Hoard v. Wilcox , 47 Pa. 51 ( 1864 )

The opinion of the court was delivered, by

Thompson, J.

The Act of 7th of April 1849 and supplements, providing for the incorporation and organization of manufacturing companies, were designed to furnish an entire system in regard to the powers, rights, and liabilities of such institutions and their stockholders. These institutions are unique, partaking of a combination of the characteristics of corporations proper and partnerships, but neither in form nor substance, precisely either. They are special, and must be governed in most, if not in every particular, exclusively by the law of their creation. • The organization is specially provided for, and must be followed; their rights are defined, and the remedies for enforcing the obligations of the institutions are also specially provided for. Hence there is a provision for joining as defendants the corporation itself with one, or all, or any less number of the stockholders, in actions by creditors of these corporations. If judgment be recovered, execution is to be levied, first on the property of the corporation; if there be none, or it be insufficient, then upon that of the stockholder defendants; who, in turn, if the debt be collected from them, are entitled to have the judgment to enforce contribution rateably against the remaining stockholders. The remedy for the collection of demands against such institutions is therefore statutory and special, and must be followed. This we have lately held in Brinham et al. v. The Wellersburg Coal Company et al., ante, p. 43, in obedience to the rule of the Act of 1806, requiring the remedy prescribed by a statute to be followed.

Here, the plaintiffs below first sued the corporation alone, and failing to realize their demand, brought suit against the present defendants, a portion of the stockholders of the company, without joining the corporation, and this raises the main question in the case, whether, under the pleadings, they are entitled to maintain the judgment of the court below in their favour, against these stockholders.

It is very evident- that the remedy of the statute was not followed in these proceedings, and it is also quite apparent on the face of the narr. that it is under the statute that they seek to make the stockholder defendants answerable. The remedy of the statute against stockholders seems to require that they be joined with the corporation. What would be the effect of joining the whole of them without the corporation, it is not necessary to say; but if a less number be joined, it must be with the corporation. It is claimed, however, that as the provision is, that in any action brought to enforce any liability against the institution, the plaintiff may include as defendants one or more of the stockholders; an option to omit to do so, is with the plaintiff. Doubtless he may sue the corporation alone, if he feels secure that he can realize his debt therefrom, as it is the primary party answerable. But unless this be so, the only safe way is to follow the statute, and include as defendants at least some of the stockholders. . Certain it is, that if it be necessary to look to the stockholders, the creditor must join them or a portion at least, in an action with the corporation. This is the statutory remedy.

But it is contended here, that the present defendants are fixed for -want of a plea in abatement to the non-joinder of proper parties. This would be a.n invulnerable position, were it not for the fact, that as the liability is statutory, and the remedy is prescribed, it must be followed, and hence we think that the defendants might allege that they were not answerable modo et forma, and that this might be taken advantage of under the special plea in bar, of payment with leave, &c. That this may be done was shadowed forth, in Straub v. The Commonwealth, 11 Casey 137, and more clearly affirmed in Commonwealth, for use, v. Cope et al., 9 Wright 161. The failure to pursue the statutory remedy was taken advantage of in both these somewhat analogous cases, under pleas in bar. That is the defect here, specifically the non-joinder of proper parties; and to hold the defendants to a technical rule of pleading, would be manifestly unjust, as it would entail upon them the payment of the debt sued for, with only the remedy of a separate action against each of the other stockholders for contribution, even if such an action would lie at all.

But it is suggested, that as there is already a judgment against the corporation, it cannot be again sued for the same debt. We encountered something like this in Patterson v. The Wyomissing Manufacturing Company, 4 Wright 117, and it was suggested there that proper averments in the new action, of the former recovery, might obviate the force of a plea of a former recovery. It is true, that there, but a part of the claim was embraced in the suit agáinst the corporation -alone; but that could .not make any difference, as the whole claim -was intended to be embraced in the second suit, and I see not how the judgment could be anything but an identity against all the defendants. For my own part, I think the difficulty could be obviated by proper averments. At most the first judgment was at common law; the second would be statutory, in pursuance of the prescribed remedy. Before the remedy for renewing judgments by scire facias was adopted, it was .usual to bring debt upon judgments after a year and a day. Proper averments would therefore in such a case as this, in analogy to the old rule, carry forward the original judgment at common law, into the statutory remedy, without prejudice, I think,'to any interest. We are, however, not bound to decide these questions in advance. The difficulties pointed out illustrate the importance in all cases, under the Manufacturing Act, of pursuing the statutory remedy, and the trouble consequent on neglecting it. We think the defendants had a right to avail themselves of the departure from the statute suggested in their case, and for this reason we must reverse this judgment, and send the case hack for a retrial, upon the introduction of proper parties.

It was alleged as error, that the learned judge admitted the evidence offered by the plaintiff to show the insolvency of the company, and that nothing was ever received by them on their execution against the real estate of the corporation; that the sale was never perfected, and no money ever paid on the bid of the president; and also the pendency of a motion to set aside the sale. A levy on real estate is not a satisfaction of a judgment, and a sale that produces nothing is no better. Even in case of a levy on personal property, if the fruits of the levy be defeated by the defendant in the execution, he cannot set up that there was a sufficient levy to satisfy the execution: 4 Wright 255. That would be to take advantage of his own wrong. And 'certainly a defendant, whose real estate is levied, cannot do so, otherwise he might always plead an ineffectual levy or sale to the scire facias for revival of the judgment. Nothing ordinarily, short of actual satisfaction, will answer. That is not pretended here. If the sheriff’s return be looked to, the property was bid in by the president of the corporation, and the property remains just where it was in the outset of the proceedings, and yet the corporation seeks to set up that fruitless sale as a satisfaction. This cannot be done.

There is no question that the company were authorized to contract debts for merchandise ; it is one of the things for which stockholders are expressly to be liable. We-see nothing in the idea suggested that it was for a general stock of goods that the debt was contracted. If so, it was a very small one, but the proof was that .the merchandise was such as was needed at the works for the convenience of hands. We see no other error on the record but that already noticed; but, for the reasons stated, the judgment is reversed, and a venire de novo awarded.

Agnjíw, J., was absent at Nisi Prius.