Gallagher v. Irish-American Bank

• Decision Date: 05 March 1900
• Docket Number: 11,879 - (183)
• Citation: 81 N.W. 1057,79 Minn. 226
• Parties: THOMAS GALLAGHER v. IRISH-AMERICAN BANK and Others
• Court: Minnesota Supreme Court

81 N.W. 1057

79 Minn. 226

THOMAS GALLAGHER v. IRISH-AMERICAN BANK and Others

Nos. 11,879 - (183)

Supreme Court of Minnesota

March 5, 1900

Action in the district court for Hennepin county to enforce the liability of stockholders in defendant bank. Judgment was entered in favor of plaintiff and the intervening creditors determining and adjudging the liability of the stockholders. From an order denying a motion to modify the judgment, W. D Hale, as receiver of the American Savings & Loan Association one of the intervening creditors, appealed. Affirmed.

SYLLABUS

Judgment -- Material Modification -- G.S. 1894, § 5267.

In an action against stockholders to recover for creditors, under G.S. 1894, § 5903, a motion to modify the judgment, after it has been entered, so as to change the amounts distributed to each of such creditors, is authorized solely by the provisions of G.S. 1894, § 5267.

Modification during Time for Appeal.

Before the time for taking an appeal from such judgment has expired, the court in which it was entered has authority, under such statute, upon cause shown, to modify, vacate, or set aside the same.

Modification after Time for Appeal.

But such right is limited in time to six months (except in cases of mistake, surprise, etc., otherwise provided for in the statute) after the entry of such judgment, and the same in all respects becomes res judicata after such period has expired.

Hay & Van Campen, for appellant.

Fred W. Reed, Wm. H. Donahue, S. Meyers, Weed Munro and George R. Robinson, for respondents.

OPINION

LOVELY, J.

The Irish-American Bank became insolvent, and made an assignment under the insolvency laws of this state. Its avails liquidated only 35 per cent. of its debts in that proceeding, and this action was brought by plaintiff for himself and other creditors, under the statute (G.S. 1894, § 5903, et seq.), to recover from the stockholders the deficiency. Some time after the commencement of this action, W. D. Hale was, upon proper cause, permitted to intervene therein for the American Savings & Loan Association, and, setting up a claim for that company, asked to be allowed to participate in the benefits of the pending suit. Such proceedings were had that the stockholders were held liable to the creditors of the bank for double the amount of their respective holdings of stock, for debts due before August 1, 1895, and for an equal amount thereafter, which latter rating of liability was based upon the statute (Laws 1895, c. 145), changing the obligation of stockholders for corporate debts by its terms from double to single liability, to take effect after July 31 of that year.

A referee was appointed to ascertain and report the facts as to number of stockholders and creditors, the amount of respective liabilities, as well as claims of each, and upon the report of such referee -- which was accepted -- the court determined as a conclusion of law, inter alia, "that there is due from the Irish-American Bank to plaintiff and each of said creditors sixty-five per cent. of the sum set opposite his name in said Schedule B" (which contained the names of all the creditors reported by the referee), except the amount due upon the claim represented by the intervenor, which was substantially reduced in amount, and a stay of thirty days was granted, after which judgment was ordered to be entered upon the findings of the court.

October 21, 1898, judgment was duly entered in favor of the plaintiff and intervening creditors for an aggregate indebtedness of $192,420.03, of which amount $75,096.35 was adjudged to have accrued before the stockholders' liability had been reduced by the statute referred to. By this judgment the stockholders were, in terms, held to the creditors of the bank for double the amount of their stock, where the debts accrued before the statute took effect; and in cases of transfers the transferrors were held secondarily liable for a like amount; and it was further adjudged that the liability of all stockholders should be one-half of the amount of their estimated pro rata obligations previous thereto on debts accruing after the statute took effect. The defendant W. H. Donahue was appointed receiver to collect and distribute all moneys by enforcement of the judgment, and now has in his hands in round numbers $29,000, to be divided among the creditors. A large portion of this sum was obtained from stockholders on account of debts incurred before August 1, 1895, when their double liability was reduced one-half by the statute; but in the judgment no distinction was recognized in the amounts which any of the creditors were to receive whether his claim existed before or after the change in the liability. All were adjudged to share alike pro rata to the extent of 65 per cent. of the sums collected of the stockholders according to the schedule, which in this respect follows the conclusions of the court ipsissimis verbis, and in the concluding paragraph such judgment provides that the court may

"Make any further order necessary for the furtherance of justice or equity not inconsistent herewith."

It does not appear from the return that any objection was made to the judgment for any cause until eight months and more after the same was entered of record, when, upon an order to show cause, based upon affidavits of counsel setting out in detail the facts heretofore stated, it was, in behalf of the intervenor, moved

"That the records and judgments herein be modified, amended, and corrected by adjudging the existing creditors who were...