# Hale v. Hardon

> Court of Appeals for the First Circuit · May 31, 1899 · 95 F. 747

URL: https://www.frixlaw.com/law-library/cases/8865864

## Case

- **Full name:** HALE v. HARDON
- **Court:** Court of Appeals for the First Circuit
- **Decided:** May 31, 1899
- **Citations:** 95 F. 747; 37 C.C.A. 240; 1899 U.S. App. LEXIS 2488
- **Precedential status:** Published
- **Opinion:** Dissent by Colt
- **Judges:** Aldrich, Colt, Webb
- **Cited by:** 22 later opinions in the Frix Law Library

## Citator (automated)

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## Opinion text

COLT, Circuit Judge
(dissenting). This is an action at law brought in the circuit court of the United States for the district of Massachusetts by William E. Hale, receiver, against Henry C. Harden, a citizen of Massachusetts, to enforce his double liability as stockholder in the Northwestern Guaranty Loan Company, a corporation created under the laws of the state of Minnesota. The company was adjudged insolvent in May, 1893, and a general receiver appointed, under the laws of Minnesota. In November, 1893, Arthur L. Rogers, in behalf of himself and all other creditors, brought suit against the corporation, its receiver and its stockholders, for the purpose of enforcing the superadded statutory liability of the stockholders, under chapter 76, Gen. St. Minn. 1894. To this bill of complaint the corporation and its receiver made no answer, and were declared in default. The- defendant, Harden, was never made a party to that suit by the service of any process or notice upon him. In that suit the court proceeded to ascertain the amount of the debts and assets of the corporation, and entered judgment against the resident stockholders over whom it had acquired jurisdiction by service of process, and against the corporation for the amount of its indebtedness. The plain! iff, Hale, was appointed special receiver by the court to collect these judgments, and for the further purpose of enforcing the liability of nonresident stockholders “against whom no personal judgment herein has been ordered,” by instituting “such actions or proceedings in foreign jurisdictions as may be necessary or appropriate to this end.” Hence the receiver has brought this present action at law, demanding judgment against the defendant in the sum of 817,000. It is admitted that the defendant was the owner of 170 shares of stock in the corporation at the time it was adjudged insolvent.
Judge Putnam in the court below held ( 89 Fed. 289 ): “First, that the proceeding [in Minnesota] in which this plaintiff was appointed a so-called receiver is void so far as this defendant is concerned; and, second, that the plaintiff is not of the class entitled to maintain a, suit at law in a jurisdiction foreign to that which vested him with his office.” With these conclusions I agree. The double or super-added liability of stockholders to creditors for corporate debts is always a creature of statute; it does not exist at common law. Where a right is created by statute, and a remedy for its enforcement is provided by statute, the remedy is “exclusive of all others.”
In the federal courts this rule has been authoritatively established by the supreme court in Pollard v. Bailey, 20 Wall. 520, 527 ; Bank v. Fracvklyn, 120 U. S. 747, 756, 758 , 7 Sup. Ct. 757, 762. In the latter case the court, speaking through Mr. Jus I ice Gray, said:
“In the leading case of Pollard v. Bailey, 20 Wall. 520 , under a statute of the state of Alabama incorporating a hank, and providing in one section that the stockholders should ‘he hound respectively for all the debts of the bank in proportion to their stock holden therein,’ and in other sections that they might be charged by bill in equity, it was held that the remedy prescribed in these sections was the only one, and a creditor of the bank could not maintain an *778 action at law against the stockholders in the circuit court of the United States; and the chief justice, in delivering judgment, affirmed the following principles, which have been constantly adhered to in subsequent cases: ‘The individual liability of stockholders in a corporation for the payment of its debts is always a creature of statute. At common law it does not exist. The statute which creates it may also declare the purposes of its creation, and provide for the manner of its enforcement.’ ‘The -liability and the remedy were created by the same statute. This being so, the remedy provided is exclusive of all others. A general liability created by statute, without a remedy, may be enforced by an appropriate common-law action. But, where the provision for the liability is coupled with a provision for a special remedy, that remedy, and that alone, must be employed.’ 20 Wall. 526, 527 . * * In all the diversity of opinion in the courts of the different states, upon the question how far a liability, imposed upon stockholders in a corporation by the law of the state which creates it, can be pursued in a court held beyond the limits of that state, no case has been found in which such a liability has been enforced by any court, without a compliance with the conditions applicable to it under the legislative acts and judicial decisions of the state which creates the corporation and imposes the liability. To hold that it could be enforced without such compliance would be to subject stockholders residing out of the state to a greater burden than domestic stockholders.”
