FEDERAL REPORTER, vol. 38.
«(Jircuit Oourt, D. Vermont. April 17. 1889.)
In Vermont. a married woman is competent to become a stockholder In f corporation and to contract to charge her separate property witt the payment of any liability which is implied from entering into that relation. l
At Law. On motion for a new trial. Action by Chester W. Witters, receiveT, against Margaret A. Sowles, to enforce defendant's liability as a stockholder in the First National Bank of St. Albans. Verdict for plaintiLf, and defendant moves for a new trial. Albert P. GrOs8, for plaintiff. E. A. Sowles, for defendant. Before WALLACE and WHEELER, JJ. , WALLACE, J. This is a m()tion by the defendant for a new trial in an action ilt law. The action is brought against the defendant as a shareholder of the First National Bank of St. Albans, Vt., to recover an assessment made by the comptroller of the currency in winding up the bank in insolvency, for an amount equal to the par value of the shares. The defendant is a married woman, and was residuary legatee under the will of Susan B. Bellows, and her husband was the sole executor of the will. In March, 1881, the proper probate court decreed the distribution of the estate, and the next day the defendant's husband, as executor, transferred to her upon the books of the bank, in accordance with its by-laws, 400 shares of the stockof the bank, part of the estate. These shares stood in her name on the books of the bank until Aplil, 1884, when the bank failed. The dividends were always paid to her husband. The question of fact litigated upon the trial was whether the defendant was aware before the failure of the bank that the shares bad been transferred to her. The judge instructed the jury, in substance, that if the defendant was informed of the transfer of the stock to her by her husband as executor, and acquiesced in it, or if she left the management of her property to her husband, and he treated the shares as hers, she was a shareholder; and he ruled as matter of law that if the jury found she was a shareholder she was liable for the amount of the assessment in an action at law, although a feme covert. The question of the liability of a married woman to an assessment upon shares standing in her name has been fully considered by Judge WHEELER, before whom this action was tried, in previous litigations between the parties. 32 Fed. Rep. 130. 767, 35 Fed. Rep. 641. ,His conclusion was that the defendant was liable'to an assessment; but in an action broughton the equity side of the
lConcernlng the power of married women to contract under the various "married women's acts," see Flaum v. Wallace, (N. C.) 9 S. E. Rep. 567, and note; Jones v. Holt, (N. H.) 15 At!. Rep. 214, and note.
court he sustained the demurrer of the defendant to the bill, upon the ground assigned by the demurrer, that the remedy was not in equity, but was exclusively at law. As those cases were decided by him in the circuit court upon deliberate consideration, while sitting alone,they would now be treated as the law of the court until reversed by the supreme court were it not that he has requested the further examination and review of the main question upon this motion. It is too late, however, to re-examine with propriety the question whether the defendant is liable at law. Having succeeded in the previous suit in equity upon the ground then taken by her that the remedy to enforce the liability was solely at law, it would be indecent to permit her, now that the plaintiff has brought his suit at law, to urge that she can only be sued in equity. If that question was correctly decided in the former case the ruling upon it at the trial was right; if the former decision was erroneous, it should be followed as the law of this court, as between the present parties, until it may be reversed by the supreme court. The defendant inSISts that by the law of Vermont, at the time the cause of action accrued, a married woman was incapa.ble of making a contract, and could not assume the liability of a shareholder of a national bank, and hence she is not affected by the provisions of section 5151, Rev. St. U. S., which make shareholders individually responsible, to the extent of ·their stock, for the debts and engagements of the bank. This proposition involves primarily a question of statutory interpretation. The term "shareholder" in the statute-there being nothing in the section or its context. to indicate that it was used in a different sense-is to be considered as used in its ordinary legal signification, and therefore intended to describe a class of persons who occupy the statU8 and relation of members towards the corporation, and of contributories towards creditors. The statute does not