McKusick v. Seymour, Sabin & Co.

• Court: Supreme Court of Minnesota (US)
• Citation: 48 Minn. 158,50 N.W. 1114
• Parties: MCKUSICK, v SEYMOUR, SABIN & CO., (MINNESOTA THRESHER MANUF'G CO., INTERVENER.)
• Decision Date: 18 January 1892

48 Minn. 158
50 N.W. 1114

MCKUSICK,
v
SEYMOUR, SABIN & CO., (MINNESOTA THRESHER MANUF'G CO., INTERVENER.)

Supreme Court of Minnesota.

Jan. 18, 1892.

[50 N.W. 1114]

(Syllabus by the Court.)

1. Section 3, art. 10, of the constitution of the state, relating to the liability of stockholders for corporate debts, held to be self-executing. Following Willis v. Sanitation Co., 50 N. W. Rep. 1110.

2. The individual liability of stockholders for corporate debts may be enforced in a sequestration proceeding against the corporation under Gen. St. 1878, c. 76, upon the application or complaint of any creditor who has become a party to the proceedings. Following Arthur v. Willius, 46 N. W. Rep. 851,44 Minn. 409.

Appeal from district court, Washington county.

Proceedings by Myron McKusick against Seymour, Sabin & Co. for the appointment of a receiver and the sequestration of the effects of defendants. The Minnesota Thresher Manufacturing Company intervened, and filed a supplemental complaint against John F. Meagher and others. From an order overruling the demurrer to the intervener's supplemental complaint John F. Meagher and others appeal. Affirmed.

Horace G. Stone, for appellants.

Flandrau, Squires & Cutcheon and Davis, Kellogg & Severance, for respondent.

MITCHELL, J.

This case comes up on appeal from an order overruling the so-called supplemental complaint of the Minnesota Thresher Manufacturing Company, a creditor of Seymour, Sabin & Co., a corporation organized under title 2, c. 34, St. 1866. The facts alleged in this complaint are as follows: Upon the complaint of McKusick, a judgment creditor of Seymour, Sabin & Co., after execution issued and returned unsatisfied, a decree or judgment had been rendered sequestrating all the property, things in action, and effects of the corporation, and appointing a receiver of the same. The receiver still continues in the discharge of his duties, but it appears that the corporation is hopelessly insolvent, and has not property or effects sufficient to pay over 2 per cent. of its debts. The Minnesota Thresher Manufacturing Company, in pursuance of an order of court, exhibited its claims against the corporation, and became a party to the sequestration proceeding. Subsequently, in behalf of itself and all other creditors who had exhibited their

[50 N.W. 1115]

claims, it filed its so-called “supplemental complaint” against all the stockholders of the corporation, having first obtained an order of court allowing it to do so, and requiring the stockholders thus impleaded to appear and defend. In obedience to this order the stockholders (appellants here) appeared, and demurred to the complaint. The object of the complaint is to recover in this sequestration proceeding from the stockholders on their individual liability for corporate debts under section 3, art. 10, of the constitution. That this section of the constitution is self-executing, and creates a liability on the part of each stockholder for corporate debts in a sum equal to the amount of stock held or owned by him, has been determined in the case of Willis v. Sanitation Co., 50 N. W. Rep. 1110 (just decided.) Inasmuch as it appears that these appellants had become stockholders before the indebtedness constituting the claims of the thresher company was incurred, and that they have always since continued to be stockholders, questions as to the amount of their liability that may arise in view of the fact that their holdings of stock have varied in amount at different times during the intervening period are not involved in this appeal.

The only remaining question is merely one of practice, viz., whether this “double liability” of stockholders can be thus enforced in this sequestration proceeding at the instance or upon the complaint of a creditor who has become a party to it. Unless to be overruled, Arthur v. Willius, 44 Minn. 409,46 N. W. Rep. 851, is decisive of this question, for, notwithstanding an attempt of counsel to do so, that case cannot be distinguished from the present. To the same effect, by implication at least, is the more recent case of Spooner v. Syndicate, (Minn.) 50 N. W. Rep. 601. As rules of practice are but a means to an end, and ordinarily, as in this case, do not go to the merits of a controversy, such questions should not, as a general rule, occupy an extensive space in the decisions of courts of last resort; and, if a rule is once established which works well in practice, the mere fact that it may be technically erroneous is not...