Limited liability company

“ They present the proposition that the court erred in finding that the notes of the limited liability company of October 20, 1884, were accepted as payment and satisfaction of the original liability under the contract. Here we face the proposition that we are not triers of fact ”

“ Whether a project be to make a railway from one small place to another, or to provide gas to supply any town, great or small, all those companies, as a matter of course, come to the legislature and ask for, and obtain, limited liability. They are commercial companies, and one cannot trace the reason why they should have limited liability a bit more than any other company—but it is so.'
Here we have at least a precedent, which is of importance in a country like this, so truly conservative in the sense of adhering to anything that is fixed law or matter of traditional business routine. ”

“ The liability in such companies is limited altogether [Pg 191] to the assets in the company's hands. There are no general partners. The liability of all stockholders is limited. The English and Canadian law requires that the word Limited be added to the name, so that the public may not be deceived into believing that the company is a partnership. ”

“ The shareholders of a Company can limit their liability either to the amount not paid up on their shares—if there be any so unpaid—or to such sum as each may agree to contribute to the assets of the Company, if it should require to be wound up. In other words, the liability may be limited by shares or limited by guarantee. Most Companies are limited by shares. ”

“ Where a member with limited liability has acted in a manner to induce others to misconceive him of a member with unlimited liability, he shall assume the same liability as a member with unlimited liability against any person who has effected a transaction with the company due to such misconception.
(2) Paragraph (1) shall apply mutatis mutandis where a member with limited liability has acted in a manner to mislead others as to the extent of his liability. ”

“ It has been urged on the part of the defence, that, though the contract does not attempt to exempt, and could not have exempted, the express company from liability for loss occasioned by the neglect of itself or its servants, yet, when it is sought to charge the company with neglect, it must be such as it is responsible for upon the general principles of law; and that, upon those principles, no one is responsible for damage occasioned by neglect, unless it be the neglect of himself, his servants, or agents. ”

“ Business men and investors wanted greater facilities for launching joint-stock enterprises, and for the risking of a certain sum of money, and no more, in such concerns, thereby setting a limit to their liability. According to the old law of partnership, each and every member of a corporation or Company was liable to the utmost extent of his means for the liabilities that might have been contracted on behalf of the undertaking. ”

“ They indicate, however, a disposition to ingraft a limitation upon the general doctrine as to the master's exemption from liability to his servants for the negligence of their fellows, when a corporation is the principal, and acts through superintending agents. Thus, in the first case, the court said: 'A corporation cannot act personally. It requires some person to superintend structures, to purchase and control the running of cars, to employ and discharge men, and provide all needful appliances. ”

“ By no device can a body corporate avoid liability for fraud, for willful wrong, or for the gross negligence which, if it does not intend to occasion injury, is reckless of consequences, and transcends the bounds of right with full knowledge that mischief may ensue. Nor, as I am inclined to think, will any stipulation against liability be valid which has the pecuniary interest of the corporation as its sole object, and takes a safeguard from the public without giving anything in return. ”

“ Their employees may, nevertheless, elect to claim compensation, and if it is awarded, an action to recover the amount may be maintained against the employer. Such an action may also be maintained against a self-insuring employer who fails to pay an award.
Should an employer who is subject to the Act fail to pay premiums, or otherwise omit to comply, means are provided to fix civil liability upon him, even to the extent of the appointment of a receiver of his business. ”

“ We think the liability imposed by section 10 is a liability arising upon contract. The stockholders of the company are by that section made, severally and individually liable within certain limits to the creditors of the company for its debts and contracts. Every one who becomes a member of the company by subscribing to its stock assumes this liability, which continues until the capital stock is all paid up and a certificate of that fact is made, published, and recorded. ”

“ The incident of individual liability attached to and formed a part of the contract as long as it lasted, but its repeal did not deprive the plaintiff of any of the rights secured to him when the contract was made. They still exist, and the remedy to enforce them remains the same. If the corporation itself cannot pay, the members who composed it at the time of the repeal are unaffected by it, and there is nothing in the way of subjecting them to the double liability provision. ”

“ Notwithstanding the great rigor with which courts of law have always enforced the obligations assumed by common carriers, and notwithstanding the reluctance with which modifications of that responsibility, imposed upon them by public policy, have been allowed, it is undoubtedly true that special contracts with their employers limiting their liability are recognized as valid, if in the judgment of the courts they are just and reasonable-if they are not in conflict with sound legal policy. ”

“ By the settled law of this court, common carriers of goods or possengers cannot, by any contract with their customers, wholly exempt themselves from liability for damages caused by the negligence of themselves or their servants. ”

“ This information, in our view, supports at most an inference that Contrux may have made an error in business judgment in placing its excess coverage with Integrity. It furnishes no genuine support for an inference of improper purpose.
The doctrine of limited liability is intended precisely to protect a parent corporation whose subsidiary goes broke. That is the whole purpose of the doctrine, and those who have the right to decide such questions, that is, legislatures, believe that the doctrine, on the whole, is socially reasonable and useful. ”

“ There are few persons who would consent to take stock in such enterprises, if subject to the double liability provision. Although willing to risk the loss of their stock, they would be unwilling to involve their estates beyond it. Especially would this be so if they were invited to take part in the completion of works greatly in debt, and which had languished for years. ”

