Hambleton v. Glenn

Alvey, C. J., delivered the opinion of the Court. This is another of the many actions that have been brought by Grlenn, trustee, against stockholders of the National Express and Transportation Company, a cor ³³³ poration organized under the law of the State of Virginia, to recover calls made upon the shares of stock. As has been stated in other cases in this Court, the corporation becoming embarrassed in its affairs, it made a deed of assignment of all its assets for the benefit of its creditors, and the trustees in the deed failing to execute the trust, a creditors' bill was filed in the Chancery Court of the City of Richmond, in the State of Virginia, and a decree obtained, whereby the trustees in the deed were removed, and Glenn, the present plaintiff, was appointed trustee in the place and stead of the former trustees, with power and authority to sue for and collect any and all calls made by the Court upon the unpaid subscriptions to the capital stock of the corporation, for the purpose of paying the debts of the corporation, ascertained and adjudged to be paid by the decree. The decree was jjassed on the 14th of December, 1880, and it made a call or assessment upon each share of the stock, of 30 per cent, of the par value thereof, the par value being $100, and there having been a previous call of 20 per cent.

The call of 30 per cent, so made was directed to be paid to the trustee; the decree providing that “the said trustee is hereby authorised and directed to collect and receive the said call and assessment, and to take such prompt steps to that end, by suit or otherwise, and in such jurisdictions, as he may be advised; and if the amount realized from this call and assessment shall prove to be insufficient for the purposes of this decree, liberty is reserved to the said creditors and the said trustee to move the Court for such further assessment as may be necessary and proper.” The facts upon which the proceeding against the National Express and Transportation Company, and the trustees under the deed of assignment, in the Chancery Court of the City of Richmond, was founded will be found fully set forth in the cases of Glenn, Trustee vs. Williams, 60 Md., 93 , and McKim vs. Glenn, Trustee, 66 Md., 479 . ³³⁴ It is alleged by tbe declaration in this case, that the defendants, the present appellants, had been the holders of 385 shares of the capital stock of the Express Company, of which there remained unpaid 80 per cent, of the par value of such stock; that the company had made an assignment of all its assets, including the unpaid subscriptions for stock, for the benefit of its creditors; that by the decree of the 14th of December, 1880, the debts of the company had been ascertained and adjudged to be paid, and that a call or assessment of 30 per cent, on the par value of the stock was made by the decree; that the original trustees under the deed of assignment had been removed, and the plaintiff substituted in their stead, with full power and authority to demand and collect, by suit or otherwise,-the assessment so made upon the stock, and that demand had been made upon the defendants, and they had refused payment. The defendants pleaded five pleas: first, That they never were indebted as alleged; second, That they never promised as alleged; and the third and fourth pleas, being special pleas, were demurred to; and by the fifth plea it was alleged that the National Express and Transportation Company was never duly served with process to appear in the suit in the Chancery Court of Richmond, and therefore the decree of the 14th of December, 1880, and all the orders passed in. that cause, were and are, as against the defendants, null and void. Issues were joined on the first, second, and fifth pleas, and they were tried and passed upon by a jury, who found for the plaintiff, under instructions given by the Court. There is no conflict or dispute in regard to the main facts of the case.

All the statute law of Virginia, including the charter of the National Express and Transportation Company, bearing upon the questions involved; the record of the Chancery suit in Virginia, referred to in the declaration; and also the petition of the defen ³³⁵ dants filed in that cause, with, the proceedings thereon, including the proceedings.thereon in the Court of'Appeals of Virginia; were all produced in evidence, and are, by agreement, made part of the case before this Court. It appears that the shares of stock in respect of which this suit was brought, had all been acquired and held by the defendants in 1866, and had all been sold and transferred by them to other parties, by actual transfer on the books of the corporation, and for which certificates had been issued by the company to the transferrees, prior to the 20th September, 1866, the date of the deed of assignment to trustees for the benefit of the creditors of the corporation. The plaintiff admitted, in respect to the ownership of the stock, that the assessment of $30 per share, sued for in this case, had been by the plaintiff collected from other persons, claimed to be liable therefor, as holders of such stock, as to 175 shares, part of the 385 shares; and that the assessment claimed of the defendants in this case is upon 210 shares. It was also shown in evidence that the plaintiff, by letter dated the 16th of March, 1881, gave notice to the defendants of the assessment upon the stock, and demanded payment within twenty days from that date.

