Kennedy v. East Union Lumber & Manufacturing Co.

Mayes, J., delivered the opinion of the court. On the 22d day of August, 1906, the East Hnion Lumber & Manufacturing Company and others filed a bill in the chancery court of Leflore county against the Chenoweth Lumber Company and C. W. Ohenoweth, J. D. O. Hammond, O. -S. Kennedy, and T. A. Gleason. The bill alleges that the above-named persons obtained a charter of incorporation under the laws of this state, incorporating themselves as the Ohenoweth Lumber Company, to be domiciled at Greenwood, Miss., in Leflore county. The authorized capital stock of the corporation was fixed by the charter at $20,000, in shares of $100 each. The charter authorized the. incorporators to begin business after $5,- [413] 000 of the capital stock had been subscribed. The bill further alleges that the Chenoweth Lumber Company commenced business under that name and incurred liabilities to the complainants in the sum of $710.11. It is further alleged that complainants are unable to state whether or not the $5,000 required to be subscribed before commencing business was subscribed; but it is charged that, if any amount of the capital stock was subscribed, no amount was ever paid into said corporation on the subscriptions, but notwithstanding this the defendants Chenoweth, Hammond, Kennedy, and Gleason commenced business under this charter without having subscribed or paid in any part of the capital stock. It is further alleged that complainants were in ignorance, of this fact, and it is further alleged that their action was a fraud in law, and rendered them liable as individuals for such sum as they may have subscribed to the capital stock, if any; and, if they had never subscribed, then they were liable as partners jointly and severally. It is further alleged in the bill of complaint that since the debt was contracted the corporation has become insolvent and gone out of business, and the prayer of the bill is that Chenoweth, Hammond, Kennedy, and Gleason be compelled to discover what amount they may have subscribed to the capital stock, if any, and what amount they paid on their subscription, if any, and that they be required to pay any amount subscribed and not paid, and that same be made liable to debts of complainants, and, if it be found that no subscription was ever made by the parties, then the prayer is that the defendants be held liable as partners. After the filing of this bill it was joined in by other creditors, to whom defendants were indebted. The charter is made an exhibit to the bill, and it shows that C. W. Chenoweth, J. D. C. Hammond, C. S. Kennedy, and T. A. Gleason were the incorporators, and the charter was filed for record on July 22, 1904. All of the defendants answered but O. S. Kennedy, and on his failure to in any way answer the bill a pro confesso was taken as to him. All the other defendants offered proof under their answers, and on final hearing' of the cause the bill was dismissed as to T. A. [414] Gleason and J. D. 0.. Hammond, and the court further decreed that the complainants recover from C. W. Chenoweth and O. S. Kennedy, the other defendants, the sum sued for. Krom this decree O. S. Kennedy, who did not answer the bill and against whom a pro confesso was taken, appealed to this court, claiming that the proof offered by the answering codefendants proved his nonliability, and hence the decree final against him was wrong, even though he had allowed a pro confesso to be taken. In view of the record in this case; we think that the decree against C. S. Kennedy should not have been rendered. It shows conclusively that there was no liability on the part of C. S. Kennedy to the complainants; and, this being the case, even though he had suffered a decree pro confesso to be taken against him, there should not have been any judgment final entered on this pro confesso. There was a direct connection between the defense of Hammond and Kennedy. In making his defense Hammond also proved conclusively that there was no liability on the part of Kennedy; and, this being the case, no decree should have been entered against Kennedy. It is not every case where the defendant suffers a pro confesso to be taken that will warrant a final judgment. A final judgment can never be taken where there are other codefendants making defense to the bill of complaint, and in making their proof they also disprove liability on the part of their eodefendants not answering. In such case no judgment should be taken against the defaulting defendant. This is the uniform chancery practice followed in this state and elsewhere. In the case of Simpson v. Smith, 75 Miss., 505, 22 South., 805, the court said: “Notwithstanding the decree pro confesso•, the final decree, and the failure of appellant to appear in the court below, if, on the whole case as presented here, it appears that the appellee was not entitled to relief, the decree must be set aside.” Minor v. Stewart, 2 How. (Miss.), 912; Kelly v. Brooks, 57 Miss., 225; Hargrove v. Martin, 6 Smed. & M., 61; Soria v. Stone, 66 Miss., 615, 6 South., 317. It is argued by the appellees, however, that the authorities [415] above cited only apply to a case where the complainant is not entitled to relief against any of the defendants. Appellees contend that, if the facts warrant a judgment against one or more of the answering defendants, then a defendant who has suffered a pro confesso to be taken against him cannot avail of the rule, even though the facts developed under the issue made by the other defendants prove his nonliability. There is no sound reason for such a distinction as is attempted to be made, and no authority for it that we can find. A judgment should be entered according to the very right of the cause as shown by the facts. The cause is reversed as to O. S. Kennedy alone, and affirmed in all other respects. Reversed.