Prince v. Lynch

Sawyer, C. J., delivered the opinion of the Court:

This cause was tried by the Court, without a jury, on the 24th of October, 1868; and on the 7th of November following, the Court filed its findings in writing, stating the facts found and conclusions of law separately, as required by the Practice Act, and concluding with a direction to enter judgment for the defendant in pursuance of the findings. The plaintiff having given the defendant notice on the 10th of November of the filing of said findings, on the 14th of November the defendant gave plaintiff notice that he excepted to the findings on the ground that they were not in accordance with the evidence introduced, and served therewith other and different findings, which he claimed to be in accordance with the evidence, and a notice that on the 21st of November he would move the Court to substitute the findings so served for those on file. On hearing the motion, the Court made the substitution, with some slight modification, to all of which the plaintiff excepted, and he now relies on this action of the Court as one of the grounds for reversing the judgment and order denying a new trial. The change, however, was in some minor particulars, and the conclusion of law and judgment are the same as they were upon the finding first filed.

We know of no provision of the Practice Act authorizing the Court to re-examine the evidence upon the motion of one of the parties, after it has once filed its findings and rendered judgment, and on such re-examination to reverse its former action and substitute different findings of fact. Under the Act of 1861, and Section 180 of the Practice Act, as amended *531 in 1866, the Court is authorized to supply omissions and defects. We have often stated the object and scope of these provisions. (Hidden v. Jordan, 28 Cal. 304—5; Miller v. Steen, 30 Cal. 408; Cowing v. Rogers, 34 Cal. 648; Rice v. Inskeep, Id. 224.) But these provisions do not authorize a re-examination of the evidence for the purpose of correcting former errors, and changing the finding of facts. The mode provided for reviewing its former action by the same Court, as to the sufficiency of the evidence to justify the finding, is by motion for new trial. On the motion for new trial, when the Judge is of opinion that the damages are excessive under the evidence, he may require a portion to be remitted, as a condition of denying a new trial, and in this way, if submitted to, correct the error. Perhaps there may be other errors, which could readily be corrected in this way. But if there is an error of fact affecting the judgment, which cannot be obviated in this mode, we know of but one regular way to correct it, and that is by motion for new trial. (Carpentier v. Gardiner, 29 Cal. 163. See, also, Calderwood v. Pyser, 31 Cal. 337.)

If the Judge should discover a clerical mistake in his findings, or that he had inadvertently committed an error, and should correct it at the same term, before the entry of judgment, while the proceeding is still in fieri, and in such a manner that the party against whom the correction is made shall not thereafter lose an opportunity to move for a new trial, or have the time within which to move in any way abridged, or lose any other right thereby, we, doubtless, should not grant a new trial on that ground. But the practice of entertaining a motion to review the action of the Court in the mode pursued in this instance, if adopted, would be liable to abuse. It is nowhere recognized by the Practice Act, and ought not to be encouraged. A much better practice would be to submit the finding for the suggestions of the attorneys of the respective party, before signing and filing. (Tewksbury v. Magraff, 33 Cal. 237, 255.)

A release under seal of one of several joint, or joint and several debtors or obligors, is a release as to all. (Armstrong v. Hayward, 6 Cal. 185-6; Rowley v. Stoddard, 7 John. 210; *532 Cheatham, v. Ward, 1 Bos. & Pul. 633; Nicholson v. Revill, 4 Ad. & El. 683; American Bank v. Doolittle, 14 Pick. 126; Tuckerman v. Newhall, 17 Mass. 583; Goodnow v. Smith, 18-Pick. 415.) A release extinguishes the obligation. (McCrea v. Purmort, 16 Wend. 474.)

Both defendant, Lynch, to' the extent of his personal liability as a stockholder of the corporation, and the corporation, the Gobernadora Silver Mining Company, were jointly and severally liable to McClelland and Atkinson for their respective debts due from the corporation to them. If not jointly liable in the strict sense of that term, as has been suggested, the legal incidents, as between the corporation and stockholders, to the extent of their personal liability, are, it seems to Us, precisely the same. The stockholder is not a surety in any sense of the term. He is Under the Constitution and the statute primarily liable in the same sense as the corporation is primarily liable. The same identical act which casts the liability on the corporation, also casts it on the stockholder. There are not separate contracts. The Stockholder does not stand, in the position of an endorser or guarantor. An endorser or guarantor is not liable on the same contract. His contract is a separate and distinct one of his own, to which the principal is no party. It is founded upon the principal contract, and finds its consideration only in that-contract; but it is a separate and distinct contract, nevertheless, and the terms are different. Each is liable on his own particular contract, but there is no joint contract or joint obligation. The maker and endorser or guarantor of a note' may be sued jointly, it is true, but this does not result from the fact that there is a single joint contract.

It is suggested that the reason the release of one joint obligor discharges the other, is, that if either pays the debt the other is liable to contribution, which would be defeated by the release if it were permitted to exonerate only the party to whom it is made. On this ground it is said to be held to extinguish the debt. How this incident attends, the' relation in question, and this principle is as applicable to it as to the case of two joint makers of a note.

