Guilds v. Cleaves

• Decision Date: 30 October 1901
• Parties: GUILDS v. CLEAVES.
• Court: Maine Supreme Court

50 A. 714

95 Me. 498

GUILDS

v. CLEAVES.

Supreme Judicial Court of Maine.

Oct. 30, 1901.

(Official.)

Exceptions from supreme judicial court, Cumberland county.

Action by Clarence H. Childs, receiver of the Bank of New England, a foreign corporation organized under the laws of Minnesota, against Henry B. Cleaves, to enforce defendant's personal statutory liability as a stockholder under the laws of Minnesota. From an order overruling a demurrer to plaintiff's declaration, defendant brings exceptions. Overruled.

Argued before WISWELL, C. J., and EMERY, WHITEHOUSE, SAVAGE, FOGLER and POWERS, JJ.

E. M. Rand, for plaintiff.

J. W. Symonds, D. W. Snow, C. S. Cook, and C. L. Hutchinson, for defendant.

WHITEHOUSE, J. This is an action at law, in which the defendant is summoned to answer to the plaintiff, Clarence H. Childs, of Minneapolis, "as receiver for the collection and enforcement of the liability of stockholders of the Bank of New England," a corporation organized under the laws of the state of Minnesota. The action is brought to enforce the double liability of the defendant, who was a nonresident stockholder in the corporation.

In 1893 the bank in question, upon complaint filed by the state of Minnesota, one of its creditors, was adjudged insolvent by a district court in Minnesota, and a general receiver was appointed, by whom all of the existing assets of the bank were received and distributed. The administration of the estate by this receiver was completed in July, 1897.

In the meantime, in 1895, it having become apparent that the existing assets were insufficient to discharge the entire indebtedness of the bank, an order was issued by the court, upon petition of another creditor, to have all of the resident stockholders impleaded in the original complaint upon which the adjudication of insolvency was made, for the purpose of enforcing their statutory liability to the creditors of the bank who might thereafter Intervene. Thereupon all of the resident stockholders became parties to that proceeding, an order was entered by the court limiting the time within which creditors might intervene and present their complaints, and on the 9th day of July, 1897, a final decree was entered in favor of the intervening creditors as follows, to wit:

"First That the several sums due and owing to the several creditors who had intervened in said action by the defendant Bank of New England, which said indebtedness was therein adjudged and decreed, aggregated the sum of ninety-three thousand three hundred fifteen dollars and thirty cents.

"Second. That the total capital stock of said Bank of New England was one hundred thousand dollars, all of which was issued and outstanding at the time of the contracting of said indebtedness and the date of the assignment of said bank, as aforesaid.

"Third. The names of the several resident stockholders and the amount of stock held by each.

"Fourth. That each of said stockholders was liable upon said stock to the creditors therein ascertained for an amount equal to double the par value of stock held by him.

"Fifth. That said other intervening plaintiffs and said intervening creditors so ascertained recover from each of the several stockholder defendants within the state of Minnesota a sum equal to double the par value of the stock held by each stockholder.

"Sixth. That this plaintiff be appointed receiver therein for the purpose of collecting the judgment so rendered against each of the defendants therein, and for the further purpose of instituting all necessary actions and proceedings for the purpose of collecting from the nonresident stockholders of said corporation, to the end that any and all sums so collected by him be divided ratably among the creditors of said corporation so enumerated in said judgment and in proportion to the amount of their respective claims.

"Seventh. That the court retain jurisdiction of said cause for the furtherance of justice and equity."

The plaintiff duly qualified as receiver, and gave his bond to the court in the sum of $50,000 for the faithful performance of his duties; and on the 15th day of August, 1898, a further order of the court was made authorizing and directing him to institute, in his own name as receiver, all auxiliary actions necessary to enforce the liability of nonresident stockholders. The corporate assets had proved sufficient to pay only the preferred claim of the state of Minnesota, so that at the time of the entry of judgment against the stockholders there was due to the intervening creditors the sum of $93,315; and at the time of the commencement of this action the receiver, in discharge of his duty under the decree, had been able to collect no more than $35,000.

