156 Minn. 323 | Minn. | 1923
Defendant has appealed from a judgment for plaintiff entered on the pleadings.
The complaint alleged that defendant was the owner of 205 shares of the capital stock of Stevens & Company, a Minnesota corporation; that the par value was $100 a share; that on June 5, 1922, at the suit of a judgment creditor, plaintiff was appointed receiver of the corporation and directed to enforce the constitutional liability of its stockholders and had duly applied for an order for their assessment and the court had held them liable for the debts of the corporation; that the court had found that the corporation was a bankrupt with an estate valued at $140,000 and debts amounting to $390,000, and had levied an assessment of 100 per cent of the par value of the stock against the defendant and all the other stockholders and directed plaintiff to collect the assessments; and that defendant had refused to pay his assessment. Judgment was demanded for $20,500, the amount of’the assessment.
The answer denied that defendant was a stockholder, but admitted the other allegations of the complaint. It stated that defendant’s relations with the corporation were as follows: Early in July, 1921, the president of the corporation informed defendant that there was to be an issue of preferred stock and solicited him to buy some of it. To induce him to make the purchase, a written statement which ¡purported to show the financial condition of the corporation was exhibited. It shows that the assets> of the corporation were 3 times the amount of the liabilities. It was represented that the statement was taken from the books of the corporation and was true; that the business of the corporation was prosperous; that it owned bonds worth $350,000 and would maintain a bid on the preferred stock of not less than $95 a share and purchase
The facts stated in the answer would entitle defendant to rescind the contract for the purchase of the stock if he and the corporation were the only parties concerned. He was the victim of a fraud perpetrated by its officers. He might have sued for a rescission at any time after the fraud was perpetrated. He did not learn of the fraud until April lá, 1922. Then the rights of creditors had intervened, and the question to be decided is whether his equities are superior to theirs. His explanation for his failure to discover the hopeless insolvency of the corporation is that the books were kept in such a manner as to conceal its true financial condition. It is doubtful whether that fact would excuse his failure to discover the
The appointment of a receiver in a sequestration proceeding is in the nature of an equitable attachment whereby the court acquires the custody of the property of the'corporation for the benefit of its creditors. Farmers L. & T. Co. v. Minneapolis E. & M. Works, 35 Minn. 543, 29 N. W. 349; Greenfield v. Hill City L. L. & L. Co. 141 Minn. 393, 170 N. W. 343. The rights of the creditors then become vested and maybe enforced against those who have allowed themselves to appear as stockholders, and are superior to those of a stockholder who has failed to assert his right of rescission against the corporation while it was a going concern. Dunn v. State Bank of Minneapolis, 59 Minn. 221, 61 N. W. 27; Bartlett v. Stephens, 137 Minn. 213, 163 N. W. 288; Olson v. State Bank, supra; Scott v. Deweese, 181 U. S. 202, 21 Sup. Ct. 585, 45 L. ed. 822. Another reason for the rule is that the creditors are presumed to have extended credit or to have refrained from enforcing their demands on the faith of the showing as to stockholders which is made by the books of the corporation, and, if one of two innocent persons must suffer, the loss should fall upon him whose conduct induced the other to act or refrain from acting.
Judgment affirmed.