HAND, District Judge
(after stating the facts as above). Two questions are raised by this action: First, whether the district court of Minnesota had jurisdiction to determine not only the amount of the liability of a past stockholder, supposing that some of the debts antedated his transfer of stock, but, in addition, that some of the debts did in fact antedate that transfer; second, whether the suit in Minnesota intended to conclude the defendant upon that question.
[1] As to the first question, I do not doubt that the court had jurisdiction. Since Bernheimer v. Converse, 206 U. S. 516, 27 Sup. Ct. 755, 51 L. Ed. 1163, it must be accepted that for one who is a stockholder at the time of the dissolution all decrees in the parent suit are conclusive upon all matters relating to the amount of, the propriety of, and the necessity for, the said assessment, and that section 5 of chapter 272 of the Laws of 1899 is constitutional, and can be enforced as against such stockholders. The question in the case at bar is whether the statute has the same effect against one who has ceased to be a stockholder. Section 2864 of the Revised Laws of 1905 prescribes that the transfer of stock shall not exempt the stockholder from liability upon all the indebtedness existing at the time of the transfer, As to those, therefore, his relation to the corporation remains just as it did before the transfer. Section 1 of chapter 272 of the Laws of 1899 includes stockholders who are liable to the corporation or its creditors “for, or upon, or growing out of or in respect to the stock or shares at any time held or owned by such stockholders,” clearly contemplating others than present stockholders.
[2] Moreover section 2864 was, in substance, in existence when Selig took his stock. Therefore he took it subject to a continuance of his liability after a transfer, and it begs the question to say that he had severed his connection with the corporation in 1904. The statute says quoad then existing indebtedness he did not. This being so, he was as much and as little subject to the estoppel of a judgment as a stockholder who remained such. The measure of his liability was different, but that is only a guide to the court which makes the assessment, and cannot be thought to limit its power to determine the amount. Otherwise, the whole assessment would be tentative as against a past stockholder, which cannot he the lawj though the defendant seems to urge it in his brief. The theory of the estoppel of the judgment against the corporation upon the stockholder depends wholly upon his voluntary association of himself with the incorporators by the act of taking stock. Whatever be the contract which he makes at that time, it is held to make him privy to a determination of the corporate assets, the deficiency, and the propriety of an assessment against him. Now there is no conceivable reason, at least that I can see, why a stockholder who remains liable for a portion only of the debts, if there are such debts,' should not he bound, while a [156] stockholder who is liable for all debts, if there are any debts, should be bound by such a determination. Each is no doubt possibly subject to assessment' when he is not liable at all, for the existence of'debts is a condition to his liability, but it is no more so in one case than in the other, and the theory so far as it is developed, that each is concluded by his consent in respect of the amount and existence of corporate debts, applies equally to each. There seems to me to be no possible principle which justifies saying that the past stockholder cannot be concluded by a determination that some of the indebtedness was in existence at the time of his transfer, provided the statute when he bought his stock said that a transfer should not exempt him. I do not, therefore, think that the court lacked jurisdiction to conclude the defendant merely because he had sold his stock.
The more, important question is whether the statute permitted, and the decree in the parent suit intended, to include among those liable as stockholders all who had transferred their stock. The decree of July 6, 1906, follows the language of the statute ipsissimis" verbis. It lays an assessment upon each share of stock and upon each person liable as a stockholder, and then it provides “each and every person liable as such stockholder of saidi defendant pay” the receiver $100 for each share cf stock upon which he is liable as a stockholder. The interpretation of this decree in Hamilton v. Levison was too broad, for it did not mean to lay an assessment upon every person named in the schedules for the number of shares set opposite his name. That language, however, was irrelevant to the decision in that case, because it was proved that Gevison was a stockholder, and that ’there were of the debts in existence at the time the suit was instituted some which antedated his transfer. It was proved, therefore, in that case dehors the record under any construction that he was a person liable as a stockholder. The defendant in this case urges,, however, that, although it has been proven that he was a stockholder, this did not make him liable as such without the added proof that some of the existing debts antedated his transfer, or, in the alternative, that his sale was for the purpose of avoiding his liability. I have already decided that the absence of such proof did not prevent the jurisdiction of the court, provided the statute meant to give it and the court meant to exercise it. There can be no doubt that, provided the defendant was within the class indicated by the decree, he cannot now question the fact that the debts for which he was liable would require a full assessment upon him and his shares.
