Castleman v. Templeman

Boyd, J., delivered the opinion of the Court. The appellant, as a creditor of the Salem Loan and Real Estate Investment Company, a corporation chartered under the laws of the State of Virginia, filed the bill in equity in this case to enforce payment of subscriptions to the stock of that company, alleged to have been made by James A. Templeman and Thomas A.- Bryan, who were residents of this State. James A. Templeman having died before the bill was filed, his executors and his wife, who was residuary legatee, for life, under his last will and testament, were made parties. The decree below having dismissed the bill of complaint as to them, the appellant took this appeal, and the decree being in her favor against Thomas A. Bryan, he took an appeal which will be disposed of in the next succeeding case.

The appellant obtained a judgment against the company in the Circuit Court of Roanoke County, Va., and afterwards filed a bill in equity in that Court, which resulted in a decree establishing an indebtedness due her by the company on the judgment of over seven thousand dollars, and appointed A. B. Pugh receiver, directing him to take charge of all the assets of the company (excepting the real estate which was sold by a trustee named in a deed of trust and only realized a few hundred dollars), and to collect the unpaid subscriptions from the resident stockholders who were named, together with the amounts due by each. Shortly afterwards another decree was entered which confirmed a report of the receiver, -which stated that he had collected one thousand and fifty dollars from two resident stockholders, and had paid over to the plaintiff the balance, after deducting costs, and had issued executions against the other resident stockholders which had been returned “ no effects.” It was then further decreed that the several non-resident stockholders of the company, as shown by the report of a commissioner previously filed in the case, pay to said A. B. Pugh, receiver, the amounts due by them respectively as follows : T. A. Bryan the sum of $3,300; J. A. Settle the sum of $2,504, and J. A. Templeman the sum of $1,250— ⁵⁴⁸ the two decrees including all the stockholders, and the assessments being for the entire amount of subscriptions unpaid. The decree further provided that “said A. B. Pugh, receiver, is authorized to collect said several sums of money, and to sue for the same in any proper Court or Courts having jurisdiction of the person or property of the parties owing the same, whether in this State or any other State, District or Territory of the United States. And said receiver shall report to the Court.” The evidence shows that the amounts stated above were still due on stock in the name of Messrs.

Templeman and Bryan, but it is denied that J. A. Templeman ever subscribed for the stock. The directors of the company had made several assessments, amounting in all to 50 per cent, of the stock, which had been paid, leaving the above amounts still due, as claimed by the appellant. The Court below held that J. A. Templeman had not subscribed or ratified the subscription in his name. From the view we take of the case it will be unnecessary to discuss that question, as well as some others that were argued.

Neither Templeman nor Bryan were served with process in the Virginia Court, although they were made parties and proceeded against by an order of publication, and hence there could be no valid decree in personam against them, but in the case of Glenn, Trustee, v. Williams, 60 Md. 93 , this Court held that a decree of the Virginia Court making assessments on stock of a Virginia corporation, held by stockholders who were not parties to the suit, was valid and binding on them, both as to the necessity for the assessment and the amount thereof. It was there said that “when the Court obtained jurisdiction of the corporation, every stockholder, in his corporate capacity, was a party to the cause, and was supposed to be represented by the president and directors, who were intrusted with the management of the corporate interest of all the stockholders;” and again it was said, “ The judgment is conclusive as against the corporation and its property, and upon principle those who hold its property or funds for the ⁵⁴⁹ payment oí debts ought to be concluded, except where there has been fraud or collusion.” That decision has been distinctly approved of by the Supreme Court of the United States in Glenn v. Hawkins, 131 U. S. 330 , and other cases in this State, as well as elsewhere. Of course it does not decide that one who is alleged to be a stockholder is precluded by such a decree, in a case to which he was not personally a party, from showing that he was not a stockholder or that he had actually paid for the stock subscribed for by him, but when the fact is established that he is the owner of stock liable to assessment, which is not paid in full, the assessment made by a Court of Equity having jurisdiction over the corporation is binding on him. In the absence of authorized assessments by the president and directors, the Court has the power to make them, and until they are made the stockholders are not called upon to pay.

The authority of the president and directors to make assessments is the same in this case as it was in Glenn v. Williams—the statute requiring a payment of two dollars upon each share at the time of subscribing, and the residue as required by the president and directors. The appellant, having obtained the decree from the Virginia Court thus establishing the amount to be paid by each stockholder, being the balance of the unpaid subscriptions, filed this bill on behalf of herself and any other creditors of the company, who may make themselves parties and contribute to the costs of the suit. In her bill filed in Virginia she alleged that there was no other creditor, and as the decree of that Court directed the money collected to be paid over to her, she apparently satisfied that Court that such was the case. It is not contended that there are any creditors residing in this State, and we understand it to have been conceded that the appellant did not reside here.

The important question therefore for us to decide is whether the appellant, after obtaining such a decree in the Virginia Court as we have referred to, can now sue in her own name to recover the amount of the unpaid subscriptions alleged to be due by Thomas A. Bryan ⁵⁵⁰ and the estate of J. A. Templeman. The bill alleges that the receiver made demand upon the executors of Temple-man and on Bryan for the balance alleged to be due by them respectively, but they refused payment and that the receiver has taken no further steps to collect them, although it is not alleged that he was unwilling or unable to do so. So far as we are informed, and indeed it is so stated in the brief of the appellant, there is no statutory remedy in Virginia in favor of creditors directly against stockholders for unpaid subscriptions. The right of the appellant therefore to proceed against them must depend upon the principle established by Courts of Equity, that unpaid subscriptions to stock of an insolvent corporation constitute a trust fund for the payment of debts, and that, notwithstanding the company may have failed to make a call or assessment, a Court of Equity can make its own call for such amount of the unpaid subscriptions as is necessary to pay the debts.

The appellant went into the Virginia Court and asked for the appointment of a receiver to take charge of the assets of the company, including the unpaid subscriptions to its capital stock, and that the stockholders of the company “ after they shall have been definitely ascertained, and their respective liabilities in the premises determined, may be required to pay to such receiver or to some one especially appointed by the Court for the purpose, so much of their unpaid subscriptions, respectively, as may be found necessary to pay the plaintiff’s said judgment and the costs of this suit.” That Court granted her prayer, made the assessments relied on as the basis of this proceeding, but, in doing so, expressly directed that thejf should be paid to A. B. Pugh, receiver, and authorized him to sue for them. That decree, as we have said, is binding on and conclusive against the stockholders to the extent of determining the necessity for and the amount of the assessment, and until the assessment was made there was no unconditional liability on the stockholders who had paid the calls made by the president and directors. But the appellant having obtained a decree in a Court of com ⁵⁵¹ petent jurisdiction, by which the receiver and not herself , is authorized to collect the amounts due by the stockholders, as fixed by the assessment of the Court, her right to sue for them is merged in that decree. Payment to the receiver would have been an absolute bar to her recovery, and he undoubtedly has the