Frost v. St. Paul Banking & Investment Co.
| Decision Date | 24 May 1894 |
| Docket Number | 8671 |
| Citation | 59 N.W. 308,57 Minn. 325 |
| Parties | Newton R. Frost v. St. Paul Banking & Investment Co. et al |
| Court | Minnesota Supreme Court |
Argued May 11, 1894
Appeal by defendants, Daniel W. Lawler and Arthur B. Ancker, from a judgment of the District Court of Ramsey County, Charles D Kerr, J., entered April 21, 1893, against them and others.
The defendant, the St. Paul Banking and Investment Company, is a corporation organized September 1, 1887, under 1878 G. S. ch 34, Title 2, to buy, improve and sell lands and to deal in stocks and securities and loan money. It rented of plaintiff Newton R. Frost offices at Nos. 28 and 30 East Fourth street St. Paul, for two years at $ 133.33 per month payable monthly in advance. Wallace J. Hope, W. H. Swinton and J. P. Frye signed the lease as sureties for the corporation. On November 13, 1889, Frost recovered judgment for $ 1,285.35 against the corporation and its sureties for rent and on February 11 1891, he recovered another judgment for $ 567.56, for subsequent rent, against the corporation only. Executions upon both judgments were issued and returned unsatisfied. The defendants, Lawler and Ancker and ten others, were holders of stock in the corporation. Its total stock was $ 200,000 divided into shares of $ 100 each. Only forty of the shares were ever subscribed for or issued. Lawler subscribed for four shares, but paid nothing thereon. Ancker subscribed for four shares and paid in on them $ 200 only. The total amount paid in on the forty shares subscribed was but $ 580. Some of the subscribers were nonresidents of this state and had no property therein, others were insolvent. The corporation was also insolvent but owed no debts except the two judgments and a debt of $ 94 to the St. Paul Sash and Door Company. The plaintiff brought this action under 1878 G. S. ch. 76 against the corporation and the holders of the forty shares of stock stating these facts and asking that the property and effects of the corporation be sequestered, that a receiver be appointed, that the stockholders be severally required to pay their unpaid subscriptions for their stock and further sums to the amount of their stock and that the two judgments and all other debts be paid from the proceeds and for such other and further relief as to the court should seem equitable. Answers were filed on behalf of the resident solvent stockholders. The St. Paul Sash and Door Company intervened and presented its claim and the issues were tried February 26, 1892; findings were made and judgment entered April 21, 1892, appointing Edward B. Graves receiver of the corporation and directing him to collect its assets and convert the same into money and to collect from the stockholders the unpaid amounts due on their stock and to report to the court. The decree further adjudged that each of the stockholders served with process in the action naming them pay to said receiver the amount owing by him upon his shares of stock, stating the amount due from each. The decree further adjudged that each of the said stockholders was liable to the receiver in a further additional sum equal to the par value of the shares of stock subscribed for and owned by him, stating the sum each was liable for. The decree further directed the receiver to report to the court the amount realized from the assets of the corporation and from unpaid subscriptions. He was also directed to report the costs and expenses and his fees and the sum necessary to pay any balance due to creditors. The decree then directed each of said stockholders to pay upon his individual liability his proportionate part of the deficit and provided that writs of execution issue from time to time under the direction of the court to enforce such payments. The stockholders, Lawler and Ancker, appealed from the judgment, but only served notice of appeal upon the plaintiff and the clerk of the trial court.
Judgment affirmed.
Edmund S. Durment, for appellants.
The judgment rolls introduced in evidence by plaintiff showing his two judgments against the corporation were not as against the stockholders evidence of indebtedness of the corporation. It is only for the indebtedness of the corporation that stockholders are liable. Those judgments, if they establish anything, establish that the indebtedness to the plaintiff was the indebtedness of the defendant corporation and three other persons, not the indebtedness of the corporation singly. Cook, Stockholders, &c., § 221.
Executions had been issued to the sheriff and he had made return on them that he could collect nothing, but the writs were not actually filed with the clerk of court until January 23, 1892, just before the trial of this action. No execution was shown to have been returned unsatisfied before this suit was commenced. In that regard plaintiff failed to show a compliance with the statute authorizing a proceeding against the stockholders. Trippe v. Huncheon, 82 Ind. 307; Chesnut v. Pennell, 92 Ill. 55; Chandler v. Brown, 77 Ill. 333; Chase v. Curtis, 113 U.S. 452; Miller v. White, 50 N.Y. 137; McMahon v. Macy, 51 N.Y. 155; Southmayd v. Russ, 3 Conn. 52.
