Rule v. Omega Stove & Grate Company
| Decision Date | 08 May 1896 |
| Docket Number | 9234--(4) |
| Citation | 67 N.W. 60,64 Minn. 326 |
| Parties | D. C. RULE v. OMEGA STOVE & GRATE COMPANY and Others |
| Court | Minnesota Supreme Court |
Appeal by defendant L. F. Hubbard from an order of the district court for Goodhue county, Williston, J., overruling a demurrer to the complaint. Affirmed.
Order affirmed.
F. M Wilson, for appellant.
A judgment obtained in another state cannot be the foundation of a creditors' bill in this. It must be sued over before it becomes a judgment for the purpose of any remedy here. Claflin v. McDermott, 12 F. 375; Walser v Seligman, 13 F. 415; McLure v. Benceni, 2 Ired Eq. 513; Tarbell v. Griggs, 3 Paige, 207; Davis v. Bruns, 23 Hun, 648; Steere v. Hoagland, 39 Ill. 264; Farned v. Harris, 19 Miss. 366; Berryman v. Sullivan, 21 Miss. 65; Bullitt M. & Co. v. Taylor, 34 Miss. 708; Brown v. Bates, 10 Ala. 432; Greenway v. Thomas, 14 Ill. 271; Patterson v. Lynde, 112 Ill. 196; May v Black, 77 Wis. 101, 45 N.W. 949; Erickson v. Nesmith, 4 Allen, 233; Bank of Virginia v. Adams, 1 Pars. Eq. Cas. 534; National Tube Works v. Ballou, 42 F. 749; Globe Rolling Mill Co. v. Ballou, 42 F. 749; Turner Bros. v. Alabama Min. & Manuf'g Co., 25 Ill.App. 144; Nimick v. Mingo Iron Works Co., 25 W.Va. 184; Freeman, Ex'ns, § 427; Beach, Mod. Eq. Jur. § 889, p. 954, and note 4; 2 Black, Judgm. § 862; Murfree, Foreign Corp. § 394 et seq.; Rorer, Interstate Law, 290, 291; Rocky Mount. Nat. Bank v. Bliss, 89 N.Y. 338; Lowry v. Inman, 46 N.Y. 119; Christenson v. Eno, 106 N.Y. 97, 12 N.E. 648; New Haven Horse-Nail Co. v. Linden Spring Co., 142 Mass. 349, 7 N.E. 773; Post v. Toledo, C. & St. L. R. Co., 144 Mass. 341, 11 N.E. 540; Bank of N. Am. v. Rindge, 154 Mass. 203, 27 N.E. 1015. Conceding that the corporation has ceased to exist, a bill might be filed in Ohio to wind up its affairs, and have a receiver appointed, and that receiver might in our courts prosecute actions for the recovery of unpaid balances due on the capital stock. Patterson v. Lynde, supra, and authorities cited. The remedy prescribed by the statute of the state from which the corporation derives its charter should be stated in the complaint, and it should be made to appear therein that it can be employed in this state. Rice v. Merrimack Hosiery Co., 56 N.H. 114.
Albert Johnson and John F. Merrill, for respondent.
The complaint herein attempts to state two causes of action. The first one is to reach and apply upon the debt of the defendant corporation to the plaintiff certain unpaid subscriptions by the individual defendants to the capital stock of the corporation. The second one is to enforce against the stockholders a further liability created by the laws of the state of Ohio to an amount equal to the stock owned by each of them. The defendant Hubbard demurred to the entire complaint, and from an order overruling his demurrer he appealed. If the complaint states any cause of action, the order must be affirmed.
As to the second alleged cause of action, the allegations of the complaint are manifestly insufficient, as the trial court held. The language of the Ohio statute set out in the complaint is to the effect that the stockholders of a corporation which may be hereafter formed, and such stockholders as are now liable, shall be deemed and held liable, in addition to their stock, to an amount equal to their stock; but the complaint does not state when the defendant corporation was formed, or show that it belongs to the class of corporations upon whose stockholders the double liability has been imposed.
As to the first cause of action the allegations of the complaint are substantially as follows: The defendant company is a corporation for profit, organized under the laws of the state of Ohio, with a capital stock of $ 150,000, divided into shares of the par value of $ 100 each. On December 22, 1891, in the court of common pleas of the county of Cuyahoga, in the state of Ohio, the plaintiff duly recovered a judgment against the defendant corporation upon a promissory note made by it in the sum of $ 1,969, which court then had jurisdiction of the parties to the action and of the subject-matter thereof. On January 21, 1892, an execution on such judgment was duly returned wholly unsatisfied, and no part of the judgment has ever been paid. The corporation has ceased doing business, disposed of all its assets, and has now no property. The individual defendants constitute all of the stockholders of the corporation, and they were each such stockholders at the time the plaintiff's debt was incurred, and at all times thereafter. Each of them duly subscribed for the capital stock of the corporation in the number of shares set opposite the name of each in the complaint. The defendant Hubbard subscribed for 15 shares, and neither he nor any other defendant has ever paid any part of his subscription for his stock. The fair inference from these allegations is that the defendant corporation is absolutely insolvent, and without any assets other than the stock subscriptions, and is a foreign corporation beyond the reach of the process of the court; hence the plaintiff cannot obtain a money judgment against it in this state in an action at law, and have execution returned unsatisfied. The complaint states that this action is brought on behalf of the plaintiff and all of the creditors of the corporation. The relief demanded is in these words: "Wherefore plaintiff prays that the creditors of said company, and the amount due each, may be ascertained; that the stockholders of said company in arrear for payment of subscription to the stock of said company may be compelled to pay the balance due from them respectively upon said subscription; that judgment may be rendered against the said defendants for the amount due the creditors of said company in the premises, and for further equitable relief."
Unpaid stock subscriptions to the capital stock of a corporation may be reached by creditors of the corporation, and applied in payment of their claims, wherever and whenever the court can obtain jurisdiction of the stockholders, or any of them whose subscriptions are unpaid, although the corporation is a foreign one. But the remedy adopted must be that of the forum. First Nat. Bank v. Gustin Minerva Con. Min. Co., 42 Minn. 327, 44 N.W. 198. In the case cited it is incidentally stated that the procedure adopted in Merchants' Nat. Bank v. Bailey Mnfg. Co., 34 Minn. 323, 25 N.W. 639, which...
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