Hanson v. Davison
| Decision Date | 27 July 1898 |
| Docket Number | 11,190 _ (253) |
| Citation | 76 N.W. 254,73 Minn. 454 |
| Parties | J. A. HANSON v. SUVIAH T. DAVISON |
| Court | Minnesota Supreme Court |
Original Opinion Filed July 26, 1898
Corporation -- Liability of Stockholder Several -- Judgment.
The liability of stockholders in this state for the debts of the corporation is several, and a judgment against a part of them does not have the effect to release the others.
Obligation of Stockholder Contractual -- Allen v. Walsh Limited.
Held (distinguishing and limiting Allen v. Walsh, 25 Minn. 543), that a stockholder of a corporation, by the act of becoming such, assumes the liability for the corporate debts imposed by law, and that the obligation thus raised is not penal or statutory in its character, but purely contractual, containing all the elements of a contract, and is to be enforced as such.
Stockholder Omitted in Action under Chapter 76 -- Ancillary Action by Receiver -- Judgment in Former Action Conclusive.
Held further, that if a stockholder's liability is not enforced in the original action, prosecuted under the provisions of chapter 76, G.S. 1878, because the court had no jurisdiction of him or his property, or for other cause, an ancillary action may, when necessary, be maintained against him alone by the receiver in the original action to enforce his liability. The judgment in the original action, so far as it determines the amount of the corporate debts after exhausting the corporate assets, is conclusive on such stockholder, unless impeached for fraud.
Omitted Stockholder -- Property May Be Sequestered in Action under Chapter 76.
Where, however, the property of such stockholder is found within the jurisdiction of the court, either before or after judgment in the original action, a separate action against the stockholder to reach the property is neither necessary nor proper; for it can be attached or sequestered in the original action.
The following opinion was filed July 27, 1898:
I cannot concur in that part of the foregoing opinion which intimates that the liability of officers and directors of a corporation for its debts, because of their fraud or neglect, is a statutory penalty. We held directly to the contrary in National N.H. Bank v. Northwestern Guar. Loan Co., 61 Minn. 375, 63 N.W. 1079.
Neither can I concur in that part of the opinion which holds that a judgment in an action under chapter 76, G.S. 1878, determining the amount of the corporate debts, is conclusive on a stockholder who was not made a party to the action. A judgment taken against the corporation while it was a going concern is conclusive against the stockholders. Holland v. Duluth Iron M. & D. Co., 65 Minn. 324, 68 N.W. 50. But a judgment in an action commenced after the assets of the corporation have been sequestered in insolvency proceedings is of no effect as against the stockholders. Danforth v. National Chem. Co., 68 Minn. 308, 71 N.W. 274; Schrader v. Manufacturers Nat. Bank, 133 U.S. 67, 77, 10 S.Ct. 238. The stockholders' double or superadded liability is, in its nature, the liability of a surety or guarantor for the corporation; and, in my opinion, the judgment in an action under chapter 76, determining the amount of the corporate debts, is prima facie evidence against the stockholders. See Beauchaine v. McKinnon, 55 Minn. 318, 56 N.W. 1065; Hursey v. Marty, 61 Minn. 430, 63 N.W. 1090. When the corporation is a going concern, it represents all of its stockholders in defending actions brought against it, and that is the reason why the stockholders are bound by a judgment taken against it at such a time. But, after the corporation goes into liquidation, it ceases to represent its stockholders, -- at least, as to their superadded liability.
The majority admit this by admitting that all of the stockholders within the jurisdiction are necessary parties to an action to enforce that liability. It is the first time I have ever heard the doctrine laid down by a court that you may neglect to bring in a necessary party to the action, and yet bind him as conclusively by the result as if he had been brought in. It seems to me that this is a most extraordinary doctrine.
Neither can I concur in that part of the opinion which holds that there is no difference between a suit against a stockholder for an unpaid subscription, and a suit against him on his superadded liability, so far as the conclusiveness of the judgment obtained against the corporation is concerned. In a creditors' bill to reach an unpaid subscription, the creditors' judgment against the corporation is conclusive. As was said in National N.H. Bank v. Northwestern Guar. Loan Co., supra, such a suit is a mere garnishment proceeding. Of course, the garnishee cannot dispute the judgment against the principal debtor, if the court had jurisdiction.
The case of Hawkins v. Glenn, 131 U.S. 319, 9 S.Ct. 739 cited by the majority, is merely a case of an assessment on unpaid subscriptions; and the proceeding is upheld on the ground that the debts due the corporation on these...
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