Sonoma Valley Bank v. Hill

Thornton, J.: This action was brought to recover of the defendant his ratable proportion of a debt of the corporation (the Sonoma Wine and Brandy Company), in which he owned stock.

It appears that on the trial there was evidence showing that the corporation had transferred to the plaintiff its personal property, including evidences of debt to secure its indebtedness to it, some of which had not been disposed of in any way. At the request of the plaintiff, the Court directed the jury as follows: “It is no defense to this action that a portion of the property of the Sonoma Valley Wine and Brandy Company, which was given in pledge to the plaintiff, remains in the hands of the plaintiff undisposed of.” After-wards, on a motion for a new trial, made on the minutes of the Court, a new trial was ordered, “ upon the ground and no other” (so expressed in the statement made on which to bring the case to this Court) that the plaintiff could not recover against a stockholder of the corporation until it had disposed of or accounted for all the property given it in pledge as security by the corporation. The plaintiff appealed from the order granting a new trial.

If this latter view taken by the Court is correct, the new trial was properly granted.

The action against the stockholders is provided for by section 322 of the Civil Code. Under a statute of this State not differing in any essential particular from the section of the code above referred to, as far as the question involved in the instruction quoted is concerned, it has been repeatedly held that the stockholders of a corporation are not, as regards the creditors of such corporation, sureties, but principal debtors. [110](Mokelumne Hill etc. v. Woodbury, 14 Cal. 265; Davidson v. Rankin, 34 id. 503; Young v. Rosenbaum, 39 id. 654.) Such, in our judgment, is the relation of a stockholder under the code to the creditors of a corporation who became such creditors while the stockholders held and owned shares. (Civ. Code, § 322.)

Now it is well settled that in the absence of a statute or stipulation to the contrary, the possession of the pledged property does not suspend the right of the pledgee to proceed personally against the pledgor for his debt, without selling the pledge, for the reason that the security is only collateral. It has been repeatedly so held. (See Bank of Rutland v. Woodruff, 34 Vt. 89; Robinson v. Hurley, 11 Iowa, 410; Butterworth v. Kennedy, 5 Bosw. 143; Elder v. Rouse, 15 Wend. 218; Langdon v. Buel, 9 id. 80, 83; Case v. Boughton, 11 id. 106; Beckwith v. Sibley, 11 Pick. 482; Townsend v. Newell, 14 id. 332; Whitaker v. Sumner, 20 id. 399.)