McKusick v. Seymour, Sabin & Co.

50 N.W. 1114, 48 Minn. 158, 1892 Minn. LEXIS 388
CourtSupreme Court of Minnesota
DecidedJanuary 18, 1892
StatusPublished
Cited by21 cases

This text of 50 N.W. 1114 (McKusick v. Seymour, Sabin & Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKusick v. Seymour, Sabin & Co., 50 N.W. 1114, 48 Minn. 158, 1892 Minn. LEXIS 388 (Mich. 1892).

Opinion

Mitchell, J.

This case comes up on appeal from an order overruling the so-called “supplemental complaint” of the Minnesota Thresher Manufacturing Company, a creditor of Seymour, Sabin & Co., a corporation organized under 1866 G. S. ch. 34, tit. 2. The facts alleged in this complaint are as follows: Upon the complaint of McKusick, a judgment creditor of Seymour, Sabin & Co., after execution issued and returned unsatisfied, a decree or judgment had been rendered sequestrating all the property, things in action, and effects of the corporation, and appointing a receiver of the same. The receiver still continues in the discharge of his duties, but it appears that the corporation is hopelessly insolvent, and has not property or effects sufficient to pay over two (2) per cent, of its debts. The Minnesota Thresher Manufacturing Company, in pursuance of an order of court, exhibited its claims against the corporation, and became a party to the sequestration proceeding. Subsequently, in behalf of itself and all other creditors who had exhibited their claims, it filed [167]*167its so-called “supplemental complaint” against all the stockholders of the corporation, having first obtained an order of court allowing it to do so, and requiring the stockholders thus impleaded to appear and defend. In obedience to this order the stockholders (appellants here) appeared, and demurred to the complaint. The object of the complaint is to recover in this sequestration proceeding from the stockholders on their individual liability for corporate debts under article ten, (10,) section three, (3,) of the constitution. That this section of the constitution is self-executing, and creates a liability on the part of each stockholder for corporate debts in a sum equal to the amount of stock held or owned by him, has been determined. in the case of Willis v. St. Paul Sanitation Co., ante, p. 140, (50 N. W. Rep. 1110,) just decided. Inasmuch as it appears that these appellants had become stockholders before the indebtedness constituting the claims of the thresher company was incurred, and that they have always since continued to be stockholders, questions as to the amount of their liability that may arise in view of the fact that their holdings of stock have varied in amount at different times during the intervening period are not involved in this appeal.

The only remaining question is merely one of practice, viz., whether this “double liability” of stockholders can be thus enforced in this sequestration proceeding at the instance or upon the complaint of a creditor who has become a party to it. Unless to be overruled, Arthur v. Willius, 44 Minn. 409, (46 N. W. Rep. 851,) is decisive of this question, for, notwithstanding an attempt of counsel to do so, that case cannot be distinguished from the present. To the same effect, by implication at least, is the more recent case of Spooner v. Bay St. Louis Syndicate, 47 Minn. 464, (50 N. W. Rep. 601.) As rules of practice are but a means to an end, and ordinarily, as in this case, do not go to the merits of a controversy, such questions should not, as a general rule, occupy an extensive space in the decisions of courts of last resort; and, if a rule is once established which works well in practice, the mere fact that it may be technically erroneous is not necessarily a sufficient reason for changing it by overruling former decisions. Although counsel for appellants do not entirely agree among themselves in their conclusions as to what is [168]*168the proper method of enforcing such a liability against stockholders, yet all their arguments against the practice adopted in this case are mainly what may be called “historical,” — that is, based upon the history of 1878 G. S. eh. 76, and the construction put upon it in the state of New York, from which most of its provisions, particularly sections fifteen (15) to twenty-two, (22,) inclusive, were originally borrowed, as part of our 1851 E. S. ch. 77, and which had been construed in Mann v. Pentz, 3 N. Y. 415, as applying only to “moneyed corporations,” referred to in section twelve, (12.)

The burden of the arguments is that, in adopting this statute, we also adopted this construction, although one of the counsel seems to take the ground that only sections fifteen (15) and sixteen (16) apply to actions brought under section twelve, (12,) and that section seventeen (17) and those following refer to an action to be brought by creditors only, and different from that provided for in section nine (9) or in section twelve, (12,) and that only the corporate assets, properly so called, can be sequestered in an action under section nine, (9;) while another counsel, although seeming to claim that all of the sections from fifteen (15) to twenty-two, (22,) inclusive, apply only to actions ■ brought under section twelve, (12,) concedes that a receiver, where one is appointed, may enforce this liability of stockholders, and claims that he alone can do so, and that it cannot be done as attempted in this case, upon the complaint or application of a creditor. It is difficult to perceive any good reason why one method of enforcing the liability of stockholders should obtain in the case of moneyed corporations and another in the case of other corporations; or one method in actions whose primary object is to dissolve the corporation, and another in actions “to sequestrate its stock, property, things in action, and effects,” which almost always results in practical dissolution. But, without stopping to consider what would have been the proper construction of the statute of 1851 as it originally stood, or how far the construction given to it in New York would have been controlling, had the question arisen prior to the adoption of our Eevision of 1866, these considerations have now but little weight. In the Eevision of 1866, chapters 76 and 77 of the Statutes of 1851 were, with certain changes and modifications, consolidated into one, [169]*169entitled “Actions Eespeeting Corporations.” The first four sections of the new chapter were taken from chapter seventy-six, (76,) and the remainder from chapter seventy-seven, (77;) section twelve (12) of the latter being omitted entirely. The first section of the new chapter declares that "this chapter embraces all corporations, including in such designation all associations having any corporate rights, whether created by special acts or under general laws.” As long ago as Allen v. Walsh, 25 Minn. 543, 555, it was said that “this chapter applies to all corporations and associations having any corporate rights,” from which it is evident that the court construed the first section as making applicable to all corporations all the provisions of that chapter which were not expressly limited in their application. And while it is true that the question in that case was the proper method of enforcing the liability of stockhdlders of a bank, yet there is not a suggestion anywhere in the opinion that any of the provisions on that subject in chapter seventy-six (76) were applicable only to moneyed, corporations, or to actions to dissolve the corporation. It is very evident that the court did not then understand that chapter seventy-six (76) made any such distinctions between different kinds of corporations or different kinds of actions as are now sought to be made. The same thing is true of the cases of Johnson v. Fischer, 30 Minn. 173, (14 N. W. Rep. 799;) Merchants’ Nat. Bank v. Bailey Mfg. Co., 34 Minn. 323, (25 N. W. Rep. 639;) Farmers’ Loan & Trust Co. v. Minneapolis E. & M. Works, 35 Minn. 543, (29 N. W. Rep. 349;) Patterson v.

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Bluebook (online)
50 N.W. 1114, 48 Minn. 158, 1892 Minn. LEXIS 388, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckusick-v-seymour-sabin-co-minn-1892.