Majority
p. 198Burr v. E. E. Wilcox, Executrix, &c., of Elisha C. Wilcox; Burr v. Peake. (Before Bosworth, Ch. J., and Robertson, J.) Heard, February 23; decided, March 10, 1860.
Headnote
1. Where a stock subscription, on the organizing of a manufacturing Corporation under chapter 40 of the Laws of 1848, is made by and in the name of J., but at’the request of and for the benefit of W.; and where after all the stock had been subscribed for, the trustees apportioned the stock according to the several subscriptions, and apportioned ten shares to J. for W.; and W. subsequently paid the Corporation for such stock in monthly installments of ten per cent; and the Corporation, on such installments being paid, issued to W. a certificate of his ownership of said ten shares: and such facts appear on the records of the proceedings of said Corporation, W. is liable to creditors of said Corporation as a stockholder in said Corporation, according to the provisions of said statute, for debts contracted after such apportionment of stock was made, though contracted before such certificate was issued.2. A person may be a stockholder within the meaning of that statute, whose name does not appear on the stock-transfer book as a transferree of stock; or the book purporting to contain an alphabetical list of the stockholders of the Corporation.
3. So also a person may be, to whom no certificate of ownership of any shares of such stock has been issued by the Company.
These actions come before the Court on questions of law arising at the trial, and there directed to be heard at the General Term, in the first instance. The suit of Burr v. Wilcox was commenced on the 23d of June, 1858, and was tried on the 25th of June, 1859, before Mr. Justice Pierrepont and a jury. It was originally commenced against Elisha C. Wilcox, to recover of him as a stockholder in the Hudson River Stone Dressing
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Company, $1,000, and interest from June 23d, 1858. He denied, in his answer, that he ever was such a stockholder. He having died pending the action, the action, by order duly entered, was continued against Ellen E. Wilcox, executrix of his last will and testament.
The facts of the case were agreed upon by stipulations between the parties, and are as follows:
On or about the 31st of March, 1853, a corporation named the Hudson River Stone Dressing Company was duly organized under a statute of the State of Hew York, entitled “ An act to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes,” passed February 17,. 1848, with a capital of $200,000, divided into 2,000 shares. Such corporation was organized to carry on the business of stone-cutting in all of its branches, in the city of Hew York.
Immediately after it was so organized, to wit, in April, 1853, it commenced said business, and continued to carry it on until after the recovery of the judgment hereinafter mentioned, by the Bank of the Union, against it, and one John T. Bruen.
The whole amount of said capital stock was never paid in, nor was any certificate of such payment made, signed, sworn to, Or recorded as required by the 10th and 11th sections of said act; which sections are in these words, viz.:
“ § 10. All the stockholders of every Company incorporated under this act, shall be severally individually liable to the creditors of the Company in which they are stockholders, to an amount equal to the amount of stock held by them respectively, for all debts and contracts made by such Company, until the whole amount of capital stock fixed and limited by such Company shall have been paid in, and a certificate thereof shall have been made and recorded as prescribed in the following section; and the capital stock, so fixed and'limited, shall all be paid in, one-half thereof in one year, and the other half thereof within two years from incorporation of the said Company, or such corporation shall be dissolved.
“ § 11. The President and a majority of the Trustees, within thirty days after the payment of the last installment of the capital stock so fixed and limited by the Company, shall make a certificate stating the amount of the capital so fixed and paid in; which
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certificate shall be signed and sworn to by the President and a majority of the Trustees; and they shall, within the said thirty days record the same in the office of the County Clerk of the county wherein the business of the said Company is carried on.”
On the 19th of January, 1854, the said corporation made its promissory note in writing, for the sum of $1,500, payable to the order of John T. Bruen, four months after its date, and Bruen indorsed it to the Bank of the Union in the city of Few York. Said Bank brought a suit on the note against the Hudson River Stone Dressing Company, and said John T. Bruen in the Supreme Court of this State, on or about the 27th of May, 1854, and recovered judgment therein, April 21st, 1854, against said maker and indorser for the amount of said note with interest and costs, being $1,786.98.
