The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1904-02-12
CITY NEWS
OLD STOCKHOLDERS
ARE HELD LIABLE
Can't Claim Exemption on the
Ground That They Didn't
Join in Reorganization.

In a decision handed down yesterday
the supreme court discriminates as to
the respective liability of the original
stockholders of the Germania bank and
the stockholders of the reorganized
bank, with particular reference to
those who were stockholders of the
old bank and did not enter into the re-
organization. The decision arises in
the suit of Gustave Willius, receiver,
respondent, VS.. Frederick F. Mann,
Amanda L. Moss and Nina Fetzhold;
but it is Of broad interest because of
cases more or less analogous. The
opinion is written by Justice Brown,
and the syllabus says:
The Germania Bank of st. Paul became
insolyent and made a general assignment
for the benefit of it's creditors. Suisse
quently at the instance of creditors, a
reorganization of the bank was effected
under the provisions of chapter &c. Cen
duced to $780, 600, which was subscribed
and the assignee turned over and delivered
to the officers of the new bank all prop
erty and effects of the old. New certifi-
Gates of deposit were issued and delivered
TO the creditors for the amounts due them
respectively; and the bank was reopened
and thereafter engaged in general bank
ing business. A number Of stockholders
In the old bank took no part in the reor-
gan1zat1on proceedings and did not be-
come stockholders in the new bank. Sub
sequent to the reorganization the bank
again became insolvent, and a receiver
was appointed by the court to take charge
Of its affairs, who thereafter duly quail
flied and entered upon the duties of his
trust. The assets being insufficient to
pay the outstanding indebtedness of the
bank, an application of the receiver the
court made an order assessing all stock
holders, both in the old and the new
Pank, 100 per cent Of the amount Of their
holdings. 1t Is held:
1. That the issuance and delivery by
the reorganized bank of new certificates
of deposit to the creditors for the amounts
uue them was not a payment of their
claims and did not operate to release and
discharge the stockholders who did not
become members of the new bank from
their statutory liability as such.
2. That as the new bank received all
the property and effects Of the old bank.
and used and employed the same in It's
business, the stockholders thereof are
primarily liable for all debts Of the old
bank, and all remedies against them
should be exhausted before resorting to
the stockholders who did not become
members of the new concern, and who are
secondarily liable only.
3. The judgment of the court adopting
and calculating the reorganization pro-
Vided that the reorganization should not
operate to release any of the Stockhold-
ers in any way, or to any extent, from
their liability heretofore existing Held
lneffectual as against stockholders who
We're not parties to such proceedings and
did not become members of the new bank
4. stockholders are bound by a judg-
ment against a corporation entered in
proceedings to which they are not a party,
only so far as it concerns the affairs and
liability of the corporation itself; such
Judgment does not conclude them upon
questions respecting their personal or in
dfvidual liability as stockholders. Order
modlned. Brown, ].