Myers v. Sierra Valley Stock & Agricultural Ass'n

California Supreme Court Dec 17, 1898 No. Sac. No. 400Published

Before: Chipman

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Holding. The court held that the superior court lacked jurisdiction over the action because the claims against individual stockholders were for amounts less than the $300 jurisdictional threshold, and the plaintiffs failed to establish a basis for equitable relief that would bypass this requirement.

Issues

Whether the superior court had jurisdiction over an action for contribution against stockholders where individual claims were less than $300.
Whether the plaintiffs were entitled to invoke equitable jurisdiction for subrogation and contribution when a clear and adequate legal remedy existed under the statute.

Disposition. reversed

Quotations verified verbatim against the opinion

“it was not necessary to go into equity for contribution from the stockholders, because the statute gave a clear and adequate legal remedy, against them.”

Synopsis

Corporations—Payment of Note by Sureties—Contribution Among Stockholders — Statutory Action.—An action by stockholders-against other stockholders of the corporation, to enforce their liability, to contribute to the payment of a note upon which, the plaintiffs were sureties, and. which they have paid, does not arise out of the relation of surety, but is a statutory action to enforce the liability to them of the stockholders as principal debtors.

Id.—Subrogation—Equity—Action of Assumpsit.—The holder of the paid note had no right or remedy which required the interposition of equity to invest tne sureties therewith, or to entitle them to be subrogated thereto; and equity has no jurisdiction of an action by them to enforce the liability of the other stockholders to them; but the sureties, upon payment of the note, had their action in assumpsit, as sureties, directly against the stockholders as principals.

Id.—Jurisdiction of Superior Court.—The superior court has no jurisdiction of such an action, where the ’amount recoverable from each stockholder .is less than three hundred dollars.

Id.—Affidavit Denying Note—Confession and Avoidance.—Conceding that an affidavit of plaintiffs denying the genuineness and due execution of a note pleaded in an answer came too late, the plaintiffs nevertheless had the right to controvert the note by showing any other matters in confession or avoidance thereof.

Id.—Want of Consideration—Absence of Authority.—An admission of the genuineness of a note not purporting to have been made by the corporation does not involve an admission that it was a. corporation note, and it may be shown that it was not authorized oy the directors of the corporation, and was without consideration.

CHIPMAN, C. The complaint sets forth the following facts: Defendant corporation made its note to Charles and Margaret Perry for $1,500 December 24, 1892, payable two years after date. It was signed by plaintiffs and by defendants Pritchard, Dolley, Darling, and Newman as sureties; the payees assigned the note to Mrs. King; she demanded payment at its maturity, and, the corporation being unable to pay, plaintiffs and Pritchard and Dolley, sureties, under a legitimate and fair effort to protect their interest in the corporation property, on May 27, 1895, paid the amount then due ($1,790), each paying $223.75 thereof, the other two sureties, Newman and Darling, being unable to pay anything. The corporation had issued but 353£ of its 500 shares of capital stock, and all the parties, plaintiffs and defendants, held shares except defendant Darling, who held none. Appellant Pritchard held 75 shares, and appellant, the literary society, 12-¡- shares. No other person held more than 24 shares. The complaint alleges other unpaid indebtedness of the corporation, the amount of which and the holders thereof being unknown to plaintiffs; and plaintiffs allege that “they seek in equity to be subrogated to the rights and remedies of said Mrs. King, .... and thus ask to enforce contribution against M. Pritchard, who owned 75 shares of the subscribed capital stock of said corporation, while plaintiffs owned but a small number (as aforesaid) of the shares thereof when said indebtedness of the said $1,500 loan was so incurred by said corporation, .... and pray that he pay to them his proportionate share of such indebtedness. These plaintiffs also, for the same reasons, and after their subrogation to the rights and remedies of said Mrs. King, demand contribution in equity, that each of the defendants who owned stock in said corporation when said $1,500 indebtedness was incurred pay them his proportionate share thereof.” An accounting of the affairs of the corporation and a receiver are asked, and that the property of the corporation be sold and the affairs of the corporation be wound up, and that plaintiff be subrogated to the rights of Mrs. King, and “that they thus be enabled to enforce, by way of contribution, recovery from M. Pritchard and the other owners of stock of said corporation, their proportionate share of said $1,500 note and indebtedness of said corporation so paid by the sureties thereon as aforesaid.”

[671]Defendants demurred on several grounds: “1. For insufficiency of facts; .... 4. Want of jurisdiction in that it does not appear that the demand of plaintiffs, or any of them, against each stockholder amounts to $300 or over.” The demurrer was overruled and defendants answered. The answer sets up, among other things, certain unpaid indebtedness of the corporation to defendants Pritchard and Dolley (in addition to the said note of $1,500) for work and labor and for money advanced to the corporation which they allege should be paid, but does not deny any of the material allegations of the complaint. The facts found are substantially as alleged in the complaint, and the court finds certain sums to be due defendants Pritchard and Dolley on account of matters alleged in the answer. The .decree adjudges that plaintiffs recover from the corporation $1,483.44; that de-fendant Dolley recover from the corporation $623.24; and that Pritchard recover from the corporation $330.89; that plaintiffs and Pritchard and Dolley be subrogated to the rights annd remedies of Mrs. King to enable them to enforce by contribution from the stockholders of the corporation their proportionate share of its indebtedness. And to effect such recovery a joint judgment was given plaintiffs against the defendants, “severally, the respective amounts! and the proportionate share of plaintiffs’ costs set opposite their respective names, with legal interest thereon as follows: From M. Pritchard the sum of $121.98, with eleven per cent, plaintiff’s costs amounting to $3.87; from Sierra Valley Literary Association the sum of $56.62, with .... costs amounting to $1.23.” (Here follows a statement that judgment was entered against each of the other defendants in favor of plaintiffs.) Judgment was also given for Dolley against Pritchard for $64.89 and three cents costs, and against the literary society for $29.60 and forty-six cents costs; and also a judgment in favor of Dolley against each of the other defendants' for the proportionate share of the indebtedness. Pritchard and the literary society each appeals from the several judgments against them and from the order denying motion for a new trial.

Myers v. Sierra Valley Stock & Agricultural Ass'n

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