Fisher v. Seligman

I. Sherwood, O. J. In the case of Griswold v. Seligman, 72 Mo. 110, the legal points involved in the present record were fully discussed, and the rulings there made are decisive of the case before us. Inasmuch,, however, as those — 22 — points have been re-argued in this instance, we have thought best to say somewhat more concerning them. It was conceded in argument, by counsel for defendants, that if a party without any contract therefor, assumes the attitude and privileges of a stockholder ; assuming unwarrantably the exercise of such privileges; assumes to vote as a stockholder, that thereby he will take upon himself all the burdens and liabilities incident to such a position. But the contention is made that here there was a written contract entered into between the corporation and J. & W. Seligman & Co., of which firm Joseph Seligman was a member. The record shows there was indeed a contract entered into as contended, but of what avail is such, a contract, when it contained no provision that the members of the firm should acquire the rights of stockholders ? Is it not manifest that this being so, the case must stand as if no such contract had been entered into? We cannot regard the matter in any other light. In a word, it is but the assertion of a truism to say that a contract which does not confer a right, cannot be relied on to support or uphold the exercise of such right; cannot be looked upon, so far as concerns that particular right, as any contract at all. The case stands here then on this point precisely as did the Griswold case; that of a party who votes as a stockholder, and, when the endeavor is made to fasten upon him the customary liability arising from such conduct, attempts to shelter himself under a contract giving him the alleged right to vote asa stockholder; but which contract when examined, is bare and barren of any such provision. But even if the contract gave such a right, a right to vote the stock, that contract expired by its own terms and limitation, in one year from the reception of the stock, May 29th, 1873, so that in any event, the voting of the stock, occurring as' it did, after Seligman ceased to have any right to hold the stock as trustee, such voting was wholly unauthorized, and must, therefore, be attended by those consequences to which we have heretofore adverted. — 23 — IL As to Joseph Seligman being estopped from denying that he is a stockholder, we hold, as we did before, that he • is thus estopped. The fact that Seligman did not hold Mmself out to the world as a stockholder; the fact that Eisher, the creditor, at the time he gave credit, was not aware of Seligman’s liability, is a matter altogether immaterial. If Seligman so conducted himself toward the corporation as to preclude himself from denying as to the ■corporation, that he was a stockholder, by the same steps he estopped himself as toward any creditor, who, under our law, succeeds and is subrogated to the corporate rights and assets. And there is-nothing novel in this application of the doctrine of estoppel. Subrogated as the creditors are, to the rights of the insolvent corporation, among those rights will be included those acquired by reason of estoppel as well as those- acquired in the ordinary way. The authorities cited in the Griswold case fully sustain and illustrate this. Nothing is more common in the law of estop'pel than that a party estopped as toward a particular person, is likewise estopped against all claiming under or in privity with such person. In instances like the present, the creditor claims under, represents and stands in the shoes of the corporation, and doing this, is entitled to advantage himself to the same extent as could the corporation. According to the authorities cited on a former occasion, already referred to, had Seligman been sued for calls, it would not have lain iu his mouth after assuming to act as a stockholder, to resist such action by denying what he- had before by his conduct asserted. III. Nor are our views changed as to the effect of section 9, Wagner’s Statutes, page 301. “ No person holding stock in any such company as executor, administrator, guardian •or trustee, and no person holding such stock as collateral — 24 — security, shall be personally subject to any liability as a stockholder of such company; but the person pledging-such stock shall be considered as holding the same and shall be liable as a stockholder accordingly, and the estates and funds in the hands of such executor, administrator, guardian or trustee shall be liable, in like manner and to the same extent as the testator or intestate, of the ward or person interested in such fund would have been if he had been living and competent to act, and held the stock in his own name.” Joseph Seligman cannot be regarded as holding the stock in the capacity of “trustee,” nor as holding it as “collateral security,” within the meaning of that section. This, section, according to the plain import of its terms, relates to stock already issued in ordinary course of business, and which subsequently comes into the hands of either a trustee of some person laboring under a disability, as ex. gr., a femme covert, or into the hands of the administrator of the estate of some decedent, or into the hands of a guardian of some infant; or, lastly, into the hands of a pledgee as “ collateral security.” In the last instance the “ person pledging such stock shall be considered as holding the same and liable as a stockholder accordingly.” This person is the pledgeor, and is “ personally subject to * * liability as a stockholder-of such company.” It is not pretended here That there is any person who pledged this stock — that any person is liable thereon; and so it is not possible that the statute in question should apply. In every case of pledging stock, within the meaning of the statute, there must be a stockholder whom the law, notwithstanding he has pledged his stock, still considers as occupying his original attitude and responsibilities, and, therefore, looks to him and holds him individually answerable. The bare statement of this case shows no such individual pledgeor; no person against whom the creditor, if remediless in consequence of the insolvency of the corporation, could seek redress. He might recover judgment; he might have an execution issued; that writ be returned — 25 — nulla bona, but when he had gone to such legal extremity, he would, if a certain theory is to prevail, find that though stock in abundance had been issued, that though it had been pledged, that no one was responsible on that stock-either as pledgeor or as stockholder. But enough on this point. Take another instance mentioned in this section and the view becomes no better for Seligman. He is a “trustee,” it is said, but who is his ceslui que trust ? What “ estates and funds in the hands of such * * trustee,” are there, which can be made “liable in like manner and to the same extent as the * * person interested in such fund would have been if * * competent to act and hold the stock in his own name?” Is it not plain that the statute, when speaking of the “estates and funds” of the person beneficially interested, does not and cannot refer either to the corporation or to the assets and funds thereof? If it does not thus refer, then this of itself must conspicuously show both that there were no “ estates and funds” in the hands of the alleged trustee, and that of consequence, he is not the sort of fiduciary whom the section exempts from liability. That section treats of-two and only two kinds of liability ; one personal, that imposed on the pledgeor of stock 1 the other, that imposed on the estates and funds of him- “ who, if * * competent to act,” would have “held the stock in his own name.” This record presents neither kind of liability, and as it does' not, there are no circumstances upon which section 9 can operate. This being the case, that doctrine is properly invoked here, which declares that a person who assumes the anomalous' attitude of a trustee, when representing no cestui que trust, becomes personally liable. This principle finds apt illustration in Johnston v. Laflin, 5 Dill. 65. Britton bought stock with the bank’s funds and.had it registered in the books as held by “ Britton, trustee for the bank;” and because there was no cestui que trust who could become liable, the — 26 — liability, incurred was fastened on the party who unwarrantably assumed to act as a fiduciary. IV. There have been many devices, many schemes, many cunningly devised transactions whereby men have sought to receive every benefit and yet shirk every burden incident to the position of a stockholder, but such devices have generally come to naught. The courts have been sedulous in their endeavors to bring about such a result. We have no doubt that the matters set forth in this record are of the nature indicated, and we cannot better illustrate our views than by quoting the language of the learned judge of the court of appeals : “A method of issuing bonds and selling no stock, but issuing paid up stock, on which nothing has ever been paid, to the bond-holder, who is to vote the stock, and, when called by a creditor, to say that though nothing has ever been paid on the stock, and no one is liable upon it; that his voting was illegal though it gave him control of the road; and that he merely held the stock as collateral though it represented no indebtedness of anybody, no property, and nothing but a right to vote — would seem to be an ingenious evasion of the law.’ ’ So say we, and, therefore, reverse the judgment of the court of appeals and affirm that of the circuit court. Hough and Ray, JJ., concur; Henry, J., as heretofore; Norton, J., dissents.