set up any criterion or indulge in any definition by which to ascertain what persons fall within the designated «lass, but leaves that inquiry to be ascertained aliunde and determined by the rules of law which are always invoked when the question arises whether a given person who claims or is claimed to be a shareholder has assumed or then sustains that relation. In the language of a recent COUlmentator: "In determining who is a shareholder or stockholder or member within the meaning of a provision of this description, the same principles aIld the same rules apply as in determining who is liable to contribute, as a shareholder, to the capital stock of the company." Mor. Priv. Corp. § 614. In those states where the common-law disabilities of coverture have been so relaxed by statute that married women may acquire and hold separate property and contract in respect to it as though unmarried, there is no legal obstacle to prevent a married woman from becoming a shareholder of a corporation, and assuming all the liabilities incident to that relation. This has recently been decided by the BUpreme court in the case of Bv-ndy v. Cocke, 128 U. S. 185, 9 Sup. Ct. Rep. 242. In that case a bill in equity was filed to enforce such a liability against a married woman, and the court held that she was liable. The .present case, however, turns upon the capacity of a. married
woman. to ,assume the relation of &sharebolder in tbe absence of sucb enabling acts. :rr'he.statutes which have been enacted in Vermont concededly do not touchithe present case. The question. is therefore one of the defimclant's.capacity by the rules·of the common law as recoKuized and adopted in Vermont. At common law a married wOman cannot make a valid contract (If any description in relation to either real :or personal property; and matriage operates as'a gift to the husband of all the sOnal property of the wife, both stich as is hers at the, time or such as subsequently accrues to her. As to choses in action, including shares of stock, she may retain a qualified property in. them; and they remain hers until reduced to possession by the husband,and, if be dies without havinK done so, they are hers by,survivorship. She cannot transfer them during his life. No decision of the courts of Vermont has been cited in which the question of.the competency ofa married woman to become a shareholder of It corporation has been considered. Two acljudications in other .states, by courts of last resort, are reported, in which it was held that, notwithstanding the existence of the common-law disabilities, a married woman who has shares in a corporation standing in her name, not reduced by the ,husband to his possession, is a shareholder within the meaning of statutes making shareholders liable for the debts. In re Bank, 22 N. Y. 9; Sayles v. Bates, 15 R. 1. 342,5 At!. Rep. 497. In the first of these cases, it was assumed, without. much consideration, that the married woman was a shareholder because of herundivested property in the shares, and the decision was placed upon the ground that, being a shareholder, she was liable by the terms of the statute. In ,the second case the decision was placed upon the authority of the first, and the court said: "If a married woman is capable of becoming a stockholder, which is not questioned, she becomes SUbject to theiiability by force of tbe statute, not by contract, when sbe becomes a stockholder." . These decisions are entitled to great respect, but t.hey seem to ignore the contractual character of the relatiou and the liability. Doubtless it would be competent for the legislature to declare that any married woman who might acquire shares in a corporation should be regarded as a stockholder, and should be liable as such, notwithstanding her shares might be the absolute propei:ty of the husband, at his option; but, in the of la.nguage to that effect, a statute which makes shareholders liable for the debts of the corporation must be presumed to inelude only. persons helonging to the class who can contract that relation towards the corporation and creditors. The relation is a contractual one, and the liability is founded on the presumed assent of the shareholder to be bound by the terms of the organic la w of the corporation. This is well stated by ALLEN, J., in Lowry v. Inman, 46 N. Y. 125: ..A personalliahility of stockholders for the debts a corporation, in virtue of the charter. is not in the nature of a penalty or forfeiture. and does not exist solely as a liability imposed by statute. It is not enforced simply as a statutory obligation, but is regarded as voluntarily'assumed by the act of becoming a stockholder. By such act he assents to be bound, or that his
WITrERS II; SOWLES.
