Central Wisconsin Trust Co. v. Barter

SEAMAN, Circuit Judge (after stating the facts as above). This appeal from an order dismissing the appellant’s petition for an assessment against the stockholders of an insolvent corporation presents a novel plan for charging such personal liability for corporate, indebtedness, under the Wisconsin statute providing for incorporation for general business purposes, notwithstanding the fact that the stock is “paid for in full.” The contention is, in substance, that such double liability may be imposed, within the general terms of the statute, (a) either by provision in the original articles of incorporation, or (b) by subsequent amendment adopted by stockholders of the corporation; and that such liability was created in the case at bar, by an amendment so adopted nearly two years after the corporation was organized and engaged in business, and more than eighteen months prior to the filing of the present bill. It is not averred in the petition when or in what manner the corporate indebtedness arose — greatly in excess both of its property assets and of the entire issue of common stock — nor whether it arose before or after the present holders of common stock became owners thereof, so that no question of personal liability is presented, by contract or otherwise, unless the above-mentioned amendment creates such liability, per se, against every purchaser and holder of the stock. Thus narrowed, without plain statutory authority therefor, it is unquestionable that provision in the articles to that end by the alleged amendment cannot be upheld. The several provisions of the Wisconsin statute, applicable to the incorporation in question (sections 1772 and 1774, c. 86, Wiis. Stat. 1898) are completely set forth in the opinion of Judge Sanborn, as filed below and reported under the title of Harris v. Northern Blue Grass Land Co. (C. C.) 185 Fed. 192, and reference thereto is sufficient for the purposes of this opinion, with the remark that section 1774 authorizes amendment of the articles, “by a vote of at least the owners of two-thirds of all the stock then outstanding,” to “provide anything which might have been originally provided in such articles.” An amendment of the Constitution of Wisconsin (adopted in 1871), in section 31, art. 4, prohibits the enactment of “special or private laws” for various enumerated purposes, including, “7. For granting corporate powers or privileges, except to cities”' — municipalities being included thereunder by a subsequent amendment — and in section 32 requires the enactment of general laws “for the transaction of any business” thus prohibited by section 31, and; that “such laws shall he uniform in their operation throughout the state.” So, no special charter “powers or privileges” are authorized, for incorporations under the above-mentioned general laws and their general provisions must be interpreted in conformity with this constitutional requirement, if otherwise uncertain. [838] Tlie purposes for which these general corporations may be organized are stated in section 1771 — with the business of banking and other special purposes provided for in other sections and chapters excepted therefrom — and it is not contended that any provision applicable to the incorporation in question authorizes, in express terms, assessment of stockholders or charge of personal liability, for general indebtedness of the corporation, as attempted by the amendment referred to. Section 1772 prescribes the subject-matter of the articles for. incorporation, concluding as follows: “7. Such other provisions or articles, if any, not inconsistent with law, as they may deem proper to be therein inserted for the interests of such corporation or the accomplishment of the purposes thereof, including, if desired, the duration of its existence.” And these general terms are relied upon for support of the amendment to the articles. Two other statutory provisions are cited in the argument as recognitions that such personal liability “is not contrary to public policy”: (1) Section 1769, providing that stockholders shall be liable for certain debts to corporate employés; and (2) section 2024, providing double liability thereof in banking and trust corporations. But both are plainly marked exceptions from the general rule, lending no force to the contention. The nonliability of stockholders for the debts of the corporation except to make good unpaid subscriptions for their shares, is the established rule, both at common law and in the American states; and the attempted departure therefrom, in the instant case, cannot be upheld! without “provisions of positive law” for its support. Gray v. Coffin, 9 Cush. (Mass.) 192, 199; 3 Thomp. Con. on Law of Corp. § 2925; Cook on Stock & Corp. Law, § 242. Interpretation of the above-mentioned provision to that end is not only without sanction under any Wisconsin decision cited, but would, as we believe, depart from the uniformity of corporate “powers and privileges” intended by the statute, within the constitutional requirement, andl thus be unauthorized. We are of opinion, therefore, that the provisions of the statute were rightly construed by the trial court, and that the alleged amendment affords no ground for an assessment against the appellees, as sought under the petition. The order of the Circuit Court, accordingly, is affirmed.