Upon this evidence the jury were.instructed by the Court, at the request of the plaintiff, that if they found from the evidence that the defendants were stockholders of the National Express and Transportation Company before the passage of the decree of December 14th, 1880, by the Chancery Court of the City of Richmond, mentioned in the declaration, then, under that decree, and the laws of Virginia given in evidence, the defendants became liable to pay to the plaintiff the sum of $30 per share on each and every share of said stock which the jury might find to have been held by the defendants before the date of said decree of December 14th, 1880, less the amount of $30 per share on each and every share ³³⁶ so held by them, which the jury might find to have been paid or settled for by other persons. To the granting of this instruction the defendants excepted, and the first question is, was there error in so instructing the jury. 1. This instruction would appear to be strictly in accordance with the provision of the statute law of Virginia, in regard to corporations, in force at the time of the organization of the National Express and Transportation Company, and which was in force at the date of the decree of December 14th, 1880, and it was with reference to the provisions of the Virginia statute, that all the shares of stock of the corporation were issued to, held and transferred by, those dealing in such stock. In the Code of Virginia of 1860, tit. 18, ch. 57, sec. 24, but in Code of 1873, same tit. and ch., sec. 26, it is provided, that “No stock shall be assigned on the boohs without the consent of the company, until all the money which has become payable thereon shall have been paid; and on any assignment the assignee and assignor shall each be liable for any instalments which may have accrued, or which may thereafter accrue, and may be proceeded against in the manner before provided. ” And by sec. 29 it is provided, that “If any such person shall, for valuable consideration, sell, pledge, or otherwise dispose of, any of his shares of stock to another, and deliver to him the certificate for such shares, with a power of attorney authorising the transfer of the same on the books, the title of the former (both at law and in equity) shall vest in the latter so far as may be necessary to effect the purpose of the sale, pledge or other disposition, not only as between the parties themselves, but also as against the creditors of any subsequent purchasers from the former, subject to the provision of the twenty-sixth section. ’ ’ As we have said on a former occasion, when required to construe this same provision of the statute, the terms of the 26th section would seem to be too clear for any ³³⁷ reasonable doubt as to their meaning.

In the case of McKim vs. Glenn, Trustee, 66 Md., 479 , it was held by this Court that both the assignor and assignee of the stock of the corporation remained responsible for all future calls thereon, though the transfer was regularly made on the books of the corporation. This is the clear import of the terms employed in the statute; and there is no ground for the distinction attempted to be made by the defendants, between an assignment of the certificate and the transfer of the stock on the books of the corporation; for section 26 speaks of and designates the transfer on the books as an assignment of the stock. It is that act of transfer that the statute contemplates when it declares that both the assignor and assignee shall each remain liable for any instalment which may thereafter accrue, to be collected in the manner provided. And by section 29, while the owner of stock is allowed to sell, pledge or otherwise dispose of his shares, hy delivering the certificates therefor, and such disposition is declared to be sufficient to vest title in the assignee, so far as may be necessary to effect the purpose of such disposition, as between the parties, yet it is expressly provided that such disposition can only he made subject to the provision of the 26th section; that is to say, that both parties to the assignment shall remain liable to all instalments that may thereafter accrue due to the company.

If this was not the purpose, why subject the assignment authorised by the 29th section to the provision of the preceding 26th section at all ? We have, however, been strongly xirged to reconsider our previous construction of these sections of the Virginia statute; and if we could see that there was any reasonable ground for supposing that there was error in our construction adopted in the case of McKim vs. Glenn, we should not hesitate to reconsider that construction, and to correct the error. But we see no reason to doubt the ³³⁸ correctness of our former conclusion. Prior to the decision of that case by this Court, the question of the construction of these same sections of the statute had been the subject of consideration of both State and Federal Courts in Virginia, and they had all concurred in holding, as this Court held, that both the assignor and assignee were liable for future calls upon the stock, notwithstanding such stock had heen regularly transferred before the institution of the proceedings that resulted in the passage of the decree of December 14th, 1880.

Since the decision of this Court in McKim’s Case, the same question has arisen and been decided by Courts of last resort, and among them the Court of Appeals of Virginia, and they have all placed upon these sections of the statute the same construction that this Coiirt placed upon them. They have all held that both the assignor and assignee were liable for future calls upon the stock, hy force of the language of the 26th section of the 51th chapter of the Code. In Morris vs. Glenn, Trustee, 87 Ala., 628, 630 , the Supreme Court of Alabama, in passing upon this same question of the construction of the Virginia statute, held, that one who had assigned his shares of stock in the National Express and Transportation Company prior to the call made by the Court, was still liable for the assessment, by force of the terms of the statute. And in Hambleton & Co. vs. Glenn, Trustee, 13 Va.

