Court Opinion

ID: 3396052
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:02:57.47324+00
Date Added: 2024-06-11T13:28:19.258145
License: Public Domain

This case is before us on rehearing granted. We find no reason to recede from the opinion and judgment hereinbefore entered.
On the death of Auguste Gieske the Executors of her Last Will and Testament became the stockholders of the stock in the banking institution involved in this case and they were chargeable in their representative capacity as such stockholders. Section 8027, Mason's Minnesota Statutes, 1927, a statute duly proven as applicable law in this case, provides:
"Same — Order for assessment — Enforcement — Effect — Defenses available — Such order shall authorize and direct the assignee or receiver to collect the amount so assessed, and, on failure of anyone liable to such assessment to pay the same within the time prescribed, to prosecute an action against him, whether resident or non-resident, and wherever found. Such order shall be conclusive as to all matters relating to the amount, propriety, and necessity of the assessment, against all parties therein adjudged liable upon, or on account of, any stock or shares of such corporation, whether appearing or being represented at the hearing or not, or having notice thereof or not, except that the defense of ultra vires set forth in Section 6646 may be interposed by any stockholder in any suit for any such assessment and if maintained shall diminish the liability of such stockholder *Page 890 
in the proportion that the liabilities determined to be ultravires shall bear to the total liabilities of such corporation."
Section 3, Article X, of the Constitution of Minnesota provides as follows:
"Liability of stockholders — 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."
In Bernheimer v. Converse, 206 U.S. 516, 27 S. Ct. 755, 51 L. Ed. 1163, Mr. Justice DAY, speaking for the Court in the opinion which dealt with the Minnesota statutes regarding the liabilities of stockholders in defunct corporations, set forth those statements which we quoted in our origial opinion in this case. And, amongst other things, he said: "By becoming a member of a Minnesota corporation and assuming the liability attaching to such membership he became subject to such regulations as the State might lawfully make to render the liability effectual."
In addition to what was said in the original opinion it was pointed out in the case of Bernheimer v. Converse, supra, that it had been held in Hawkins v. Glenn, 131 U.S. 319, 33 L. Ed. 184; Great Western Telegraph Co. v. Purdy, 162 U.S. 329, 40 L. Ed. 986, that when an assessment is necessary to be made upon unpaid stock subscriptions for the benefit of creditors the court may make the assessment without the presence or personal service of the stockholder. In the original opinion we quoted from Spargo v. Converse, 191 Fed. 823.
It has been contended on rehearing that a judgment of assessment upheld in that case was so upheld because the original stockholder was living at the time a first assessment *Page 891 
of 36% was made, but died before the second assessment was made.
The first assessment was made December 22, 1902, and the other was made on June 11, 1907. It appears that there was no connection between the two assessments except that they were made on the basis of the same certificates of stock. In regard to this second assessment the Court said:
"The proceeding under the Minnesota law is in a sense a proceeding in rem. It provides for assessment against each share of the stock and for the payment of the amount so assessed. Whoever is the lawful owner and holder of the stock must pay the amount. While he is the lawful owner he is entitled to all the advantages and must suffer all the disadvantages incident to such holding. If the stock earns dividends he will receive them. If it be assessed to pay losses he must pay them. The proceeding in Minnesota was against a corporation which represented its stockholders and the Receiver complied with the order and followed the direction of the court. Notice was sent to all persons whose names and addresses were known to the Receiver. The judgment of the Minnesota court cannot be disregarded. It is conclusive as to the insolvency of the corporation and that the assessment of 64% was necessary to enable it to pay its debts. The stockholders whether holding individually or in a representative capacity were liable for the amount so assessed. The law of Minnesota (Rev. Laws 1905, Sec. 3186) provides that:
"Such an order shall be conclusive as to all matters relating to the amount, propriety and necessity of the assessment, against all parties therein adjudged liable upon or on account of any stock or shares of such corporation, *Page 892 
whether appearing or being represented at the hearing or not, or having notice thereof or not."
In Straw  Ellsworth Co. v. Kilbourne Co., 80 Minn. 125, 83 N.W. 36, the Court says:
"`The order of assessment is, under Section 5 (Laws 1899, c. 272), conclusive upon all of the stockholders, so far as it decides the amount of assets and liabilities of the corporation before the court, and is conclusive as to the necessity of making an assessment to the extent and in the amount ordered.'"
So, the judgment rendered herein on September 25, 1935, is now reaffirmed.
WHITFIELD, C.J., and TERRELL and DAVIS, J.J., concur.
BROWN, J., dissents.
ELLIS, P.J., not participating.