Chaffin v. Cummings

An execution against a Rail Road Company may be levied upon tbe property of an owner of shares to tbe amount of his stock, for debts contracted during his ownership. To the validity of a levy made on such an execution upon the property of an individual, it must appear — I. That he was a share holder to the amount levied. — It is not necessary, however, that such fact be shown by the corporation records or by the officer’s return. It is provable by parol. H. That the levying officer, forty-eight hours before the levy, gave him notice of the amount of the debt and of an intention to make the levy. — It is not requisite, however, that the levy be made at the end of the forty-eight hours. A levy was sustained, though not made tiü twenty-four days after such notice. Neither will such notice become ineffectual by an intermediate payment of a part of the debt. ' III. That there was no attachable property of the corporation. — Held, that the levying officer’s return upon the execution, that he cannot find such property, is conclusive evidence that there was no such property. In a controversy as to the validity of such a levy, it is not competent for the stockholder to object that the creditor had reserved and secured usurious interest in his contract with the corporation.

On Report from Nisi Prius, Howard, J., presiding. Writ op Entry for possession of a tract of land. The land formerly belonged to the demandant. It is, however, claimed by^the tenant under a levy to himself, on an execution, issued upon a judgment of §2449,46, which he had recovered, on contract, against the Buckfield Branch Rail Road Company, of which company the demand-ant was alleged to be a member. The land was set off at the appraised value of §1000. The demandant offered- to prove that, in the contract between the tenant and the Rail Road Company, usury was reserved and secured by the tenant. This evidence was excluded. To show that the demandant, at the time of the contract between the Rail Road Company and the tenant, was the owner of shares to the amount of §1000, the tenant introduced evidence .having some tendency to prove, that the demandant, before the organization of the Company, had subscribed to “take and fill” shares to that amount; that he attended the meeting to organize the Company; and that he had admitted his ownership of stock to said amount. But no record of the corporation was found, showing that he had ever been a stockholder. The demandant then contended, that by reason of certain defects in the proceedings, the levy passed no title. 1. That the levying officer does not state in his return that the demandant was an owner of stock. 2. That the notice required by the statute does not appear to have been to the demandant as owner of stock. [Memo. — The provision of the statute is, that the officer may cause the property of the stockholder to be levied upon, “ after giving him forty-eight hours previous notice of his intention to levy, and of the amount of the debt or deficiency, unless the stockholder shall show to the creditor or officer, attachable corporate property or estate.”] On this point the officer’s return is as follows: — “On the4th day of April, 1851,1 notified the following persons, stockholders in said corporation, to wit: Rodney Chaffin, (and twenty-one others,) by giving to each of them verbal notice of the amount of the debt, to wit: of the amount of the within execution, and of my intention to levy the' within execution upon their'several individual property, rights, credits and estate, to the amount of the stock owned by them severally in said corporation, unless they should on demand and notice aforesaid, disclose and show to the execution creditor, within named, or to me, as an officer, attachable corporate property or estate belonging to the said corporation, sufficient to satisfy the within execution, and all fees; and now, forty-eight hours from and after the time of giving the notices as aforesaid, to each and all of said stockholders above named, has expired, and they each and all have neglected to disclose and show to me, as an officer, or to the within named execution creditor, attachable corporate property or estate, belonging to the said corporation, sufficient to satisfy the within execution and all fees.” After the giving of that notice, and before the levy, which was on the 28th of April, some of the other stockholders paid to the officer some considerable sums upon the execution. 3. That the company itself had attachable property. In this respect the demandant offered to show, that, at the time when the levy was made, the Rail Road Company were the owners of a right in equity to redeem their road and franchise from a mortgage, which they had given to Francis O. J. Smith, for $35,000, and that the same being attached, prior to the tenant’s levy, on a writ in favor of Porter and Benson, was sold after the levy, upon an execution issued on the judgment, which they recovered in their suit, for the sum of $6005. On this point, the officer returns that he had “ made diligent search for corporate property or estate, belonging to the within named Buckfield Branch Rail Road Company, wherewith to satisfy the within execution, and having demanded the same of Stephen Emery, as treasurer of said corporation, wherewith to satisfy the same, I have first ascertained and hereby certify, that I cannot find corporate property or estate belonging to the said corporation.” The cause was thereupon taken from the jury, by agreement of the parties, with authority for the Court to enter judgment upon nonsuit or default, or to order a new trial, as justice may require. 