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HAND, District Judge
(after stating the facts as above). Two questions are raised by this action: First, whether the district court of Minnesota had jurisdiction to determine not only the amount of the liability of a past stockholder, supposing that some of the debts antedated his transfer of stock, but, in addition, that some of the debts did in fact antedate that transfer; second, whether the suit in Minnesota intended to conclude the defendant upon that question.
[1] As to the first question, I do not doubt that the court had jurisdiction. Since Bernheimer v. Converse, 206 U. S. 516, 27 Sup. Ct. 755, 51 L. Ed. 1163, it must be accepted that for one who is a stockholder at the time of the dissolution all decrees in the parent suit are conclusive upon all matters relating to the amount of, the propriety of, and the necessity for, the said assessment, and that section 5 of chapter 272 of the Laws of 1899 is constitutional, and can be enforced as against such stockholders. The question in the case at bar is whether the statute has the same effect against one who has ceased to be a stockholder. Section 2864 of the Revised Laws of 1905 prescribes that the transfer of stock shall not exempt the stockholder from liability upon all the indebtedness existing at the time of the transfer, As to those, therefore, his relation to the corporation remains just as it did before the transfer. Section 1 of chapter 272 of the Laws of 1899 includes stockholders who are liable to the corporation or its creditors “for, or upon, or growing out of or in respect to the stock or shares at any time held or owned by such stockholders,” clearly contemplating others than present stockholders.
[2] Moreover section 2864 was, in substance, in existence when Selig took his stock. Therefore he took it subject to a continuance of his liability after a transfer, and it begs the question to say that he had severed his connection with the corporation in 1904. The statute says quoad then existing indebtedness he did not. This being so, he was as much and as little subject to the estoppel of a judgment as a stockholder who remained such. The measure of his liability was different, but that is only a guide to the court which makes the assessment, and cannot be thought to limit its power to determine the amount. Otherwise, the whole assessment would be tentative as against a past stockholder, which cannot he the lawj though the defendant seems to urge it in his brief. The theory of the estoppel of the judgment against the corporation upon the stockholder depends wholly upon his voluntary association of himself with the incorporators by the act of taking stock. Whatever be the contract which he makes at that time, it is held to make him privy to a determination of the corporate assets, the deficiency, and the propriety of an assessment against him. Now there is no conceivable reason, at least that I can see, why a stockholder who remains liable for a portion only of the debts, if there are such debts,' should not he bound, while a [156] stockholder who is liable for all debts, if there are any debts, should be bound by such a determination. Each is no doubt possibly subject to assessment' when he is not liable at all, for the existence of'debts is a condition to his liability, but it is no more so in one case than in the other, and the theory so far as it is developed, that each is concluded by his consent in respect of the amount and existence of corporate debts, applies equally to each. There seems to me to be no possible principle which justifies saying that the past stockholder cannot be concluded by a determination that some of the indebtedness was in existence at the time of his transfer, provided the statute when he bought his stock said that a transfer should not exempt him. I do not, therefore, think that the court lacked jurisdiction to conclude the defendant merely because he had sold his stock.
The more, important question is whether the statute permitted, and the decree in the parent suit intended, to include among those liable as stockholders all who had transferred their stock. The decree of July 6, 1906, follows the language of the statute ipsissimis" verbis. It lays an assessment upon each share of stock and upon each person liable as a stockholder, and then it provides “each and every person liable as such stockholder of saidi defendant pay” the receiver $100 for each share cf stock upon which he is liable as a stockholder. The interpretation of this decree in Hamilton v. Levison was too broad, for it did not mean to lay an assessment upon every person named in the schedules for the number of shares set opposite his name. That language, however, was irrelevant to the decision in that case, because it was proved that Gevison was a stockholder, and that ’there were of the debts in existence at the time the suit was instituted some which antedated his transfer. It was proved, therefore, in that case dehors the record under any construction that he was a person liable as a stockholder. The defendant in this case urges,, however, that, although it has been proven that he was a stockholder, this did not make him liable as such without the added proof that some of the existing debts antedated his transfer, or, in the alternative, that his sale was for the purpose of avoiding his liability. I have already decided that the absence of such proof did not prevent the jurisdiction of the court, provided the statute meant to give it and the court meant to exercise it. There can be no doubt that, provided the defendant was within the class indicated by the decree, he cannot now question the fact that the debts for which he was liable would require a full assessment upon him and his shares.
