Childs v. Cleaves

95 Me. 498 | Me. | 1901

Whitehouse, J.

This is an action at law in which the defendant is summoned to answer to the plaintiff, Clarence H. Childs of Minneapolis, “ as receiver for the collection and enforcement of the liability of stockholders of the Bank of New England,” a corporation organized under the laws of the State of Minnesota. The action is brought to enforce the double liability of the defendant who was a non-resident stockholder in the corporation.

In 1893, the bank in question, upon complaint filed by the State of Minnesota, one of its creditors, was adjudged insolvent by a district court in Minnesota, and a general receiver was appointed, by whom all of the existing assets of the bank were received and distributed. The administration of the estate by this receiver was completed in July, 1897.

In the meantime, in 1895, it having become apparent that the existing assets were insufficient to discharge the entire indebtedness of the bank, an order was issued by the court, upon petition of another creditor, to have all of the resident stockholders impleaded in the original complaint upon which the adjudication of insolvency was made, for the purpose of enforcing their statutory liability to the creditors of the bank who might thereafter intervene. Thereupon all of the resident stockholders became parties to that proceeding, an order was entered by the court limiting the time within which creditors might intervene and present their complaints, and on the ninth day of July, 1897, a final decree was entered in favor of the intervening creditors as follows, to wit:

“First: That the several sums due and owing to the several creditors who had intervened in said action by the defendant Bank of New England, which said indebtedness was therein adjudged and decreed, aggregated the sum of ninety-three thousand, three hundred fifteen dollars and thirty cents.

“Second: That the total capital stock of said Bank of New England was one hundred thousand dollars, all of which was issued and outstanding at the time of the contracting of said indebtedness and the date of the assignment of said bank, as aforesaid.

“Third: The names of the several resident stockholders and the amount of stock held by each.

“ Fourth: That each of said stockholders was liable upon said stock to the creditors therein ascertained for an amount equal to double the par value of stock held by him.

“Fifth: That said other intervening plaintiffs and said intervening creditors so ascertained, recover from each of the several stockholder defendants within the State of Minnesota a sum equal to double the par value of the stock held by each stockholder.

“ Sixth: That this plaintiff be appointed receiver therein for the purpose of collecting the judgment so rendered against each of the defendants therein and for the further purpose of instituting all necessary actions and proceedings for the purpose of collecting from the non-resident stockholders of said corporation, to the end that any and all sums so' collected by him be divided ratably among the creditors of said corporation so enumerated in said judgment and in proportion to the amount of their respective claims.

“Seventh: That the court retain jurisdiction of said cause for the furtherance of justice and equity.”

The plaintiff duly qualified as receiver and gave his bond to the court in the sum of fifty thousand dollars for the faithful performance of his duties; and on the fifteenth day of August, 1898, a further order of the court was made authorizing and directing him to institute, in his own name as receiver, all auxiliary actions necessary to enforce the liability of non-resident stockholders. The corporate assets had proved sufficient to pay only the preferred claim of the State of Minnesota, so that at the time of the entry of judgment against the stockholders there was due to the intervening creditors the sum of $93,315; and at the time of the commencement of this action the receiver, in discharge of his duty under the decree, had been able to collect no more than $35,000.

This defendant was never served with process, and never in any manner entered his appearance in the proceeding in the district court of Minnesota.

I. The case comes to the law court on a general demurrer interposed by the defendant to the plaintiff’s declaration which duly set out the facts above stated. The presiding justice overruled the demurrer and adjudged the declaration good. Two questions are thus presented to the court:

First, to what extent, if at all, is this defendant, a non-resident stockholder, bound by the decrees of the Minnesota court in which the parent suit was instituted ? And, second, whether the plaintiff, in his capacity as receiver for the creditors, appointed by the Minnesota court, for the purpose of enforcing the liability of stockholders, is entitled to maintain this action in a state jurisdiction other than that of his appointment, either on grounds of comity or otherwise ?

Article IX, Section 13, of the Constitution of Minnesota provides as follows:

“Third. The stockholders in any corporation and joint association for banking purposes, issuing bank notes, shall be individually liable in an amount equal to double the amount of stock owned by them for all the debts of said corporation or association ; and such individual liability shall continue for one year after any transfer or sale by any stockholder or stockholders.”

And in Chapter 33, Section 21, of the statutes of Minnesota is found this provision:

“And the stockholders in each bank shall be individually liable in an amount equal to double the amount of stock owned by them for all the debts of such bank, and such individual liability shall continue for one year after any transfer or sale of stock by any stockholder or stockholders.”

