New York Life Ins. v. Beard

FOSTER, District Judge (after stating the facts as above). It is a well-settled principle of law that when a statute gives a new right, and prescribes the remedy for its enforcement, that the remedy is exclusive, and must be strictly followed. Morley v. Thayer, 3 Fed. 737-741, and cases cited; Pollard v. Bailey, 20 Wall. 527. Section 32 of chapter 23 of the General Statutes, based on section 2 of article 12 of the constitution, gives a new right to creditors of corporations, and also gives the creditor his choice of procedure to enforce it. He has a special remedy by motion in the same court where the judgment is obtained, or the right to resort to his general remedy in any court having jurisdiction. The statute says: “Or the plaintiff in the execution may proceed by action to charge the stockholders with the amount of his judgment.” It is fair to presume that the right here; given to charge the stockholders by action contemplates a proceeding at law or in equity, as the facts of the case might justify. “The capital stock of an incorporated company is a fund set apart for the payment of its debts. * * * The creditors have a lien upon it in uity.” Morgan Co. v. Allen, 103 U. S. 508; Hatch v. Dana, 101 U. S. 205; Sawyer v. Hoag, 17 Wall. 610; Upton v. Tribilcock, 91 U. S. 45; Sanger v. Upton, 91 U. S. 56; Webster v. Upton, Id. 65. The proper mode to reach this fund is by bill in equity. See cases cited; also, Hawkins v. Glenn, 131 U. S. 319-334, 9 Sup. Ct. 739; Patterson v. Lynde, 106 U. S. 520, 1 Sup. Ct. 432; Pollard v. Bailey, 20 Wall. 520; Leucke v. Tredway, 45 Mo. App. 507; Ogilvie v. Insurance Co., 22 How. 380; Holmes v. Sherwood, 3 McCrary, 405, 16 Fed. 725. There is a severable liability imposed on each stockholder, and doubtless the creditor could proceed at law against any single stockholder; but it does not follow that this remedy is necessarily exclusive, and I do-not understand that the supreme court of Kansas has so held in Abbey v. Dry-Goods Co., 44 Kan. 415, 24 Pac. 426, or in Howell v. Bank, 52 Kan. 133, 34 Pac. 395. If a party has a plain and adequate remedy at law, equity will not interfere. Among the reasons, however, which justify a resort to equity, is that it prevents a multiplicity of suits-at law. Insurance Co. v. Bailey, 13 Wall. 621; Preteca v. Land-Grant Co., 1 C. C. A. 607, 50 Fed. 674; 1 Pom. Eq. Jur. § 245; Louisville, H. A. & C. Ry. Co. v. Ohio Val. Imp. & Cont. Co., 57 Fed. 42; Pennefeather v. Steam-Packet Co., 58 Fed. 481; Apgar v. Christophers, 10 Fed. 857; Chase v. Cannon, 47 Fed. 674; Valentine v. Richardt, 126 N. Y. 272, 27 N. E. 255; Lynch v. Railway Co., 129 N. Y. 274, 29 N. E. 315; Railway Co. v. Dyer, 1 Sawy. 641, Fed. Cas. No. 2,552; Brooks v. Stolley, 3 McLean, 523, Fed. Cas. No. 1,962; Plummer v. 68 Insurance Co., Holmes, 270, Fed. Cas. No. 11,232. I can see no good purpose to be served where a stockholder is indebted for subscriptions to stock in a bankrupt corporation, as well as for his double liability under the statute, to put the creditor to a double proceeding to reach the funds and assets to which he is entitled in payment of his judgment. It is a rule in equity that the court being properly in possession of a cause for the purpose of equitable relief will, to prevent a multiplicity of suits, proceed to determine the whole matter. Gormley v. Clark, 134 U. S. 338-349, 10 Sup. Ct. 554; Ferson v. Sanger, Davies, 252-263, Fed. Cas. No. 4,751; Harding v. Fuller, 141 Ill. 308, 30 N. E. 1053; McGean v. Railway Co., 133 N. Y. 16, 30 N. E. 647. The demurrers must be overruled.