[3] The sole question, therefore, narrows to this: Was it necessary, in order to bring him within the terms of the decree, that the plaintiff should show the existence of some of the present indebtedness at the time of this transfer? This question in turn depends wholly upon the meaning of the phrase, “persons liable as stockholders.” A past stockholder is liable as a stockholder for all past debts. Gunnison v. U. S. Investment Co., 70 Minn. 292, 73 N. W. 149. He is among the class, therefore, of those “liable- as stockholders,” at least in some cases. It is urged that his liability is conditional upon the existence of past debts, .and- this is true, but, as I have already shown, the same [157] tiling is true of the liability of present, stockholders, for they are liable t'iily in case of the present existence of some debts. Why should the words be construed conditionally in one case, and not in the other, when a similar fact, as one chooses to take it, is equally a condition or a limitation upon the liability itself? Furthermore, consider the purpose of the statute itself which was to adjust the burdens equitably between all those who must in the end bear them. Such an adjustment was inevitably subject to defeat in case the court mistook those who were or had been stockholders, for the acceptance of stock was a condition of any jurisdiction, and for that reason the decree would follow the limitation of jurisdiction by assessing those only who are liable as stockholders. It would have been idle to make the decree speak more broadly than the jurisdiction of the court extended; on the other hand, the suit might fail in its purpose of an equitable adjustment if it subjected its calculations to any more chances than were necessary. The court’s duties were to determine the indebtedness and the assets of the corporation, and to apportion the deficiency upon all those stockholders liable who were financially responsible in proper proportions. As the assessment was necessarily somewhat provisional, the court might return to the stockholders any surplus. To subject its assessment to- the chance of defeat in case the receiver did not prove ueliors the record the existence of some indebtedness at the time of the transfer of a past stockholder would be unnecessarily to introduce a serious element of uncertainty into its calculations. The nature of the undertaking required as much certainty as was compatible with the powTer of the court, which included all the facts other than those upon which its jurisdiction depended; that is to say, all facts except whether the person assessed had ever actualh accepted the stock, together with the personal defenses mentioned in Great Western Telegraph Co. v. Burnham, 162 U. S. 339, 16 Sup. Ct. 850, 40 L. Ed. 991, and Straw, etc., Mfg. Co. v. Kilbourue, 80 Minn. 125, 83 N. W. 36, which clearly could not be ascertained in advance. At least it is not to be supposed that the court only intended to make recovery conditional upon reproving a fact which it had already found, and necessarily found, and upon which its jurisdiction was not dependent, a fact, moreover, which eoncededly need not be reproven as against the great mass of stockholders. I do not rely in this conclusion on the change in section 3186, which seems to me here inapplicable.
1 therefore think that by the term ‘‘persons liable as stockholders” the court meant to assess all those who should be shown to be holders of stock at the time of the decree, or to have held stock theretofore, and to leave open only that fact, the. extent of their holdings, and the personal defenses above mentioned. Whether the court in fact was wrong in assessing the defendant for the full amount of the shares because of the indebtedness existing at the time of the transfer is not a question now open for discussion, under too obvious principles.
[4] Nor need I consider whether the basis of the determination was that the prior debts needed his contribution, or that his transfer was not bona fide. Given jurisdiction and the actual determination, the [158] -course of reasoning by which the result was reached is not open for collateral inquiry.
The remaining question relates to the statute of limitations, which I have not examined, because I regard myself as concluded by Bernheimer v. Converse, supra. Whether the Supreme Court was in error in regard to the decision of the Court of Appeals is not a question which is open before me, because the disposition of that case required that decision, and it ife authoritative upon me. If the defendant wishes in this case as was done in Bernheimer v. Converse to raise the question of the constitutionality of the statute, as *1 have interpreted it, he may do so, and the question can go directly to the Supreme Court where that matter may then be reargued in the light of the decision of the Court of Appeals of the state of New York. I therefore will direct a verdict for the plaintiff for the sum of $5,000, with interest and costs.