Harper v. Carroll

Decision Date23 December 1896
Citation69 N.W. 610,66 Minn. 487
PartiesHARPER v CARROLL ET AL.
CourtMinnesota Supreme Court

OPINION TEXT STARTS HERE

(Syllabus by the Court.)

1. In an action under chapter 76, Gen. St. 1894, to enforce the double liability of the stockholders of an insolvent corporation, held, the creditors are entitled to a judgment against each stockholder for the full amount of his statutory liability, even though the aggregate amount of this judgment exceeds the aggregate amount of all the corporate indebtedness and costs and expenses of the action to be satisfied by such judgment. Clarke v. Opera-House Co., 59 N. W. 632, 58 Minn. 16, distinguished.

2. But held, where the aggregate amount of the judgment so exceeds the aggregate amount to be satisfied by the same, execution should not be issued against some or all of the stockholders for the full amount of the judgment against each,-but the judgment should, by its terms, provide for issuing successive executions on the order of the court, at first for each stockholder's pro rata share of such indebtedness and expenses, and then for subsequent successive executions for such additional pro rata amounts or assessments as may be found necessary by reason of the failure to collect from stockholders found to be insolvent in attempting to satisfy the prior execution; and, when such indebtedness and expenses are paid in full, the balance of the judgment against those stockholders paying their full share of the same shall be satisfied. Execution should be issued on the judgment accordingly.

3. The court may, in its discretion, on application on notice, stay the docketing of the judgment against any particular stockholder on the giving of a bond to pay each and every assessment on the judgment due from such stockholder, whenever ordered by the court.

4. Under section 2501, Gen. St. 1894, the stockholder of a banking corporation is liable to double the amount of his stock in an action under chapter 76, if the bank becomes insolvent, and suspends payment within one year after he transferred his stock. But held, such a transferror is only secondarily liable, and execution should not issue against him until his transferee fails to respond to execution against him for his liability for the same stock; and in such a case it is error to enter a judgment which permits the creditors to collect twice for the same block of stock, once from the transferee, and again from the transferror.

5. The liability of such transferror is secondary only to the liability of the succeeding holders of the same block of stock, and not, as held by the court below, secondary to the liability of all subsequent transferrors of the same or any other stock.

6. While such transferror is liable only for his proper share of the indebtedness still existing, which existed at the time he transferred his stock, still he should not escape liability because this amount has been already collected from others reached before him in the order of liability adopted by the court; and it was error so to provide.

7. Such transferror should, as well as the present stockholders, be allowed the benefit of any dividend realized from the corporate assets.

8. The manner of determining the portion which the transferror should pay of such indebtedness existing at the time of his transfer stated.

9. The amounts collected from each transferror must be put into the common fund, and distributed ratably among all the creditors.

10. Such transferror cannot be made to contribute either directly or indirectly on account of debts incurred after he made his transfer, or debts which existed at that time, and have since been paid.

11. Following Allen v. Walsh, 25 Minn. 551, held, said section 2501, imposing the double liability on the stockholders of banking corporations, is constitutional.

12. Held, it is not necessary to consider whether, after a transfer of stock, an extension of the time of payment of corporate debts without the consent of the transferror releases him from liability as to the debts so extended, because, even if such transferror becomes a mere surety for the payment of corporate debts, it does not appear in this case that he did not consent to the extension, and the burden is on him to prove that he did not.

13. Where a transfer of stock was never registered on the books of the bank until after the bank failed and made an assignment, when it was registered as a transfer from him to the bank itself, held, it was error to charge such assignor as liable only as transferror on the amount of indebtedness existing at the time he assigned his stock, but he should be held liable as a present stockholder.

14. Where a pledgee of stock registered it on the books of the bank as transferred to himself absolutely, held, he voluntarily made himself a stockholder, is liable as such, and the court cannot relieve him from any part of his liability.

15. Where an assignee of Stock failed to register the transfer on the books of the bank, so that the assignor continued to be liable as a present stockholder, and he filed a cross bill against the assignee (already a party to the suit), who is in default for want of an answer thereto, held, the creditors need not undertake to enforce any liability against such assignee, or accept the benefit of such attempted enforcement by the assignor; but, under the circumstances, the latter may retain his present hold on the former for the purpose of compelling contribution by him in this action for any sum which the latter may be compelled to pay herein.

