Court Opinion

ID: 7978867
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:03:04.235478+00
Date Added: 2024-06-11T16:34:59.289064
License: Public Domain

Brown, C. J.
Proceedings under section 6632, 6. S. 1913, for the appointment of a receiver of the Twin City Motor Speedway Company, an insolvent Minnesota corporation, to sequestrate its assets, enforce the constitutional liability of its stockholders, and for a distribution of the net proceeds among creditors of the company.
The cause comes to this court on an appeal taken by C. E. Dutton, a stockholder subject to the statutory liability, from the allowance of certain claims against the corporation.
In furtherance of the enterprise for which the corporation wa«3 formed and to provide necessary funds, the corporation issued its certain bonds in different denominations, securing the payment of the same by a mortgage upon specified property. There was default in the payment of the interest on the bontls as it accrued and the mortgage was foreclosed, the mortgaged property sold, and enough realized to pay the secured indebtedness to the extent of something over 60 per cent. The claims involved on this appeal represent the balance due claimants upon the mortgage bonds held by them and so in part paid from the proceeds of the foreclosure sale.
It is the contention of appellant that, under the terms-and conditions of the mortgage securing the payment of the bonded indebtedness, the holders of the bonds in the collection thereof are expressly precluded from resorting to or participating in funds derived from the statutory liability of the stockholders; that the only fund likely to come to the receiver will be from such liability, and therefore that the court erred in allowing the claims here involved, for the fund so to be derived cannot be applied in payment thereof.
It may for present purposes be conceded that respondents are not entitled to share in the fund to be collected from the stockholders, and that the contract in this respect is valid. But it is clear th'at appellant is premature in raising the question. The record before us will not justify the conclusion that the stockholders’ liability constitutes the sole present asset of the corporation. In fact it was conceded on the argument that the receiver now has the sum of about $1,300 of other fpnds, and for aught th'at the record discloses further additions may be made thereto to which respondents may rightfully resort in payment of their claims. In view of *122this situation it cannot be held that the court below erred in allowing the claims. A different conclusion no doubt could properly be reached in a ease where it affirmatively appears that the only fund to be distributed will come from the statutory liability. It does not so appear in this case.
The question sought to be raised may be presented on the final accounting of the receiver or when he applies to the court for an order directing a distribution among the creditors of funds available for the purpose.
The other question suggested on the argument, namely, that respondents’ sole remedy for the enforcement of the balance due on their bonds was a deficiency judgment in the foreclosure proceeding is not presented by the record. It does not appear whether the foreclosure was by action or by advertisement. The question was not presented to the lower court and no findings were made upon which it may be 'determined by this court!
Order affirmed.