Ochiltree v. Iowa Railroad Contracting Co.

Napton, J., delivered the opinion of the court. The only question in this case, necessary to be decided, is, whether a stockholder in a corporation, who becomes such after the constitutional amendment of Nov. 1870, is liable to the double liability imposed upon its stockholders by the 6th Sec. of Art. 8 of this constitution of 1865, and the provisions of the statute made to carry this constitutional provision into effect. The position is assumed and maintained by an elaborate and able argument of counsel, that the liability extends to the [117] stockholders subscribing after the repeal of the double liability-clause as to all debts contracted by the company before the repeal, and to support this position the case of Hawthorne vs. Calef, 2 Wall., 10, is specially relied on. The argument is based on the doctrine, that the rights of creditors cannot be impaired by subsequent legislation, which the case cited abundantly establishes, as well as other decisions by the same court. But what were the creditors’ rights under the double liability statute ? Did they go beyond a right to subject the existing stockholders to this provision in the nature of a penalty? Had the creditors any right to anticipate an additional responsibility which did not exist when they gave the credit ? The law which subjected the stockholder to the double liability was in the nature of a penalty (Kritzer vs. Woodson, 19 Mo.,327), based upon considerations of public policy, and liable to be repealed upon like considerations. It could only be enforced in the mode and time, and against the parties subjected to it. The defendant was not a member of the corporation when this law was in force; he became such after its repeal and when the law only subjected his stock to the creditors. It is conceded in the agreed case, that the defendant had paid up his stock, and that, of course, like other assets-of the corporation,was liable to the debt. It cannot be implied, and certainly was not expressed in his subscription, that it was his contract to assume a liability which neither the law nor his contract imposed. To so construe it would be wholly unwarranted. The case of Marcy vs. Clark, 17 Mass., 329, is relied on, and the opinion of the court in that case is quoted, which says: “As to those who became members after judgment against a corporation, or after a debt has accrued, they voluntarily subject themselves to the inconvenience, having the means to satisfy themselves of the solvency of the company if they choose to make inquiry. Those who become inhabitants of a town after a liability for [118] debt is incurred, are in the same predicament, and the case of Hoffman vs. The City of Quincy, 4 Wall., 535, is to the same effect. But those decisions are not applicable. It is clear, that a person, who moves to a town or eitjq sub. jects himself to such taxation as all other citizens are liable to, and that anew stockholder in' a corporation makes his stock liable to its debts though antecedent to his membership. But something more than this is claimed here. It is claimed, that the new stockholder not only makes the property he puts in the corporation liable to its debts, but assumes a personal responsibility which neither the law nor his contract created. That such a law existed before he subscribed is certainly no ground for the presumption, that he had any thought of incurring this personal responsibility at the time of his subscription, seeing that it was repealed. The creditor cannot complain that any of his rights have been taken away, for when' his debt accrued he had no claim whatever against the defendant. His rights against the corporation and its members remain just as they were,- and the new subscription, in fact, increases the capacity of the company to pay the debt. But the personal liability,which he seeks against defendant, has no existence, and had none when the defendant became a stockholder in the company. Another question was discussed in this case, whether this double liability clause ever did apply to the R. R. company in which defendant took stock, and whether its charter did not exempt it from the provisions of the general statute on this subject. But upon the view we have taken of the first point it is unnecessary to examine this question. The judgment is affirmed. All the other judges concur.