Court Opinion

ID: 7974748
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:58:37.691317+00
Date Added: 2024-06-11T16:34:52.515450
License: Public Domain

START, C. J.
This is an appeal from an order of the district court of the county of Ramsey directing the distribution by the receiver herein of a fund of $9,507.25 paid into court by certain stockholders of the defendant corporation to abide the final determination of the amount of their liability as such stockholders for the debts of the defendant. The Germania Bank of St. Paul, the defendant, was a banking corporation organized under the laws of this state. On January 4, 1897, the bank made an assignment for the benefit of its creditors, being then insolvent and owing debts to the amount of $750,000. The then outstanding stock amounted to $400,000, divided into shares of $100 *450each. On August 12, 1897, it was reorganized by the judgment of the district court, which expressly provided that the reorganization should not operate to release any stockholder from his liability for the then existing debts of the bank.
The plan of reorganization, so far as here material, was substantially this: To repair the capital by levying a 75 per cent, assessment upon the outstanding stock, and by securing voluntary subscriptions from the creditors of the bank for such additional stock as might Ibe necessary to realize at least the sum of $200,000. The capital to be ¡reduced to such amount as should be raised by the assessment and subscriptions, to be effected by the voluntary surrender and cancellation of shares, or by sale and cancellation thereof in the event of failure of the holders to pay the assessment thereon. The holders of 1,914 shares of stock were in default in the payment of the assessment, and such shares were declared forfeited and canceled, and it was ordered that they should not be reissued, but the amount thereof be deducted from the capital stock of the reorganized bank. The holders of the remaining shares paid the 75 per cent, assessment in full. The old stock certificates, representing the 2,000 shares of (capital stock upon which the assessment had been paid, were nearly .-all surrendered to the reorganized bank, and it issued new certificates of stock therefor. There were also issued to creditors of the old bank -567 shares of the stock of the reorganized bank, who accepted the -same in payment of their deposits with the old bank. The reorganized bank received all the assets of the original bank.
The bank again became insolvent, and on July 26, 1899, Gustav 'Willius was appointed receiver thereof by the district court of the -county of Ramsey, and on September 17, 1903, the court by its order made an assessment of one hundred per cent, upon the entire 4,000 shares of stock issued and outstanding on January 4, 1897, the date •of the original insolvency and assignment by the bank. Upon an appeal from such order to this court it was held that, the stockholders of the reorganized bank were primarily liable for the debts of the old bank, and the stockholders of the latter who did not accept stock in the new bank were secondarily liable for such debts only as were in • existence on the day of the reorganization of the bank. Willius v. Mann, 91 Minn. 494, 98 N. W. 341, 867. The district court, upon *451the remand of the case to it, made its order restraining the receiver from talcing any action for the collection of the amount against the stockholders who were only secondarily liable therefor until the exhaustion of all remedies against those who were primarily liable therefor and until the further order of the court.
On the day of the first failure of the bank, the ancestor of the appellants Furness, through whom they claim, Alexander Ramsey, deceased, was the holder of 83 shares of the stock of the bank, and the appellant Frank Crawshaw was the owner of 44 shares thereof. Only sixty one and a half shares of the stock of the reorganized! bank were accepted by Governor Ramsey, and only ten by Crawshaw. The assessments on such shares of stock have been paid in full by the respective appellants. No shares of stock were of record in the name •of either Ramsey or Crawshaw in the stock ledger of the reorganized bank at the time of its failure, except the new stock so issued to them respectively. On November 5, 1903, the appellant Crawshaw paid to the receiver the full amount, $3,400, of the assessment on the 34-shares of the stock of the bank held by him before it was reorganized, .and for which he did not take new certificates. The condition upon which payment was made was expressed in a receipt given to him by the receiver, which, omitting date and signature, was in the words following;
“Received of Frank Crawshaw $4,400 in full of all liability as a stockholder in the Germania Bank of St. Paul, which he has paid upon the express condition that in case it shall hereafter be determined “by the court that the liability of stockholders composing the classes to which his stock belongs is less on account of either of them, or if for any reason it shall hereafter be made to appear to the satisfaction of the court that he has made an overpayment, he is to receive back from said estate the amount of the overpayment; it being the intention that his rights shall not be in any manner prejudiced by his making payment at this time of the full amount claimed by the receiver to be due from him as a stockholder.”
