Int'l Trust Co. v. Am. Loan & Trust Co.

• Decision Date: 22 November 1895
• Citation: 65 N.W. 78,62 Minn. 501
• Court: Minnesota Supreme Court
• Parties: INTERNATIONAL TRUST CO. v. AMERICAN LOAN & TRUST CO.

62 Minn. 501

65 N.W. 78

INTERNATIONAL TRUST CO.

v.AMERICAN LOAN & TRUST CO.¹

Supreme Court of Minnesota.

Nov. 22, 1895.

(Syllabus by the Court.)

1. An annuity, safe-deposit, and trust company organized under Laws 1883, c. 107 (Gen. St. 1894, § 2841 et seq.), is not a corporation “embracing banking privileges,” within the meaning of the constitution of Minnesota, article 10, section 1. That term refers only to banks of issue or circulation provided for in article 9, section 13. Hence the stockholders of annuity, safe-deposit, and trust companies are liable, under article 10, section 3, of the constitution, for corporate debts to the amount of stock held or owned by them.

2. Where a general assignment of all the corporate assets for the benefit of creditors has been made, either under the assignment law of 1876 or the insolvency law of 1881, creditors who subsequently commence an action under Gen. St. 1878, c. 76, § 9 (Gen. St. 1894, § 5897), are not entitled, as a matter of right, to have a receiver appointed to supersede the assignee, and take the possession and administration of the corporate assets out of his hands.

3. But, although they have no right to have a receiver appointed, they may maintain such an action for the purpose of enforcing the personal liability of stockholders, such liability being one which cannot be enforced in the assignment proceedings.

Appeal from district court, St. Louis county; J. D. Ensign and Charles L. Lewis, Judges.

Action by the International Trust Company

against the American Loan & Trust Company. From an order sustaining demurrers to the complaint, and refusing the appointment of a receiver, plaintiff appeals. Order sustaining demurrers reversed. Order refusing appointment of receiver affirmed.

James Spencer and Towne & Davis, for appellant.

Billson, Congdon & Dickinson, Walter Ayers, J. L. Washburn, Cash, Williams & Chester, Pealer, Titus & Lemon, Draper, Davis & Hollister, Mann & Corcoran, and Abbott & Crosby, for respondents.

MITCHELL, J.

The plaintiff, on behalf of itself and all other creditors of the defendant corporation, brought this action under Gen. St. 1878, c. 76, § 9 (Gen. St. 1894, § 5897), to sequester the corporate assets, and to enforce the constitutional liability of the stockholders for corporate debts. The stockholders severally demurred to the complaint, on the ground that, as to them, it did not state a cause of action. The court sustained the demurrers. The court also denied plaintiff's application for the appointment of a receiver of the corporate assets. Plaintiff appealed from both orders.

1. The American Loan & Trust Company is an annuity, safe-deposit, and trust company, organized under Laws 1883, c. 107 (Gen. St. 1894, § 2841 et seq.), and the ground of the stockholders' demurrers is that, such corporations not being banks of issue or circulation, the provisions of article 9, section 13, of the constitution of the state are inapplicable; that, although not banks of issue, they are corporations “embracing banking privileges,” within the meaning of article 10, section 1, of the constitution, and therefore the provisions of section 3 of the same article are also inapplicable, and hence that no personal liability for corporate debts is imposed by the constitution upon the stockholders of such corporations. It is conceded that there is no statutory liability, and it is clear that article 9, section 13, is inapplicable, for that relates solely to banks of issue.

Article 10 is as follows:

“Section 1. The term ‘corporations' as used in this article shall be construed to include all associations and joint-stock companies having any of the powers and privileges not possessed by individuals or partnerships, except such as embrace banking privileges.”

“Sec. 3. Each stockholder in any corporation (except those organized for the purpose of carrying on any kind of manufacturing or mechanical business) shall be liable to the amount of stock held or owned by him.”

The line of argument, briefly stated, is about this: Annuity, safe-deposit, and trust companies, in addition to their other numerous powers, have power to receive general deposits of money, to loan or invest the moneys so deposited, as well as their own capital, on mortgages, or by purchasing bills, notes, and other evidences of indebtedness; that these are banking privileges; therefore, that these corporations are associations having or “embracing banking privileges,” within the meaning of the constitution. It is always an unsafe way of construing a statute or contract to divide it, by a process of etymological dissection, into separate words, and then apply to each, thus separated from its context, some particular definition given by lexicographers, and then reconstruct the instrument upon the basis of these definitions. An instrument must always be construed as a whole, and the particular meaning to be attached to any word or phrase is usually to be ascertained from the context, the nature of the subject treated of, and the purpose or intention of the parties who executed the contract, or of the body which enacted or framed the statute or constitution. The constitution of the state must be read and construed as a whole. In article 9 it provides for and treats of corporations authorized to issue their notes to circulate as money, commonly called “Banks of Issue or Circulation.” In article 10 it proceeds to treat of other corporations, and in the first section it defines the sense in which the term “corporation” is used in that article, to wit, “All associations and joint-stock companies having any of the powers and privileges not possessed by individuals or partnerships, except such as embrace banking privileges.” This exception was, in our...