“ The one thing which that amendment was intended to prevent was the use of this msurance or relief for which the employee has himself paid in whole or in part, as a bar to the right which the statute has given him to recover damages from the corporation.' It is urged, however, that the amendatory act prohibits the making of a contract for settlement 'by acts done after the liability had become fixed.' The acceptance of benefits is, of course, an act done after the injury, but the legal consequences sought to be attached to that act are derived from the provision in the contract of membership. ”

“ The court, in enforcing the liability, said: 'While it is true that shareholders of the stock of a corporation generally have a right to transfer their shares, and thus disconnect themselves from the corporation and from any responsibility on account of it, it is equally true that there are some limits to this right. A transfer for the mere purpose of avoiding his liability to the company or its creditors is fraudulent and void, and he remains still liable. ”

“ As the stockholder of a corporation is not liable, beyond the amount of his unpaid subscription, for its debts, unless such liability is imposed by statute, and as the acts of congress in question are silent upon that subject, every subscriber to the stock of the Union Pacific Railroad Company must be deemed to have become such upon the condition, implied by law, that he should not be personally liable for the debts of the corporation. ”

“ Whether a corporation created for the purpose of dealing in lands, and to which the powers to purchase, to subdivide, and to sell, and to make any contract essential to the transaction of its business, are expressly granted, possesses, as fairly incidental, the power to incur liability in respect of securing better facilities for transit to and from the lots or lands which it is its business to acquire and dispose of? ”

“ The Limited Liability Act of 1862 gave great facilities for conducting business by companies of more than seven members, whose liability in case of a collapse does not exceed the amount promised on formation—a scheme inaugurated for the benefit of the working classes, but which has been misapplied in many instances. ”

“ By the same reasoning it, with the other members of the class, might release the company from liability already incurred, or even discharge it altogether from the duty of carrying out the agreement in the future. If this did not entirely substitute the taxpayer for the municipality, it would at least subject the promisor to liability to many, where it only had contracted with one. Dow v. Clark, 7 Gray, 201.
In many jurisdictions a third person may now sue for the breach of a contract made for his benefit. ”

“ In all the diversity of opinion in the courts of the different states, upon the question how far a liability, imposed upon stockholders in a corporation by the law of the state which creates it, can be pursued in a court held beyond the limits of that state, no case has been found, in which such a liability has been enforced by any court, without a compliance with the conditions applicable to it under the legislative acts and judicial decisions of the state which creates the corporation and imposes the liability. ”

“ Thus employers were given every reason to believe they could buy their insurance and make other business arrangements on the basis of the limited Compensation Act liability.' (Footnote omitted.)
Congress, then, deliberately gave employers certain 'counterbalancing advantages' in exchange for imposing on them absolute liability. If these advantages are to be discarded as purely 'superficial,' then the true purpose of the statute was apparently to give an additional remedy to employees while not requiring them to relinquish any existing remedies as part of the bargain. ”

“ Justice Field, said: 'The plain answer to this contention is that the liability imposed by the law of 1874 arises only for injuries subsequently committed; it has no application to past injuries, and it cannot be successfully contended that the state may not prescribe the liabilities under which corporations created by its laws shall conduct their business in the future, where no limitation is placed upon its power in this respect by their charters. ”

“ If, when that was done, the agents of the company repudiated all liability, and informed the parties that the policy had lapsed, then no proof of loss was required by them, and the failure to file it cannot alter the case.' We think that there was no error in this instruction. The weight of authority is in favor of the rule that a distinct denial of liability and refusal to pay on the ground that there is no contract, or that there is no liability, is a waiver of the condition requiring proof of the loss or death. ”

“ True, the legislature cannot exempt the city and county from liability, but it can authorize the corporation to refuse to contract with persons who do not waive the proportionate liability established for their protection. How the individual liability of a stockholder of a corporation can be a matter of public concern any more than the liability of a copartner, we are unable to perceive, and we are not aware that it has ever been claimed that the latter liability had its foundation in public policy. ”

“ Every issue of ultra vires or proof of officers' authority in a contract action involves inquiry into internal affairs, but that inquiry is not one which must be relegated to home jurisdiction. The contracts of a corporation may make its liabilities turn on such events as realization of net earnings which submit its internal affairs to scrutiny in order to determine liability and which any court with jurisdiction may adjudicate. ”

“ One of the matters that should be carefully guarded in forming a limited liability partnership is to contribute the full amount of capital advertised. If any deception is practiced, or mistake made, whereby a smaller amount is contributed, should the partnership not succeed, the special partners become liable as general partners for the full amount. ”

“ The reason is, because the extent to which they can pay is known, and the people who deal with the company calculate accordingly. Unlimited liability existing in some indefinite parties, while it too often ruins these parties themselves, is a bait for that indefinite credit which produces their ruin, and sometimes leaves the careless creditor unpaid, even when he has taken the last farthing from the unfortunate partner. ”

“ It is a general rule that a holder of claims against an insolvent corporation cannot set them off against his liability for an assessment on his stock in the corporation in a suit by an assignee in bankruptcy. ”