44 Minn. 409 | Minn. | 1890
The two main points made by appellants are, first,
that the constitutional “double liability” of stockholders, if it existed, was not enforceable in this action; second, that-no such liability existed in this ease. The grounds upon which it is sought to maintain the first proposition are: (1) That no such cause of action is set up in the complaint, and (2) that all the stockholders were not made parties to the suit. If the correctness of the first ground is to be determined by reference exclusively to the complaint of the judgment ■creditors who instituted the action, appellants’ contention might perhaps be correct; but in assuming this to be the fact consists the ■ehief fallacy in their argument. An action against a corporation, under Gen. St. 1878, c. 76, is in the nature of an action to wind up its affairs, to collect and convert all its assets, and appropriate them ratably among creditors, and to enforce the individual liability of stockholders and others to the extent of the deficiency of assets. As was said in Merchants’ Nat. Bank v. Bailey Mfg. Co., 34 Minn. 323, (25 N. W. Rep. 639,) “it is an action not proceeding in the ordinary way "of actions at law by trial of simple issues, judgment, and execution, but by the exercise of powers peculiar to the former courts of •chancery.” The proceedings are susceptible of being moulded into almost any form necessary to accomplish their purpose of securing a full and final adjustment of the rights and liabilities of all parties growing out of the corporate business. During the progress of the ■proceedings new parties may be admitted or brought in, and new issues introduced from time to time, as they become necessary for ■the final winding up of the affairs of the corporation, and the enforcement of all the rights of creditors. The original complaint need not ■state more than a case for the sequestration of the corporate assets. Neither stockholders, directors, nor creditors, (save the one who institutes the suit,) need be made parties in the first instance. Other •creditors may subsequently come in or be brought in. Stockholders and directors may also be brought in for the purpose of enforcing their individual liability. This may be done at the instance or upon the complaint of any creditor who has become a party to the proceedings. In short, the proceedings are intended to be so elastic as to
As to the alleged defect of parties, the rule undoubtedly is that in an action under chapter 76, when it is sought to enforce the individual liability of stockholders, all of the stockholders should be made, parties, and that if they are not it constitutes a defect of parties, which may be taken advantage of by answer or demurrer. Allen v. Walsh, 25 Minn. 543; Johnson v. Fischer, 30 Minn. 173, (14 N. W. Rep. 799.) But, as in any' other action, if the objection is not taken, either by answer or demurrer, the defect is deemed waived. Indeed, in such a case, there are special reasons why the defect should be deemed waived if not thus specifically objected to. The rule requiring all stockholders to be made parties is one peculiarly for the ben-
2. Upon the merits of the case, however, the appellants contend that no individual liability of stockholders under the constitution exists in this case, because — First, according to its articles, the corpo
Whether an individual liability, and if so what, would attach to the stockholders of a corporation organized for the purpose, as expressed in its articles, of carrying on an exclusively manufacturing business, but which should in fact engage in some other business, is a question upon which this court has never passed, and which is not involved in this case.
By consent of the attorneys in this ease, outside counsel has filed a brief, in which it is contended that section 3, art. 10, of the constitution is not self-executing, and that, as there is no statute carrying it into effect, therefore there is no individual liability of stockholders, none existing at common law. As the appellants make no such point', it is not presented by this appeal, and we cannot consider it.
It is also assigned as error that the evidence was insufficient to» justify the referee'allowing the claims of certain creditors; also that the referee admitted incompetent ^idence in support of one of these
Order affirmed.