Birmingham National Bank v. Mosser

The tenth section of the statute authorizing- the formation of corporations for manufacturing purposes (Laws of 1848, ch. 40),. makes the stockholders of each company severally individually liable to the creditors thereof to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by the company, until the whole amount of the capital stock of such company shall have been paid in, and a certificate thereof •shall have been made and recorded. Taking this section alone, there would be no question of the liability of the defendants. But the twenty-fourth section of the same statute provides that no stockholder shall be personally liable for the payment of any debt contracted-by any company formed under that act, unless a suit for the collection of such debt shall be brought against such -company within one year after the debt shall become due. And inasmuch- as the instituting of a suit only, would be productive of no benefit to the stockholder, it has been held, that a proper construction of this section requires that the suit should be consummated by a judgment and execution. (Lindsley v. Simonds, 2 Abb. [N. S.], 69.) However that may be, the statute unquestionably requires a suit to be .brought. , The language is too plain to admit *607of any dispute. Nor can tbe court refuse to give effect to the statute, because they can discover no sufficient reason for requiring a suit to be brought. It is a positive requirement, and must be enforced. Here no suit for the collection of the debt in question has been brought against the company. If an excuse might be allowed for a non-compliance with a condition precedent to the right of action, none has been shown. The proceeding in bankruptcy was not a suit within the .meaning of the statute ; nor was it one. for .the collection of the debt m any sense. Nor did such proceeding destroy the right of action against the company. (Ansonia B. & C. Co. v. New Lamp-Chimney Co., 53 N. Y., 123; S. C., 1 Otto, 650; Kincaid v. Dwinelle, 59 id., 548.) It did suspend such right of action, but the plaintiff was one of the petitioners in that proceeding, and cannot take advantage of its own act to defeat the operation of the statute. . Such act is rather evidence of an election to pursue the remedy afforded by the Bankrupt Act, and to forego those given by the State statute. Tt does not appear that an action against the company would have been fruitless, if the proceeding in bankruptcy had not been taken. But, however that may be, the statute makes the prosecution of such suit a condition precedent to the right of action against a stockholder. We have no power to dispense with such a condition, except upon grounds arising from the conduct of the defendants, or which can be imputed to them.

The order appealed from should be reversed and the demurrer sustained, with costs and disbursements.

Order overruling demurrer reversed and demurrer sustained, ivith leave to plaintiff to amend in twenty days, on payment of costs.