed is — 367 — the case a trial on the merits will disclose.1 But we have just as little right to infer the opposite, and the infirmity of the case for Mr. Beecher on this motion, as it seems to me, consists in this: that it rests exclusively on the assumption that extraordinary and suspicious proceedings are being taken against him, which he must be allowed to defeat by a more extraordinary and wholly unprecedented and unauthorized use of the corporate name. Obviously we cannot allow ourselves to be influenced on this motion by suggestions as to what the real merits are, when we have neither the means nor the right to inquire into them. In the view I take of the position of the parties on the pleadings, the cases examined, by my brother Campbell have no relevancy, and I therefore do not refer to them further. I think the writ should issue. I cannot refrain, however, from noticing more specifically what seems to me 'the extraordinary fact that the act of 1877 should have limited the constitutional right of a laborer to enforce his demand against stockholders to two years, when for all similar demands six-years are given. If the purpose of this act had been to defeat the constitutional right, it could not have contained a provision more directly calculated to further it. It was held in Hanson v. Donkersley, 37 Mich., 184, that the liability of the stockholder was only secondary; but whether primary or secondary, the laborer will naturally look to the corporation first, and, except in cases of corporate bankruptcy, may usually expect, for some considerable period after the labor is performed, to have payment made or provided for by the corporation itself. As stockholders very often reside át a distance, and may not readily be found when the creditor discovers a necessity for resorting to them, this short statute of limitations may almost be said in many cases to give complete immunity, especially as it makes no exception of persons out of the State. The stockholder in a failing Lake — 368 — Superior corporation, residing in Detroit or Boston, if lie finds laborers likély to pursue him with personal demands, has only to take a pleasure excursion through Europe and. he washes his hands of all legal obligation. This is certainly not just, and whether it is or is not competent for the Legislature thus to limit the remedy, there can be- no question, as it seems to me, that it never should have been done. It was held in Pereles v. Watertown, 6 Biss., 79, that a two-years limitation in the case of municipal bonds, which are usually sold abroad, was unconstitutional, as impairing the obligation of contracts ; but it was certainly quite as just a limitation as the one here. I refer to this not because it is involved in this motion, but because of the importance it seems to have had in influencing the action of the parties in this ease. If the statute must be construed, as was claimed, in opposition to this motion, I desire that nothing I may say or assent to in this cause shall imply an opinion that it was competent for the Legislature to pass it. Statutes of limitation cut off the remedy because the party has not, within a reasonable time, availed himself of it; and it is certainly a very notable fact that the Legislature should deem it reasonable that the creditor be required to pursue the party secondarily liable with thrice the promptitude and vigor which is demanded in seeking redress against the principal debtor. A mandamus should issue as prayed.