The only provisions found in the statutes of Minnesota for enforcing this liability are contained in Gen. St. 1894, chap. 76, §§ 5905-5911, which are as follows:

“Sec. 5905. Whenever any creditor of a corporation seeks to charge the directors, trustees, or other superintending officers of such corporation, or the stockholders thereof, on account of any liability created by law, he may file his complaint for that purpose in any district court which possesses jurisdiction to enforce such liability.

“ Sec. 5906. The court shall proceed thereon as in other cases, and, when necessary, shall cause an account to be taken of the property and debts due to and from such corporation, and shall appoint one or more receivers.

“Sec. 5907. If, on the coming in of the answer, or upon the taking of any such account, it appeal’s that such corporation is insolvent, and that it has no property or effects to satisfy such creditors, the court may proceed, without appointing any receiver, to ascertain the respective liabilities of such directors and stockholders, and enforce the same by its judgment, as in other cases.

“Sec. 5908. Upon a final judgment in any such action to restrain a corporation, or against directors or stockholders, the court shall cause a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among its creditors.

“Sec. 5909. In all cases in which the directors or other officers of a corporation, or the stockholders thereof, are made parties to an action in which a judgment is rendered, if the property of such corporation is insufficient to discharge its debts, the court shall proceed to compel each stockholder to pay in the amount due and remaining unpaid on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the company.

“ Sec. 5910. If the debts of the company remain unsatisfied the court shall proceed to ascertain the respective liabilities of the directors or other officers, and of the stockholders, and to adjudge the amount payable by each, and enforce the judgment, as in other cases.

“Sec. 5911. Whenever any action is brought against any corporation, its directors or other superintending officers, or stockholders, according to the provisions of this chapter, the court, whenever it appears necessary or propei’, may order notice to be published, in such a manner as it shall direct, requiring all the creditors of such corporation to exhibit their claims and become parties to the action, within a reasonable time, not less than six months from the first publication of such order, and in default thereof, to be precluded from all benefit of the judgment which shall be rendered in such action, and from any distribution which shall be made under such judgment.”

It thus appears that the several orders and decrees made by the court of Minnesota, in the course of its proceedings, requiring an account to be taken of the corporate property and debts, and ascertainments to be made respecting the names of the several stockholders and the amount of stock held by each, were in harmony with- the provisions of the constitution and laws of Minnesota above quoted. It will be observed, however, that while the court rendered personal judgment only against the Minnesota stockholders, it expressly authorized the receiver to institute all necessary actions for the purpose of collecting from the non-resident stockholders. The defendant claims that the proceedings under the Minnesota statute instituted by the creditors, and which form the basis of this action, were essentially an action against the stockholders to enforce their individual liability, and not an action against the corporation, and therefore res inter alios and of no effect against this defendant, a non-resident stockholder who did not become a party to the action.

This question has been the subject of frequent examination in recent years in both the federal and state courts, and the great weight of authority in both jurisdictions is undoubtedly against the defendant’s contention.

In considering the scope and purpose of a statute, regard is properly had, in the first instance, to the construction placed upon it by the courts of the state in which it was enacted, this being deemed a part of the law itself.

In Hanson v. Davison, 73 Minn. 454, the court say: “Equitable considerations and the statute require that an action of the character prescribed by chapter 76 be brought by and on behalf of all the creditors, and against the corporation and all of the stockholders of whom the court has jurisdiction, to determine the amount remaining due to such creditors, respectively, after the assets of the corporation have been exhausted; thereby providing a basis for determining the extent of the liability of the respective stockholders. The judgment in such original action, determining the amount of the corporate debts remaining unpaid, is binding on all of the stockholders, whether parties to the action or not, unless impeached for fraud. A judgment against the corporation is, in effect, a judgment against the stockholders in their corporate capacity. They are represented by the corporation in the action.

“In principle, there can be no difference in this respect between an action to enforce an unpaid subscription and one to enforce a stockholder’s liability. The action required to be brought by chapter 76 is the, original action for the sequestration and distribution of the fund to be derived from tbe stockholder’s liability, and the decree entered therein is a final and conclusive determination of the amount (unless impeached for fraud) for which the stockholders are liable, not exceeding the maximum limit of liabilities as fixed by law. As the amount and par value of the stock issued and outstanding is a matter of record and readily proven in any action, there is nothing to prevent the prosecution, after such decree is entered, of an ancillary action in another jurisdiction by the receiver appointed to collect and distribute its funds arising from stockholders’ liability in the original action, or by any other party or person who may be appointed by the court for that purpose, against any stockholder who was not made a party to the original action, to collect from him the amount of his liability on account of the debts of the corporation, for the benefit of all the creditors.” See also Holland v. Development Co., 65 Minn. 324; Marson v. Deither, 49 Minn. 423 ; Olson v. Cook, 57 Minn. 552; Hirst Nat. Bank v. Gustin, 42 Minn, 327.

