Court Opinion

ID: 6737558
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:42.248576+00
Date Added: 2024-06-11T16:01:50.877366
License: Public Domain

Burke, J.
Appeal from judgment of the trial court sustaining' a demurrer to plaintiff’s complaint and dismissing the action with prejudice. The amended complaint is very long, and states in substance that defendant is a stockholder of a defunct Minnesota corporation; that said corporation was in the hands of a receiver appointed by the district court of the fourteenth judicial district of the state of Minnesota; that a judgment remained unsatisfied against the said corporation, and that said district court in Minnesota had deemed it necessary to levy an assessment against the stockholders. Those allegations are not set out in full, as we do not deem them necessary to- a decision of the controversy presented. Paragraph 6 of the complaint alleges that the said defunct corporation was organized on or about the 18th of February, 1905, “with a capital stock of $50,000, divided into 500 shares of a par value of $100 each, and that by its articles of incorporation it was empowered to manufacture and sell biscuits, crackers, candies, confections, cereals, and other kindred products,” etc. Paragraph 2 of the complaint reads as follows: “That at the time of the creation and organization of the Amei’ican Biscuit Company it was and still is the law of the state of Minnesota that each stockholder of any corporation organized for the purposes specified in the articles of incorporation of the said American Biscuit Company, as hereinafter set forth, is personally liable to the creditors of such corporation to the amount of the stock held or owned by him, which said law is, and at all times was, part and parcel of the corporate charter of the said Corporation.” Plaintiff was the receiver of the said American Biscuit Com*541pany, insolvent. To this amended complaint a demurrer was interposed upon the grounds that said complaint does not state facts- sufficient to constitute a cause of action. The Minnesota statutes upon which plaintiff relies for his recovery are §§ 3184 — 3187, inclusive, Revised Laws of Minnesota 1905, and § 3 of article 10 of the Minnesota Constitution, the latter reading as follows: “Each stockholder in any corporation, excepting those organized for the purpose of carrying on any kind of manufacturing or mechanical business, shall be liable to the amount of stock held or owned by him.”
There is little dispute as to the law in this case, and no dispute as to the facts. Appellant insists that the complaint shows a judgment of the district court of Minnesota to the effect that the American Biscuit Company is insolvent; that it owes debts oyer and above its assets; that there is a judgment unsatisfied and outstanding, and that in the judgment of the trial court an assessment upon the stockholders is necessary. These findings of said Minnesota court are claimed to be unassailable in the present action. Respondent concedes that if the Minnesota district court had jurisdiction, appellant is right upon his construction of the law, but insists that the complaint itself discloses affirmatively that said Minnesota court did not have jurisdiction. This is the only controversy.
(1) We have already set forth extracts from the amended complaint which show that this company was organized for the purpose of manufacturing biscuits, etc. Under the holdings of the supreme court of Minnesota, the stockholders of such corporations were exempt from superadded liability. Senour Mfg. Co. v. Church Paint & Mfg. Co. 81 Minn. 294, 84 N. W. 109; Cuyler v. City Power Co. 74 Minn. 22, 76 N. W. 948; Hastings Malting Co. v. Iron Range Brewing Co. 65 Minn. 28, 67 N. W. 652; Vencedor Invest. Co. v. Highland Canal & Power Co. 125 Minn. 20, 145 N. W. 611.
In the Senour Case they say: “In proceedings to enforce the individual liability of stockholders [for the debtsj'of a corporation, the articles of incorporation are the sole criterion as to the purposes for which the corporation was formed.” In the said case their articles read: “The general nature of the business of this corporation shall be to manufacture painters’ materials and supplies, and the owning, holding, and using of., letters patent pertaining to the manufacture of such ar*542tides, and the selling of such manufactured articles, and the doing of anything that is properly incident to or necessarily connected with such manufacturing business.” In the Cuyler Case the articles read: “The general nature of its business shall be the acquiring and holding, either by purchase or lease, of real estate and water power, and the purchasing,, hiring, building, improving, or construction of canals, locks, ponds, or watercourses . . . for the purpose of producing and creating, water, steam, and other motive power,” etc.
In all of these cases the corporations were held to be manufacturing and the stockholders exempt. It- is thus apparent that plaintiff has pleaded facts showing conclusively that the Minnesota district court was. without jurisdiction to make this assessment. Paragraph 2, which we have already quoted, to the effect that under the laws of Minnesota each stockholder of any corporation organized for the purposes specified in the articles of incorporation of the said American Biscuit Company, as hereinafter set forth, is personally liable to the creditors, is a mere conclusion of law. Plaintiff might as well have pleaded that the defendant owed plaintiff $100 and let it go at that. The facts disclose that the Minnesota court did not have jurisdiction.
The fact that the said court thought it actually had jurisdiction is not conclusive. Having no jurisdiction of the subject-matter, and not having personal service upon Augedahl, the assessment falls. The demurrer was properly sustained. Affirmed.