Clinton Mining & Mineral Co. v. Cochran

• Decision Date: 17 January 1918
• Docket Number: 2300.
• Parties: CLINTON MINING & MINERAL CO. v. COCHRAN et al.
• Court: U.S. Court of Appeals — Third Circuit

247 F. 449

CLINTON MINING & MINERAL CO. v. COCHRAN et al.

No. 2300.

United States Court of Appeals, Third Circuit.

January 17, 1918

Arthur O. Fording, of Pittsburgh, Pa., and Norman T. Mason, of Deadwood, S.D., for appellant.

E. C Higbee, of Uniontown, Pa., and J. M. Hodgson, of Deadwood S.D., for appellees.

Before BUFFINGTON, McPHERSON, and WOOLLEY, Circuit Judges.

McPHERSON Circuit Judge.

This bill in equity was filed in the Western District of Pennsylvania by the Clinton Mining & Mineral Company, an Iowa corporation, which is a judgment creditor of the Imperial Gold Mining & Mineral Company, a corporation of South Dakota. The bill named as defendants, the Imperial Company, A. J Cochran, and ten other persons, citizens and residents of the Western district, and Charles S. Graham, a citizen of the Eastern district of Pennsylvania. Neither Graham nor the Imperial Company was served, and only six of the other defendants either were served or appeared to the action. These were made parties in their character as holders of stock in the Imperial Company, and their answers disclosed the names and addresses of 23 other holders, all residing within the Western district, who had not been named as defendants. The plaintiff's evidence having been heard and the District Court having dismissed the bill, we have to do on this appeal with the correctness of the decree, without regard to the reasons that may have led the court below to enter it. Boise Water Co. v. Boise City, 213 U.S. 287, 29 Sup.Ct. 426, 53 L.Ed. 796; Security Ass'n v. Buchanan (C.C.A. 6) 66 F. 801, 14 C.C.A. 97. We turn to the bill in order to ascertain the grounds that underlie this suit in equity before a federal court.

Two distinct grounds of relief are set up: (1) A South Dakota statute, which is said to make each of the six defendants liable to the plaintiff for its claim; and (2) the general liability of stockholders (if they still owe the corporation anything on their stock) to contribute ratably toward paying a plaintiff and all others who join in a creditors' bill. The Clinton Company asks for an accounting of debts due by and to the Imperial Company, for an assessment on the stock as far as may be necessary, and for the appointment of a receiver. We need not spend time on the second ground. Assuming, but without deciding, that these two causes of action may be joined in the same bill, we think that lack of essential parties prevents the District Court from determining the defendants' general liability in this proceeding. The bill does not aver, and the evidence does not prove, that the Imperial Company has been dissolved; apparently the corporation has not been doing business since March, 1914, but it still exists, has a corporate organization, and is capable of being sued. To such a proceeding as a creditors' bill, the corporation itself would appear to be an indispensable party. Swan Co. v. Frank, 148 U.S. 603, 13 Sup.Ct. 691, 37 L.Ed. 577; Elkhart Bank v. Guaranty Co. (C.C.A. 3) 87 F. 252, 30 C.C.A. 632. It is not necessary to pass now upon the questions whether the twenty-three other stockholders in the Western district should be made parties defendant; or, if so, by whom that step should be taken.

It remains to consider the South Dakota statute (the Civil Code), which (as far as we know) has not yet been passed upon by the Supreme Court of that state:

'Section 441. Each stockholder of a corporation is individually and personally liable for the debts of the corporation to the extent of the amount that is unpaid upon the stock held by him. Any creditor of the corporation may institute joint or several actions against any of its stockholders that have not fully paid the capital stock held by him, and in such action the court must ascertain the amount that is unpaid upon the stock held by each stockholder and for which he is liable, and several judgments must be rendered against each in conformity therewith. The liability of each stockholder is determined by the amount unpaid upon the stock or shares owned by him at the time such action is commenced, and such

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