Law J., 242 , (a case between the same parties, and in relation to the same subject-matter, of the present case,) the Court of Appeals of Virginia, in deciding the case before them, said, in reference to the defence now set up, — “But they further claim that they have assigned their stock, and are not liable as assignors, having been originally assignees. The statute, however, includes them, (ch. 51, sec. 26, Code,) and provides that on any assignment the assignee and assignor shall each be liable for any instalments which may have accrued, or ³³⁹ which may thereafter accrue, and may be proceeded against in the manner before provided. They were first assignees, and were liable because their assignor had not paid up the stock, and now they are assignors, and are liable as such because they have not paid up the stock before assignment, and so are their assignees. This is the obvious meaning and purpose of the law.” And in the case of Hawkins vs. Glenn, 131 U. S., 319, 334 , the Supreme Court, after quoting the language of sec. 26, ch. 51, of the Virginia Code, state the construction of the section by the Court of Appeals of Virginia, in Hambleton & Co. vs. Glenn, and of this Court in McKim vs. Glenn, without intimation of a different opinion, and only say that the question of liability in respect to certain shares of stock that had been transferred by the defendant, was not presented on the record.

Indeed, it does not appear that the counsel in that case deemed it worth their while to raise and present the question. Surely, under such circumstances, this Court ought not to be expected to open the question of construction that has been settled by such conciu’rence of opinion, with nothing to the contrary. 2. Now, in order to avoid the liability thus fixed by the statute, and authorized to be enforced by the decree of December 14th, 1880, the defendants have set up certain special defences, which have not heretofore, in any of the numerous cases founded upon the call made by the decree of December 14th, 1880, in the different Courts of the country, been attempted to be availed of, — certainly not heretofore judicially sanctioned as valid defences, in any of the cases to which we have been referred, — and not even suggested by the defendants themselves, in their petition for review and reversal of the decree of December 14th, 1880, filed so late as November 3rd, 1881, the final adjudication upon which rvas made by the Court of Appeals of Virginia, and to Avhich we have already referred. ³⁴⁰ The special defences taken were set out in the third and fourth pleas, to which the demurrers were entered by the plaintiff, and the demurrers were sustained. The third idea entirely fails to present a ba,r or full answer to the action.

If the facts alleged were found to be true, they would not entitle the defendants to the verdict. The plea does not present a material, single, and certain issue of fact, which, if found for the defendants, would constitute a full answer to the claim made by the declaration, and therefore bar the right to recover. If the matter set up in the plea were available at all, it would only be in reduction of the 30 per cent, call upon the stock, and would be admissible in evidence under the plea of never indebted as alleged. But we cannot perceive upon what principle the matter of this plea can avail the defendants in any form.

The plea alleges that after the decree of December 14th, 1880, ascertaining the amount of indebtedness of the National Express and Transportation Company, and fixing the rate of assessment upon each aud every share of the capital stock of the company, for the purpose of paying the debts thus ascertained, the various creditors and complainants, (without naming the creditors') for the purpose of avoiding the possible result of a pending litigation as to the validity of the decree of December 14th, 1880, institxxted by certain stockholders, assented to the passage of an order by the Court, of -July 21st, 1883, whereby the plaintiff, as trustee, was authorised and directed to accept from any of the stockholders of the company, or from any other person claimed to be liable on account of the stock, within six months from the date of said order, $25 per share, part of the $30 per share called for by the decree of December 14th, 1880, with interest axxd costs, “in full discharge of all further liability, of all persons on account of the shares of stock wherever such payment should be made.” That the stockholders who insti ³⁴¹ tuted the proceedings for a review and vacation of the decree of December 14th, 1880, for the purpose of avoiding any further liability and loss, accepted the terms of the order of July 21st, 1883, and paid the amount specified, and abandoned their petition and allowed the same to be dismissed, and thereby permitted the original bill of complaint and the decree thereon of December 14th, 1880, to remain without further question or impeachment; that the number of stockholders who accepted the terms of the order and paid the amount specified, exceeded one hundred, and the number of shares in respect to which the $25 per share was paid, exceeded four thousand. And it is further alleged, that these proceedings were taken and had without the knowledge and consent of the defendants; and that the creditors of the company, by procuring and assenting to the passage of the order of July 21st, 1883, and by authorising the plaintiff to accept the $25 per share from the stockholders, with interest, &c., in full discharge of all liability for and in respect of the stock, and by procuring the dismissal of the petition assailing the decree, without decision thereon, “abandoned and surrendered any right, ‘if any they had, to demand, ask or receive from these defendants, any other or greater sum than the twenty-five dollars per share, with interest and costs, as in the decree of July 21st, 1883, is provided, or to in anywise further enforce said decree of December 14th, 1880.” The defendants, while they allege that the proceedings that led to the decree of July 21st, 1883, were had without their knowledge, do not allege that they were not aware of the offer made by the decree, within the period allowed for the election to accept the terms prescribed , nor do they allege that they were prevented from availing themselves of the terms offered by the decree by anything done or said by the plaintiff, or those represented by him. On the contrary, we