Harper v. Carroll

• Decision Date: 06 August 1895
• Parties: HARPER v. CARROLL ET AL. (TWO CASES.)
• Court: Minnesota Supreme Court

62 Minn. 152

64 N.W. 145

HARPER

v.CARROLL ET AL. (TWO CASES.)

Supreme Court of Minnesota.

Aug. 6, 1895.

(Syllabus by the Court.)

1. That part of Gen. St. 1894, § 2501, which provides that the stockholders of all banks of deposit and discount shall be individually liable in an amount equal to double the amount of stock owned by them for all the debts of the bank, and such individual liability shall continue for one year after a transfer of their stock shares, construed. Held, that the individual liability of a stockholder who, in good faith, has transferred his shares, is confined and limited to such debts as have been created and incurred prior to the time of the transfer.

2. Held that, at the end of the year of continuing liability the novation of the parties may be complete, the old stockholder being relieved of further responsibility. But if, within the year, conditions arise or exist which authorize the commencement of an action to enforce the stockholder's liability, under the provisions of Gen. St. 1894, c. 76, the right is complete, and the action may be brought within six years after the debt against the bank matures.

3. The action may be maintained by a creditor, in his own behalf and in behalf of all other creditors, against all stockholders, past or present, who are liable to any of the creditors, the respective rights and obligations to be determined on the trial. But the complaint must show a liability on the part of each defendant to some one or more of the creditors.

Appeals from district court, Hennepin county; No. 9,409, Seagrave Smith, Charles M. Pond, and Charles B. Elliott, Judges; No. 9,410, C. B. Elliott, Judge.

Separate actions by James C. Harper against Walter N. Carroll and others to enforce a stockholders' liability. From an order sustaining general demurrers to the complaints, plaintiff appeals. Affirmed.

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

Hahn & Hawley, for respondent, Nathan M. Barnes.

Wilkinson & Traxler, for respondent, Henry Hill.

COLLINS, J.

To determine these appeals, which were taken from orders sustaining general demurrers to a complaint, we are called upon to construe Gen. St. 1894, § 2501, which section, after requiring that a true and correct list of the names of the shareholders of each bank shall be kept by the president and cashier, together with the amount of stock held by each, the time of transfer, and to whom transferred, and that copies thereof shall be filed in certain public offices on the first Mondays in January and July, in each year, provides that: “The stockholders in each bank shall be individually liable in an amount equal to double the amount of stock owned by them for all of 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 first proposition contended for by counsel for appellant is that, by reason of the latter part of this section, the stockholder is not only liable for all debts which existed at the time of the transfer of stock, but also for all debts that have been incurred during the year subsequent to such transfer, and that the remedy to enforce such liability continues for six years from the end of the year. But, if it should be held that the liability does not continue as to debts created during the year subsequent to the transfer of stock, the second proposition is that the statute extends the liability which exists at the time of the transfer for the period of one year longer; and, further, that the liability may be enforced at any time within six years thereafter; or, in case a cause of action accrues during the year succeeding the transfer, by reason of the insolvency of the bank, the creditor has six years after such insolvency within which to commence his action. The claim of counsel for respondents is that the purpose of the words, “and such liability shall continue for one year after any transfer or sale of stock,” was to continue the liability of a transferring stockholder, for one year only, upon all debts existing at the time of the transfer; that there is no continuing liability as to obligations subsequently incurred; and that, as the complaint clearly showed that the debts in question were not created by the bank until after the respondents had ceased to be stockholders, and also showed that more than one year had elapsed after the transfer of the stock shares before these actions were brought, their clients were discharged and exonerated from all liability. In stating this claim counsel seem to have entirely ignored the allegations in the complaint to the effect that in less than one year after the transfer...