On October 4, 1904, the appellants Furness in like manner paid to the receiver the full amount, $3,168.64, including interest, of the assessment on the 30% shares of the stock of the bank, before its reorganization, held by their ancestor, upon the same condition express*452ed in the receipt given to Crawshaw, and a like receipt was given to them. Fourteen other stockholders belonging to the same class also paid to the receiver the amount of the assessment on their respective stock, seven of whom paid on the condition named in Crawshaw’s receipt. The other seven paid unconditionally, making the total fund so paid into court by this class of stockholders, $9,507.25.
On August 13, 1907, the receiver presented his petition to the court, praying that the order theretofore .made, restraining him from enforcing the assessment against stockholders secondarily liable therefor, be vacated, and that the fund of $9,507.25 so paid to him be distributed to creditors. Thereupon the court made its order fixing a time and place for a hearing on the petition. Notice of such hearing was given as directed by the court. Only the appellants Furness answered the petition; but the appellant Crawshaw and others appeared at the hearing and objected to the granting the prayer of the petition.
The trial court, after a full hearing of the matter, made its order directing the distribution of the fund, in which the court found, in effect, the following facts: None of the payments so made by the appellants and other stockholders belonging to the same class exceeded the amount of the liability of the respective stockholders making such payments. All has been collected on account of such liability from the stockholders primarily liable therefor that can be collected. The total amount of uncollected primary liability is within the bar of the statute of limitations, except the sum of $31,005.92, which is due from stockholders who are insolvent, and from whom nothing can be collected. All the assets and all that has been collected from stockholders has been distributed, except $27,000 and the fund here in question, leaving the total unpaid indebtedness of the bank $273,000, of which $101,000 arose prior to January 4, 1897. The total collectable secondary liability does not exceed the sum of $30,000.
The appellants’ assignments of error are to the effect that the trial court erred in finding that there was no overpayment of their liability, that all has been collected that can be collected from the stockholders primarily liable, and in distributing the fund to creditors.
1. The appellants’ first contention is that the stock upon which they paid into court the amounts here in question was included in the 567 shares of stock issued by the reorganized bank to creditors; hence *453their relation to and liability on such stock was that of transferrors only, and' any action to enforce their liability as transferrors- was barred in one year thereafter. Laws 1895, p. 301, c. 145, § 5. The record does not sustain this claim. The most that can be claimed in this connection is that the forfeiture and cancellation of 1,914 shares of stock and the deduction of the amount thereof from the capital stock of the bank as reorganized enabled it to issue to creditors 567 shares of new stock and keep within the authorized limit of its capital stock, $200,000. The evidence fails to identify the stock of the appellants, for which they did not accept new certificates, with the shares of stock issued to creditors in payment of their deposits, which was, in effect, a subscription for stock of the bank to be paid for by their deposits, as provided by the plan of reorganization.' Again, it was expressly provided by the judgment of reorganization that none of the stockholders should be released from any of their then existing liability by reason of the reorganization of the bank. The evidence affords no basis for the claim that the appellants were only transferrors of the stock on which they were held secondarily liable.
2. The next contention of the appellants to be considered' is that the finding of the court, to the effect that all remedies have been exhausted against stockholders primarily liable for the debts of the bank before its reorganization, is not sustained by the evidence. The order of the court requiring such exhaustion must receive a reasonable construction, and not a technical one. It is not to be construed as requiring the exhaustion of all remedies against stockholders primarily liable in favor of whom the statute of limitations has run. -An examination of the evidence satisfies us that it fairly sustains the finding, and we so hold.
3. The appellants further urge, in effect, that the receiver’s right to have the fund distributed to creditors is barred by the statute of limitations, and therefore they are entitled to have their respective share of the fund returned to them. This claim is based upon the decision of this court in the case of Willius v. Albrecht, 100 Minn. 436, 111 N. W. 387, 112 N. W. 862, in which it was held that the statute of limitations commenced to run from the appointment of the receiver. This is not an original action to enforce the liability of stockholders, but a proceeding to secure the distribution of a'fund-paid into-court. *454by the appellants in full of their stock liability upon the condition that, if for any reason it should thereafter be determined that there was an overpayment, the amount thereof should be repaid. Such payment was made within six years after the appointment of the receiver, and six years has not elapsed since the fund, or any part thereof, was so paid, during which time the receiver was restrained from taking any proceedings against stockholders secondarily liable until the further order of the court. It is clear that the right of the receiver to apply to the court for an order vacating the restraining order and distributing the fund is not barred.
It follows that the finding of the court to the effect that there was no overpayment by the appellants of their liability is sustained by the evidence, and that the court did not err in directing a distribution of the fund.
Order affirmed.