But the principle that stockholders represent the corporation and that a judgment against the corporation is conclusive against the stockholders with respect to corporate matters, may properly be termed familiar and well-settled. It is established beyond question by both state and federal authority. In Hawkins v. Glenn, 131 U. S. p. 329, the chief justice says: “Sued after such an order of court, the defendant does not deny the existence of any one of the facts upon which the order was made, but contends that there has been no call as to him, because he was not a party to the cause between creditors and corporation. We understand the rule to be otherwise, and that the stockholder is bound by a decree of a court of equity against the corporation in enforcement of a corporate duty, although not a party as an individual, but only through representation by the company. A stockholder is so far an integral part of the corporation that, in the view of the law, he is privy to the proceedings touching the body of which he is a member.”

But a more recent case to this effect is Hancock National Bank v. Farnum, 176 U. S. 640, in which it is said: “Now, as the judgment rendered in the Kansas court is in that State not only conclusive against the corporation, but also binding upon the stockholder, it must, in order to have the same force and effect in other States of the Union, be adjudged in their courts to be binding upon him, and the only defenses which he can make against it are those which he could make in the courts of Kansas. The question to be determined in this case was not what credit and effect are given in an action against a stockholder in the courts of. Rhode Island to a judgment in those courts against the corporation of which he is a stockholder, but what credit and effect are given in the courts of Kansas in a like action to a similar judgment there rendered. Thus, and thus only, can the full faith and credit prescribed by the constitution of the United States and the act of Congress be secured.....

“ The law and usage in Kansas, prescribed by its legislature and enforced in its courts, make such a judgment not only conclusive as to the liability of the corporation, but also an adjudication binding each stockholder therein. We do not mean that it is conclusive as against any individual sued as a stockholder, that he is one, or if one, that he has not already discharged by payment to some other creditor of the corporation the full measure of his liability, or that he has not claims against the corporation, or judgments against it, which he may, in law or equity, as any debtor, whether by judgment or otherwise, set off against a claim or judgment, but in other respects it is an adjudication binding him. He is so far a part of the corporation that he is represented by it in the action against it.” See also Glenn v. Liggett, 135 U. S. 533; Great West. Tel. Co. v. Purdy, 162 U. S. 329; Ball v. Reese, 58 Kan. 614.

In the recent case of Whitman v. Oxford Nat. Bank, 176 U. S. 559, an action brought by an individual creditor to enforce a non-resident stockholder’s liability, the court say: “The liability which by the constitution and statutes is thus declared to rest upon the stockholder, though statutory in its origin, is contractual in its nature......While the statute of Kansas permitted the forming of the corporation under certain conditions, the action of these parties was purely voluntary. In other words, they entered into a contract authorized by statute. . . . . And as this liability is one which is contractual in its nature, it is also clear that an action therefor can be maintained in any court of competent jurisdiction.” See also Hancock Nat. Bank v. Ellis, 172 Mass. 39; Bell v. Harwell, 176 Ill. 489; West Nat. Bank v. Lawrence, 117 Mich. 669; Paine v. Stewart, 33 Conn. 516; Cushing v. Perot, 175 Pa. 66; and Guerney v. Moore, 131 Mo. 650, in which the court say, “The ordinary statutory liability of a stockholder is a contractual liability..... “It does not follow that, because people in this commonwealth have restricted the liability of stockholders in corporations created by virtue of our own laws to the amount of their stock, they will refuse to enforce in their courts the contracts of its own citizens who voluntarily go into other states and become stockholders in corporations under their laws, which impose upon stockholders a personal liability in excess of the amount of stock taken. Such a contract is not against public policy. It contravenes no principle of good morals and has no mischievous tendency. It is not in any sense repugnant to our ideas of honesty or justice.”