16. When a stockholder is also a creditor, it is proper to order judgment against him for the full amount of his statutory liability, the same as against other stockholders, to declare the judgment against him a lien on the amount due him, and to order him to pay all assessments on such judgment until the court is fully satisfied that the dividend coming to him will fully pay the balance due from him on any further assessments on the judgment against him, when the collection of such further assessments may be stayed, and on distribution the dividend due him may be set off against such assessments.

17. Four days before the trial, plaintiff discovered that nonresident stockholders, over whose persons the court did not and could not acquire jurisdiction, had property within this state. On the trial, the defendant stockholders objected to entry of judgment until the court should acquire jurisdiction over this property by attachment. Held, at that late day, these defendants were not entitled to delay the trial or other proceedings in order to make this property contribute to the payment of the corporate debts; but the court might, in its discretion, compel the plaintiff or other creditors to attach and proceed to condemn the property, and, if condemned too late to contribute directly, it or its proceeds might, after the creditors were paid in full, be applied to reimburse those stockholders who had paid more than their share.

18. Held, the creditors are entitled to recover the receiver's expenses in addition to their debts and statutory costs and disbursements, not exceeding the amount of the stockholders' statutory liability.

19. The stockholders' liability is several, not joint; and a judgment against only a part of the stockholders, within the jurisdiction, does not have the effect of releasing the others. While such liability is several, it produces only a limited fund, which belongs to all the creditors as tenants in common, and must be enforced in equity.

20. A variance between the judgment entered by the clerk and that ordered by the court cannot be raised for the first time on appeal, but an application should be made to the court to correct the judgment.

21. It is proper to provide in the judgment that, after the receiver has collected in full or has exhausted all the collectible liability, a judgment of contribution may be entered in favor of those who have paid more than their share, and against those who have paid less.

22. After the commencement of this action, a stockholder who had been served with summons died, leaving no property within the jurisdiction of the court. Held, her transferror should, on the first assessment on the judgment against the stockholders, be made to contribute on the amount of indebtedness existing at the time of the transfer.

Appeal from district court, Hennepin county; Charles B. Elliott, Judge.

Action by James C. Harper against Walter N. Carroll, as assignee of the Citizens' Bank of Minneapolis, and others. Judgment for plaintiff. From orders denying motions for new trial, and from the judgment, some of the defendant stockholders appeal. Judgment set aside.

Shaw, Cray, Lancaster & Parker, Hahn & Hawley, Woods, Kingman & Wallace, Jones & Babcock, George H. White, and Wilkinson & Traxler, for appellants.

W. S. Dwinnell and F. F. Davis, for respondent.

CANTY, J.

This is an action to enforce the statutory double liability of the stockholders of the Citizens' Bank of Minneapolis, a banking corporation, organized under chapter 33 of the General Statutes of this state. This is the second appeal in the case. See 64 N. W. 145. After the former appeal, the case was tried by the court, without a jury.

From the findings of the court and other proceedings, the following facts appear: On May 17, 1893, the bank suspended payment, closed its doors, and ceased to do business. Thereafter, on July 8, 1893, it made a general assignment for the benefit of its creditors, under the insolvency law of 1881. The assignee qualified, administered the assets of the bank, and paid to the creditors dividends amounting in all to 29 per cent. of their claims, which is all that will be realized from the assets of the bank unless something is collected or realized on certain judgments against certain apparently insolvent judgment debtors of the bank. The plaintiff, a creditor of the bank, commenced this action, making all of the resident stockholders parties. An order...

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  • Hale v. Hardon, 265.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • 31 May 1899
    ... ... full and final accounting between all parties in interest, is ... made clear from the case of Harper v. Carroll, 66 ... Minn. 487, 69 N.W. 610, 1069, decided in 1896. In that case ... the questions arising under the statutory remedy were ... ...
  • Converse v. ÆTna Nat. Bank
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    ... ... See Harper v. Carroll, 66 Minn. 487, 495, 508, 516, 69 N. W. 610, 1069. The act of 1899 distinctly authorizes the court in which such a creditor's bill is ... ...
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    ... ... But we cannot say, in advance of the issue of execution, that ... the old stockholders are solvent. Harper v. Carroll, ... 66 Minn. 487, 69 N.W. 610, 1069 ...          Let us ... suppose that, after the return of execution against the old ... ...
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