Said judgment was duly docketed; and an execution issued upon it to the Sheriff of the proper county was returned wholly unsatisfied before this suit was commenced. Said judgment is in full force and wholly unpaid.
On the 10th of May, 1858, the Bank of the Union duly assigned to the plaintiff in this action the aforesaid judgment, together with the claims and demands on which the same was founded, and all rights and remedies for the collection thereof.
The defendant holds a genuine certificate of stock in said Company of ten shares of said stock, which certificate is in the words and figures following, to wit:
Humber 148. Shares 10.
Hudson River Stone Dressing Company.
CO to Be it known that E. C. Wilcox, Esq., of Few York-City, r"l is entitled to ten (10) shares of the capital stock of the Hud- w H son River Stone Dressing Company, on each of which shares £5 p, one hundred dollars have been paid, and which are trans- 8 <í ferable only on the books of said Company, by said E. C. 15 1g Wilcox, or his attorney, on surrender of the certificate. o | In witness whereof, the President and Secretary of said | ^ Company have hereto subscribed their names, at the city P“ 8 of Few York, this 6th day of February, A. D., 1854. ^ Charles T. Shelton, President.
Charles F. Sanford, Secretary.
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Samuel H. Jordan subscribed for ten shares of the capital stock of the Company in his own name, but such subscription was made at the request of Elisha C. Wilcox, in the name of said Samuel H. Jordan, but for said Wilcox, to whom the certificate was issued—the name of Wilcox, however, not appearing on the subscription book. The original subscription book is lost.
The stock of the Hudson River Stone Dressing Company was all taken up by subscription in April, 1853, the subscribers obligating themselves to pay for the stock in ten monthly installments of ten per cent, commencing May 1st, 1853. On the 15th day of April, 1853, the whole stock having been subscribed for, the Trustees apportioned the stock according to the several subscriptions, and ten shares were apportioned to Jordan for Wilcox— all of which facts appear on the records of the Company.
Wilcox himself paid for his stock in monthly installments of ten per cent, paying his first installment May 3d, 1853.
The Hudson River Stone Dressing Company keep at its business office in the city of New York, a book for the purpose of entering alphabetically the names of stockholders.
The defendant’s name appears on a page under letter, “ W” in said book thus: “ Feb. 6th, 1854, E. 0. Wilcox, ten shares,” and the same appears in no other place or manner in said book.
Said Corporation also always keep at its said office, a book called a transfer book for the purpose of transferring therein the stock of said corporation. Said book is composed of blank transfers, which are filled up from time to time, as transfers of stock are made and signed by the transferrers, showing by whom, to whom, and when such stock was transferred, and the number of shares transferred. Said book on the 27th of December, 1858, was about one-half filled with executed transfers of stock.
No stock transfer whatever to the defendant, is contained in said transfer book, or any transfer book of said Company; nor has any share, nor have any shares of stock of such Company, been ever transferred to defendant, or any other person or persons for him or his use, on the transfer books of said Company.
Said Corporation also have a book of records in which are entered the by-laws of said Corporation, and the minutes of its proceedings, and in said record book is a by-law adopted by said Corporation at the time of its organization, declaring that the
p. 202I. The fact that Wilcox subscribed for the stock in the name of Jordan, does not affect the liability of Wilcox. Wilcox personally paid up all the installments, and took the certificate in his own name. -It is admitted that the name of Jordan was merely
stock of such Corporation is transferable only on the transfer book of said Corporation by the holder thereof, or his attorney, on surrender of his certificate thereof; said by-law was in force and was the law of such Corporation before and on the 6th day. of February, 1854, and ever since has been, and still is, the law in respect to the transfer of, and title to, the stock of such cor-, poration.
