65 Minn. 324 | Minn. | 1896
This was an action brought by a judgment creditor of a corporation to enforce against the stockholders individually their double liability for the corporate debts.
At the trial the court held that the judgment previously obtained against the corporation was conclusive evidence of its indebtedness and liability, and would not permit the stockholders to litigate the merits of the claim upon which it was based. The correctness of this position is directly attacked upon an appeal from an order denying defendant stockholders’ motion for a new trial.
The practical effect of the decision in Dodge v. Minnesota Roofing Co., 16 Minn. 327 (368), was to hold that a judgment against a corporation was conclusive against the stockholders in any action or proceeding to enforce their individual liability, although the exact question was not before the court. And in the case of Frost v. St. Paul B. & I. Co., 57 Minn. 325, 59 N. W. 308, which was an action upon judgments against a corporation for the recovery of money to enforce the liability of stockholders for unpaid subscriptions, and their statutory liability, it was held that the judgments were evidence of the indebtedness of the corporation; the court saying that a judgment for the recovery of money is, as against everybody, evidence of a debt from and after its rendition, as fully as could be any other transaction between the parties.
The force of these decisions seems to be admitted by counsel for the defendants here, but they insist that there is a distinction in principle, as to the effect or conclusiveness of judgments against cor-' porations, between the cases in which actions are brought against stockholders on account of unpaid subscriptions and those wherein the object is to enforce the statutory or constitutional liability, the ground for distinguishing being that anything due for unpaid sub
When we consider the character of stock corporations, and the powers and duties of the officers selected and authorized to manage them, it is not an easy task to demonstrate upon principle why a'judgment against the body corporate should sometimes and under some circumstances bind the stockholders, and not at all times and under all circumstances; or why stockholders are privies in interest, and therefore concluded by the judgment, when their liability to respond to the full extent of amounts due on unpaid subscriptions is involved, and not privies in interest, and not bound by the judgment, when the same creditor undertakes to compel response to statutory or constitutional liability to pay the same judgment. Both liabilities are incurred at the same time, and by the same act, namely, by the act of subscribing for stock. The subscriber then becomes obligated to pay for his shares, and also to pay an amount- equal to their face value, if necessary, and his liability is as definitely fixed in the one case as in the other. The difficulty we have referred to is apparent from an examination of the cases cited by counsel in their briefs, in which the courts have attempted to give reasons for restricting the effect of judgments against corporations, and limiting their binding force to cases in which corporate assets only were involved; and of -those cited by counsel Miller v. White, 50 N. Y. 137, and Stephens
Certainly the rule in New York is not settled, and, in our judgment, the logic of the reasoning adopted in some of their cases, in support of a conclusion that to the extent of the corporate property- or assets the shareholders are bound by the judgment, tends thoroughly to establish the doctrine which seems to prevail in this country that, as the statutory or constitutional liability is an obligation voluntarily assumed by the stockholderwhen he subscribes for his shares,, the officers of the corporation represent him as to that liability to the same extent as they do when his ordinary liability assumed by the same act of subscription is involved. The officers of the corporation, in the absence of fraud and collusion, can bind the stockholders, and fasten upon them obligations which cannot be questioned by the latter. The officers can not only make the corporation liable to the full extent of the corporate assets, but they can also fasten the statutory or constitutional liability upon the stockholders. This liability is incident to taking stock, and is incurred by the subscriber. When subscribing for his shares and entering into the organization, he undertakes the responsibility for the result of litigation in which the corporation becomes involved, to which he is not a party, and has not been given an opportunity to defend personally. He is then represented by officers who are not only authorized to take charge of all litigation, but whose duty it is so to do; and why should not those whom the officers represent be held privies in interest, and concluded by the result, in the absence of fraud and collusion? There would seem to be no middle ground on which to place a judgment against a corporation, and, if the stockholders are bound under any circumstances, they must be under all. This is the common conclusion of nearly all of the courts, although their reasons are not always the same. See cases cited in the following text-books: 3 Thompson; Corp. § 3392, 2 Black, Judgm. § 583; 2 Morawetz, Corp. § 619.
At the trial an objection was made by defendants’ counsel to the introduction in evidence of the judgment roll, upon the ground that the complaint on which the judgment was rendered failed to state a •cause of action against the corporation. What has been said herein-before covers the claim that the objection should have been sustained. See, also, Lane v. Innes, 43 Minn. 137, 45 N. W. 4, and cases cited.
Taken as a whole, the evidence was sufficient to support the finding that defendant Wilson was a stockholder. The rule is that, where the name of an individual appears on the stock books of a corporation as a stockholder, the prima facie presumption is that he is the owner of the stock; and in an action against him as a stockholder the burden of proving that he is not a stockholder, or of rebutting the presumption, is cast upon the defendant. 1 Cook, Stock. & Stockh. § 55, and cases cited in notes. From some of these cases it will be seen that the rule has been laid down much more broadly than here stated. The reasons why, in opposition to the general rule, entries in the books of a corporation are admissible for the purpose of showing who are stockholders, are well stated in Glenn v. Orr, 96 N. C. 413, 2 S. E. 538, and Liggett v. Glenn, 2 C C. A. 286, 51 Fed. 381. The entries introduced here were found in a stock or •share book kept by the corporation. It may not have been the book required by statute,
The claim is made in behalf of the defendants Chapman and Sheridan that there was no sufficient evidence to warrant a finding that
It was established by the evidence here that these four original incorporators became stockholders in the corporation, unless it was absolutely necessary to show that formal action was taken by the corporation on their proposition. It had been carried out and executed. In consideration and as payment for the mining leases and for mon
The corporation was organized, not only for the purposes of mining, but also for the business of “buying and selling and dealing in mineral lands.” It is not within the terms of the constitutional provision respecting corporations organized for manufacturing or mechanical business. St. Paul Barrel Co. v. Minneapolis Distilling Co., 62 Minn. 448, 64 N. W. 1143, and cases cited; Anderson v. Anderson Iron Co., supra, page 281, 68 N. W. 49.
Order, affirmed.
Gr. S. 1894, § 2599.