73 Neb. 547 | Neb. | 1905
This is a suit in equity, the real controversy being between stockholders of a banking corporation in process of voluntary liquidation. The disputed questions are with reference to the distribution among the stockholders of moneys derived from the assets of the corporation while its affairs were being closed up. The plaintiff sues for the purpose of having applied on his stock a certain per cent, of the moneys belonging to the corporation, which is alleged to be due him under the terms of an agreement entered into between the stockholders for the purpose of disbursing among those entitled thereto the funds which had accumulated prior thereto. The following is a copy of the agreement on which the suit is grounded and which is set out in the petition of the plaintiff: “It is agreed between the stockholders of the Blue Valley Bank that a dividend of 70 per cent, shall be paid to the stockholders at once on presentation of stock certificates to Elias Ballard for indorsement, and out of said dividends shall be charged any note held by the bank against such stockholders * * * and no money shall be paid any shareholder till his indebtedness to the bank is paid.” The plaintiff alleges that by the terms of said agreement he as a stockholder of the bank is entitled to the sum of $6,930. He alleges that he has paid all of his indebtedness due to the bank and thereby has become entitled, under the terms of the agreement, to his proportionate share of the funds held for distribution among the stockholders. It is alleged in the petition:
“That under such agreement all of the stockholders of said bank excepting this plaintiff have been paid the full 70 per cent, dividend upon the face value of the stock held by each stockholder; that the amount due under said agreement to this plaintiff was held by the said trustees and by the said Elias Ballard, as treasurer, .awaiting the determination of a liability of this plaintiff upon a certain note due to the said Blue Valley Bank upon which this plaintiff was surety.
*550 “6. Plaintiff further alleges that the liability of this plaintiff upon said note has been fully determined by a judgment in the district court for Thayer county, state of Nebraska, and that he has fully paid, satisfied and discharged the said note and the obligation evidenced thereby, and is entitled to receive from the trustee of said bank and from Elias Ballard, as treasurer, upon said 70 per cent, distribution, the sum of $6,930.”
The appellants, who also are stockholders, take issue with the plaintiff regarding the question of his indebtedness to the bank and its satisfaction, and by their answer allege that the plaintiff is indebted to the bank.in the sum of $4,841.15, with interest thereon at 6 per cent, per annum from January 7, 1896, as evidenced by a promissory note in favor of the bank for the principal sum stated, dated April 19, 1899, and executed by the plaintiff and one George H. Hayes. It is further alleged in the answer that the judgment mentioned in the petition, the satisfaction of which the plaintiff pleads, as a satisfaction of the indebtedness owing by him to the bank, was procured to be obtained fraudulently and collusively, and that such judgment is not binding and conclusive upon the stockholders as an adjudication of the amount due from the plaintiff to the banking corporation. These answering stockholders ask for an accounting and an ascertainment of the amount due to the bank from the plaintiff, and pray for a distribution of the proceeds, after the .amount found to be due from the plaintiff is determined and deducted from his pro rata share of the fund for distribution, which would otherwise be coming to him as one of the stockholders.
The substance of the controversy, therefore, it will be seen, is in respect of the liability of the plaintiff to the corporation on the indebtedness mentioned and the conclusiveness of the judgment rendered in Thayer county district court, in an action on the note in which the bank was the plaintiff and one Hayes and the plaintiff herein were the defendants. The plaintiff relies on the adjudi
“Under the modern American codes of procedure, where equitable defenses are allowed in actions at law, no reason is perceived why a defendant, sued ujmn a judgment, who was not in strictness a party to the record in which the judgment was rendered, should not be allowed to set up, as a reason why it should not be enforced against him, that it was procured to be rendered by collusion and fraud.”