The defendant was not one of the signers of the certificate for the formation of said Corporation, nor had any claims to, or right to, or interest in, any stock thereof, other than what the certificate dated February 6th, 1854, may indicate.
The entry of defendant’s name, as before stated, in the transfer book aforesaid, thus: “ February 6th, 1854, E. C. Wilcox, ten shares,” is not in the handwriting of defendant, but said entry appears to be in the same handwriting as many of the other similar entries of names in said book.
The debt and contract on which the aforesaid judgment was recovered, and for the collection of which this action is brought, was made by said Company on the 19th day of January, 1854.
On these facts, the jury, by the direction of the Judge, found a verdict for the plaintiff for $1,071. The Judge then ordered, that the questions of law arising at the trial be first heard at the General Term, and that the entry of judgment in the meantime be suspended.
The case of Melancthon Burr v. William J. Peake, and the foregoing case, were argued together. The facts in the two cases are alike, except that Peake was an original subscriber in his own name. Six shares were apportioned to him, and like Wilcox, he paid his ten installments, and took a certificate for six shares, dated February 6, 1854.
The verdict ordered against him was for the sum of $642.60, and the questions of law arising at the trial, were there ordered to be heard in the first instance at the General Term.
J. N. Balestier, for plaintiff.
p. 203lent; that he had no interest whatever. Wilcox cannot be suffered to evade the claims of creditors by setting up that he originally subscribed for the stock under an alias. (Belmont v. Coleman, 1 Bosw., 188 .) II. Assuming the correctness of the first point, Wilcox was a stockholder in the Hudson River Stone Dressing Company when the debt was contracted, and continued to be one up to the time this action was brought. 1. He became a stockholder as soon as he subscribed for the stock. Neither the index nor the certificate made him a stockholder: his subscription made him one. (§ 6 of Corporation Act; United Society v. Eagle Bank, 7 Conn., 456 .) 2. It made no difference that he had not paid in full for his stock when the debt was contracted. He was still a stockholder and a partner, and, as such, liable, as much as a member of a mercantile firm is for its debts before he has paid in his capital in full. The statute does not create, but only limits, his liability as a partner. (Corning v. McCullough, 1 Comst., 47.) The statute itself, under which the Company was organized, contemplates a credit in paying for stock. It provides that half the stock may be paid for in one year, and the other half in two years, (§§ 10, 11, Laws of 1848, p. 56,) and authorizes the Trustees “to call in subscriptions in such payments or installments as they shall deem proper.” (§ 6.) It would, therefore, be absurd to say that, until the subscribers had paid in full, no stockholder existed. 3. About nine-tenths of the installments had been paid by Wilcox when the Company’s note was made. Could his refusal to pay the tenth installment relieve him from liability to creditors? (Corning v. McCullough, supra; §§ 6,10,11 of Corporation Law; Mann v. Currie, 2 Barb., 294 ; Mann v. Pentz, 2 Sand. Ch. R., 257.) 4. The terms “subscriber ” and “stockholder, within the meaning of the act, are identical propositions. (Act, passim.) III. Even if Wilcox was not a stockholder until he paid for his stock and got his certificate, he is still liable, under section 10 of the act of 1848. There is nothing in that section to favor the doctrine of Tracy v. Yates, ( 18 Barb., 152 ,) that stockholders are liable only for the debts contracted after they become and while they are stockholders. On the contrary, they take their stock cum onere. Especially is this the case with respect to a