But one of the most valuable of all the recent contributions to the discussion of this subject is found in Hale v. Hardon, 95 Fed. Rep. 747. This, like the case at bar, was an ancillary suit brought in the U. S. Circuit Court for the district of Massachusetts by a receiver appointed in Minnesota to enforce the liability of a non-i’esident stockholder to the creditors; and it was held in an elaborate opinion by Judge Aldrich that for the purpose of ascertaining the assets and liabilities of the corporation, non-resident stockholders were represented by the corporation, or by its general receiver, and as to such matters they were bound by the adjudication though not personally made parties; but as the individual liability is directly to the creditors and not an asset of the corporation, it was considered that the non-resident stockholder was not concluded by a finding upon the ultimate question of his individual liability, nor as to the measure of such liability. In the opinion it is said: “As our conclusion is that the proceedings in Minnesota were sufficiently comprehensive as to domiciliary adjudications and ascertainments, and such as the constitution and statutes of Minnesota contemplated, and such as the statutes required, it follows that the defendant’s liability results by force of the constitutional provision and the statutes in respect to which he by implication contracted by becoming a stockholder, and that the plaintiff is entitled to recover, provided he is entitled to maintain his action in this jurisdiction as a receiver, or representative of the creditor interests, in and of the parent proceedings in Minnesota.”

In like manner, as it appears from the declaration in the case at bar that the decree of the court in the corporate domicile respecting the indebtedness of the corporation, and the ascertainments to be made in regard to the stockholders, were such as were authorized and required by the statute of Minnesota, it is clear that upon the first question presented the demurrer was properly overruled.

II. But it is insisted, in behalf of the defendant, that as the plaintiff receiver is not vested with any of the rights or assets of the corporation, he is not entitled to maintain a suit against a stockholder in another jurisdiction. It is contended that his official character is not essentially different from that of an ordinary master in chancery, appointed as the hand of the court to render incidental aid in the litigation.

It has been seen that, under the provisions of chapter 76 of the Minnesota statutes, above quoted, authorizing proceedings by creditors to enforce the statutory liability of officers, directors and stockholders, “the court shall proceed thereon as in other cases, and, when necessary, shall cause an account to be taken of the property and debts due to and from such corporation, and shall appoint one or move receivers” ; that if it appears that the corporation is insolvent, the court may proceed without appointing any receiver to ascertain the liabilities of stockholders “and enforce the same by its judgment as in other cases”; that upon final judgment the court shall cause a just and fair distribution of the proceeds of the property of the corporation to be made among its creditors; that if the property of the corporation is insufficient to satisfy its debts, the court shall enforce the payment of anything unpaid on the shares of stock, and if the debts still remain unsatisfied, — the court shall proceed to ascertain the liabilities of the stockholders and adjudge the amount payable by each and enforce the judgment “as in other cases.”

Here, again, we should look to the decisions of the Minnesota courts for some declaration of the true purpose and policy of the legislature in enacting this statute. In the first place, as has already appeared, it has been held repeatedly in that state that this constitutional, or statutory liability of the stockholders, is a liability to the creditors. It forms no part of the assets of the corporation, and it cannot be enforced by the corporation. Hence, it is obvious, that the receiver originally appointed in this case to receive and distribute the existing assets of the bank, unless expressly authorized by the statute, would have no authority to enforce the individual liability of stockholders for the purpose of paying the debts of the corporation. In re People’s Live Stock Ins. Co., 56 Minn. 180; Olson v. Cook, 57 Minn. 552, supra. And inasmuch as the general scheme of liquidation devised by the Minnesota statute requires an accounting and a pro rata distribution among all the creditors, it follows that individual creditors could not maintain an action under this statute against an individual stockholder either in Minnesota or elsewhere. The practical result would be that unless the plaintiff receiver, appointed by the court under authority of the statute for the express purpose of “instituting all necessary actions and proceedings for the pimpose of collecting from the non-resident stockholders ” any sums due for the benefit of all the creditors, can be permitted to maintain a suit for that purpose in extraterritorial jurisdictions upon the principle of comity or otherwise, the remedy provided by the statute would be a barren and inoperative one except as against the stockholders in Minnesota; and while non-resident stockholders would thus have the right to share in all the profits of a successful enterprise, they could not be compelled to fulfil their promises to creditors in the case of a losing one.

Again, it has already been seen that Hanson v. Davison, 73 Minn., supra, contains an express recognition of the right of such a receiver as this plaintiff to maintain an action in another jurisdiction to enforce the liability of a non-resident stockholder; and in Railway Co. v. Gebbard, 109 U. S. p. 531, it is said: “A corporation must dwell in the place of its creation and cannot migrate to another sovereignty.....Whatever legislative control it is subjected to at home must be recognized and submitted to by those who deal with it elsewhere.....Such being the law, it follows that every person, who deals with a corporation, impliedly subjects himself to such laws of the foreign government, affecting the affairs and obligations of the corporation with which he voluntarily contracts, as the known and established policy of that government authorizes.”

