Hunt v. Ward

McFarland, J. Action to recover of defendant Ward his proportionate share of the alleged indebtedness of a corporation in which he was a stockholder. Judgment went for plaintiff, from which, and from an order denying a new trial, said defendant appeals. Appellant contends, among other things, that the complaint does not state facts sufficient to constitute a cause of action, and that the action is barred by section 359 of the Code of Civil Procedure.

It is averred in the complaint that on February 20,1888, a certain corporation called the “ Exchange Block Company” made and delivered to respondent its promissory note for $7,500, payable one year after date with twelve per cent per annum interest, and also executed to respondent a mortgage on certain corporate property to secure said note; that afterwards respondent foreclosed said mortgage, and that after the sale of the mortgaged premises there was a deficiency of $3,291.50, for which judgment was docketed against said corporation on January 9,1891, and that the same is wholly unsatisfied; and that during the times mentioned appellant owned such a number of shares of the corporate stock as would make his proportionate share of said deficiency judgment $827.50, for which last-mentioned sum judgment is prayed in this present action against appellant.

It will be observed that there is no averment of the time of the incurring of the indebtedness or liability for which the note was given or of the nature of such indebtedness—the facts upon which it was founded; the only averment on the subject being the making and execution of the note and mortgage. The complaint bases the right to recover on the making of the note and the judgment against the corporation; but, as the liability of a stockholder is a separate and independent one, commencing with and dependent upon the original indebtedness, it is doubtful if the averments of the complaint in the case at bar are sufficient. Indeed, such averments were directly held by this court in Tilden v. Gashwiler, No. 4053, decided in 1875, to be insufficient. In that case the complaint did aver that the corporation was indebted to plaintiff’s assignor in a stated sum of money, and that in consideration of such indebtedness it made its promissory note, upon which it was sought to hold the stockholder; but the trial court sustained a general demurrer upon the ground that the liability [614]of the stockholder was upon the original indebtedness, and not upon the note, and that there was no averment of facts showing such indebtedness. The plaintiff appealed, and the appellate court, after a most elaborate argument, as shown by the briefs in the record, affirmed the judgment; but as that case was not reported and there was no written opinion delivered in it—it being simply noticed in 50 Cal. 668, under the head of “cases not reported”—it cannot betaken as known generally to the bar, and, therefore, should not have much, if any, weight as authority. We allude to it merely to show how the court viewed the question at that time, and to illustrate the possible danger of relying upon such averments as those contained in the complaint in the case at bar. And, as we think that appellant’s plea of the statute of limitations is a perfect defense to this action, we prefer not to say more upon the question above suggested, leaving its final decision to some case in which it must necessarily be determined.