p. 204maturing debt, when a certificate of stock is taken with notice of such maturing debt. (Belmont v. Coleman, supra.) IV. If the naked proposition embraced in the third point can be questioned, there is a yet stronger one, based on the statute. The stockholders áre, by the terms of the law, liable to creditors “for all debts and contracts made by such Company.” The two classes of obligations are here described and distinguished. Although the note of the Company was a contract before Wilcox had paid his last installment and taken the certificate in his own name, still it did not become a debt until several months after-wards. The note was dated January 19th, 1854, but it did not fall due until May 23d, 1854. Wilcox had notice that it was running to maturity, when he took his certificate. It might never have become a debt, if a defense had existed. At all events, it was not a debt before the day it fell due. Wilcox’s stock certificate bears date February 6th, 1854, upwards of three months and a half before the debt was due. Unless it can be held that even paying for his stock and taking his certificate did not make him a stockholder, he was such when this debt was made. (Garrison v. Howe, 17 N. Y. R., 458.) V. Although it has been held, under the old general corporation laws, that a person, having no interest, who allowed his name to stand as a stockholder, was liable to creditors, it has never been held, and probably never will be, that the real stockholder or party in interest is not liable under the law of 1848. (§25.) VI. Some stress is laid on the facts that the index was improperly kept, and that the names of stockholders were not given at length, &c. All objections of this class are of no avail against creditors. Ho improper or unlawful act of the Company, or of individual stockholders, can screen them from creditors. They cannot set up their own errors and shortcomings as a defense to the payment of their debts, and no Court will ever establish such a “ new way to pay old debts.” VII. The defendant’s counsel at the trial argued that a “ transfer ” of stock in a “ transfer book ” was necessary to constitute a stockholder. How there could be a transfer of stock to an original subscriber, he did not disclose. The stock did not exist until it was subscribed for, and it could not be transferred until
p. 205it existed. If the learned counsel’s argument on this point proves anything, it is that no original subscriber for stock is liable to creditors, but only those taking the stock at second-hand. But, even if a formal transfer to an original subscriber were proper, the want of one will not enable a stockholder to evade liability. (§25.) I. Wilcox and Peake were never stockholders of the Company ; especially they were never stockholders in such a sense as to be individually liable to the payment of its debts, within the meaning of section 10 of the Act of 1848. (Sess. of 1848, chap. 40.) 1. The defendants respectfully submit that the statute of 1848, authorizing the formation of these corporations, and the decisions of the Courts interpreting its various provisions, establish the distinction between stockholder, and stockowner, in respect to the rights of creditors to sue individual members in actions at law. The former are liable, the latter are not. A stockholder is one in whom the legal title to the stock is vested; a stock-owner has some equitable right to acquire the legal title from the Company or third persons. The 34th [16] section of the statute of 1848, (Sess. of 1848, ch. 40; 1 R. S., 1218, 4 ed.,) is framed on this distinction. It assumes that the legal title to the stock appears on the books in the name of the executor, trustee, &c., but is, in fact, owned by others whom they represent, and hence the necessity of providing that the executors, trustees, &c., should not be personally liable as stockholders. This distinction is further manifest from the closing paragraph of that section, which makes the estates represented liable, as the intestates, wards or persons represented would have been, if living, &e., and they held the same stock in their own names. (1 Kern., 148.) This case establishes the distinction mentioned. In the further discussion of this point, the counsel cited and commented on, 6 Hill, 624 ; 5 Barb., 210 ; 1 R. S., 4 ed., 1219, 1220; 3 Paige, 350; 1 Comst., 47; 2 Hill, 265 ; 18 Barb., 152 ; 2 Wend., 327 .
Elisha S. Capron, for defendant.
