Court Opinion

ID: 7968278
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:52:42.563428+00
Date Added: 2024-06-11T16:34:42.409779
License: Public Domain

Mitchell, J.
The claim presented to the Probate Court for allowance was founded on the liability of the deceased, as a stockholder, for the debts of the corporation, under the constitution of the state, Art. 10, § 3, which provides that “each stockholder in any corporation * * * shall be liable to the amount of the stock held or owned by him.”
Under this provision, all the stockholders are liable to all the creditors. The object is to create a common fund, limited in amount, for the benefit of all creditors. Hence, if one creditor is allowed to proceed alone, he might exhaust the fund, or get more than his share. This personal liability was evidently intended to *423provide for the contingency of a deficiency of corporate, assets, which remain the primary fund for the payment of corporate debts. Hence, it is evident, no action or proceeding can furnish a complete remedy, or protect the rights of all persons interested, except one which brings in all interested parties, — the corporation, all the stockholders, and all the creditors. And for these reasons the courts generally hold, and in the absence of any statutory provision, that to enforce such a liability, created for such a purpose, the only remedy is by an action or proceeding to which all those interested are made parties, so that the rights and liabilities of all may be adjusted. The reasoning in Allen v. Walsh, 25 Minn. 543, is entirely applicable to the present case. There is no statute authorizing a single creditor to commence an action against a single stockholder to enforce this constitutional personal liability. In Merchants’ Nat. Bank v. Bailey Manuf’g Co., 34 Minn, 323, (25 N. W. 639,) and Nolan v. Hazen, 44 Minn. 478, (47 N. W. 155,) the action was brought to enforce a liability under 1878 G. S. ch. 34, § 9, which has no application to a case like the present.
The only remedy to enforce this constitutional personal liability of stockholders is under 1878 G. S. ch. 76.
The Probate Court has neither the power nor the machinery by which to determine either the existence or amount of such a liability, or to enforce it. It cannot bring in other stockholders or other creditors of the corporation as parties, so as to adjust their respective rights. The presentation of such a claim to that court would be a useless and idle ceremony.
It could do nothing with it if it was presented. It could not even determine the amount of the claim, beyond saying, what is already known, — that it could not in any event exceed the amount of stock held or owned by the deceased; and its decision, even as to the amount of stock, would bind nobody but the estate and the creditor presenting the claim. It could not even allow it as a contingent claim, for the liability is not contingent. The only contingency, or, to speak more accurately, the only uncertainty, is as to its amount, which can only be determined upon a full settlement of the affairs of the corporation, and an adjustment of the rights and liabilities of all stockholders and creditors. Our conclusion, *424therefore, is that while this claim is, in one sense, one “arising upon contract,” to wit, the contract implied by the constitution, it is, by virtue of the inherent limitation of the Probate Code itself, impliedly excluded from those which can be presented for allowance by the Probate Court, and that the only remedy is by action under 1878 G. S. ch. 76, to which the personal representative of the deceased stockholder must be made a party.
Order affirmed.
(Opinion published 57 N. W. Rep. 1065.