Santa Rosa National Bank v. Barnett
Before: Chipman
Synopsis
Corporations — Liability of Stockholders — Indebtedness to Bank—Over-Drafts—Note—Statute of Limitations.—A corporation is liable upon an implied promise to pay over-drafts to a bank when made; and its stockholders are liable on the indebtedness thus accruing to the bank, upon the daily balances against the corporation shown by the account. A note given in renewal or extension of the indebtedness of the corporation for overdrafts cannot operate to renew or extend the liability of the stockholders, or prevent the statute of limitations from running against it.
Id.—General Deposits After Over-Drafts—Presumption of Payment-Account not Mutual.—General deposits made by the corporation in a bank to which it is indebted for over-drafts, of sums not greater than the balance of indebtedness, are presumed to be made as payments thereupon, and do not make the account mutual, open and current, within the statute of limitation's. The fact that the account started with a credit cannot alter the nature of the Indebtedness for over-drafts, nor render the account of such Indebtedness and of payments thereupon a mutual, open and current account.
Id.—Limitations of Stockholders’ Liability — Constitutional Law.—Section 359 of the Code of Civil Procedure, limiting the liability of the stockholders of corporations, is not inconsistent with section 3 of article XII of the state constitution, imposing such liability, and was continued in force by section 1 of article XII of the constitution, continuing in force all laws not inconsistent therewith.
Id.—Construction of Code.—There is no conflict between section 359 of the Code of Civil Procedure and section 309 thereof, relating to the liability of directors of corporations, or section 348 thereof, relative to actions against persons and corporations with whom money has been deposited.
Id.—Amendment of Complaint — Discretion — Ruling Without Injury.—The refusal of the court to allow the complaint to be amended to conform to claimed proof that the indebtedness evidenced by the note upon which the stockholders were sued was for a balance due upon a mutual, open and current account between the corporation and the plaintiff was within the discretion of the court, and the ruling will not be disturbed if no abuse of discretion appears. The ruling is without injury where the evidence shows that the cause was tried as fully as if the proposed matter of amendment had been pleaded.
CHIPMAN, C. Action to enforce the personal liability of defendants as stockholders in Central Street Railway Company, a corporation. Defendants pleaded the statute of limitations, and upon that plea had judgment except as to the sum of [409]$392.49, for which plaintiff had judgment against defendants for the proportionate share of each. Plaintiff appeals from the judgment and from an order denying motion for new trial.
The court found that defendants were stockholders of the railway company; that from and after May 28, 1891, and until December 4, 1892, plaintiff loaned and advanced the company, from time to time, large sums of money, which were used in the construction of its railroad, the purchase of material for equipment, et cetera; during this time the company made deposits of money and a balance of account was struck nearly every . month, showing the amount due from the company, which balance on December 4, 1892, was $9,607.51; on December 6, 1892, the company, by resolution, authorized its secretary and president to make and deliver its promissory note to plaintiff for the amount due plaintiff, and this note was executed December 7, 1892, for the sum of $10,000 and delivered to plaintiff. The plaintiff thereupon, on December 7th, gave the company credit on plaintiff’s books for $325.89, that sum being the difference between the overdraft and the face of the note at the time of the credit; no other or different consideration was given for said note; that $9,607.51 of said indebtedness was created and existed prior to December 4, 1892, and was created at different times between May 14, 1891, and December 4, 1892, and said sum was included in and made part of the sum agreed to be paid by said note of $10,000. It is also found that this note was renewed June 7, 1894, for $9,000, a payment of $1,000 having been previously made by the company, and that the renewal note, which is the note set up in the complaint, included the same sums of money as did the original note of December 7th. As conclusions of law the court found that the sum of $9,607.51, included in said note, is barred by the statute (Code Civ. Proc., secs. 338, 359); that the sum of $392.49 was a debt created by the company at the time of making the note of December 7, 1892, and that defendants are separately liable for their proportionate share of that sum and no more. The complaint was filed December 5, 1895, one day more than three years after the balance of $9,607.51 was found to be due plaintiff.
1. Appellant claims that the note of December 7th was in accordance with section 456 of the Civil Code, “and became an
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