In Volume 3 of Thompson on Corporations, § 3492, referring to the “two courses open to creditors,” the author says: “The other course .... is to bring the suit on behalf of the creditors, to procure the appointment of a receiver, to have an account taken and stated, and an assessment upon all the shareholders ordered, and to enforce that assessment by supplementary actions brought by the receiver wherever the shareholders may be found. Where the latter course is taken, no objection is perceived to mingling the two kinds of procedure so far as to make such stockholders as may be found within the jurisdiction parties defendant, and to rendering decrees against them in personam, without requiring the receiver to bring separate actions at law against them, — which practice is sanctioned by the decision first above cited. This would leave him free to bring actions at law against such stockholders as might reside in other jurisdictions, as was done in the Grlenn cases.” See Hawkins v. Glenn, 131 U. S. 319 ; Glenn v. Liggett, 135 U. S. 533.

In Volume 2 of Morawetz on Corporations, § 902, the author says: “ When the liability of the shareholders is imposed for the purpose of providing a general fund for the security of creditors, in addition to the company’s capital, the proper method of proceeding seems to be to have a receiver appointed to take charge, of the fund belonging to the creditors, and distribute it ratably among them.” See also Gluck Becker on Receivers of Corp., § 58, p. 188.

In Cushing v. Perot, 175 Pa. St. 66, it was held that a single foreign creditor of an insolvent trust company in Kansas could not maintain an action in Pennsylvania to enforce the statutory liability of a stockholder residing in that state after a receiver had been appointed by the Kansas court having jurisdiction over the corporation; but that the right to sue for that purpose was in the receiver. In the opinion the court say: “ A receiver represents not only the corporation, but all its creditors, and as to the latter it is his duty to secure all the assets available for their payment. For this purpose he succeeds to their rights and has all the powers to enforce such rights that the creditors before his appointment had in their own behalf, even though such powers be beyond those which he has as the representative of- the corporation alone. As each creditor may sue, the right is equal in all and common to all, and hence the receiver who represents all alike is the proper party to assert the common right and pursue the common remedy for the common benefit.....In this manner the rights of all will be protected and justice done in a single proceeding in which every one will get what is his due, no one will be called upon to pay more than his fair proportion, and the expense, delay, inconvenience and inevitable occasional injustice of separate actions by different creditors against different stockholders with their attendant legion of resulting actions for contribution, will be avoided.”

In Relfe v. Rundle, 108 U. S. 222, the statute provided that the Superintendent of Insurance should become trustee of the funds of any insolvent life insurance corporation of Missouri. In the opinion the court say: “ The law which clothed him with this trust was in legal effect part of the charter of the corporation. . . . . His authority does not come from a decree of the court, but from the statute.....The appellees, when they contracted with the Missouri corporation, impliedly agreed that if the contract was dissolved under the Missouri laws, the superintendent of the insurance department of the state should represent the company in all suits instituted by them affecting the winding up of its affairs.” See also Parsons v. Insurance Co., 31 Fed. Rep. 305.

In Davis v. Gray, 16 Wall. 203, we are reminded that in the progressive development of equity the functions of receivers are continually broadening, and with reference to the statutes as the source of their powers, the court say: “We see no reason why a court of equity, in the exercise of its undoubted jurisdiction, may not accomplish all the best results intended to be secured by such legislation without its aid.” '

