Miller v. Ahneman
| Citation | 235 N.W. 622,183 Minn. 12 |
| Decision Date | 06 March 1931 |
| Docket Number | 28,271 |
| Parties | EDWIN A. MILLER v. MARY AHNEMAN |
| Court | Supreme Court of Minnesota (US) |
Action in the district court for Faribault county by the receiver of the Wells Farmers Mercantile Company to recover on the constitutional liability of defendant as a stockholder of the company. There were findings for defendant on the ground that the action was barred by the statute of limitations. From an order, Haycraft, J. denying his motion for a new trial plaintiff appealed. Affirmed.
Action accruing at appointment of receiver barred.
1. This action to recover the constitutional liability of the stockholders of a business corporation was commenced more than six years after a receiver had been appointed and had taken possession of the property of the corporation. If the cause of action accrued at the time the receiver was appointed, the action was barred.
Sufficient judicial determination of insolvency.
2. When the capital of a business corporation has become impaired and it is unable to pay its current obligations and is in imminent danger of insolvency, an appointment of a receiver for the corporation by the court on those grounds, consented to by the corporation, is an admission of insolvency, and the order appointing the receiver is a sufficient judicial determination of insolvency.
Conclusions of trial court sustained.
3. The findings and conclusions of the trial court, that the corporation was insolvent at the time the receiver was appointed, that the appointment of the receiver was a sufficient declaration of such insolvency, and that the statute of limitations commenced to run at the time the receiver was appointed, are sustained by the evidence.
Neither tolling of statute nor estoppel against defendant.
4. The statute was not interrupted or tolled, and no estoppel resulted from the evidence referred to in paragraph 4 of the opinion.
No error in excluding evidence or refusing to strike findings.
5. We find no error in the exclusion of evidence or in the denial of the motion to strike out findings of fact and conclusions of law and make other findings and conclusions.
Meighen Knudson & Sturtz, for appellant.
Frundt & Morse, for respondent.
Plaintiff appeals from an order denying his motion for a new trial.
Plaintiff was appointed receiver of the Wells Farmers Mercantile Company, a Minnesota corporation engaged in the mercantile business, on June 8, 1923. The receiver was appointed on the complaint of five stockholders, two of whom were creditors of the corporation and held promissory notes against it to the amount of $2,500. A $1,000 note was past due, had been presented for payment, and the corporation had failed to pay. The complaint further states that the corporation owes debts to wholesale houses, banks, and individuals aggregating some $36,000, all due or about to become due, and that it is unable to meet its obligations as they mature; that its capital is impaired and it is in imminent danger of insolvency; that it is necessary for the preservation of the property and the protection of the rights of the stockholders and creditors that the court immediately appoint a receiver to take over the assets and business of the corporation and administer same as a trust for creditors and stockholders, with the powers usually vested in such receivers. It is stated that plaintiffs have no adequate remedy at law. In one paragraph of the complaint it is stated that the corporation's property consists of a stock of merchandise of approximately $45,000 and accounts receivable of about $5,000. No actual value is stated. The corporation by answer admitted all allegations of the complaint and consented to the receivership.
The court appointed the receiver "with the usual powers and directions." In addition thereto it enumerated certain special powers of the receiver, among them the power to continue to operate the business, which was part of the relief asked for in the complaint. The receiver qualified and immediately took possession of the property and business of the corporation and has since administered and disposed of the same, except some $10,000 in cash on hand at the time the assessment against stockholders was made January 15, 1930. It may be noted that there were two receivers appointed, but the other died thereafter and plaintiff has continued as sole receiver and is herein referred to as such.
1. The present action was commenced in March, 1930, to recover an assessment made January 15, 1930, against the defendant on her constitutional liability as a stockholder of the corporation. Defendant by her answer set up the six-year statute of limitations as a defense, and the court sustained that defense. Under our statute and decisions, if the cause of action now sued upon accrued at or near the time of the appointment of the receiver in 1923, this action is barred. Ueland v. Haugan, 70 Minn. 349, 73 N.W. 169; Willius v. Albrecht, 100 Minn. 436, 111 N.W. 387, 112 N.W. 862; Lagerman v. Casserly, 107 Minn. 491, 120 N.W. 1086, 23 L.R.A.(N.S.) 673, 131 A.S.R. 506; Swing v. Barnard-Cope Mfg. Co. 115 Minn. 47, 131 N.W. 855; Shearer v. Christy, 136 Minn. 111, 161 N.W. 498.
2. The stockholders' liability to creditors of a corporation is created by art. 10, § 3, of our state constitution. The liability is absolute and unconditional under the language there used. When a business corporation is placed in the hands of a receiver because it is unable to meet its obligations when due and the corporation consents to such receivership, as it did here, it amounts to an admission of insolvency and constitutes an act of bankruptcy under the federal law. In re Maplecroft Mills (D.C.) 218 F. 659. The proceeding in that case was very similar to that before us here. The complaint or petition for appointment of a receiver did not directly allege insolvency. It alleged inability to meet current bills and danger of insolvency. It asked, as here, for the appointment of a receiver to conserve the property for the stockholders and creditors and to carry on the business. The court pointed out that a court of equity had no jurisdiction to appoint a receiver for the purpose of carrying on business for a corporation and that in the situation there shown the only ground on which the court could appoint the receiver was because of insolvency. It held that insolvency was sufficiently shown and that it must be presumed that the court based its action on a finding of insolvency.
There is other evidence of insolvency here. On June 14, 1923, the receiver inventoried the assets and liabilities of the corporation and found liabilities of $39,525, and assets of the value of $26,743.
There is conflict in the authorities as to whether an adjudication of involvency is necessary in order to start the running of the statute of limitations. There are a number of cases holding that, where a corporation is unable to meet its current debts and ceases to pay or is placed in the hands of a receiver on that account, sufficient insolvency is shown to start the statute running. Godfrey v. Terry, 97 U.S 171, 24 L.Ed. 944, and cases cited in note 1 to Cowden v. Williams, 55 A.L.R. 1059, 1081. Other cases hold that the statute runs in favor of the stockholder from the time the insolvency of the corporation has been established in a judicial proceeding. Cases are cited in note 2, 55 A.L.R. 1084, as sustaining this rule. The cases cited from the state courts are based to a large extent on the construction of the statutes of the particular state. The Ohio cases there cited appear to go only to the extent of holding that the mere fact that corporate assets are insufficient to meet corporate debts is insufficient to start the statute running, but that when a receiver is appointed or the property of the corporation put in liquidation for the benefit of...
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