Olson v. State Bank

• Decision Date: 22 June 1894
• Citation: 57 Minn. 552,59 N.W. 635
• Parties: OLSON v. STATE BANK ET AL. (TWO CASES).
• Court: Minnesota Supreme Court

57 Minn. 552

59 N.W. 635

OLSON

v.STATE BANK ET AL. (TWO CASES).

Supreme Court of Minnesota.

June 22, 1894.

(Syllabus by the Court.)

1. The statutory liability of stockholders for corporate debts cannot be enforced in insolvency proceedings against the corporation under the act of 1881, but pending such insolvency proceedings the creditors may bring an action to enforce that liability under Gen. St. 1878, c. 76, § 17, in which the court may at once determine the maximum liability of each stockholder, and await the result of the insolvency proceedings to ascertain how much of it shall be enforced by execution.

2. One acquiring stock in a banking corporation incurs the statutory liability, not only in respect to corporate debts contracted after he became a stockholder, but also in respect to debts contracted before that time. Gebhard v. Eastman, 7 Minn. 56 (Gil. 40), followed.

Appeal from district court, Hennepin county; Henry G. Hicks, Judge.

Action by Hans H. Olson against the State Bank and others to enforce a stockholder's liability. From orders overruling the demurrers to complaint, defendants appeal. Affirmed.

James O. Pierce, for appellant Levi L. Cook.

George D. Emery, for appellants Roos & Manley.

John W. Arctander, for respondent.

GILFILLAN, C. J.

The bank defendant was incorporated under the laws of this state to do a banking business, at first with a stock capital of $60,000, afterwards increased to $75,000, and later still to $100,000. June 27, 1893, it made, under the insolvent law, an assignment for the benefit of its creditors, and defendant Hahn is the assignee thereunder. July 7, 1892, plaintiff made a deposit with the bank, repayable to him in 12 months after that date. It not being paid when due, on August 19, 1893, he recovered judgment against the bank for the deposit, issued execution thereon, and September 5, 1893, it was returned wholly unsatisfied, for want of property whereon to levy. The plaintiff brings this action in behalf of himself, and all other creditors of the bank who shall exhibit their claims and become parties to the action, against all the stockholders, to enforce their statutory liability; and he asks for the appointment of a receiver to receive and distribute the proceeds of enforcing it. The allegations of the complaint are full, stating, in addition to the foregoing facts, among other things, that the property and assets of the bank are of not higher value than $100,000, and that it is indebted in more than $500,000. Several of the stockholder defendants demurred to the complaint on the grounds that it appears therefrom that there is another action pending between the same parties for the same cause, and in which the same relief may be had, and that the complaint does not state facts sufficient to constitute a cause of action. From orders overruling such demurrers, these appeals are brought.

The objection that the complaint shows another action pending for the same cause is based on the proposition that the statutory liability of stockholders of an insolvent corporation may be enforced in insolvency proceedings against the corporation under the law of 1881. The question was indirectly before us in State v. Bank of New England, 56 N. W. 575, in which it was stated, as a distinction between proceedings against an insolvent corporation under Gen. St. 1878, c. 76, and insolvency proceedings under the act of 1881, that, under the former proceedings, directors and stockholders may be brought in, and their liabilities to creditors enforced; and it was assumed, or taken for granted, that this cannot be done under the latter proceedings. Chapter 76 clearly contemplates bringing in stockholders for that purpose. If this were not so, then, so far as that chapter is concerned, the creditors would be left to a suit in equity to enforce any liability of stockholders, other than such as are deemed assets of the corporation. The statute determines the scope and compass of every special proceeding provided by it; and if authority is not found, either in express terms or by implication, in a statute regulating a special proceeding, for doing a particular thing, there is no authority. In Spilman v. Mendenhall (Minn.) 57 N. W. 468, it was held that the proceeding regulated by Gen. St. 1878, c. 34, §§ 415 to 420, inclusive, being one to dissolve a corporation, settle its business, and convert its assets, and apply the proceeds in payment of its debts, stockholders cannot be brought in to answer to their statutory liability, for the reason that the statute does not so provide, though they may be to enforce unpaid subscriptions, because such are assets of the corporation. And it is the same with insolvency proceedings under the law of 1881. There is nothing in that law to suggest that any remedy of creditors who come into the proceeding can be enforced, except as to the assets of the debtor. It is a proceeding merely to convert such assets, and apply the proceeds upon the claims of such creditors as come in, and comply with the terms of the law. There is no provision either for bringing in the stockholders of a corporation debtor, or for bringing in the other creditors who are equally interested in the statutory liability with those who voluntarily come in, or for sequestering that liability for the benefit of the latter. That liability cannot be enforced in the insolvency proceeding. The proceeding commenced under chapter 76, § 9, is, primarily, one to convert the assets and pay the debts; and, as such, it and an insolvency proceeding under the act of 1881 cannot go on effectually at the same time against the same corporation. If both are commenced, one or the other must give way. In the nature of things, there cannot be two proceedings, whose sole purpose is to administer the same assets, running at the same time. But by the provisions of sections 15 and 16 of chapter 76 the purpose of a proceeding commenced under section 9 may be enlarged so as to make it a proceeding to enforce the statutory liability of directors and stockholders, as well as to administer the assets of the corporation.

Under the ground of demurrer that the complaint does not state facts sufficient to constitute a cause of action, the objection is made that the action is prematurely brought. This is on the proposition that, before creditors can seek to...