But the case of Hale v. Hardon, 95 Fed. Rep., supra, is also a leading case in the First U. S. Circuit upon this question of the capacity of a receiver, appointed by authority of the Minnesota statute under consideration, to maintain an action in a foreign jurisdiction. The opinion contains a critical analysis of the statute and an exhaustive discussion of the whole subject in the light of both reason and authority. On page 771 it is said: “The plaintiff is not a common law receiver representing the interests of all the parties ; he is not a statutory receiver by express personal or official designation, as in Relfe v. Rundle, supra; he is not a receiver who has leave to sue; but he is a receiver appointed by the court, under an express statutory provision, and an imperative requirement that the court shall appoint, and is exercising the functions which the law-making power intended he should exercise, and is exercising such power under the authority of the statute conferred by the court, not by law, as in the other class of cases, but by express authority and direction, which charge him with the specific duty. It being the statutory intent to have the separate and distinct interests of the creditors against stockholders represented by a separate and distinct statutory agency, an express provision ‘that the court shall appoint one or more receivers for the interests of the corporation, and a separate receiver for such interests of the creditors,’ would have meant no more than the provision actually employed that ‘ the court .... shall appoint one or more receivers ’ means under fair and reasonable intendment.” And on page 775: “Whether a receiver shall or shall not maintain an action extra-territorially is not a question of absolute right. A receiver does not possess the absolute right to sue in a foreign jurisdiction. Neither does an absolute right exist on behalf of a defendant that he shall not sue. Under our system of territorial and state divisions, and the resulting quasi independent judicial systems, there is and can be no imperative and absolute right on the subject. If this action at law is maintained extraterritorially in favor of a receiver, in aid of a parent proceeding in Minnesota, it is upon wholesome grounds of public policy, and of justice and comity. . . . . As such a rule would operate in the direction of right and equity and in the direction of a convenience, and would effectuate the purposes of justice, we think it should be held to exist as an inherent necessity in our system of government.”

The case of Hale v. Hardon, has been recently reaffirmed in Hale, receiver, v. Conant in the U. S. District Court in Rhode Island, and in Hale, receiver, v. Hilliker in the U. S. Circuit Court in the Northern District of New York. It has also been followed in Hale, receiver, v. Tyler, admx. in the U. S. Circuit Court in Massachusetts, 104 Fed. Rep. 757, notwithstanding the decision of the Supreme Court of that state in Hayward v. Leeson, 176 Mass. 310. See also Howarth v. Lombard, 175 Mass. 570; Howarth v. Angle, 162 N. Y. 179, and Tompkins v. Blakey decided in N. H., March 15, 1901; (Atl. Rep. June 12, 1901.)

In the case at bar it is not necessary to hold that the plaintiff receiver succeeded to the rights of either the corporation or of the creditors; his authority emanated directly from the statute under which he was appointed. It appears, from the declaration in the writ, that he was expressly authorized and directed by a decree of the Minnesota court to institute, in his own name as receiver, all auxiliary actions necessary to enforce the liability of non-resident stockholders, and it has been seen that this decree was expressly authorized by the statute under which this receiver was appointed. True, the statute does not designate the person to be appointed receiver, but intrusts that duty to the court. In Relfe v. Rundle, 103 U. S., supra, the statute made an official designation of the Insurance Superintendent as the receiver or trustee, and the power of appointing that officer was intrusted to the Executive. In neither case does the statute make a personal selection of the receiver; and no essential difference in principle can be suggested between the receiver in Belfe v. Bundle, supra, and the receiver in the case at bar, respecting the capacity to sue in a foreign jurisdiction.

As said by tbe court in Hancock National Bank v. Ellis, 172 Mass. 47, “It certainly concerns the due administration of justice that all stockholders, wherever they reside, should be compelled by proceedings somewhere to perform the statutory obligations towards creditors of the corporation which they have assumed by becoming stockholders.” An increasing tendency has been observable in both state and federal jurisdictions, during the last decade, to sanction the enforcement of these obligations extraterritorially in any court of competent jurisdiction, except where the rights of a citizen in the state of the forum are thereby prejudiced, or the pub-lie policy of such state is contravened. It is apparent that no rights of domestic creditors can intervene, since the law creating the stockholders’ liability declares it shall be enforced for the benefit of all creditors of the corporation. That the proceeding is not opposed to the policy of any local laws in this forum is apparent from the fact that judgment was rendered for the plaintiff in the unreported cases of ' Citizens’ Sav. Bank, a Kansas corporation, against Small, Beede and Briggs respectively in Androscoggin county in 1897, holding the defendant stockholders liable.

The Minnesota statute authorizing the collection from stockholders of only so much as may be necessary to satisfy the debts of the corporation, and requiring a pro rata distribution of it among all the creditors, is seen to be free from the less equitable features of those statutes which authorize a single creditor, without a pro rata assessment, to maintain an action against a single stockholder for his own benefit and not for the benefit of all the creditors.

To the end, therefore, that the right created by the laws of another state for the common benefit of all the creditors of one of its insolvent corporations, may not be practically without a remedy, this court feels constrained to hold that the principle of comity between states is broad enough to extend recognition to the plaintiff in the courts of this state.

Exceptions overruled. Demurrer overruled.

Case Details

Case Name: Childs v. Cleaves

Court Name: Supreme Judicial Court of Maine

Date Published: Oct 30, 1901

Citation: 95 Me. 498

Court Abbreviation: Me.