Finney v. Guy

• Decision Date: 20 March 1900
• Citation: 106 Wis. 256,82 N.W. 595
• Parties: FINNEY ET AL. v. GUY ET AL.
• Court: Wisconsin Supreme Court

106 Wis. 256

82 N.W. 595

FINNEY ET AL.

v.GUY ET AL.

Supreme Court of Wisconsin.

March 20, 1900.

Appeal from circuit court, Pierce county; A. J. Vinje, Judge.

Action by A. C. Finney and others against Mary A. Guy and another. From an order overruling a demurrer to the petition, defendants appeal. Reversed.

Dodge, J., dissenting.

Action to enforce the statutory liability of a stockholder of a bank to creditors under the laws of Minnesota.

The complaint stated, in effect, as follows: The Farmers' & Merchants' State Bank, a banking corporation organized under the laws of and located in the state of Minnesota and there engaged in business from June 6, 1888, till June 20, 1893, on the last-named date, pursuant to the laws of such state, made an assignment for the benefit of its creditors, which assignment was fully perfected and such proceedings were thereafter had in administering it that the assets of the bank were converted into money and the net proceeds thereof distributed to the creditors, without paying them in full, of about $80,000. The capital stock of the bank was $75,000. Each individual stockholder was named in the complaint, with the amount of stock owned by him. Defendant, Mary A. Guy, being one of such stockholders and said to be the owner of 19 shares of the par value of $100 each. She resides in Pierce county, Wis. It was further alleged in the complaint, in effect, that by the laws of the state of Minnesota every person, on becoming a stockholder of a bank organized under its laws, in proportion to his interest, succeeds to the rights and becomes subject to the liabilities of his predecessor, and that the individual liabilities of stockholders to its creditors extends to double the amount of the stock and continues, as to any stockholder who may sell or transfer his stock, till the expiration of one year after such sale or transfer; that a creditor of a bank, desiring to enforce the individual liability of its stockholders for the payment of his claim, may file his complaint, in an action instituted for that purpose, in any court in Minnesota having jurisdiction of the subject, and that thereupon such court is required to proceed “as in other cases and when necessary to cause an account to be taken of the property and debts due to and from the corporation, and appoint one or more receivers”; that there is a provision of statute, however, that in certain circumstances therein named the court may proceed to enforce the stockholders' liability without appointing a receiver and by its judgment as in other cases. The complaint further stated, in effect, that the statutes of Minnesota provide that in a creditors' action to enforce the statutory liabilities of bank stockholders the court may require all the creditors of the bank to become parties to the action and exhibit their claims within a reasonable time fixed by the court, not less than six months from the date of the first publication of the order to that effect, or be barred from all the benefits of such liabilities. The complaint further stated, in effect, that according to the judicial system established in Minnesota by its highest judicial tribunal (citing the various cases that have been decided by such tribunal), the liability of stockholders of a bank organized under the laws of that state, to its creditors, must be enforced by first instituting an action, at the domicile of the corporation, against the corporation and all of its stockholders within the jurisdiction of the court, on behalf of all creditors of such corporation who shall participate in the action; that the proper method of proceeding in the action is to cause a judgment to be rendered in favor of each creditor for the amount owing him from the bank, and a judgment against each stockholder over whom the court shall have been able to obtain jurisdiction for the maximum amount of his liability, and to enforce the judgment as to such liabilities pro rata, as far as practicable, in order to realize a sufficient amount of money to pay all indebtedness of the bank established in the action to the extent of the full amount of such liabilities, and to cause a receiver to be appointed in the action to collect the judgments and distribute the proceeds and to enforce the liabilities of other stockholders residing in jurisdictions outside of that in which the judgment is rendered. Further, it was stated to be the law of Minnesota, as held by its highest judicial tribunal, and as indicated in the adjudications mentioned, that the statutory liability of stockholders is several and that a judgment against a part of them does not release others against whom no judgment is or can be rendered in the action; that if any of the stockholders are omitted from the first action because the court cannot acquire jurisdiction of them for any cause, an action ancillary to such first action, in any jurisdiction in which such stockholders may be found, may be brought; that an action to enforce such a liability is upon contract; that the judgment in the original action is binding on all stockholders, whether parties thereto or not, as to the amount due to creditors of the bank, and on all creditors entitled to the benefits of the stockholders' liability to creditors, and as to the respective rights of the particular creditors; that a stockholder of a bank organized under the laws of Minnesota, wherever he may reside, is bound by its laws, and his liability in accordance therewith may be enforced wherever he may be found and without any judgment there obtained against the corporation, if it be a place where no such judgment is possible. The complaint further alleged, in effect, that in January, 1894, an action was commenced, in a district court for the state of Minnesota having jurisdiction of the subject, against the banking corporation named and its stockholders, by a creditor of such bank, suing in his own behalf and that of all others who might come in and participate in the action, to enforce the liability of such stockholders to such creditors, and that such proceedings were thereafter had in such action that the amount of the indebtedness of the bank was adjudicated according to the laws and judicial system of Minnesota, and that the total amount collectible from all the stockholders of the bank, aside from the defendant, has been judicially determined to be, and in fact is, less than sufficient to pay such indebtedness by over $80,000; that defendant, being a nonresident stockholder, residing in Pierce county, Wis., could not be reached in such action, and that she is liable to the creditors entitled to participate in the benefits of the stockholders' liability to the extent of $3,800, with interest thereon from April 28, 1897. There were further allegations in the complaint showing that the receiver appointed in the creditors' action at the domicile of the corporation, and all the creditors whose claims were established in such action and entitled to participate in the benefits of the stockholders' liability, are joined as plaintiffs in this action, that they came to this state after having exhausted all remedies at the domicile of the corporation for the satisfaction of their claims, that they instituted this action against the defendant stockholder in this state because she could not be reached in the original action, and that this action is ancillary to the action brought at the home of the corporation. The prayer for judgment is: (1) That defendant be required to pay $3,800 as her liability to plaintiffs, with interest from April 28, 1897, at the rate of seven per cent. per annum, with costs and disbursements, and that plaintiffs have execution therefor. (2) That plaintiff, A. C. Finney, be appointed receiver to collect the judgment and distribute the proceeds among the plaintiffs according to their respective rights in the fund. (3) That the court award such further judgment or order as may be necessary to enforce such liability of the defendant, and grant such further relief as the court can grant in the premises.