p. 206II. If the defendants be stockholders, they did not become such until after the debt was contracted for which the judgment was recovered, and therefore are not individually liable to its payment, according to the statute under which this action is brought. . If ever stockholders, the defendants did not become so before February 6th, 1854, whereas the debt was contracted January 19th, 1854, or eighteen days prior to defendants becoming interested in the Corporation or Association. In deciding a question of this kind arising on the statute creating the “ Rossie Galena Co.” (Stat. of 1837, 445,) the Court of Appeals determined that individual stockholders were liable to creditors, after judgment against the company, “in the same sense as partners or members of an unincorporated association,” and that the statute by allowing one to be sued alone, merely deprived him of his plea of non-joinder of his associates in the action, but that he was in other respects liable on the same principle as a partner. (1 Comst., 47, 53.) The Supreme Court, also, in an action arising under the statute incorporating the “Rossie Lead Mining Co.,” (Stat. of 1837, 441,) the individual liability—sections of which are identical with those of the other statute of 1837, page 445, incorporating the “ Rossie Galena Co.,” adjudged that only those stockholders are individually liable who were such when the debt was contracted. ( 2 Hill, 265 .) The 9th and 10th sections of the two special statutes cited above, and which are identical, are in legal effect the same as the 28th [sec. 10] and 42d [24] of the general act of 1848, excepting that the former declares stockholders jointly, as well as individually, liable to creditors of the Company, and for the whole amount of the debts, instead of an amount equal to their stock, and one or two other immaterial limitations. But the question here discussed must require the same decision under all those statutes. The case cited from 1st Hernan, 148, does not present the question here considered, because the statute under which the Corporation in that case was organized, provided that “the persons composing the Company at the time of its dissolution, should be responsible for its debts;” but the reasoning of Judge
p. 207Edwards in that case, (pages 153,154,) and of Judge Johnson, on pages 155 and 156, clearly indicates their concurrence in the doctrine of 2 Hill, 265 , and 1 Comstock, 47. The defendants therefore insist, that if ever stockholders in a sense which subjects them to liability for debts of the Company, they are only liable for such as were contracted after they became stockholders, and it could be legally asserted that the debt had been contracted on their credit; and the debt in this case not being such a one, they are not liable. The counsel commented on the case reported in 6 Abbott’s Practice Reports, 385, as follows: In the head-notes of this case the Reporter says, that in proceedings under the act of 1849, chapter 226, those “persons are liable as stockholders who were such when the bank failed, and that it is not necessary to inquire who were such when the debt was contracted,” &c. It is enough to say that those are proceedings against banks and under a special statute defining the liability of stockholders, and definitely directing all the proceedings; and, therefore, whatever may be the liability of bank stockholders under its provisions, they can have no application on that question to the liability of stockholders under the general manufacturing statute, the provisions of which are very different. But the general language of the Reporter in his notes is not justified on that point of liability by any part of the Judge’s opinion, nor by any of the sections of the statute of 1849; on the contrary, it is important to inquire, not only who were stockholders when the debt was contracted, but also who were such, within the meaning of that term, as defined by section 2 of the statute of 1849, when default in payment was made. It may, however, be mentioned that the Judge, on page 397, by his remarks, very strongly implies, at least, that the defendant’s objection to the entry of the stockholder’s name, made in the index book, is well taken: that unless it conforms to the statute in all respects, it is available for no purpose. The creditor is as chargeable with knowledge of the requirements of law as the stockholder is, and if he consults the “index book ” and finds an imperfect entry, he is put on his guard, and ■is thereby cautioned to look further, and see whether the person
p. 208on whose credit he would trust the Company is really a member thereof. III. The stockholder, in an action at law, brought under the provisions of the general manufacturing statute, cannot be charged with interest on the amount of his liability. These actions are in their nature penal, and the recovery must be confined to the amount fixed by the law creating the liability. The 10th section of the statute of 1848 provides that the stockholders shall be liable to an amount equal to the amount of stock held by them, not to the amount of the plaintiff's debt; and it is submitted that the Court cannot extend the liability to include interest. The effect of the statute is at least to liquidate the damages.