In an action purely equitable in character, such as the case at bar, the reasons for permitting the defendants to attack the judgment relied on as an adjudication of the amount due the corporation from the plaintiff are as persuasive, or more so, than those underlying the rule mentioned in the text. It is obvious from an inspection of the plaintiff’s petition that his right to the relief prayed for is dependent upon the satisfaction and discharge of his indebtedness to the bank. For the purpose of showing himself entitled to the dividend sued for, and as a basis for a decretal order in his favor, he pleads affirmatively that the amount by him owing to the corporation has been regularly determined and adjudicated by a court of competent jurisdiction, and that the sum found and adjudged to be due has been paid • and the debt thereby discharged. Coming into a court of equity and relying upon the adjudication as a determination of the amount justly owing by him, it surely ought not to be said that, if the judgment Avas procured fraudulently or collusively, the defendants cannot be heard to raise the question and be relieved from
In Clarke and Marshall, Private Corporations, sec. 800, the author speaking to the same point says:
“It is a well settled rule that a judgment rendered by a court of competent jurisdiction is conclusive, in the absence of fraud or collusion, against the parties to the suit, and against all persons represented by the parties; and it is also well settled that a corporation represents its stockholders in all matters within the scope of its corporate powers transacted in good faith by its officers. In an action against a corporation by a creditor, the stockholders are represented by the corporation, within this principle; and it follows that the judgment rendered against the .corporation therein, if the court has jurisidction, is conclusive upon the stockholders, in the absence of fraud or collusion, in any collateral suits or proceedings against them, in equity or at law, to compel payment of the balance due on their stock. * * * The judgment may be attacked by stockholders for want of jurisdiction, or for fraud or collusion between the officers of the corporation and the creditor.”
The adjudicated cases, and especially those of more recent date, seem to fully sanction the rule as thus stated by the text writer. The right to impeach a judgment as having been obtained by fraud or collusion is by some of the authorities held to be a right to be availed of to the same extent as lack of jurisdiction as affecting the validity of a judgment and its conclusive character as against the stockholders of the corporation. A recent authority may be cited which is regarded as directly in point, and which in principle is controlling in the case at bar as to the proposition being considered, unless the rule it enunciates is repudiated as unsound. In Wilson v. Kiesel, 9 Utah, 397, 35 Pac. 488, the president of the corporation acquired an interest- in a claim against it, and by his consent a judgment at law was obtained against the corporation for an amount largely in excess of the plaintiff’s just
“It appears that Henderson was interested in obtaining this judgment against the power company and yet as president of the company he consented to its entry or rather directed the company’s attorneys to consent, which they did. Is such a judgment, so entered, conclusive on the stockholders? We think not. In the language of Judge Baxter in Bissit v. Kentucky River Navigation Co., 15 Fed. 353, ‘we are satisfied that the complainant’s judgment, to put it mildly, Avas unfairly .obtained, and for an amount greatly in excess of the sum due.’ Now, in this suit is the first opportunity the stockholders haAre had to inquire into the validity of plaintiff’s claim against the corporation, and, all other matters aside, the judgment in plaintiff’s favor would have to be reversed in order to afford the stockholders an opportunity to contest this claim before a master or the court below. This Avas the course taken in the Bissit case above referred to, and seems to be abundantly supported by authority. In the absence of fraud or mistake in- obtaining judgment against the corporation, of course, the judgment is conclusive on the stockholders. Henry v. Vermillion & A. R. Co., 17 Ohio, 187; Donworth & Behan v. Coolbaugh, 5 Ia. 300; Came v. Brigham, 39 Me. 35. But if the judgment against the corporation was obtained by fraud or through collusion with the company’s agents, the stockholders may obtain relief through equitable proceedings 2 Morawetz, Private Corporations, sec. 619. And the judgment may be impeached for fraud or collusion by cross-bill in the action upon it. Conway v. Duncan, 28 Ohio St. 102; Bank of Wooster v. Stevens, 1 Ohio St. 233.”
