Vencedor Investment Company v. Highland Canal & Power Company
| Decision Date | 13 February 1914 |
| Docket Number | 18,499 - (292) |
| Citation | 145 N.W. 611,125 Minn. 20 |
| Parties | VENCEDOR INVESTMENT COMPANY v. HIGHLAND CANAL & POWER COMPANY |
| Court | Minnesota Supreme Court |
Action in the district court for St. Louis county to enforce against the stockholders of defendant corporation their constitutional liability and to appoint a receiver of defendant. From an order, Cant, J., sustaining defendant's demurrer to the complaint, plaintiff appealed. Affirmed.
Manufacturing corporations -- liability of stockholders.
1. A corporation organized for the purpose of generating electricity for distribution to the public is a manufacturing corporation within the meaning of section 3, article 10, of the Constitution, by which the stockholders of manufacturing corporations are exempted from the liability there imposed upon corporations in general.
Manufacturing corporations
2. The fact that the corporation, organized for the purpose stated also is vested with the power of eminent domain in acquiring property for the conduct of its business, does not render it any the less a manufacturing corporation.
Stearns & Hunter, for appellant.
Washburn Bailey & Mitchell, for respondent.
Action to enforce the liability imposed upon stockholders of corporations by section 3, article 10, of the state Constitution. Defendant interposed a general demurrer to the complaint, and plaintiff appealed from an order sustaining the same.
The only question presented is whether the defendant is a manufacturing corporation, within the meaning of the Constitution, and therefore exempt from the liability there imposed. If it be a manufacturing corporation, the demurrer was properly sustained, for to enforce liability against the stockholders appears to be the sole purpose of the action. We come directly to that question.
The section of the Constitution referred to provides as follows:
"Each stockholder in any corporation, excepting those organized for the purpose of carrying on any kind of manufacturing or mechanical business, shall be liable to the amount of stock held or owned by him."
The general nature of the business of this corporation is expressed in its articles of incorporation as follows:
"The generation of electricity by means of water power and the distribution of the same for light, heat and power purposes; all of the foregoing to be done for public use for reasonable compensation; for such purposes the corporation may acquire by purchase, lease or condemnation * * * all necessary dams, reservoirs, canals, pipe lines, power houses * * * necessary or convenient for carrying on the business of the corporation as above defined. * * *"
The question whether a corporation formed for the purpose of generating electricity for sale and distribution to the public is a manufacturing corporation, within the meaning of statutes upon the subject of taxation, insolvency laws, and the Federal bankruptcy act, or constitutional or statutory provisions exempting the stockholders thereof from personal liability for the debts of the corporation, has been presented in one form or another to the different state and Federal courts, and there is direct conflict in the decisions. It has been expressly held that the generation of electricity is in no sense manufacturing, within the meaning of such statutes, Frederick Co. v. City of Frederick, 84 Md. 599, 36 A. 362, 36 L.R.A. 130; State v. New Orleans Ry. & L. Co. 116 La 144, 40 So. 597, 7 Ann. Cas. 724; In re Hudson River Electric Power Co. (D.C.) 173 F. 934. But the general trend of the decisions is to the contrary. People v. Wemple, 129 N.Y. 543, 29 N.E. 808, 14 L.R.A. 708; Commonwealth v. Keystone Electric Light, Heat & Power Co. 193 Pa. St. 245, 44 A. 326; McMillan v. Noyes, 75 N.H. 258, 72 A. 759; Beggs v. Edison Electric Co. 96 Ala. 295, 11 So. 381, 38 Am. St. 94; Bates Machine Co. v. Trenton & N.B.R. Co. 70 N. J.L. 684, 58 A. 935, 103 Am. St. 811; Angola Ry. & Power Co. v. Butz (Ind. App.) 98 N.E. 818; Kentucky Electric Co. v. Buechel, 146 Ky. 660, 143 S.W. 58, 38 L.R.A. (N.S.) 907, 20 Ann. Cas. 714. Practically all the adjudicated cases will be found cited in a note to Williams v. Warren (N.H.) 64 L.R.A. 38 [72 N.H. 305, 56 A. 463]. The question has not heretofore been presented to this court in controverted form, though it was directly involved in Cuyler v. City Power Co. 74 Minn. 22, 76 N.W. 948. Defendant in that case was incorporated for the purpose of "producing and creating water, steam and other motive power" and distributing the same to the public, and, the corporation being insolvent, the action was to enforce the liability imposed by the Constitution upon its stockholders. The chief contention in that case was that the corporation was not exclusively a manufacturing concern, because, as was claimed, its articles of incorporation authorized it to buy and sell power sites and other property, not necessary in the conduct of the corporate business of creating motive power, and, therefore, that it did not come within the class of corporations intended...
To continue reading
Request your trial