property shall be charged, with the debts of the corporation, to the extent and In the manner prescribed b!the act of incorporation." In Ireland v. Turnpike Co., 19 Ohio St. 372, the court say: "He becomes a stockholder by virtue of a contract with the company, and he has'a right to stand upon the terms of that contract, interpreted' and limited by the .laws under whieh it Was made." . . The nature of the liability is considered bythe supreme court in Oarrol v. Green, .92 U. S. 509, .in a: case where the question was whether an action against a E'tockholder, under' a statute making stockholders liable forthe debts of the compa;iy to a limited amount, was"grounded upon contract," so as to be barred by the statute of limitations; and held that it was. Speaking of the assent of the shareholder to be bound by the terms Of the statute of incorporation, evidenced by taking stock, the court said: . "The assent thus given, and the promise implied, are of the essence of the liability sought to be enforced in this proceeding." Ta the same effect are the following adjudications: Corning v. ¥cCullough, 1 :N.Y".,47; Hawt)wrn!Jv. Calef, 2 Wall. 10; Norris v. WremchaU, 34 Md.· 492; ..Erickson v. Nesmith,.46 N. H. 371; Coleman v. White, 14 Wis. 700.. It does not. follow that because a married woman may have at COn;Lmon law a qualified property in the shares of a corporation which have not 'been reduced to the possession of her husband she may therefore become a.shareholder. A person can become a shareholder in only one of two ways,-by origillal subscription for shares, or by a transfer which operateI'! as a novation, and substitutes the transferee in the place of, and him to the li,abilitiesof, the original subscriber, and releases the latter from all further liability on his contract. A married woman, under the common-law be a competent party to either form of the contractual relation thus created. "A fe:me covert cannot sustain the character of partner, because she is legally incapable of entering illto the contract of partnership; and althouJh married women are not unfrequently en'i.itled to shares in banking houses and other mercantile under positive cov!!nants, yet, where this happens, their husbands are entitled to such shares, and become partners in their stead. " Colly. Partn. § 14. Herincapacity to enter into the relation ora shareholder is manifest because a transfer of shares to her, like the transfer to an infant, does not the transferrer from the obligations of a shareholder, and because she cannot transfer them and substitute another ,by her act in the place of the original shareholder. Many cases are found in the books where transfers of shares to infants have been treated as. ineffectual to relieve the transferrer from liability as a shareholder, upon the ground that a transfer to one incapable of taking is void al'! to creditors and the company. Thus it bas been held that, because a transfer to' an infant is voidable by the company until ratified by the infant Up01l' attaining his majority, if the company is wound up before that time ,the transferrer is liable as a contributory, even when he acted in good faith., and in ignorance of the infancy of the transferee.. Mann',
REPORTER, vol. 38.
L. R. 3 Ch. 459; Weston'8 'Ca8e, L. R. 5 Oh. 614; Nickiifls v.Memj, L. R. 7 H. L. 530; Ruchizky v. De Haven, 97 Pa. St. 202; Roman v. Fry, 5 J. J. Marsh. 634. Yet,unlike a ,married woman, the infant can transfer his shares to anotherj and when he does this to one who is competent to become a sharehoJder his title passes, as against the corporation, and the original shareholder is absolved from further liability. Gooch's Gase, L. R. 8 Ch. 266·. The shares of the married woman must be transferred by her husband, if transferred at all; and if he has reduced them to possession by allowing them to stapd in his name he is liable to contribute as a shareholder to the payment of the debts of the corporation, whether they belong to her at the time of the mamage, or whether she sUbsequently acquired them. Burlinson's case, 3 De Gex & S. 18; Sadkr's Case, ld. 36; White's Case, ld. 157; Thomas v. Bank, 6 Ct. Seas. Cas. 607. Unless the proposition can be maintainpd that a person can occupy the status of a shareholder, who cannot make a contract of purchase or sale, whose acquisition of the shares does not absolve the prior holder from the obligations of a shareholder, who cannot receipt for the dividends, and who. cannot transfer, the shares to another, a married woman cannot at common law become a shareholder. In the caSt:! of Bundy v. Cocke, supra, the court was careful to put the married woman's liability on the ground that the enabling acts of the state whose laws controlled the question had removed her common-law disability. The modifications in Vermont of the common-law doctrine of the capacity of married women to acquire and enjoy separate property, evinced by the decisions of the highest court of the state, are quite radical, and would seem to remove any question of capacity to become a stockholder in that state. In' caldwell v. Renfrew, 33 Vt. 213, the supreme court held that, where both husband and wife have always treated money and notes belonging to her before or accruing to her after marriage as her separate estate, her right to hold ahd dispose of them will be recognized and protected by courts of law as well as in equity. In Child v. Pearl, 43 Vt. 224, the court, referring to several previous decisions, state their result as follows: "In these cases the legal title of the wife was recognized in a court of law as existing against the effect of coverture by reason of an understanding between the husband and wife after marriage, rather jmplied than expressed, that certain property which would otherwise belong to the husband should re. main and be the sale and separate property of the wife." In that case the court held, the. wife being divorced, that she could maintain trover for such property against one who had purchased it from the husband. In Pre:nw v. Hewitt, 55 Vt. 362, the court held that the wife acquired tbe legal title to property purchased by her with moneys of the husband, which were paid to her with his consent, he having treated the property so purchased as her own, and could maintain trover against an execution creditor of the husband who had seized it. Many other cases decided by the supreme court recognize the law to be that whatever property the wife acquires during marriage, either by gift from the husband, or from third persons, which she is allowed by his consent,
WITTERS V. SOWLES.