This defendant was never served with process, and never in any manner entered his appearance in the proceeding in the district court of Minnesota.

1. The case comes to the law court on a general demurrer interposed by the defendant to the plaintiff's declaration, which duly set out the facts above stated. The presiding justice overruled the demurrer, and adjudged the declaration good. Two questions are thus presented to the court:

First to what extent if at all, is this defendant, a nonresident stockholder, bound by the decrees of the Minnesota court in which the parent suit was instituted? and, second, whether the plaintiff, in his capacity as receiver for the creditors, appointed by the Minnesota court for the purpose of enforcing the liability of stockholders, is entitled to maintain this action in a state jurisdiction other than that of his appointment either on grounds of comity or otherwise.

Article 9, § 13, of the constitution of Minnesota, provides as follows:

"Third. The stockholders in any corporation and joint association for banking purposes, issuing bank notes, shall be individually liable in an amount equal to double the amount of stock owned by them for all the debts of said corporation or association; and such individual liability shall continue for one year after any transfer or sale by any stockholder or stockholders."

And in chapter 33, § 21, of the statutes of Minnesota, is found this provision:

"And the stockholders in each bank shall be individually liable in an amount equal to double the amount of stock owned by them for all the debts of such bank, and such individual liability shall continue for one year after any transfer or sale of stock by any stockholder or stockholders."

The only provisions found in the statutes of Minnesota for enforcing this liability are contained in Gen. St. 1894, c. 76, §§ 5905-5911, which are as follows:

"Sec. 5905. Whenever any creditor of a corporation seeks to charge the directors, trustees, or other superintending officers of such corporation, or the stockholders thereof, on account of any liability created by law, he may file his complaint for that purpose in any district court which possesses jurisdiction to enforce such liability.

"Sec. 5906. The court shall proceed thereon as in other cases, and, when necessary, shall cause an account to be taken of the property and debts due to and from such corporation, and shall appoint one or more receivers.

"Sec. 5907. If, on the coming in of the answer, or upon the taking of any such account, it appears that such corporation is insolvent, and that it has no property or erfects to satisfy such creditors, the court may proceed, without appointing any receiver to ascertain the respective liabilities of such directors and stockholders, and enforce the same by its judgment, as in other cases.

"Sec. 5908. Upon a final judgment in any such action to restrain a corporation, or against directors or stockholders, the court shall cause a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among its creditors.

"Sec. 5909. In all cases in which the directors or other officers of a corporation, or the stockholders thereof, are made parties to an action in which a judgment is rendered, if the property of such corporation is insufficient to discharge its debts, the court shall proceed to compel each stockholder to pay in the amount due and remaining unpaid on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the company.

"Sec. 5910. If the debts of the company remain unsatisfied the court shall proceed to ascertain the respective liabilities of the directors or other officers, and of the stockholders, and to adjudge the amount payable by each, and enforce the judgment, as in other cases.

"Sec. 5911. Whenever any action is brought against any corporation, its directors or other superintending officers, or stockholders, according to the provisions of this chapter, the court, whenever it appears necessary or proper, may order notice to be published, in such a manner as it shall direct, requiring all the creditors of such corporation to exhibit their claims and become parties to the action, within a reasonable time, not less than six months from the first publication of such order, and in default thereof, to be precluded from all benefit of the judgment which shall be rendered in such action, and from any distribution which shall be made under such judgment."

It thus appears that the several orders and decrees made by the court of Minnesota in the course of its proceedings requiring an account to be taken of the corporate property and debts, and ascertainments to be made respecting the names of the several stockholders and the amount of stock held by each, were in harmony with the provisions of the constitution and laws of Minnesota above quoted. It will be observed, however, that while the court rendered personal judgment only against the Minnesota stockholders, it expressly authorized the receiver to institute all necessary actions for the purpose of collecting from the nonresident stockholders. The defendant claims that the proceedings under the Minnesota statute...