Case ID: minn_122/html/0250-01.html
Source: Caselaw Access Project
Author: {"author": "Philip E. Brown, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

R. NELSON STEVENS and Another v. W. A. TILDEN.
    
    June 27, 1913.
    Nos. 18,086—(176).
    ■Complaint by foreign receiver — demurrer.
    1. Where there was nothing in a complaint by foreign receivers of a foreign corporation to recover a stock subscription, to show, either expressly or by implication, that the appointing court made its adjudication under its general equity powers or without statutory authority, or that it exceeded its jurisdiction, a general demurrer founded upon the existence of such jurisdictional- defects was properly overruled.
    Same.
    2. The right of the receivers to sue in this state was properly sustained as against the demurrer, it appearing from the complaint that they were duly authorized by the appointing decree to sue upon claims due the corporation, and there being no showing of the existence of domestic creditors who would be prejudiced by the maintenance of the action.
    Comity.
    3. The rule of comity whereby the receivers were entitled to maintain the action, held not' affected by the fact that plaintiffs were appointed by a Federal court.
    Action in the district court for Ramsey county by tbe receivers of tbe Empire Casualty Company, a foreign corporation, tp recover $974.79. Erom an order, Brill, J., overruling bis demurrer to tbe amended complaint, defendant appealed.
    Affirmed.
    
      Durmentj Moore & Sanborn-, for appellant.
    
      Orr, Stark & Collett, for respondent.
    
      
       Reported in 142 N. W. 315.
    
   Philip E. Brown, J.

Appeal from an order overruling defendant’s demurrer to tbe complaint on tbe grounds of its failure to state a cause of action and of plaintiff’s legal incapacity to sue. Tbe action is for recovery of tbe balance due on a corporate stock subscription, and, in addition to tbe usual averments, it is alleged, in effect, that tbe minority stockholders of tbe corporation filed a petition and bill in equity in tbe United States Circuit Court for tbe Northern District of West Virginia, its borne, charging its officers and directors with mismanagement, and praying their enjoinment from disposing of tbe assets, the appointment of receivers to take possession thereof, and to collect and administer them for the benefit of stockholders and creditors, and for dissolution. It is further alleged that tbe court duly found tbe allegations of tbe bill to be true, justifying tbe appointment of receivers •and issuance of an injunction restraining tbe corporation from disposing of its assets, and duly appointed plaintiffs permanent receivers, who. were “ordered and required, after giving bond to be approved by the court, to take possession of all the assets and effects” of the corporation, and to “collect the debts and liabilities that may be due to it, with full authority in their' names as receivers, or in the name of the corporation, to sue for and recover such debts and liabilities in any court.” Due filing and approval of the receivers’ bond was alleged.

The claim advanced in support of the general demurrer is that it appears from the complaint that the corporation was not insolvent and the proceedings resulting in the appointment of receivers is not shown to have been for the purpose of protecting creditors, but appears to have been merely an appeal by minority stockholders to a court of equity to exercise its equity powers to dissolve the corporation and distribute its property. Thus premised, the contention is that the foreign court’s grant of the alleged relief was beyond its equitable jurisdiction and general powers, and required statutory authority, which is not alleged and cannot be presumed; furthermore, that the consent of the corporation thereto would not confer jurisdiction, nor bind the defendant.

We may concede defendant’s right to attack the judgment collaterally, which is not free from serious doubt (see Basting v. Ankeny, 64 Minn. 133, 66 N. W. 266; Stone v. Penn Yan, 197 N. Y. 279, 90 N. E. 843, 134 Am. St. 879; 34 Cyc. 164), and that the general equity powers of the Federal court were insufficient, in the absence of statute, to warrant the relief granted. Yet the contentions are unavailing. Said the present Chief Justice, in First Nat. Bank of Hastings v. Corporation Securities Co. 120 Minn. 105, 107, 139 N. W. 296:

“The rule guiding the court in the construction of pleadings, when challenged by demurrer, is well settled. * * * A pleading will be held sufficient when the necessary allegations may be gathered from all the averments, although it is deficient in logical order and technical language. And as against a demurrer it will be construed to state all facts that can reasonably be implied from the allegations made. Facts so implied are traversable in the same manner as though directly stated.”

In the same ease, on rehearing, tbe further statement was made:

“Tbe demurrer will be overruled if, on any view of tbe facts pleaded, a cause of action is stated. Tbe court will not ordinarily go beyond this inquiry, or attempt to pass upon tbe question wbetber recovery may or may not be bad upon all tbe different theories to which tbe facts pleaded may be susceptible. The court limits its inquiry to tbe question wbetber, upon any particular theory, a cause of action is stated.”

Under this rule we cannot bold, in aid of tbe demurrer, that tbe Circuit Court made tbe adjudication under its general equity powers, or in tbe absence of statutory authority, for such is neither alleged nor fairly inferable; nor can we presume that tbe court exceeded its jurisdiction. Moreover, it is difficult to reconcile defendant’s insistence with tbe allegation that plaintiffs “were duly appointed by said court permanent receivers.” How can this allegation be true if tbe court’s action was unauthorized ?

Defendant insists that receivers in equity, who do not succeed to title to the property of tbe corporation or are not expressly authorized to sue by virtue of some statute of tbe parent jurisdiction, but whose powers are derived solely from tbe court appointing them, cannot maintain actions of this character. Under tbe facts alleged, this court bolds otherwise. Henning v. Raymond, 35 Minn. 303, 29 N. W. 132; Comstock v. Frederickson, 51 Minn. 350, 53 N. W. 713; Gilbert v. Hewetson, 79 Minn. 326, 82 N. W. 655, 79 Am. St. 486; tbe last cited case being particularly in point. Tbe situs of defendant’s obligation was in West Virginia, and title passed to tbe receivers, at least they were trustees of an express trust. Tbe right to sue must rest either with tbe corporation or tbe plaintiff, and clearly, under tbe decree, tbe former could not maintain this action of its own motion, and tbe latter can. See Castleman v. Templeman, 87 Md. 546, 40 Atl. 275, 41 L.R.A. 367, 67 Am. St. 363; Stone v. Penn Yan, supra. It has not been tbe policy of this court to discriminate against nonresidents (Renlund v. Commodore Mining Co. 89 Minn. 41, 47, 93 N. W. 1057, 99 Am. St. 534; Brunette v. Minneapolis, St. P. & S. Ste. M. Ry. Co. 118 Minn. 444, 137 N. W. 172), nor to apply tbe strict rule prevailing in some states as to allowing foreign receivers to sue.

Based upon the claim, correctly made, that this doctrine rests upon comity, we are urged to deny the privilege of maintaining this action, because (1) the rule announced is in conflict with the practice in the Federal courts, and (2) because there is no showing of the nonexistence of resident creditors who might be prejudiced if plaintiffs were permitted to take steps in our courts, which, if successful, would result in the removal of corporate property out of the state. We think the doctrine of comity relates more to state than to Federal courts. But, be that as it may, we are not concerned with the practice of the latter. The matter of the existence of domestic creditors whose claims might, in the practical application of the rule, warrant the denial of the right to maintain the action, is defensive. If this wore not so, the burden would devolve upon plaintiffs to establish such fact, which would often be impossible, now that choses in action are assignable.

Order affirmed.