express or implied, to hold and treat as her own, is her sole and separate property, both at law and in equity. The, doctrine established by the authorities is expressed in Bent v. Bent, 44 Vt. 555, by the language of Ross, J., as fonows: "The law is well settled in this state that the husband may surrender to the wife the right to her personal property, which the law gives him by reason of the marriage; that he may do this by an antenuptial contract to that effect, by her to claim and control for a long time property given her during the coverture as her separate property, and refraining to exercise the right which the Ill, w gi ves him to take ftom lier such property and use it as his own, and by making gifts himself to the Wife. " In the present case the husband, as executor, instead of transferring the shares to himself individually, transferred them to his wife. By that act he manifested his intention not to reduce the choses in action to his own possession, and his consent that the defendant might hold and enjoy them as her own property. She thereby acquired the legal title to the stock by tlie law of Vermont, according to the decisions of the highest courts olthe state. Consequently she became a stockholder of the corporation in every sense of the term. In those states where the title of a married woman to her separate property is only recognized in equity, her capacity to take and hold.it comprehends the power to charge it for her debts, and to alienate it; and she can charge it for a debt, or the fulfillment of a contract, either in writing or by parol, manifesting her intention to do so. According to the weight of authority express words . are not necessary to create the charge. As is stated by Mr. Bishop (1 Bish. Mar. Wom. § 862:) "The law will presume honesty and fair dealing, and not scoundrelism and ·fraud. Therefore, if a 'married woman having a separate estate contracts a debt, not on her husband's account, but on her own, and is silent on the question whether or not she means it to be a charge on her separate estate, the law should presume the latter, rather than presume an intention to cheat the oth(,f party to the contract." This, in ,substance, is the doctrine declared by Lord Justice TURNER, in a very careful opinion, in Johnson v. GaUagher, 3 De Gex, F. &. J. 494. Equity recognizes a married woman's debt, and charges it upon her separate estate, not on the ground that the contract itself is an appointment or charge, but because, when contracted on the credit of the separate estate, or for its benefit, or that ofthe woman, it is just that the estate should answer it. Yale v. Dederer, 18 N. Y. 265. In Vermont, in order to charge her separate estate, it must be shown that the debt for the payment of which the promise was made went to the benefit of her separate estate, or for her benefit on the credit of such estate. Sargeant v. French, 54 Vt. 384; Southworth, v. KimbaU, 58 Vt. 337, 339, 2 Atl. Rep. 120. It must be concluded, therefore, that in Vermont it is competent for a married woman to become a stockholder in a corporation, and to contract to charge her separate property with the payment of any liability which is implied from entering into that relation. In England, such a liability was enforced in Luard's Case, 1 De Gex, F. & J. 583, and in Re Leeds Banking 01., L. R. 3 Eq. 781. There is no reason why v.38F.no.9-45
the defendant should n6t(OO held for the liability sought to be enforced in the ptesent case, the same as though the common-law disability to acquire aeparate estate, enjoy it, and oontract with respect to it, had been removed by the statute. There is so little merit in the objections raised to the admission of evidence upon the trial, and in the criticisms upon the other fulings of the court at the trial, that they do not require special consideration. The motion for a new trial should be denied. WHEELER, J. The principal questipn upon the motion is .whether the feme defendant is liable as a shareholder for an \lpon. national bank ,of which the plaintiff is receiver, standing spares in in her name. .By the common law of Vermont, married. on ",,:omen couJd become shareholders in a national, bank, as is abundantly They could as well enter into