Suppose the corporation is sued and a recovery had : the *533 stockholder released must; contribute his share, for the corporation can levy an assessment on all the stockholders, according to their respective shares, to raise funds to pay the judgment. The corporation must pay it, unless it, too, is discharged, and the other shareholders are entitled to have him contribute his share. Or, suppose .the corporation is in funds, and pays without an assessment, it takes from the stockholder released his pro rata share of a fund which would otherwise go to him in dividends, and thus he is made to contribute notwithstanding his release. So suppose McClelland had sued other stockholders of the corporation and recovered and collected from them the whole amount of his debt: the stockholder, or stockholders, so compelled to pay, would have a claim for contribution against Lynch for his share, and thus either the right to contribution of the shareholder who has been compelled to pay, or the release to Lynch, must be defeated. Suppose, again, that McClelland should discharge all the stockholders from personal liability, as has been suggested, and the corporation itself should still remain liable, each stockholder would still be liable to contribute his pro rata share, either in the form of an assessment levied by the corporation to pay the debt, or by a diminution of dividends, and the release would be defeated, or the corporation deprived of power to protect its property. One of two results must inevitably be reached. Either the debt is extinguished as to all by the release, or the release is wholly inoperative as to all. Thus the incidents and consequences are the same as between .joint debtors and joint obligors in any other form. We think, therefore, that the case is within the rule, and that a valid release, under seal, discharges the corporation and other stockholders, as well as the stockholder released. The releases to the defendant, Lynch, referred to in the findings, were in due form and under seal, and, we think, to the extent of the amount released, discharged the coporation as well as Lynch. But we think the Court erred in holding that the whole $416 66, due McClelland, was released. The language of the release is : “I hereby release and discharge said Francis Lynch from Ms proportion of said company’s said indebted *534 ness to me.” The release, by its express terms, then, is only “from his proportion of said company’s said indebtedness to me”—not from the tuhole, “and this shall be said Lynch’s receipt in full, to date, for his proportion and share of all indebtedness to me by said company, and a bar to any and all suits against said Lynch for the same;” that is to say, for “his proportion and share.” It is manifest that McClelland did not intend to release his whole demand, but only Lynch’s share. Although Lynch might be liable under the Act to pay McClelland the whole demand against the company, as held in Larrabee v. Baldwin (35 Cal. 155), if the amount of the aggregate debts of the corporation upon which he was personally responsible was sufficient; yet the whole would not be his share of the indebtedness, because he would be entitled to recover the excess paid by him over his share from the corporation, and to call upon his co-stockholders, who were also personally liable, to contribute. The fact that he might be liable personally, under the statute, in the first instance, to pay the whole to the creditor, does not increase or diminish, or in any way affect the amount of his share of the demand. His share of the 1416 66 is that sum which bears the same ratio, to 14,418 that the amount of the capital stock held by defendant bears to the whole capital stock, and that is the sum released.

We think, however, that the Court was right in regarding the amount thus released as a payment by the defendant of other liabilities of the corporation with which he is entitled to be credited under Section 16 of the Act under which the corporation was organized. The release was to defendant, and it operated as a satisfaction of so much of the indebtedness "of the corporation procured by defendant. It is quite manifest that McClelland intended that defendant, not the corporation, should have the benefit of the release. If he chose to make a gift of this sum to the defendant, he had a right to do so; and, upon the gift being made, the amount became the property of defendant, and not of the corporation or other creditors of the corporation, and operated as a satisfaction by defendant. Defendant stands precisely in the same position as he would if McClelland had made him a *535 present of so much money, and he had immediately paid the amount back to McClelland in satisfaction of an equal amount of the indebtedness of the company upon which defendant was 'personally liable. Not to allow the amount released to defendant as a payment by him of so much indebtedness of the company, would be to take from defendant that which McClelland had given him for his own personal benefit, and give it to the corporation, or to other creditors of the corporation. We think, therefore, that the amount released by McClelland and Atkinson should be credited to defendant as a payment, and deducted from that portion of the corporate debts for which he is personally liable, and that judgment should not be rendered against him for an amount exceeding the balance of the portion of the corporate debts for which he is personally liable remaining after such deduction.

We do not see that there is any necessity for a new trial. The only issue upon the pleadings, is, as to the amount of the indebtedness of the corporation upon which defendant is personally liable. Upon this point both findings substantially agree as to the facts upon which the question is to be determined. The rest is mere matter of calculation, when the legal principles arising upon the facts are settled. Upon the pleadings, and both findings, the amount of the debts of the corporation, for a portion of which defendant is liable, on the 26th of April, 1867, was $4,418; and the amount to be credited as a payment on the debts of the corporation is the share of the defendant of the debt of $416 66 to McClelland, and $207 to Atkinson, released. The proportions and interest are mere matters of calculation. *

The judgment is reversed and the District Court directed to compute the amount and enter judgment upon the pleadings and undisputed findings, in pursuance of the principles stated in this opinion.