Hamilton v. Clarion R.

Opinion, Mr. Chief Justice Paxson : The opinion of the learned master covers this case so fully that an elaborate discussion of it is unnecessary. The main [59] contention on the part of the appellants was that the Mahoning & Susquehanna Railroad Co., the Conewango & Clarion Railroad Co., and the Clarion, Mahoning & Pittsburgh Railroad Co., never had a legal corporate existence; that the said appellants, T. K. Litch, R. C. Winslow, and S. L. Jackson never became stockholders in the last-named company, and that said company was never so far organized that they could have complied with their respective agreements to take shares of stock therein. See first, second, third and fourth assignments of error. It would be tedious to detail all the proceedings in relation to the organization of these companies, and the merger of the first two companies into a consolidated corporation under the name of the Clarion, Mahoning & Pittsburgh Railroad Company. All this has been carefully done by the learned master. It is enough to say that the merger sufficiently appeared by the certificate of the secretary of the commonwealthand the effect of it was, under the third section of the act of May 16, 1861, P. L. 702, to vest in the consolidated company all the property, rights and franchises of said companies, subject to all rights of their respective creditors. The consolidated company is estopped by'the decree pro confesso from alleging that it is not a corporation de jure, and liable as charged in the bill to the plaintiffs, who are the appellees here, and who have recovered judgments against it in actions at law. It is idle, as against creditors, to set up the defence that the corporation had no legal existence. It had sufficient existence to contract debts, and, in the interests of its creditors, it must at least be treated as a de-facto corporation. And if there is anything settled in the law, it is that the existence of a corporation de facto cannot be inquired into- collaterally: Cochran v. Arnold, 58 Pa. 399. Much less can such a corporation, or a stockholder therein, set up a defect in its charter as against a creditor who has contracted with it upon the faith of its charter. We are not considering the case of a subscriber to shares who refuses to pay his subscription on the ground that the organization has not been perfected, and the cases cited upon this point have no application. We are clearly of opinion that, by force of the articles of consolidation and the act of assembly, the subscription to the [60] stock of the Conewango & Clarion Railroad Co. enured to the benefit of the consolidated company, and became an asset in its hands for the payment of debts; and that the subscribers thereof are liable to the creditors of the latter, to the amount of their unpaid subscriptions. This bill was filed to enforce this personal liability against certain of the stockholders. The corporation itself is admittedly insolvent. It does not appear to have any available assets. While it is well settled that a single creditor may not sue a particular stockholder at law, and thus secure an advantage over other stockholders; see Lane’s App., 105 Pa. 49; yet this bill was filed by or on behalf of all the creditors against the corporation and its stockholders, precisely as was done in Lane’s App., supra. The rights of all parties, therefore, can be adjusted in the one. proceeding, and the decree of the court below is so framed as to compel contribution in case any one defendant is required to pay more than his just proportion. A point was made that this suit cannot be maintained against E. A. Litch in Warren county, for the reason that he is sued as administrator of Thomas K. Litch, deceased, the domicile of said administrator being in Jefferson county, in which county the letters of administration were taken out. See eleventh assignment. This objection is based upon the ground that the Orphans’ Court of Jefferson has the exclusive jurisdiction over the estate of said decedent. It may be conceded that the estate of Thomas K. Litch cannot be distributed by the Common Pleas of Warren, but no such question arises here. It is not a question of distribution, but of the fixing of a liability or of a right. When that is ascertained, it will be for the Orphans’ Court of Jefferson to decide to what extent it can be enforced against the estate. That will depend upon the amount of the estate and the rights of other creditors. Aside from this, it must not be overlooked that it was a bill in equity, and that the court acquired jurisdiction over E. A. Litch, administrator, because said court had “ acquired jurisdiction of the subject matter in controversy, by the service of its process on one or more of the principal defendants: ” Act of April 6, 1859, P. L. 887. No question appears to have been raised as to the regularity of the proceeding under this act. It was urged that the administrator should not have been joined with living par [61] ties, and we are asked, what execution would issue on a judgment against a survivor and the representative of a deceased party ? If this were a judgment at law there would have been more force in this suggestion ; but a court of equity can always mould its decrees to meet the difficulties of the case, and do no injustice to any one. The decree is affirmed and the appeal dismissed at the costs of the appellants.