Marin v. Augedahl
| Decision Date | 10 January 1916 |
| Citation | 156 N.W. 101,32 N.D. 536 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Cass County, Pollock, J.
Affirmed.
Demurrer sustained. Affirmed.
W. J Mayer and A. A. Miller, for appellant.
The district court of Polk county, Minnesota, had jurisdiction of the subject-matter of the action as set forth in the complaint herein, and its determination is conclusive upon all the stockholders of the defunct corporation, and cannot be challenged in any other tribunal, regardless of the place of residence of the stockholders. Straw & E. Mfg. Co. v L. D. Kilbourne Boot & Shoe Co. 80 Minn. 125, 83 N.W 36; London & N.W. American Mortg. Co. v. St. Paul Park Improv. Co. 84 Minn. 144, 86 N.W. 872; Bernheimer v. Converse, 206 U.S. 516, 51 L. ed. 1163, 27 S.Ct. 755.
The statute of Minnesota controlling this controversy is constitutional. Straw & E. Mfg. Co. v. L. D. Kilbourne Boot & Shoe Co. and London & N.W. American Mortg. Co. v. St. Paul Park Improv. Co. supra.
The order of the Minnesota court fixing the assessment against each share of stock is conclusive, and cannot be questioned in any court. Minn. Rev. Laws 1905, § 3186; Swing v. Red River Lumber Co. 105 Minn. 336, 117 N.W. 442; Straw & E. Mfg. Co. v. L. D. Kilbourne Boot & Shoe Co. supra; Spargo v. Converse, 112 C. C. A. 337, 191 F. 823; Neff v. Lamm, 99 Minn. 115, 108 N.W. 849, and cases cited; Ward v. Joslin, 186 U.S. 142, 46 L. ed. 1093, 22 S.Ct. 807; Swing v. Humbird, 94 Minn. 1, 101 N.W. 938.
The jurisdiction of the Minnesota court gave jurisdiction over each individual stockholder whether he was resident of Minnesota or elsewhere, and notice to the corporation was notice to all the stockholders, and they are bound by the order of that court, whether or not they received other notice. Howarth v. Lombard, 175 Mass. 570, 49 L.R.A. 301, 56 N.E. 888; Straw & E. Mfg. Co. v. L. D. Kilbourne Boot & Shoe Co. supra; Spargo v. Converse, 112 C. C. A. 337, 191 F. 823.
The proceeding in Minnesota was against a corporation, which represented its stockholders, and the order and judgment of that court cannot be disregarded. Minn. Rev. Laws 1905, § 3186; Straw & E. Mfg. Co. v. L. D. Kilbourne Boot & Shoe Co. supra; Bernheimer v. Converse, 206 U.S. 516, 532, 51 L. ed. 1163, 1175, 27 S.Ct. 755; Howarth v. Lombard, 175 Mass. 570, 49 L.R.A. 301, 56 N.E. 888; Hawkins v. Glenn, 131 U.S. 319, 33 L. ed. 184, 9 S.Ct. 739; Great Western Teleg. Co. v. Purdy, 162 U.S. 329, 40 L. ed. 986, 16 S.Ct. 810; Kennedy v. Gibson, 8 Wall. 498, 19 L. ed. 476; Sanger v. Upton, 91 U.S. 56, 23 L. ed. 220; Marson v. Deither, 49 Minn. 423, 52 N.W. 38; Parker v. Stoughton Mill, 91 Wis. 174, 51 Am. St. Rep. 881, 64 N.W. 751; Mutual F. Ins. Co. v. Phoenix Furniture Co. 108 Mich. 170, 34 L.R.A. 694, 62 Am. St. Rep. 693, 66 N.W. 1095; Warner v. Delbridge & C. Co. 110 Mich. 590, 34 L.R.A. 701, 64 Am. St. Rep. 367, 68 N.W. 283.
The same doctrine here applies as would in an action to recover on premium notes. Insolvency made the assessment necessary, and this assessment stands on the footing, as would premium notes. Hanson v. Davidson, 73 Minn. 454, 462, 76 N.W. 254; Holland v. Duluth Iron Min. & Development Co. 65 Minn. 324, 60 Am. St. Rep. 480, 68 N.W. 50; 3 Thomp. Corp. 3499; Howarth v. Lombard, 175 Mass. 570, 49 L.R.A. 301, 56 N.E. 888; Hamilton v. Glenn, 85 Va. 901, 9 S.E. 129; Glenn v. Williams, 60 Md. 93; Sheafe v. Larimer, 79 F. 921; Howarth v. Ellwanger, 86 F. 54; Howarth v. Angle, 39 A.D. 151, 57 N.Y.S. 187, 162 N.Y. 179, 47 L.R.A. 725, 56 N.E. 489; Hancock Nat. Bank v. Farnum, 176 U.S. 640, 44 L. ed. 619, 20 S.Ct. 506.
