Chandler v. Peketz, 583

• Decision Date: 30 March 1936
• Docket Number: No. 583,583
• Citation: 56 S.Ct. 602,80 L.Ed. 881,297 U.S. 609
• Parties: CHANDLER v. PEKETZ. *
• Court: U.S. Supreme Court

297 U.S. 609

56 S.Ct. 602

80 L.Ed. 881

CHANDLER

v PEKETZ.^*

No. 583.

Argued March 4, 1936.

Decided March 30, 1936.

Messrs. Thomas Vennum, of Minneapolis, Minn., and Harry S. Silverstein, of Denver, Colo., for petitioner.

Mr. A. D. Quaintance, of Denver, Colo., amicus curiae by special leave of Court.

PER CURIAM.

By order of the District Court of the United States for the District of Minnesota, petitioner was appointed receiver of the Diamond Motor Parts Company, a Minne- sota corporation. In the same suit, on the receiver's application, the court ordered an assessment of 100 per cent. upon the shares of stock of the corporation, in order to enforce the provisions of the Minnesota Constitution and laws relating to the double liability of stockholders. Minn.Const. art. 10, § 3; Mason's Minn.St.1927, §§ 8025, 8026; and §§ 8027, 8028, as amended by Laws Minn.1931, c. 205, §§ 1, 2. The order was affirmed by the Circuit Court of Appeals. Saetre v. Chandler, 57 F.(2d) 951.

The receiver brought the present suit in the state court of Colorado against respondent John Peketz, a resident of that state and alleged to be a stockholder in the corporation. Respondent demurred to the complaint upon the ground that the action of the District Court in Minnesota was not binding upon him. The demurrer was sustained, the suit was dismissed, and the judgment was affirmed by the Supreme Court of Colorado against the contention of the receiver that full faith and credit had been denied to the order of assessment. Compare Hancock National Bank v. Farnum, 176 U.S. 640, 645, 20 S.Ct. 506, 44 L.Ed. 619. The state court held that since respondent was not served with process in Minnesota, the court ordering the assessment acquired no jurisdiction over his person, and that the procedure provided by the laws of Minnesota in the interest of nonresident stockholders had not been followed. This Court granted certiorari. 296 U.S. 571, 56 S.Ct. 369, 80 L.Ed. 403.

The legislation of Minnesota with respect to the liability of stockholders has been reviewed and its constitutional validity has been sustained by this Court. Bernheimer v. Converse, 206 U.S. 516, 27 S.Ct. 755, 51 L.Ed. 1163; Converse v. Hamilton, 224 U.S. 243, 32 S.Ct. 415, 56 L.Ed. 749, Ann.Cas.1913D, 1292; Selig v. Hamilton, 234 U.S. 652, 660, 34 S.Ct. 926, 58 L.Ed. 1518, Ann.Cas.1917A, 104; Marin v. Augedahl, 247 U.S. 142, 38 S.Ct. 452, 62 L.Ed. 1038. We have had held that the Minnesota provisions constituted a reasonable regulation for enforcing the liability assumed by those who became stockholders in corporations organized under the laws of that state; that the order levying the assessment is made conclusive as to all matters relating to the amount and propriety thereof, and the necessity therefor; that it is thus conclusive, although the stockholder may not have been a party to the suit in which it was made or notified that an assessment was contemplated, as the order is not in the nature of a personal judgment against him and he must be deemed, by virtue of his relation to the corporation and the obligation assumed with respect to its debts, to be represented by it in the proceeding; and, further, that one against whom the order of assessment is sought to be enforced is not precluded from showing that he is not a stockholder, or is not the holder of as many shares as is alleged, or has a claim against the corporation which in law or in equity he is entitled to set off against the assessment, or has any other defense personal to himself.

These defenses respondent was entitled to assert in the suit bro ght against him by the receiver in Colorado. But the present question relates not to any such defense, as none was asserted, but to the binding quality of the order of assessment. The particulars of procedure in the Minnesota suit, which the court in Colorado found faulty, were these. The petition for assessment...