In re Martin's Estate

• Decision Date: 05 February 1894
• Docket Number: No. 8569.,8569.
• Citation: 56 Minn. 420
• Parties: <I>In re</I> GEORGE B. MARTIN'S <I>Estate.</I>
• Court: Minnesota Supreme Court

56 Minn. 420

In re GEORGE B. MARTIN'S Estate.

No. 8569.

Supreme Court of Minnesota.

Argued January 19, 1894.

Affirmed February 5, 1894.

Appeal by the National German-American Bank of St. Paul, from an order of the District Court of Otter Tail County, L. L. Baxter J., made August 12, 1893, sustaining the demurrer of the administrators of the estate of George B. Martin, deceased, to its claim against the estate.

George B. Martin of Otter Tail County died intestate November 1, 1890, leaving property and estate there. He owned and held at his death one hundred shares of $100 each of the capital stock of the Page Flour Mills, a corporation organized under 1878 G. S. ch. 34, Title 2. Proceedings were taken in the Probate Court of that county to administer his estate. Gilbert A. Topley and Charles H. Gould were appointed administrators and a time was fixed within which creditors were required to present their claims for examination and allowance. The German-American Bank of St. Paul, on January 20, 1891, presented a claim for allowance. It stated that on December 26, 1890, it recovered judgment against the Page Flour Mills Company for $15,187.61, but was unable to collect it; that the Page Flour Mills Company was insolvent and had on October 25, 1890, made a general assignment of its property to Charles D. Wright, in trust for its creditors; that its assets would not pay twenty per cent. of its indebtedness; that deceased held one hundred shares of its stock and was, under Const. Art. 10, § 3, liable to its creditors to the amount thereof; and prayed that its judgment against the Page Flour Mills Company be allowed as a claim against Martin's estate. The Probate Court on May 31, 1892, disallowed the claim and the Bank on June 12, 1892, appealed to the District Court of Otter Tail County, where, by direction of the court, it restated its claim (Laws 1889, ch. 46, § 260,) in the form of a complaint. The administrators demurred thereto. The court sustained the demurrer and the bank brings this appeal.

John B. & E. P. Sanborn, for appellant.

Parsons & Brown, for respondents.

MITCHELL, J.

The claim presented to the Probate Court for allowance was founded on the liability of the deceased, as a stockholder, for the debts of the corporation, under the constitution of the state, Art. 10, § 3, which provides that "each stockholder in any corporation * * * shall be liable to the amount of the stock held or owned by him."

Under this provision, all the stockholders are liable to all the creditors. The object is to create a common fund, limited in amount, for the benefit of all creditors. Hence, if one creditor is allowed to proceed alone, he might exhaust the fund, or get more than his share. This personal liability was evidently intended to provide for the contingency of a deficiency of corporate assets, which remain the primary fund for the payment of corporate debts. Hence, it is evident, no action or proceeding can furnish a complete remedy, or protect the rights of all persons interested, except one which brings in...