The Minnesota constitution (section 8, art. 10) declares the liability of each stockholder “to the amount of stock held or owned by him,” and chapter 76 of the General Statutes of 1894 provides the remedy. The provisions of chapter 76 are as follows:
“Sec. 5905. Whenever any creditor of a corporation seeks.to charge the directors, trustees, or other superintending officers of such corporation, or the stockholders thereof, on account of any- liability created by law, he may file his complaint for that purpose in any district court which possesses jurisdiction to enforce such liability.
“Sec. 5906. The court shall proceed thereon, as in other cases, and, when necessary, shall cause an account to be taken of the property and 'debts due to and from such corporation, and shall appoint one or more receivers.
“Sec. 5907. If, on the coming in of the answer or upon the taking of any such account, it appears that such corporation is insolvent, and that it has no property or effects to satisfy such creditors, the court may proceed, without appointing any receiver, to ascertain the respective liabilities of such directors and stockholders, and enforce the same by its judgment, as in other eases.
“Sec. 5908. Upon a final judgment in any such action to restrain a corporation or against directors or stockholders, the court shall cause a just and fair distribution of the property of such corporation and of the proceeds thereof to be made among its creditors.
“See. 5909. In all cases in which the directors or other officers of a corporation, or the stockholders thereof, are made parties to an action in which a judgment is rendered, if the property of such corporation is insufficient to discharge its debts, the court shall proceed to compel each stockholder to pay in the amount due and remaining unpaid on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the company.
“Sec. 5910. If the debts of the company remain unsatisfied, the court shall proceed to ascertain the respective liabilities of the directors or other officers and of the stockholders, and to adjudge the amount payable by each, and enforce the judgment, as in other cases.
“Sec. 5911. Whenever any action is brought against any corporation, its directors or other superintending officers, or stockholders, according to the provisions of this chapter, the court, whenever it appears necessary or proper, may order notice to be published, in such a manner as it shall direct, requiring all the creditors of such corporation to exhibit their claims and become parties to the action, within a reasonable time, not less than six months from the first publication of such order, and, in default thereof, to be precluded from all benefit of the judgment which shall be rendered in such an action, and from any distribution which shall be made under such judgment.”
*779 The remedy provided by this chapter has frequently come before the state court for judicial determination. The leading case on this subject is Allen v. Walsh. 25 Minn. 543 , decided in 1879. That was a suit by a single creditor of an insolvent bank against a single stockholder to enforce bis statutory liability. In its opinion the court, at page 551 and following, said:
“The objection of a defect of parties, which is raised by the demurrer, seems, however, to be well taken. The complainant shows that the Marine Bank derives its corporate existence from the provisions of General Statutes (chapter 33); that it was insolvent when this action was commenced, having theretofore made a general assignment for the benefit of creditors; a.nd that there were other stockholders beside the. defendant, who were also individually liable, under the stature, for the corpora to debts and demands in suit. The demurrer, therefore, distinctly presents, and for the first time in this court, the question whether a creditor of an insolvent bank, upon such a state of facts, and against an objection of this kind, can enforce his claims against one of the stockholders without joining the rest, and also all other parties having any interest in the subject of the controversy, in order that their respective interests may be fully and finally adjudicated and settled in the action. The right; determination of this question depends upon the nature of the liability, and the policy of the law in respect to its enforcement, as indicated by the statutes relating to the subject. The liability declared on is purely a statutory one. It arose out of no contract between the parties, other than that implied by the statute, and is for no debt personally contracted by the defendant, either as principal or surety. It exists wholly by force of the provisions of the statute which created it, and which alone determines its characteristics and incidents. As further indicating the legislative intention upon this subject, the General Statutes of 1866, which contain the statutory provisions upon banking and the individual liability of stockholders, also provide a special and adequate remedy for enforcing the liability, closing up the affairs of the bank in case of insolvency, and for the final adjustment of the rights of all the parties having any interest in the matter. Gen. St. c. 76. This chapter applies to all corporations and associations having any corporate rights. It provides in terms: ‘Whenever any creditor of a corporation seeks to charge its stockholders on account of any liability created by law, he may file his complaint for that purpose iii any district court which possesses jurisdiction, to enforce such liability.’ Authority is given in such action, whenever necessary, to take an account of the property and debts due to and from the corporation, to appoint one or more receivers to collect and convert into money the corporate demands and property, and make just and fair distribution of the proceeds among its creditors, and, in ca.se its assets prove insufficient to satisfy its debts, the respective liabilities of the stockholders are to be ascertained, and the amount payable from each is to be adjudged, and its payment enforced, as in other cases. Provision is also made lor giving notice to all the creditors of the corporation by publication. requiring them to exhibit their claims and become parties to the action within a reasonable time, not less than six months, or to be precluded from any benefits in the distribution which may be made under the judgment in the-action. Gen. St. c. 76, §§ 17-23. It is reasonable to suppose that the legislature intended by these sections to provide an efficient and sole remedy for enforcing payment, of the debts of an insolvent corporation out of the individual .liability of its stockholders; for the rule is well settled that, when a statute which creates a righr also prescribes an adequate remedy, the latter is to be taken as the exclusive one. City of Farlbault v. Misener, 20 Minn. 396 ( Gil. 347 ); Sedg. Const. Law (2d Ed.) 341. The chapter which gives this remedy forms a part of the General Statutes, which were adopted in 1866, and which contain the enactment that, creates the statutory liability, and therefore the rule referred to is fairly applicable. It is obvious, from an examination of these sections of chapter 76, that the remedy they provide contemplates a single action, in which all persons having or claiming any interest in the subject "of the action shall be joined or properly represented, and tlie.ir respective rights, equities, and liabilities finally settled and determined. This accords with the general policy of the law as it has existed in this state since 1853.”
*780 In Johnson v. Fischer, 30 Minn. 173, 176 , 14 N. W. 799, 800 , the court, following the construction of chapter 76. laid down in Allen v. Walsh, said:
“This statute was construed in Allen v. Walsh, 25 Minn. 543 , as prescribing an action in the nature of an equitable suit, in which all persons interested in the subject of the action should be joined or properly represented. It was further held in that case, as one of the grounds of the decision, that the remedy so provided by statute was the exclusive remedy for enforcing the statutory liability of stockholders.”
In Minneapolis Baseball Co. v. City Bank, 66 Minn. 441, 443 , 69 N. W. 331, 332 , the court said:
“In the case of Allen v. Walsh, 25 Minn. 543 , it was held that the stockholders’ liability was for the equal benefit of all creditors, and all had an equal right to enforce it; and that Gen. St. c. 76, provided an efficient and sole remedy for such enforcement, in a single action in which all persons interested should be joined, and their respective rights, equities, and liabilities finally settled and determined. This case was followed in Johnson v. Fischer, 30 Minn. 173 , 14 N. W. 799 , wherein it was held that the liability could only be enforced by or on behalf of all creditors, and against all of the stockholders upon whom the liability rested.”
The nature of the statutory remedy, as laid down in Allen v. Walsh and subsequent cases, and as showing that it involves a full and final accounting between all parties in interest, is made clear from the case of Harper v. Carroll, 66 Minn. 487 , 69 N. W. 610, 1069 , decided in 1896. In that case the questions arising under the statutory remedy were exhaustively considered, and the following, among other, propositions enunciated:
“In an action under the General Statutes of 1894 (chapter 76), to enforce the double liability of the stockholders of an insolvent corporation, the creditors are entitled to a judgment against each stockholder for the full amount of his statutory liability, even though the aggregate amount of this judgment exceeds the aggregate amount of all the corporate indebtedness and costs .and expenses of the action to be satisfied by such judgment.”
“Where the aggregate amount of the judgment so exceeds the aggregate amount to be satisfied by the same, execution should not be issued against some or all of the stockholders for the full amount of the judgment against each, but the judgment should,' by its terms, provide for issuing successive executions on the order of the court, at first for each stockholder’s pro rata share of such indebtedness and expenses, and then for subsequent successive executions for such additional pro rata amounts or assessments as may be found necessary by reason of the failure to collect from stockholders found to be insolvent in attempting to satisfy the prior execution; and, when such indebtedness and expenses are paid in full, the balance of the judgment against those stockhold'ers paying their full share of the same shall be satisfied. Execution should be issued on the judgment accordingly.”