The representation which a stockholder has by virtue of his membership in the corporation is all to which he is entitled, and it is not necessary that he be personally served with process in an action wherein the assessment is made. Howarth v. Lombard, 175 Mass. 570, 49 L.R.A. 301, 56 N.E. 888; Hawkins v. Glenn, 131 U.S. 319, 33 L. ed. 184, 9 S.Ct. 739; Great Western Teleg. Co. v. Purdy, 162 U.S. 329, 336, 40 L. ed. 986, 990, 16 S.Ct. 810.
A. W. Fowler and L. L. Twichell, for respondent.
The Minnesota court had no jurisdiction to enter the judgment set forth in the complaint.
"Neither the constitutional provision that full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state, or the act of Congress pursuant thereto, prevents an inquiry into the jurisdiction of the court by which a judgment offered in evidence was rendered." Want of jurisdiction, either as to person or subject-matter, in proceedings in rem as to the thing, may be shown. Thompson v. Whitman, 18 Wall. 457, 21 L. ed. 897; Andrews v. Andrews, 188 U.S. 14, 47 L. ed. 366, 23 S.Ct. 237; National Exch. Bank v. Wiley, 195 U.S. 257, 49 L. ed. 184, 25 S.Ct. 70; Ward v. Joslin, 186 U.S. 142, 46 L. ed. 1093, 22 S.Ct. 807.
The liability sought to be enforced in the case at bar is a superadded liability of defendant. If the defunct Minnesota corporation was a manufacturing business within the exception of the constitutional provision, then there was no superadded liability, and defendant was not liable to assessment, and there was no subject-matter upon which the jurisdiction of the Minnesota court could operate, and its judgment was therefore void, and the question of its conclusiveness is not involved. State ex rel. Clapp v. Minnesota Thresher Mfg. Co. 40 Minn. 213, 3 L.R.A. 510, 41 N.W. 1020; Straw & E. Mfg. Co. v. L. D. Kilbourne Boot & Shoe Co. 80 Minn. 125, 83 N.W. 36.
The American Biscuit Company is a corporation organized for the purpose of carrying on a manufacturing business, within the meaning of the Minnesota Constitution, and therefore a demurrer to the complaint lies, because, admitting all property pleaded facts, no liability exists. Comp. Laws 1913, Subdivs. 63 and 64, of § 7938; Foster County Implement Co. v. Smith, 17 N.D. 178, 115 N.W. 663.
Conclusions of law are no part of a pleading, and hence are not admitted by demurrer. Van Dyke v. Doherty, 6 N.D. 263, 69 N.W. 200; Iowa & D. Teleph. Co. v. Schamber, 15 S.D. 588, 91 N.W. 78; King v. Lawson, 84 F. 209; Stutsman Co. v. Mansfield, 5 Dak. 78, 37 N.W. 304; Johnson v. Kindred State Bank, 12 N.D. 336, 96 N.W. 588.
In a proceeding to enforce personal liability of stockholders for corporation debts, the articles of the association are the sole criterion as to the purposes for which the corporation was formed. Senour Mfg. Co. v. Church Paint & Mfg. Co. 81 Minn. 294, 84 N.W. 109; Cuyler v. City Power Co. 74 Minn. 22, 76 N.W. 948; Nicollet Nat. Bank v. Frisk-Turner Co. 71 Minn. 413, 70 Am. St. Rep. 334, 74 N.W. 160; Hastings Malting Co. v. Iron Range Brewing Co. 65 Minn. 28, 67 N.W. 652; Vencedor Invest. Co. v. Highland Canal & Power Co. 125 Minn. 20, 145 N.W. 611.
Appeal from judgment of the trial court sustaining a demurrer to plaintiff's complaint and dismissing the action with prejudice. The amended complaint is very long, and states in substance that defendant is a stockholder of a defunct Minnesota corporation; that said corporation was in the hands of a receiver appointed by the district court of the fourteenth judicial district of the state of Minnesota; that a judgment remained unsatisfied against the said corporation and that said district court in Minnesota had deemed it necessary to levy an assessment against the stockholders. Those allegations are not set out in full, as we do not deem them necessary to a decision of the controversy presented. Paragraph 6 of the complaint alleges that the said defunct corporation was organized on or about the 18th of February, 1905, "with a capital stock of $ 50,000, divided into 500 shares of a par value of $ 100 each, and that by its articles of incorporation it was empowered to manufacture and sell biscuits, crackers, candies, confections, cereals, and other kindred products," etc. Paragraph 2 of the complaint reads as follows: "That at the time of the creation and organization of the American Biscuit Company it was and still is the law of the state of Minnesota that each stockholder of any corporation organized for the purposes specified in the articles of incorporation of the said American Biscuit Company, as hereinafter set forth, is personally liable to the creditors of such corporation to the amount of the stock held or owned by him, which said law is, and at all times was, part and parcel of the corporate charter of the said corporation." Plaintiff was the receiver of the said American Biscuit Company insolvent. To this amended complaint a demurrer was interposed upon the grounds that said complaint does not state facts sufficient to constitute a...
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