The articles of incorporation in evidence show that the capital stock was fixed at $ 200,000. Only $ 4,000 of stock was subscribed. Defendants' subscription was therefore on its face conditional, was without consideration and not effectual as a contract until the full $ 200,000 should be subscribed. Masonic Temple Ass'n v. Channell, 43 Minn. 353; Livesey v. Omaha Hotel Co., 5 Neb. 50; Hawley v. Upton, 102 U.S. 314; Montpelier & W. R. R. Co. v. Langdon, 46 Vt. 284; Chase v. Sycamore, &c., R. Co., 38 Ill. 215; Ft. Edward & Ft. M. P. R. Co. v. Payne, 17 Barb. 567; Evansville, &c., R. Co. v. Shearer, 10 Ind. 244.
James E. Trask, for respondent.
This court has no jurisdiction over the subject matter of this case because the appeal is from the whole judgment, but the notice of appeal was not served on the receiver or upon the St. Paul Sash and Door Company, or upon the other stockholders, codefendants with these appellants. The service of notice of appeal upon all of the adverse parties within the time allowed for appeal is a jurisdictional prerequisite. Grand Rapids v. Chicago & W. M. Ry. Co., 95 Mich. 473; Stolt v. Chicago, M. & St. P. Ry. Co., 49 Minn. 353; Tierney v. Dodge, 9 Minn. 166; Portage Lake & L. S. S. C. Co. v. Haas, 20 Mich. 326.
The term "adverse party" includes everyone who is interested in the subject matter of the appeal and who will be affected by the reversal or modification of the order or judgment appealed from. It is so held in New York, where the statute is similar to our own. Thompson v. Ellsworth, 1 Barb. Ch. 624; Hiscock v. Phelps, 2 Lans. 106; Senter v. DeBernal, 38 Cal. 637; Estate of Medbury, 48 Cal. 83; Barnes v. Stoughton, 6 Hun, 254; Cotes v. Carroll, 28 How. Pr. 436; Smetters v. Rainey, 14 Ohio St. 287; Curten v. Atkinson, 29 Neb. 612; Wolf v. Murphy, 21 Neb. 472; Hendrickson v. Sullivan, 28 Neb. 790; Masterson v. Herndon, 10 Wall. 416; Williams v. Bank of U.S. 11 Wheat. 414; Simpson v. Greeley, 20 Wall. 152; Halloran v. Midland R. Co., 129 Ind. 274; Babcock v. Sanborn, 3 Minn. 141; Ash v. Ash, 89 Ia. .
The only question left before the court is as to whether or not the insolvent corporation is indebted to Frost, as found and adjudged by the court below. The judgments were at least prima facie evidence that the debt sued upon was a debt for which the corporation was liable. Hawes v. Anglo-Saxon P. Co., 101 Mass. 385; Came v. Brigham, 39 Me. 35; Holyoke Bank v. Goodman P. Mfg. Co., 9 Cush. 576; Milliken v. Whitehouse, 49 Me. 527; Burgess v. Seligman, 107 U.S. 20; Bissit v. Kentucky River N. Co., 15 F. 353; Belmont v. Coleman, 21 N.Y. 96; Merchants' Bank v. Chandler, 19 Wis. 434; Henry v. Vermillion & A. R. Co., 17 Ohio 187.
The execution and sheriff's return thereon were not filed with the clerk at the commencement of the action, but this does not change the fact that the sheriff had made his return. No question was made but that the St. Paul Banking and Investment Company was and is insolvent. This was sufficient to dispense with the return of execution as a prerequisite to the proceedings to subject the stockholders to payment of corporate debts. Morgan v. Lewis, 46 Ohio St. 1; Hodges v. Silver Hill Mining Co., 9 Oregon, 200; Walton v. Coe, 110 N.Y. 109; Terry v. Tubman, 92 U.S. 537; Merchants' Nat. Bank v. Bailey Mfg. Co., 34 Minn. 323.
Whatever may be the liability of appellants to the corporation, as to this plaintiff, they are shareholders. Morawetz, Corp §§ 821-823; Scovill v. Thayer, 105 U.S. 143; ...
To continue reading
Request your trial