and ocshown in the foregoing cupy that relation as if empowered thereto by express statute. They could not there bind theql!Selves personally byan'ordinary contract.. Ingram v. Nedd, 44 Vt. 462. The statutes of the United States provide, national banking association h()wever, '(bat the shareholders shall be held jndividuallyresponsib}e for all contracts, debts, and engagements of such ,association to a certain prescribed. extent. Rev; St. U,. S. § 5151., Married women are included by this statute whenever, by law, they have become such shareholders. Bundyv. Cocke, 128 U. S. 185,9 Sup. .ct.' Rep. 242.. They do not themselves make the contracts, . incur the. deb:ts; nor enter' into the' epgagements to which' they are so held. The bank creates its own liability. The statute annexes the ob- ' . to it by its own force. Without the statute, ligations of the are holden.. Richmond v. Irons, rione of,them would be 121 U. S. '1.7,7 Sup. Ct. Rep.. 788. The disability of coverture :would not stand. in the way of tbis force. Tbe statute itself, with the common law of the state, would remove all of that. Such an obligation of 8. mar· ried woman, arising under the law of the United States, could be en· forced by an action at law in Vermont, as a contraotunder the laws()f Massaohusetts which would not have been valid in Vermont, was in Holme8 v. ReynoldB, 55.Vt. 39. Her separate property could be taken on the execution to satisfy the judgment. Fox .v. Hatch, 14 Vt. 340. Thus her liability appears to have been fixed, and the remedy adequate. I concur fully in the conclusion reached, that the motion should be overruled.
.. !Ii'A:LEER:V.OLAY COUNTY., :
(Olreuit OO'U'l't, No
D. May 28,1889.)
The court is not ,authorized to look beyond the judgment, and, asceJ:tain whether it was based upon a contract. ' ' " ,
SAME.:-..OOUNTIES-'AUTHORITY OF ATTORNEY. "
Sectron 2589 requires the admission to be signed by the party 'to b!3 charged therewith. Held, that an answer to an information for mandamus to compel a county to pay a jUdgment, signed only by the county's attorney, cannot be treated Il.B a writing signed by the county within the meaning of that section, as the attorney had no general authority to sign the answer for that purl'lOse.
The statutes of Iowa require foreign administrators to take out auxiliary letters in that state before suing in its courts. Held, that an averment in :an amended petition, in an action by foreign administrators in the circuit court for the district, of Iowa. that since the filing of theorigiual petition auxiliary letters have been granted, cannot be stricken out on motion as irrelevant. The question as to whether the action as then pending cO,nld be sustained il a matter in and, if not properly raised, would be waived.
At Law. On motion to strike out parts of amended petition. E. C. for plilintiffs. A. C. Parker and J. F. Duncmnbe, for defendant. SHffiAS, J. On the 21st of October, 1864, ajudgmentwa$ rendered in the United States circuit court for the district of Iowa in favor of Michael McAleer' against the county of Clay, Iowa, the cause of action being county warrants issued by the defendant. Thejudgment plaintiff having died in the state of New York, of which he was a resident, the present plaintiffs were in 1881 appointed administrators of his estate by the surrogate's court for the county of New York in that state. On the 13th of November, 1888, the present action was brought, torecover the balance alleged to be due and unpaid upon the judgment rendered October 21, 1864. A demurrer to the petition being filed, setting up that upon the fnce of the petition it appeared that the cause of action was barred by the state statute of limitations, the pluintiffs filed an amended and substituted petition setting up the fact that in May, 1881, th'e tiffs had filed an information for amandamU8 against the county and its officials, for the purpose of enforcing the levy and collection of a tax for the payment of suchjudgmentj the information and the answer thereto heing set out in full, the purpose thereof being to show that in said proceedings the defendant had admitted the existence of the jUdgment; and thereby defeated the running of the statute oflimitations. The defend-