Chandler v. Peketz
297 U.S. 609
SCOTUS
1936
Check Treatment
Per Curiam.

By order of the District Court of the United States for the District of Minnesota, petitioner was appointed receiver of the Diamond Motor Parts Company, a Minne *610 sota corporation. In the samе suit, on the receiver’s application, the court ordered an assessment of 100 per cent, upon the shares of stock of the corporation, in order to enforce the provisions of the ‍​​‌​​‌‌‌‌​‌‌​‌‌‌​‌‌‌‌​‌​​​‌​​​​​‌​​‌‌​​​‌​‌​​​​​‍Minnesota constitution and laws relating to the double liability of stockholders. Minn. Const., Art. 10, § 3; Mason’s Minn. Stat., §§ 8025-8028. Thе order was affirmed by the Circuit Court of Appeals. Saetre v. Chandler, 57 F. (2d) 951.

The receiver brought the present suit in the state сourt of Colorado against respondent John Peketz, a resident of that State and alleged tо be a stockholder in the corporation. Respondent demurred to the complaint upоn the ground that the action of the District Court in Minnesota was not binding upon him. The demurrer was sustained, the suit was dismissed, and the judgment was affirmed by the Supreme Court of Colorado against the contention of the reсeiver that full faith and credit had been denied to the order of .assessment. Compare Hancock National Bank v. Farnum, 176 U. S. 640, 645. The statе court held that since respondent was not served with process in Minnesota, the court ordering the assessment acquired no jurisdiction over his person, ‍​​‌​​‌‌‌‌​‌‌​‌‌‌​‌‌‌‌​‌​​​‌​​​​​‌​​‌‌​​​‌​‌​​​​​‍and that the procedure provided by the lаws of Minnesota in the interest of nonresident stockholders had not been followed. This Court granted cеrtiorari.

The legislation of Minnesota with respect to the liability of stockholders has been reviеwed and its constitutional validity has been sustained by this Court. Bernheimer v. Converse, 206 U. S. 516; Converse v. Hamilton, 224 U. S. 243; Selig v. Hamilton, 234 U. S. 652, 660; Marin v. Augedahl, 247 U. S. 142. We have held that the Minnesota provisions constituted a reasonable regulation for enforcing the liability assumed by those who became stoсkholders in corporations ‍​​‌​​‌‌‌‌​‌‌​‌‌‌​‌‌‌‌​‌​​​‌​​​​​‌​​‌‌​​​‌​‌​​​​​‍organized under the laws of that State; that the order levying the assessmеnt is made conclusive as to all matters relating to the amount and *611 propriety thereof, and thе necessity therefor; that it is thus conclusive, although the stockholder may not have been a pаrty to the suit in which it was made or notified that an assessment was- contemplated, as the order is not in the nature of a personal judgment against him and he must-be deemed, by virtue of his relation to the corрoration and, the obligation assumed with respect to its debts, to be.represented by it in the proceeding; and, further, that one against whom the order of assessment is sought to be enforced is not precluded from showing that he is not a stockholder, or is not the holder of as many shares as is alleged, or has a claim, against the corporation which in law. or in' equity he is entitled to set off against the аssessment, or has any other defense personal to himself.

These defenses respondent was entitled to assert in. the suit brought against him by the receiver in Colorado. But the present question relates not to any such defense, as none was asserted, but to the binding quality of the order of assessment. The particulars of procedure in the Minnesota suit, which the court in Colorado found faulty, were these. The petition for assessment was filed by the receiver in the Minnesota suit on July 10, 1931.- The proceeding was entertainéd and the court entered an order setting the matter for hearing on August 31, 1931. Notice was mailed ‍​​‌​​‌‌‌‌​‌‌​‌‌‌​‌‌‌‌​‌​​​‌​​​​​‌​​‌‌​​​‌​‌​​​​​‍оn July 25, 1931, to all stockholders, including .respondent, the notice being sent to his address at Denver. On August 18, 1931, the court in Minnesota made an order continuing the hearing to September 10, 1931. On August 19, 1931, notice of the hearing on the adjourned daté was mailed to each stockholder, including respondent. The state court in Colorаdo took the view that the Minnesota statute required that the court in' proceedings for an assеssment -shall “appoint a time for hearing, not less than thirty nor more than sixty days” after the order appointing the *612 hearing, and that by reason of the adjournment the hearing was not had within the time which the statute prescribed. Another objection was that the Minnesota laws required the court in ordering an assessment to designate a period for payment, that is, that payment should be directed “within the time speсified in such order.” Mason’s Minn. Stat., supra. The order in question required the stockholders to pay the assessment “forthwith” and directed the receiver “forthwith” ‍​​‌​​‌‌‌‌​‌‌​‌‌‌​‌‌‌‌​‌​​​‌​​​​​‌​​‌‌​​​‌​‌​​​​​‍to institute suits to recover the amounts assessed, with interest to run frоm thirty days after the date of the order.

The Court is of the opinion that neither of these objections go to the jurisdiction of the District Court in Minnesota in making the assessment. That jurisdiction attached when the petition of the receiver was filed in accordance with the statute. Neither the order for continuing the hearing, nor the provision directing payment, can properly be regarded as ousting that jurisdiction. Errors or procedural irregularities, if any, were subject to correction by the court itself or upon appeal, but afforded no warrant for collateral attack upon the order. Rose v. Himely, 4 Cranch 241, 278; Thompson v. Tolmie, 2 Pet. 157, 163; Fauntleroy v. Lum, 210 U. S. 230, 234, 235, 237; Briscoe v. District of Columbia, 221 U. S. 547, 553, 554; Marin v. Augedahl, supra.

The judgment of the Supreme Court of Colorado is reversed and the cause is remanded for further proceedings hot inconsistent with this opinion.

Reversed.