If some of the positions taken by the defendant’s counsel be correct, it is possible for a Company, created under the General Incorporating Law, (2 R. S., 5th ed., p. 657,) to have all its capital stock paid in and the certificate filed under section 34, (11), and go on and transact all its business, without having a single stockholder within the meaning of that word as contended for. Moreover, it is further contended, that there may be persons having a right to all the earnings of the Company, as stockowners, but who are not stockholders, because their names are not entered on the transfer book as such; in other words, that all the stock of the Company is supposed originally to be its property; that it does not legally become the property of any
one else, until entered in the transfer book, according to the bylaws of the Company, made in pursuance of the power given to them by section 29, (7,) the certificates of stock held by subscribers, and issued by the Company are said to be only evidence of a right, and do not constitute the right itself; which should be created by a formal transfer on the books. This view receives apparently some support from cases where stock stands on the books of the Company in the name of one person, while another holds the certificate of it, where the Courts have held that the persons, in whose name the stock stands, are the stockholders responsible to third persons, (Rosevelt v. Brown, 1 Kern., 148; Worrall v. Judson, 5 Barb., 210 ; Stebbins v. Phenix Fire Ins. Co., 3 Paige, 350; Adderly v. Storm, 6 Hill, 624 ,) while they
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have intimated that the person holding the certificate was not a stockholder. (Tracy v. Yates, 18 Barb., 152 .) I am inclined to believe, that under the law as it stands, after the original issue of stock, any subsequent holders who are to be made liable, can only be those to whom the stock is transferred on the books, or whose names appear, as such on the index book, or register of stockholders. They are the only persons, with whom the creditors of the Company may be supposed to contract, or whom they may be presumed to trust. So long as a party leaves his name on the books as stockholder, he consents like a retiring partner in a firm who gives no notice to the world, to become responsible for future contracts. I am also disposed to believe, that the mere holder of a certificate whose name is not entered on any of the books of the Company is not a stockholder, within the clause making the latter personally responsible, otherwise two sets of stockholders would be liable instead of one. It is also true, that the provisions which make the index book or register prima facie evidence of stockholding and all transfers, except for the purpose of making the transferree liable to creditors, void; do not make the entries therein take the place of an actual transfer— but only throw the burden of proof upon the party whose name is registered; in the cases now before the Court, the entries do not show any stock to have been held by the defendants until after the contract was made which forms the subject of the action.
If the plaintiff relied solely upon the entry as evidence of the holding of the stock by the defendants, I should think the action could not be sustained because the defendants would not then be stockholders when the debt was created, being the 19th of January, 1854. If the statute is to be sustained as one limiting the liabilities of partners, and not as imposing a penalty, (Corning v. McCullough, 1 Comst., 47,) no principle of law could create a joint liability as a partner by one who was not a partner when the debt was created.
These considerations strip these cases of all collateral questions and reduce them to the single one of whether a subscriber for stock, to whom it is allotted, who pays his installments thereupon as demanded and finally receives a certificate of stock, is such a stockholder as to-be liable for debts contracted before he is
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entered on the books as one. I do not look upon the issue of stock by the Company to subscribers as a transfer, within the meaning of the statute; the stock in fact has no existence as such until issued, and after it is issued the power of the Company to give certificates so as to create more stock is ended, (Mechanics' Bank v. New Haven Railroad Company, 3 Kern., 599; see also 17 N. Y. R., 602.) It undoubtedly was the duty of the Company to have entered the names of the original stockholders on their index book or register, but their failure to do their duty cannot deprive creditors of any right against the stockholders. But the statute itself contemplates the existence of stockholders before certificates are issued. The 6th section of the act (Laws of 1848, p. 54,) permits the Trustees to call in and demand from the “stockholders ” all sums subscribed by them under penalty of “forfeiting the shares of stock subscribed for:” the 10th section makes the “stockholders" liable until the amount of-stock shall have been paid in. This evidently presupposes the withholding of certificates of stock until the whole is paid in, and allows the shares of stock subscribed for to be forfeited whether entered in the books or not; if this were not so, it would be in the power of the Company, in other words the subscribers themselves, to relieve themselves from all liabilities to creditors while participating in the profits of the Company. Indeed, the statute does not refer to the issue of any certificates of stock at all, and a mere subscription assented to, under such circumstances makes the subscriber a stockholder (United Society v. Eagle Bank, 7 Conn., 456 .) The payment of installments I do not consider material, except as showing the adoption of the subscription by the Company. The main point to be decided is, whether a party so situated as to be entitled to demand a share of profits, is not responsible for contracts until all the acts are performed which the statute prescribes as the condition for limiting their responsibility, and I think the defendants in the cases now under review were so situated; the fact of the subscription by the original defendant in the first case being made by an agent, I look upon as immaterial; that defendant paid the installments and took the certificate which show such a recognition of him by the Company as to entitle him to a share of the profits, and of course makes him liable as a stockholder.
