Baird v. Rask

• Decision Date: 18 February 1931
• Docket Number: No. 5831.,5831.
• Parties: BAIRD v. RASK et al.
• Court: North Dakota Supreme Court

60 N.D. 432

234 N.W. 651

BAIRD

v.RASK et al.

No. 5831.

Supreme Court of North Dakota.

Jan. 21, 1931.

Rehearing Denied Feb. 18, 1931.

Syllabus by the Court.

Where a legislative act contains alternative provisions, to be put into effect by public officers, outlining procedure for the accomplishment of a single end, a contention that one of the alternative provisions is unconstitutional must be denied, where no steps have been taken thereunder and the party making the contention has not been affected thereby.

Syllabus by the Court.

A corporation may represent its stockholders within certain limitations, and, in providing for adjudication of the insolvency of corporations and for the administration of their affairs, due process of law is not denied the stockholders by a provision which makes the corporation the sole party defendant to the proceedings.

Syllabus by the Court.

It is incumbent upon one who assails the constitutional validity of legislation to point out the specific provision of the Constitution which is violated.

Syllabus by the Court.

Chapter 99 of the Session Laws of 1927, which outlines the procedure for determining the insolvency of state banking corporations and for administering their affairs, is a general law and not a special law within section 70 of the Constitution which forbids the enactment of a special law where a general law can be made applicable.

Syllabus by the Court.

Section 70 of the State Constitution does not forbid reasonable classification for purposes of legislative regulation.

Syllabus by the Court.

Section 70 of the State Constitution does not forbid all special legislation, and it is primarily a legislative function to determine when a given subject-matter is capable of treatment by a general law rather than a special law.

Syllabus by the Court.

In an action to recover upon an assessment of the statutory liability of stockholders in a banking corporation (section 5168, Compiled Laws of 1913), the evidence is examined and held sufficient to support the findings of the trial court concerning the deficiency of the assets to meet the liabilities.

Appeal from District Court, Burke County; John C. Lowe, Judge.

Action by L. R. Baird, as receiver of the First State Bank of Columbus, against H. O. Rask, H. P. Altner, Gustav Flugge, Anton Wilson, and others. Judgment for plaintiff, and defendants Altner, Flugge, and Wilson appeal.

Affirmed.

Olaf Braatelien, of Crosby, for appellants.

B. L. Wilson, of Bowbells, for respondent.

BIRDZELL, J.

This is an action by the plaintiff, as receiver of the First State Bank of Columbus, N. D., against various defendants as stockholders for the purpose of recovering upon an assessment of the statutory liability. Certain of the defendants answered alleging that the act under which the plaintiff was appointed receiver and which purports to authorize certain proceedings by him is unconstitutional; also denying that it ever became necessary to resort to the stockholders' liability under section 5168 of the Compiled Laws of 1913, and that no power has been conferred upon the plaintiff to institute proceedings for the purpose of recovery on account of such liability; also that there has been no proper and lawful determination of the assets and liabilities of the bank or of its insolvency and no lawful administration whatsoever of the affairs of the bank. Insolvency of the bank is also denied. A trial was had before the district court without a jury, at the conclusion of which judgment was entered against the defendants. Three of the defendants appeal from the judgment and raise in this court the questions submitted to the district court with reference to the constitutionality of the statute under which the receiver was appointed and acted.

There are eleven specifications of error, eight of which pertain to the constitutionality of chapter 99 of the Session Laws of 1927 and the remainder to the sufficiency of the evidence to support the findings and judgment. The first specification is that the act is so interdependent that the features which may not be unconstitutional cannot be separated from those which are unconstitutional, so that no workable law can remain. Therefore this specification need be considered only in case portions of the act are found to be unconstitutional.

[1] Specification No. 2 is that the act is unconstitutional, in that it purports to confer original jurisdiction upon the Supreme Court which is not given it under the State Constitution. It is a sufficient answer to this specification to say that the legislative request, contained in section 1 of chapter 99, Session Laws of 1927, for this court to exercise its original jurisdiction in insolvency proceedings to liquidate and wind up the affairs of insolvent banks, has not been exercised, and that the act, in section 18, specifically provides for an alternative procedure to be resorted to in case this court should not exercise original jurisdiction. Since it is the alternative procedure that has been had, the appellants are in no position to complain on account of the alleged attempt to extend the original jurisdiction. Clearly, a holding, if such were proper or required in the disposition of the present appeal, that the original jurisdiction features of the law were unconstitutional, would not render the remainder of the act unconstitutional, in view of the fact that the alternative procedure was provided for and of the further declaration in section 24 that the unconstitutionality of any section or provision should not affect the validity of the act as a whole, or any part thereof other than the part held to be unconstitutional.

[2] Specification No. 3 is that the act is unconstitutional in that the procedure for declaring insolvency and winding up the affairs of insolvent banks provides for no notice and affords no protection to stockholders, who are parties in interest, and that it violates a fundamental rule of judicial procedure that no person may be bound by a decision affecting his right without having had his day in court. The law requires the proceedings to be instituted by the Attorney General in the name of the state, for itself and on behalf of all the creditors, as plaintiff, and against the insolvent banks as defendants. Section 3. Summons is provided for as in actions in the district court in which the bank is required to be named as defendant, service to be made upon any officer of the bank and in the same manner as a service of summons in ordinary civil actions.

The contention that the stockholders must be made parties to the insolvency proceedings is well answered by the United States Supreme Court in the case of Bernheimer v. Converse, 206 U. S. 516, 27 S. Ct. 755, 51 L. Ed. 1163. This was an action by the receiver of a Minnesota corporation to enforce stockholders' liability. The same contention that is here made was answered at page 532 of 206 U. S., 27 S. Ct. 755, 760, as follows: “It is true that the stockholder is not necessarily served with process in the action wherein the assessment is made under the act of 1899, but no personal judgment is rendered against him in that proceeding, and it has reference to a corporation of which he is a member by virtue of his holding stock therein, and the proceeding has for its purpose the liquidation of the affairs of the corporation, the collection and application of its assets and other liabilities which may be administered for the benefit of creditors. In such case it has been frequently held that the representation which a stockholder has by virtue of his membership in the corporation is all that he is entitled to. It was so held in a well-considered case in Massachusetts (Howarth v. Lombard, 175 Mass. 570, 56 N. E. 888, 49 L. R. A. 301). And it has been held in cases in this court that when an assessment is necessary to be made upon unpaid stock subscriptions for the benefit of creditors, the court may make the assessment without the presence or personal service of stockholders. Hawkins v. Glenn, 131 U. S. 319, 9 S. Ct. 739, 33 L. Ed. 184;Great Western Tel. Co. v. Purdy, 162 U. S. 329, 336, 16 S. Ct. 810, 40 L. Ed. 986, 990.”

See, also, 1 Freeman on Judgments (5th Ed.) § 435. The author states: “A corporation represents its stockholders within certainlimits, as where the necessity for an amount of assessment is judicially determined in insolvency proceedings against the corporation to which the stockholder is not otherwise a party.” It will, of course, be borne in mind that the instant case is a separate suit against the defendants as stockholders and that they are served with process and permitted to defend.

Specification No. 4 is that the act is unconstitutional in failing to provide in all things a course of legal proceedings in conformity with due process of law for the enjoyment, protection, and enforcement of private rights. This is sufficiently answered in what is said above in regard to specification No. 3.

Specification No. 5 is addressed to that part of the act which...