Court Opinion

ID: 8787718
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:40:24.895068+00
Date Added: 2024-06-11T17:03:10.275202
License: Public Domain

COXE, Circuit Judge.
The complaint alleges that the Evans-Johnson-Sloane Company was organized under the law of Minnesota and is and was a citizen and resident of that state; that the defendant subscribed for the stock of said corporation and ever since the 23d of April, 1902, has been the owner and holder of 30 shares of said stock which stood in his name on the books of the corporation from the date aforesaid until August 18, 1904, when the defendant executed the assignment indorsed on the certificate and surrendered it to the corporation. The plaintiff contends that the attempted surrender of the stock was without consideration, ultra vires, fraudulent, null and void and that during the period' when the stock stood in the defend*73ant’s name, absolutely and without qualification, a large amount of the admitted indebtedness accrued. The answer denies that the defendant ever subscribed for any part of the stock of the said corporation or ever became a stockholder therein, except that the corporation issued 30 shares to him as collateral security for a debt of over $3,000 which the corporation had assumed and owed to the defendant’s firm, it being understood that the certificate should be surrendered and canceled upon the payment of the debt.
The defendant alleges further that his firm brought suit upon the note, which suit the corporation settled by paying the note and costs, and thereupon, pursuant to the agreement, the defendant delivered up and returned the certificate to the corporation’s attorney May 27, 1904. The action was tried before the court and jury, but at the close of the testimony both sides, conceding that there was no controversy on the facts, moved for the direction of a verdict. The plaintiff insisted that the testimony shows the defendant tO' have been a past stockholder, and also that it sustains the plaintiff’s contention that the surrender by defendant of the stock was pursuant to a void secret agreement, the purpose of which was to invalidate the defendant’s subscription. There can be no doubt that a certificate was issued to the defendant, in his own name, without qualification, and remained on the books of the corporation from April 23, 1902, until August 18, 1904. It is also proved that defendant’s name so appeared upon the list of stockholders attached to the petition for assessment filed in the Minnesota court. On September 4, 1906, the court entered an order assessing 100 on each share of capital stock owned by the stockholders, the defendant being among them. During the time that the defendant held the stock in his own name a large amount of indebtedness arose which was allowed by the court. We think there can he-no doubt, at least during this period of two years and four months, that the defendant was a stockholder of the corporation.
The Minnesota courts had jurisdiction to wind up insolvent corporations created by the laws of that state in the manner provided by those laws. This the court did, giving notice to nonresident stockholders. The defendant did not appear in the winding up proceedings, .where most of the defenses he now urges could have been properly heard and decided. Judgment was taken against him by default. We think the law is well settled that when the defendant became a stockholder in the Minnesota corporation, he submitted himself to the Minnesota law, as interpreted by the courts of that state, and is bound by their decree holding him liable.
In the case of Spargo v. Converse, 191 Fed. 823, 112 C. C. A. 337, this court had before it the Minnesota statute and held that an assessment made under it was valid against the estate of a stockholder, although made after her death, notice being addressed to her and not to her executor. The defendant knew, or should have known, that his name appeared upon the corporation books as stockholder. He knew that persons dealing with the corporation who had a right to examine the corporation books might be influenced in giving credit to the *74corporation by seeing his name among its stockholders. He could have sold his stock or transferred it at any time during the two years and more that it stood in his name upon the books. We think it is too late now to avoid responsibility for his acts. The authorities sustaining these views are sufficiently cited in the opinion of the District Court and need not be restated.
The judgment is affirmed with costs..