Calder v. Calder Packing Co.

Mr. Justice Clark delivered the opinion of the court. The appellant, Jacob Baur, bases his right to a reversal of the decree upon the propositions that the appellee did not establish her right to pursue stockholders’ liability by showing exhausting of the corporate assets; that the answer under oath not having been waived, and the answer of the appellant being under oath, the decree should be reversed because the complainant did not overcome the answer by the testimony of two witnesses or the equivalent thereof; that the proof showed that the stock subscriptions have been discharged by payment; that as the notes of the company held by the appellant were not to be paid until all of the debts of the company had been paid, they were not enforceable against the company and could not diminish the assets of the company; that they did no more than constitute the appellant a preferred stockholder. Appellant admits that when payments to the corpo* ration are made on account of bonds or notes given by tbe corporation and the stock given as a bonus, that the stock liability remains unpaid, but insists that where the money is paid to the corporation on account of stock subscriptions, and the agreement only touches the question of dividends after debts are paid, no stock liability remains; and cites Gillett v. Chicago Title & Trust Co., 230 Ill. 373. Preferred stock cannot be made in any such way as this. In the Grillett case the question was whether the holders of bonds should participate with others as creditors of the corporation. No such question arises in the case now before us. In our opinion, the only question in this case is whether the $1,000 check was given by Baur to the packing company as payment for his stock or as a loan. In Thebus v. Smiley, 110 Ill. 316, it was said: “In an action by a creditor of a corporation against a stockholder to enforce his individual liability to creditors for an amount equal to his stock in the corporation, the stockholder will not be allowed to set-off against his liability an indebtedness of the corporation to him.” Mr. Baur’s explanation of why the note was given to bim is not satisfactory. He regarded it, he says, as additional security for the $1,000. Inasmuch as he had subscribed for 10 shares of stock of the par value of $100 each, he was not entitled to any “additional security” from the corporation. On the theory that he now maintains the acceptance by him of the promissory note for $1,000 shows that he regarded the money that he paid to the corporation not as payment for his stock but as a loan represented by the note which was afterwards given him. \ The appellant insists that the record in this case does not show that the assets of the corporation have been exhausted, and therefore the appellee could not maintain her bill. We think that counsel for appellant misapprehends the situation. Section 25 of the Corporation Act, being Chapter 32, permits suit to be brought against stockholders for unpaid subscriptions if the corporation “or its authorized agent shall do or refrain from doing any act * * * or shall allow any execution or decree of any court of record, for payment of money after a demand made by the officer, to be returned ‘No property found’ ” etc. In this case judgment was obtained in the Municipal Court, which is a court of record, and a return was made by the bailiff “No property found.” This entitled the complainant to begin her suit under section 25. Complaint is made by the appellant that the' Municipal Court did not get jurisdiction. The master in chancery and the court both found against him on this proposition, and, we think, correctly. The appellant has filed 19 assignments of error. We have considered all of them carefully with reference to the testimony in the case, the master’s report and the decree, and think none of them well-founded. Judgment affirmed.