Court Opinion

ID: 7970186
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:54:26.035061+00
Date Added: 2024-06-11T16:34:45.163663
License: Public Domain

COLLINS, J.
This was an independent action brought by plaintiff, as a creditor, in behalf of herself and all other creditors who should become parties, against the stockholders of the Bank of Minnesota, to enforce the individual liability of such stockholders.
From the complaint it appeared that said bank was organized *374under the laws of this state, as a bank of deposit, discount, and issue, long prior to the enactment of Laws 1895, c. 145; that it continued to do business until December 22, 1896, when, being wholly insolvent, it suspended payment and closed its doors. December 23, upon the petition of the state superintendent of banks, the district court for the proper county appointed F. A. Seymour and William EL Lightner as receivers, of said corporation. These gentlemen immediately qualified, and ever since have remained and still remain such receivers, having possession of all of the property of said corporation. They are also made defendants in the action. The formal allegations show the number of shares of stock held by each defendant, the total liability of the corporation and the value of its assets, from which the necessity of enforcing the stockholders’ liability clearly appears.
To this complaint several of the stockholders demurred, some jointly and others separately; all of the statutory grounds for demurring being urged in one or more of these pleadings. This appeal is from an order of the court below sustaining these demurrers.
In support of the order it is contended by counsel for the demurring stockholders that it clearly appears from the complaint that the proceedings which resulted in the appointment of the receivers and the sequestration of the corporate assets were under the provisions of Laws 1895, c. 145, § 20; that under this law the right of a creditor to enforce the stockholders’ liability, theretofore existing by virtue of G. S. 1894, c. 76, was devested, and the right to enforce such liability exclusively conferred upon receivers, becoming exclusive immediately upon their appointment.
The claim of counsel for the plaintiff creditor is that, for several specified reasons, chapter 145, supra, was and is unconstitutional and consequently inoperative; that, if this claim is unfounded, the provisions of said chapter are inapplicable to the facts alleged in the complaint, because not broad enough to include within their scope the stockholders of any banking corporation organized prior to its enactment or the liability of such stockholders; that, even if these receivers have the right to enforce the liability, it is not exclusive but simply concurrent with the same right already vested *375in the creditors; that in any event the exclusive right to institute proceedings against stockholders was given to creditors for six months subsequent to insolvency by Laws 1897, c. 341, which it is urged was and is applicable to this action, because it is a law of procedure only; and,finally,that as it is alleged that $500,000 of the bank’s indebtedness was contracted prior to the day that chapter 145 went into effect, August 1, 1895, for which the stockholders’ liability was double, the receivers cannot enforce it.
A large part of the brief filed by counsel for plaintiff is devoted to the contention that chapter 145 is obnoxious to the constitution. It is urged:
(a) That it does not meet the requirements of article 9, § 13, in • that it fails to provide for the issuance or regulation of circulating notes;
(b) That it impairs the obligation of the contract existing between banks theretofore organized and the state, in that it takes away the right to issue circulating notes;
(c) If it be held applicable to this insolvent bank, it impairs the contract obligation between its stockholders and those creditors whose claims arose prior to August 1, 1895, when the 1895 statute went into effect;
(d) Due process of law is not provided for when the bank superintendent is authorized to take possession of these corporations, and to make application to the court for the appointment of a receiver;
(e) That the title of the act is insufficient, under article 4, § 27; and
(f) That the act is in violation of article 4, § 33, of the constitution.
We have carefully examined every one of these points, and find that none are well taken. We are also satisfied that it would be a waste of time to discuss them. In so far as these precise questions are concerned, chapter 145 is constitutional, beyond a doubt.
The contention of counsel that the provisions of chapter 145 are not broad enough to bring banks organized prior to its becoming a law, or to bring the stockholders thereof, within its scope, is equally as unfounded. By section 29 its provisions are, in express *376words, made applicable to banks then existing and doing business under the laws of this state. This, of course, includes the rights and powers conferred in section 20.
Nor is there any merit in the contention that under the terms of Laws 1897, c. 341, the creditors of the insolvent bank had, for six months after its insolvency was determined, the exclusive right to pursue the stockholders. The language of chapter 341 is general, and we are not to suppose that it was designed to apply to, affect, or by implication repeal, any part of section 20. If construed as demanded by counsel, a part of chapter 341 would be in direct conflict with the provisions found in section 20, empowering receivers to proceed to enforce the stockholders’ liability. But from its language it seems clear that it was intended to apply only to cases where an assignment had been made or a receiver appointed under the insolvency law, and not to cases where the proceedings were brought under the provisions of chapter 145 or chapter 76.
There is nothing in the claim that receivers appointed under the provisions of said section 20 cannot enforce the double liability of stockholders imposed by chapter 33, § 2501, in all cases where such double liability should be enforced. The liability is statutory, whether double or single, and can as easily be determined, adjusted, and enforced in proceedings instituted by receivers as in those commenced by creditors.
We are now brought to a consideration of the claim made by counsel for defendants that the right given to creditors to enforce this liability under the provisions of chapter 76 has been wholly devested by the 1895 statute, and, in connection, the contention of counsel for plaintiff that, if the receivers have the right to enforce the liability in a case of this character, this right is merely concurrent with that of creditors, and that the right may be exercised by either one or the other, it being immaterial which.
Chapter 145 does not in express terms repeal the provisions of chapter 76, under which creditors have heretofore proceeded, and we find nothing to warrant the assertion that these provisions are repealed by implication. Our conclusion is that to a certain extent they are concurrent, and we have already held in Ueland v. Haugan, supra, page 349, that wrhere a receiver attempts to enforce the lia*377bility the practice and procedure may be the same as if the remedy was being sought by creditors.
But it is quite obvious that the statutes which confer upon both receiver and creditor the right to proceed must not be construed so as to invite hasty and inconsiderate action by either of these parties, or so as to provoke a contest for priority of right between them. Such a construction would lead to results quite disastrous and not to be tolerated, and so it is highly proper that we should determine who is to have the primary right.
As to this we are quite well satisfied that in providing for the appointment of receivers for insolvent banking corporations, and that such receivers should have the right to enforce the stockholders liability, — a right theretofore held by creditors only, — it was the intention of the legislature to bestow upon receivers the primarily exclusive right to proceed. They have the right of way, so to speak; and, while it is not made their positive duty to proceed against the stockholders, the duty rests upon them under the statute, by implication at least. If the duty is to be implied from the language found in section 20, it must be also held that by implication the receiver has the primarily exclusive right to institute a proceeding against the stockholder. If he has this right, the creditor cannot be permitted to supersede it or to commence proceedings himself, without good cause shown,- — for example, that the receiver is incompetent or disqualified or has willfully neglected a duty,— and leave properly obtained from the court in which the insolvency proceedings are pending.
So controlled and governed, the rights of receivers and of creditors can be adjusted and regulated without injury to any of the parties interested, and without the clashing which would otherwise be inevitable. If the receiver proceeds to enforce this liability as provided in chapter 76, as he may, it must be by supplemental complaint filed in the original action. This action was prematurely brought, and in disregard of the primary right of the receivers. From the complaint it appeared that plaintiff had no legal capacity to sue, and that there was another action pending between the same parties for” the same cause of action, namely, the action brought by the attorney general of the state against the insolvent, *378in which the defendants, Seymour and Lightner, were appointed receivers.
The order sustaining the demurrers stands affirmed.