To that complaint the defendant interposed a demurrer, upon the ground, among others, that it fails to state facts sufficient to constitute a cause of action. The demurrer was overruled, and from the order accordingly entered this appeal is taken.

John W. Bashford and R. M. Bashford, for appellants.

F. M. White and Fred W. Reed, for respondents.

MARSHALL, J. (after stating the facts).

As we view this case, the disposition of the question of whether the complaint states facts sufficient to constitute a cause of action against the defendant is decisive of the appeal. Some of the primary questions, upon which the ultimate question turns, are not free from difficulty.

The nature of the statutory liability of stockholders of a bank to its creditors under the laws of Minnesota is precisely the same as under the laws of this state, according to the adjudications of the highest judicial tribunal in each. Section 2501 of the Minnesota statutes says that each stockholder in a bank shall be individually liable, in an amount equal to double the amount of stock held by him, for all the debts of such bank. Section 47 of the banking act of this state provides that stockholders in a bank organized under the laws of this state, shall be individually responsible, to the amount of their respective shares of stock, for all its debts and liabilities of every kind. In Coleman v. White, 14 Wis. 700, it was said, in substance, that such liability is primary and absolute, attaching at the instant the liability of the bank accrues, but enforceable on a basis, akin to that of a partnership liability with the limitation fixed by statute, of the par value of the stock held by each stockholder. To the same effect are Gianella v. Bigelow, 96 Wis. 186, 71 N. W. 111;Booth v. Dear, 96 Wis. 516, 71 N. W. 816;Gager v. Marsden, 101 Wis. 598, 77 N. W. 922;Foster v. Posson (Wis.) 81 N. W. 124,--in...