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As the case has been submitted at the General Term as involving only questions of law, every intendment is to be made against the defendants as upon a demurrer to evidence and I have so considered the testimony.
The judgment must therefore be entered in conformity with the foregoing views in each of the cases for the amount of the verdict and costs, with liberty to apply for an extra allowance to be included in such costs.
It is admitted (by a stipulation contained in the case) that E. 0. Wilcox holds a certificate of ten shares of the capital stock of this Company, dated February 6, 1854. That this stock was apportioned to Samuel H. Jordan for said Wilcox, on the 15th of April, 1853; on a subscription for capital stock originally made by Jordan for Wilcox and at his request ; the amount subscribed for, to be paid for in ten equal monthly installments.. That Wilcox paid these ten monthly installments, and made the first of such payments on the 3d of May, 1853.
It is quite clear, therefore, that Wilcox was alone interested in these shares as owner from the time the subscription was made; and as such owner he paid for them, and he holds a certificate that they are his.
I entertain no doubt that he is a stockholder within the meaning of § 32, [sec. 10,] of 2 Revised Statutes, 660, 5th edition.
The fact that the ten shares were not fully paid for on the 19th. of January, 1854, (the time when the debt in question was contracted,) does not interpose any obstacle, to his being deemed a stockholder. He had then paid nine of the ten installments; had paid it on stock apportioned to Jordan for him; which stock was so apportioned on a subscription made for him. Under § 32, [sec. 10,] (supra,)) non-payment of part of the capital stock is made a ground of liability.
He was also, within the meaning of that section, a stockholder when the debt in question was contracted. The act of 1848 (chap. 40,) section 10, declares that the stockholders shall be liable to the extent named, “ for all debts and contracts made by such Company,” until the events have occurred which by that section are to terminate the liability which it imposes.
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I do not accede to the proposition, that a stockholder, under that act, cannot be made liable for debts contracted before he became a stockholder. The act itself declares and defines the liabilities as well as the immunities of the stockholders.
And that in terms, makes the stockholder liable for all debts and contracts, without reference to the time when they were contracted.
And it may be added, that if the defendant is not a stockholder within the meaning of the tenth section of that act, or was not on and before the 19th of January, 1854, then it would follow that if all the subscribers to the capital stock, had subscribed for it at the instance of third persons, and although such third persons regularly paid all the installments as they matured, and were the only persons equitably or in fact interested in it, such third persons would not be liable for any debts of the Company.
There were stockholders within the meaning of that section of the act, from the time the stock was apportioned and an installment on each share had been paid. There can be no doubt that one subscribing on his own account, and accepting the apportionment made to him and who has paid his first installment, is from that time a stockholder within the meaning of section 10, of the act of 1848. (Ch. 40.)
Being of the opinion, that Wilcox is not exempt from liability as such, because he subscribed in the name of Jordan; and that as he held a certificate of stock when. the debt in question matured, and thence until after this suit was commenced, he is liable to an amount equal to the amount of such stock; I Concur in holding that judgment should be entered for the plaintiff on the verdict. The like judgment should also be entered in the suit against Peake.[1]
Ordered accordingly.
1 Affirmed in the Court of Appeals, 22 N. Y. R., 551.