Wills v. Woolner (1913) · DecisionDepot

Wills v. Woolner

Name: California Superior Court Tentative Rulings
Creator: DecisionDepot
License: https://creativecommons.org/licenses/by-nc/4.0/

California Court of Appeal Mar 21, 1913 No. Civ. No. 1214.Published

Before: Shaw

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Holding. The court held that stockholders are liable for a corporate debt to a surety only if they were stockholders at the time the surety paid the debt, as the payment extinguishes the original debt and creates a new corporate liability.

Issues

Whether stockholders are liable to a surety who paid a corporate debt if the stockholders were not members at the time the debt was originally incurred.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The debt having been extinguished by the surety’s payment, the liability of the stockholders upon that debt came to an end.”

Synopsis

Corporation—Stockholder’s Liability to Guarantor of Note.—No liability on the part of a corporation to the guarantor of a note, given by it, arises until he pays the note; hence only those persons who are stockholders at the time of payment are liable to him.

Id.—Appeal—Briefs—Reference to Evidence.—An appellate court must not be expected to search through a voluminous record to discover evidence on a point raised by the appellant, when his brief makes no reference to such evidence.

SHAW, J.

Action in

assumpsit

to recover upon statutory stockholders’ liability. Judgment went for plaintiff, from which defendants appeal.

In 1909, plaintiff, and others for whom he sued as assignee, indorsed and guaranteed payment of certain promissory notes made by the Provident Midway Oil Company, a corporation, for money borrowed by it. The corporation made default in payment of these notes; .whereupon the holder brought suit thereon, including plaintiff and his co-guarantors as defendants therein; and on February 1, 1911, recovered judgment thereon against all of the defendants, which judgment plaintiff and his said assignors paid on July 20, 1911. At the time of the rendition of the judgment and up to and after the payment thereof on July 20, 1911, defendants were stockholders of the corporation, but they were not stockholders in 1909, at the time when the corporation executed the notes so indorsed and guaranteed by plaintiff and his assignors for the indebtedness then incurred.

[529]

The sole question presented is whether or not defendants as stockholders of the corporation were liable to the plaintiff and his assignors for any part of the judgment so paid by them. This identical question was before the court in

Yule

Bishop,

133 Cal. 574, [62 Pac. 68, 65 Pac. 1094], Basing its decision upon section 1473 of the Civil Code, as well as upon numerous authorities cited, it was there held by the court sitting in Bank (Justices Harrison and Van Dyke dissenting), that where an accommodation indorser, upon default in the payment of a note made by a corporation, paid the same, such act as to the corporation and its stockholders extinguished the note as to which there could be no equitable assignment or subrogation, and further held (all of the justices concurring) that no liability on the part of the corporation to the surety who took up and paid the note arose until the time of such payment, and hence only those persons who were stockholders at the time of payment were liable for such corporate liability. The first proposition enunciated by the court has been repeatedly affirmed.

Wills v. Woolner

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Synopsis

SHAW, J.

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