1. There was no competent evidence that the demandant, whose land was taken, was ever a stockholder. No book nor record of the corporation exhibited such an ownership. And the levying officer dared not to certify it, though his return should state all the facts necessary to establish title. If the demandant was a stockholder, there must have been recorded evidence to show it, and by such evidence, being in its nature of a higher grade, the fact ought, by the rules of law, to be proved. But the parol evidence, even if admissible, was insufficient -to show such an ownership, even to the amount of a single dollar; and especially was it insufficient to show ownership at the time the plaintiff’s usurious debt was contracted. 2. Between the time at which the officer notified the demandant of the amount of the debt, and the time of the levy, he had collected a large part of the execution, some by levies on the property of stóckholders, and some by payments made in cash. Thus, when he levied the demandant’s land, a much smaller sum was due than that of which he notified the demandant. In such case it was the officer’s duty to give him a new notice of the balance due. To pay a balance so reduced, he might have shown sufficient property of the corporation. 3. The levy, if made at all, must be made immediately after the lapse of the forty-eight hours notice of the intent to levy, for want of corporate property. The. certificate of such want of corporate property has relation to that time. It nowhere appears by the officer’s return or otherwise, that on the day of the levy, the corporation had not an abundance of attachable prop'erty to pay its whole debts. 4. We next say, that the right to take individual property for corporation debts is only given in case of deficiency of attachable corporate property or estate. If such property does exist, then no proceedings can authorize the officer in any case to seize that of the individual. His right to seize such property does not depend upon the officer’s return, but upon the fact. Stat. c. 16, § 18. The report in this case shows, that, notwithstanding the return of the officer, the corporation had attachable estate, to wit: a right in equity to redeem their road and franchise from a mortgage held by E. O. J. Smith, or rather that the plaintiff offered to show this, and that it subsequently sold in Eeb. 1852,- for six thousand dollars. The officer’s return upon this point is not conclusive, because his right to act at all in seizing individual property depends upon this fact, and without such deficiency of attachable corporate estate, he has no right or authority to make such certificate. In other words, the jurisdiction of the officer, so to speak, depends upon the fact of such deficiency of corporate estate, and without that all his acts and return in reference to. a stockholder are merely void. This case, therefore, differs from that class of cases where the acts of an officer come within the range of his duties, inasmuch as without an actual deficiency of corporate estate he has no right to proceed. Should it be said that this right was subject to an attachment of Porter & Benson for its full value, we reply that a creditor before taking individual property should. have waited until that right was sold, and then proceeded and sold the company’s right to redeem from that sale. If the corporation have corporate attachable property, the right to take individual property does not exist, nor is the case at all altered by the statute, if that property happens to be at the time in a condition that it cannot be seized and levied upon at once. If the corporation have property that is in its nature attachable, it must first be disposed of and appropriated according to law, before the individual stockholder can be made to pay, or his property be subjected to be taken in execution. It is the evident intention of the statute, that the stockholder shall be liable only in the last resort. We say, therefore,' that it being apparent, (for what is offered to be proved by the demandant must be taken as proved,) that the corporation had attachable estate to the value of six thousand dollars when the defendant made his levy, that levy could give him no rights ¿ it was premature. It could not then be told whether Benson & Porter would obtain judgment, and if they did, whether they would levy on the road and franchise. It would most clearly be an interpolation of the statute to require the attachable estate of the corporation to be unincumbered or liable to be immediately levied upon or sold. 5. The debt of the defendant was usurious to a large extent, as we offered to prove. The statute never could have contemplated that stockholders should be individually liable for debts, the creation of which the statute forbids. The defendant cannot shield himself under his judgment, against the corporation, against the well founded complaints of the stockholders, that the debt to which he is in the last resort made a party, was not honestly and bona fide due. It would be a reproach to the law if it were so. It would be against the policy of the law to subject the minority in a corporation to the deprivation of their property, from an unlawful exercise of power on the part of the majority. The stockholders should have the power somewhere to resist such legal injustice and extortion j and although the eorporation, as such, might be estopped after judgment to say that if was usurious; still the stockholder, who by force ©f the statute is made a party to that judgment without notice, should have the power to lo.ok into the legality of demands. In the case before the Court, the levy upon the plaintiif’s property, has connected him with the judgment, and gives him a right to look into it. Rankin v. Sherwood} 33 Maine, 509 ; Merrill v. Suffolk Bank, 31 Maine, 57.