Another case fully supporting the doctrine announced in the text is McBryan v. Universal Elevator Co., 130
“Is the judgment conclusive against a stockholder? 'While it is the general rule that judgments against corporations are conclusive upon the stockholders, an exception is equally well established in cases where judgments are rendered through fraud or collusion, or without jurisdiction. 3 Thompson, Corporations, secs. 3392, 3400; 2 Morawetz, Private Corporations, sec. 865; 1 Cook, Corporations, sec. 209; Bohn v. Brown, 33 Mich. 257, 263. In Bohn v. Brown, this court said: ‘If the proceedings against the corporation should appear to be tainted by fraud or collusion between the claimant and the Corporation, the judgment would not be good as inducement, or as an adjudication to fix the liability of the stockholder through it, or to fix the amount, and the suit against the stockholder would fail inevitably.’ This exception is approved in the following cases: Irons v. Manufacturers Nat. Bank, 36 Fed. 843; Schrader v. Manufacturers Nat. Bank, 133 U. S. 67, 10 Sup. Ct. Rep. 238, 33 L. ed. 564; Slee v. Bloom, 20 Johns. (N. Y.) 668; Warrington v. Ball, 33 C. C. A. 609, 90 Fed. 464; Saylor v. Commonwealth Banking Co., 38 Ore. 204, 62 Pac. 652; Ward v. Joslin, 44 C. C. A. 456, 105 Fed. 224. In Schrader v. Manufacturers Nat. Bank, judgment was rendered against the bank on a contract of guaranty. In a suit against the stockholders to enforce their liability as such, it was held that they could go behind the record of the judgment and show that the guaranty of the bank had been released by*556 the release of the prinicpal debtor before judgment was taken against the bank. In Slee v. Bloom it was said that a judgment ‘is not of itself, as res judicata, binding on the stockholders, if it was procured by fraud, or is founded in error.’ In Warrington v. Ball, the defense set up was that the judgment was obtained by collusion between the plaintiff and the representatives of the bank, and that the certificate of deposit, on which the judgment was based, was issued for money furnished to the cashier personally. The judgment was held not to be conclusive upon the stockholders. The opinion says: ‘To bind one by a judgment to which he is not a party, as provided for by the statute, is barely tolerable. To bind him by such a judgment obtained by fraudulent collusion (as here averred) would be intolerable.’ ”
In Warrington v. Ball, 90 Fed. 464, in discussing a like question, the court very pertinently observes: “The defendant cannot, indeed, impeach the judgment in any other way than collaterally. She is not a party to it, and it is valid as between the plaintiff and the bank so long as the latter acquiesces. She could not therefore be heard in an application to open it. A proceeding in equity to declare it void as to her, would be as clearly a collateral impeachment as that here proposed.”
The following cases also support the rule announced in the authorities cited: Bissit v. Kentucky River Navigation Co., 15 Fed. 353; Town of Hinckley v. Kettle River R. Co., 80 Minn. 32, 82 N. W. 1088; Skillern v. May, 4 Cranch (U. S.), 136.
We are of the. opinion that upon principle and under the authorities cited the defendants in this action may, upon the grounds and for the reasons stated, attack the judgment relied upon by the plaintiff as an adjudication of the amount of the indebtedness owing by him to the bank, and that the rule invoked by him as to its conclusive character is not applicable in its full sweep to the stockholders of a corporation who are not in the fullest and strictest sense of the word parties to the action in which
That the bank acted and relied upon his agreement in this respect, and for that reason took no action on its own initiation to collect its indebtedness against those who were then liable thereon, is no doubt true. The conclusion is reached that the plaintiff’s rights are to be measured and determined from the standpoint of primary liability to the bank for the payment of the original indebtedness of $2,000 on which the Hayes Bros, were obligated.
We do not undertake in this action and at this time to determine the amount justly due from the plaintiff to the corporation, and expressly refrain from adjudicating the amounts or validity of any of the items which seem to have entered into the consideration for the last note executed by the plaintiff to the bank, which forms the basis for the recovery sought to be enforced in this action. We are of the opinion that the amount justly due can better be ascertained upon an accounting after the legal status and rights of the parties with reference to the character of the indebtedness are here determined.
The decree of the district court is vacated and set aside and the cause is remanded, with directions to ascertain the amount justly due from the plaintiff, according to the views herein expressed, and to make such further and other orders in the premises as seem to be just and equitable, not inconsistent with this opinion, to the end that all of the rights of all parties to the litigation may be fully and finally adjudicated and determined.
Reversed,