Bidwell v. Babcock

California Supreme Court Dec 12, 1890 No. No. 13695Published

Before: Vanclief

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Holding. The court held that a complaint seeking to enforce a stockholder's liability under the Civil Code must state the specific proportion of the defendant's stock to the total subscribed capital stock at the time the debt was incurred, and that separate causes of action must independently state or properly incorporate the necessary jurisdictional facts.

Issues

Whether the complaint sufficiently alleged the proportion of the defendant's stock to the total subscribed capital stock as required by the Civil Code and the Constitution.
Whether the second and third causes of action were legally sufficient despite failing to allege or incorporate the essential facts regarding the corporation's existence and capital stock.

Disposition. reversed

Quotations verified verbatim against the opinion

“It is essential to the statement of a cause of action, under this provision of the code and constitution, that the complaint state the proportion which the stock owned by the defendant at the time the debt sued for was incurred bears to the whole”

“The second and third counts are defective in that they fail to state the existence of the corporation, the amount of its capital stock, the portion thereof subscribed, or the portion of the subscribed stock owned by defendant”

Synopsis

Corporations — Liability of Stockholders—Pleading. —The complaint in an action to enforce the liability of stockholders for the indebtedness of a corporation must state the proportion which the stock owned by the defendant at the time the debt sued for was incurred bears to the whole subscribed stock at that timé, or facts from which such proportion may be deduced.

Id.—Action for Several Debts — Pleading — Demurrer,— Subscribed Stock. — A complaint in an action to enforce several debts of a corporation against a stockholder which states the number of shares owned by the defendant during the period in which the debts sued for were incurred, and that during that period a certain number of shares were subscribed for, issued to, and owned by various parties, without stating that that number was the whole number of shares of stock subscribed at the time each debt was contracted, or stating the proportion which the shares owned by the defendant bore to the whole subscribed stock at each of said times, is insufficient, and a demurrer thereto should be sustained.

Id.—Several Counts in Complaint — Defective Pleading.—A complaint containing several counts upon several debts of a corporation with which a stockholder is sought to be charged must state in each count the existence of the corporation, and the facts showing the defendant’s proportionate share of liability for each debt, or must refer to the statement of these facts in the first count; and defects in such statement in subsequent counts cannot be supplied by statements in the first count, in the absence of reference to them.

Vanclief, C. The defendant was sued as a stockholder of a corporation,—the San Diego Street Oar Company,—under section 322 of the Civil Code, to recover his proportionate part of certain alleged indebtedness of the corporation. His demurrer to the complaint was [30]overruled, and upon his failure to answer, judgment was rendered against him by default. This appeal is from the judgment on the judgment roll, and the overruling of the demurrer is assigned as error.

The complaint embraces three causes of action: 1. Indebtedness of the corporation for goods sold and delivered by the plaintiff “during the time” between December 6, 1888, and January 23, 1889; 2. Indebtedness of the corporation to H. L. Shaug, for goods sold and delivered by him, during the same time, assigned to the plaintiff; and 3. Indebtedness of the corporation to Morris and Breadlove for goods sold and delivered by them during the same time, assigned to plaintiff. The indebtedness of the corporation, alleged in the three causes of action, amounts to $858.72.

After properly stating the organization of the corporation, its existence during the time within which the indebtedness was incurred, and that its whole capital stock consisted of two thousand five hundred shares, of the par value of one hundred dollars per share, the complaint proceeds as follows:—•

“4. That a large number of shares of said stock, to wit, 2,170, were subscribed for, issued to, and owned by the various parties who were the owners of said stock, as hereinafter specified, during the time between the sixth May of December, 1888, and the twenty-third day of January, A. D. 1889, both days inclusive, between which dates the debts hereinafter set forth were incurred.”

Then, after alleging the indebtedness of the corporation as above indicated, comes the ninth paragraph, as follows:—

“ 9. That during the time mentioned in paragraph 4 of this complaint, to wit, between December 6, 1888, and January 23, 1889, the defendant, E. S. Babcock, Jr., was the owner of, to wit, 972 shares of the capital stock of said San Diego Street Car Company, and is indebted to [31]plaintiff herein in the sum of, to wit, $384.91, under-section 322 of the Civil Code of California, and other laws of the state of California; that said sum has been demanded of defendant, but he has refused to pay the same, or any part thereof.”

Bidwell v. Babcock

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