Downer v. Union Land Co.

• Decision Date: 21 February 1908
• Docket Number: Nos. 15,410 - (171).,s. 15,410 - (171).
• Citation: 103 Minn. 392
• Parties: T. B. DOWNER v. UNION LAND COMPANY.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

103 Minn. 392

T. B. DOWNER v. UNION LAND COMPANY.¹

Nos. 15,410 - (171).

Supreme Court of Minnesota.

February 21, 1908.

Action in the district court for Ramsey county against the Union Land Company of St. Paul by a judgment creditor of that corporation, on his own behalf and on behalf of all its other creditors who might exhibit their claims and become parties to the action. Inter alia the complaint alleged that defendant was insolvent, and on information and belief that it was indebted in large amounts to other persons than plaintiff, and prayed for the sequestration of its stock and property, and the appointment of a receiver with the usual powers.

The answer admitted the recovery of plaintiff's judgment and the return of executions unsatisfied, alleged that said action was

brought upon its certain negotiable bonds which were a part of an issue of $150,000 delivered by defendant to trustees for the purpose of providing means for the payment of its debts "particularly to its own shareholders," and for other purposes, to which trustees defendant conveyed in fee a large amount of real estate upon trust to sell the same and apply the proceeds to the payment of the bonds; that in each bond reference was made to the trust deed and each holder, including plaintiff, acquired the same with full notice of its contents; that at the maturity of the bonds the property conveyed to the trustees and still unsold was sold at public auction and purchased by a committee of the bondholders on behalf of all such bondholders as should join in the purchase; that plaintiff was requested to join but refused to do so; that upon such purchase nearly, if not quite, all of the then outstanding bonds other than those held by plaintiff were cancelled; that the property so conveyed to trustees having been sold by them and purchased by or for the great body of bondholders, defendant had no property wherewith to pay plaintiff's judgment or such of said bonds, if any, as were not cancelled; that each purchaser, including plaintiff, in consideration of the high rate of interest borne by said bonds agreed to a condition of the same contained in the body of the bond, viz: "It is a condition of the issue of this bond and the execution of said trust deed that this bond is the obligation of said company only and that the stockholders of said company shall not, neither shall any of them, be in anywise liable for the payment thereof; nor shall the holder of this bond be entitled to any remedy to enforce payment thereof against any stockholder. And the holder of this bond accepts this condition and agrees to the terms thereof."

In 1903 a demurrer to the answer was overruled and plaintiff's motion for the appointment of a receiver was denied, Kelly, J., on the terms stated in the opinion. In July, 1906, a motion to serve a supplemental complaint bringing in the stockholders as defendants was made and denied, and an order, Hallam, J., was signed requiring creditors of the corporation to exhibit their claims. Pursuant to that order the holders of bonds aggregating $4,000 filed their complaints in intervention, to which defendant made answer, and the court, Kelly, J., disallowed these claims. From that order the claimants, M. L. Curry, J. Murray Forbes and F. L. Higginson, appealed. Affirmed.

James E. Trask and Morphy, Ewing & Bradford, for appellants.

Lightner & Young, for respondent.

ELLIOTT, J.

On May 5, 1903, the plaintiff, Downer, a judgment creditor of the Union Land Company, commenced this action under section 9, c. 76, G. S. 1878, on behalf of himself and all other creditors of the company, to have the assets of the company sequestrated, sold, and the proceeds thereof applied to the payment of the company's debts. To the answer which was interposed the plaintiff demurred, and at the same time moved for the appointment of a...