Palmer v. Bank of Zumbrota

67 N.W. 893, 65 Minn. 90, 1896 Minn. LEXIS 217
CourtSupreme Court of Minnesota
DecidedJune 10, 1896
DocketNos. 9759, 9760, 9761, 9762, 9868-(18, 19, 83, 84, 190)
StatusPublished
Cited by6 cases

This text of 67 N.W. 893 (Palmer v. Bank of Zumbrota) 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
Palmer v. Bank of Zumbrota, 67 N.W. 893, 65 Minn. 90, 1896 Minn. LEXIS 217 (Mich. 1896).

Opinion

COLLINS, J.

The Bank of Zumbrota was organized under the laws of this state, in 1878, with a capital of $50,000. Subsequently it reduced its capital to $25,000. In May, 1893, it suspended payment. On July 15 a meeting of the shareholders was called, and, believing the concern solvent, it was resolved to increase the capital to $45,000 by issuing new stock to the amount of $20,000. Several of the depositors who had not previously been stockholders were induced to subscribe for the new stock, and in payment therefor to ■surrender certificates of deposit The balance of the new shares was subscribed for and taken by the old stockholders. Business was resumed, but, on January 15, 1894, the bank again suspended. Heman H. Palmer was a shareholder, holding both old and new stock, and was also a director. He was also a depositor in the bank, and on the day last mentioned commenced an action against the suspended and insolvent institution, under the provisions of G-. S. 1894, §§ 5900, 5901. The next day an order of the court was entered appointing [93]*93a receiver, as provided for in. section 5902. The receiver at once entered upon the performance of his duties, and still continues to perform the same. The bank did not appear or answer in the action instituted by Palmer, and on February 23, 1895, upon' findings of fact, and an order for judgment, made by the court, a judgment or decree against it was entered, adjudging and decreeing that the bank was insolvent, as alleged in the complaint, and sequestrating, its estate and property of every nature. The former appointment of the receiver was confirmed by the judgment, and the bank, with all officers, agents, and attorneys, permanently restrained from any further business.

Soon after the appointment of the receiver, in 1894, an order of the court had been made directing all creditors of the insolvent to establish and file their claims within a specified time, and among the creditors whose claims were filed and allowed was one Thacher. He held a certificate of deposit when the bank suspended in 1893, and his claim was based upon a certificate issued in place thereof soon after the bank resumed business with the increased capital and new stockholders. In March and April, 1895, pursuant to an order of the court, the receiver paid to each of the creditors whose claims had been allowed a dividend of 20 per cent. Up to January 11, 1895, none of the persons who first became shareholders in 1893 had complained or objected in any way. On that day several of these persons filed claims against the insolvent estate, setting forth their subscription for shares in July, 1893, their acceptance of the shares in satisfaction of the amounts due upon certificates of deposit, alleging that the shares had been unlawfully issued, offering to surrender the same for cancellation, and demanding that they be treated as creditors to the extent of the amounts paid for the shares. April 25, 1895, Thacher, as a creditor of the estate, presented to the court an application for leave to intervene, and to file a supplemental complaint, in behalf of himself and all other creditors, in the Palmer action, for the purpose of enforcing the double liability of stockholders, and obtained an ex parte order permitting him to file his complaint in the office of the clerk of the court where the proceedings were pending, and to issue a summons to each of the stockholders, requiring each to answer this supplemental complaint. The complaint was filed, and a summons issued and served.

[94]*94On Juné 10, 1895, Palmer appeared and moved the court to set aside its order which permitted and authorized Thacher to intervene, to permit him to' file a complaint, and to summon the stockholders to .answer the same. In the motion Palmer’s attorneys specified three grounds therelfor, — the first, that no notice of the application made by Thacher had been served upon Palmer or his attorney; and the second, that Thacher was not entitled to intervene, or to file a complaint in intervention, because judgment had not been entered in the Palmer action. The third ground need not be stated, as it has been ■abandoned. The court below denied the motion, and Palmer appealed. This is designated the “first appeal.”

Among the persons made defendants by Thacher’s complaint were Ed. S. Person; George Person; Frederick J. George, as administrator of the estate of Fred George, deceased; Oscar H. Hall, as administrator of the estate of Thomas P. Kellett, deceased; and Harvey Miller, surviving executor and trustee of the estate of Martin S. Chandler, deceased. Miller demurred separately to the complaint, while the balance of the above-named defendants joined in a demurrer. The grounds upon which these demurrers were based were both special and general, and were the same in both cases. Each demurrer was overruled, separate orders being filed by the court, and thereupon a single notice of appeal was served, all of the demurring defendants joining therein, and but one bond on 'appeal was filed. This is called the “second appeal.”

We have stated that on February 23, 1895, a judgment or decree was entered against the bank in accordance with a part of the prayer for judgment in Palmer’s complaint. On June 10, 1895, the defendant bank, which had theretofore failed to appear in any manner, moved to vacate and set aside this judgment or decree upon three ■grounds — First, that it departed from and exceeded the relief demanded by the complaint; second, that it was contrary to law, in that it authorized and directed the receiver to sue the stockholders ■upon their statutory liability; and, third, that it was also contrary to law, because it authorized the receiver to commence a number of independent actions and did not confine the remedy of the creditors ■upon the statutory liability to the statutory method of enforcing the ■same. This motion was denied, and the bank appealed. This is .known as the “third appeal.”

[95]*95■ On the same day, June 10, 1895, Palmer moved the court for leave to file an amended complaint in the action, and to cause a summons to be served upon the defendants named therein, who were, according to the averments in the pleading, the stockholders in the bank, and the representatives of such as had deceased. This complaint did not differ materially from the one already filed by Thacher, and substantially the same persons were named as defendants. The court denied this motion, and Palmer’s appeal is called the “fourth appeal.”

The time fixed by the court, upon the motion of counsel for the intervenor, Thacher, within which creditors of the insolvent were required to exhibit their claims and become parties to the actions, expired November 23, 1895. Prior to that day more than 100 creditors had exhibited their claims against the insolvent, in the nature of complaints in intervention, adopting the allegations in the Thacher complaint, and asking to become parties to the action, for the purpose of sharing in the benefits and proceeds of the judgment to be entered. A notice was then served that, on December 12, 1895, a motion would be made before the court for an order making each and all of said creditors parties plaintiff, along with Thacher, the intervenor, the defendants impleaded, and any other person, party to the proceeding, having the right to answer any of said complaints. The order was made by the court December 14, 1895, and Palmer, with two other defendant stockholders, appeal from it. This appeal is called the “fifth appeal.” It is also the last appeal, so far as we know.

All of these appeals were argued and submitted at the same time, and will be considered in their order.

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95 F. 747 (First Circuit, 1899)
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Palmer v. Bank of Zumbrota
75 N.W. 380 (Supreme Court of Minnesota, 1898)
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73 N.W. 169 (Supreme Court of Minnesota, 1897)
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Cite This Page — Counsel Stack

Bluebook (online)
67 N.W. 893, 65 Minn. 90, 1896 Minn. LEXIS 217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/palmer-v-bank-of-zumbrota-minn-1896.