“When a stockholder is also a creditor, it is proper to order judgment against him for the full amount of his statutory liability, the same as against other stockholders, to declare the judgment against him a lien on the amount due him, and to order him to .pay all assessments on such judgment until the court is fully satisfied that the dividend coming to him will fully pay the balance due from him on any further assessments on the judgment against him, when the collection of such further assessments may be stayed, and on distribution the dividend due him may be set off against such assessments.”
“When, four days before the trial, the plaintiff discovered that nonresident stockholders, over whose persons the court did not and could not acquire jurisdiction, had property within this state, and on the trial the defendant stockholders objected to entry of judgment until the court should acquire juiisaiction over this property by attachment, held, at that late day, these defendants were *781 not entitled to delay 1he trial or oilier proceedings in order to make this property contribute to the payment of the corporate debts; but the court might, in its discretion, compel the plaintiff or other creditors to attach and proceed to condemn the property, and, if condemned too late to contribute directly, it or its proceeds might, after the creditors were paid in full, be applied to reimburse those stockholders who had paid more (lian their share.”
“The stockholders’ liability is several, not joint; and a judgment against only a part of the stockholders, within the jurisdiction, does not have the effect of releasing the others. While such liability is several, it produces only a limited fund, which belongs to all the creditors as tenants in common, and must he enforced in equity.”
“It is proper to provide in the judgment that, after the receiver has collected in full or luis exhausted all the collectible liability, a judgment of cfen-tribution may be endued in favor of those who have paid more than their share, and against those who have paid less.”
In contemplating tlie scope and character of the remedy for the enforcement of the superadded liability of stockholders provided in chapter 76, as construed by the highest court; of the state in Allen v. Walsh and Harper v. Carroll, how is it possible to adjudicate upon the rights, equities, and liability of an absent stockholder, who was never made a party to the original proceeding, in an action at law in a foreign jurisdiction?
Such was the remedy, and the exclusive remedy, for the enforcement of the stockholders’ double liability, under the Minnesota statute, as interpreted by the highest court of the state, down to 189(5. This is three years subsequent to the time the corporation in which Hie defendant was a stockholder was adjudged insolvent, and the suit of Iiogers against the stockholders was begun in the state court. Down to this time the state court had uniformly held that the right of creditors to enforce the liability of stockholders for corporate debts is created by statute; that the statute provides the exclusive remedy, which is a single action in the nature of an equitable proceeding on behalf of all the creditors, and against all the stockholders, wherein the rights of all parties having any interest may he finally adjusted; that, if there were nonresident stockholders over whom the court could acquire no jurisdiction, it would proceed with the accounting against the part of the stockholders within its jurisdiction. The court had never held that the proceeding under chapter 76 was binding upon nonresident stockholders, over whom it acquired no jurisdiction, for any purpose whatever.
In all the numerous cases which have arisen under chapter 76 concerning the enforcement of stockholders’ liability, it does not appeal-, until the case of Ttogers against the stockholders of the Northwestern Guaranty Loan Company, that the state court ever-authorized the receiver to bring suit in a foreign jurisdiction against a nonresident stockholder, or that an action at law like the present suit wras ever before instituted.
The authority upon which this suit is based, and which has been mainly followed in the reasoning and conclusion of the majority of the court, is the language used in the opinion of the supreme court of Minnesota in the recent case of Hanson v. Davison, 76 N. W. 254 , decided July 26, 1898, by a divided court. It is necessary to analyze that case with some care. The suit of Hanson v. Davison *782 grew out of the parent suit of Harper v. Carroll, supra. In the latter case, it was found that a nonresident stockholder, Davison, had property within the jurisdiction of the court, and the court thereupon authorized the plaintiff, Hanson, who was an intervening creditor in the Carroll suit, to bring a separate action against Davison to reach the property. The district court directed judgment for defendant, and this judgment was affirmed by the supreme court upon the ground that, where “the property of such [nonresident] stockholder is found within the jurisdiction of the court, either before or after judgment in the original action, a separate suit against him to reach the property is neither necessary nor proper, for it can be attached or sequestered in the original action. Such is this case.” The question before the court- for determination in Hanson v. Davison was whether a separate action would lie against a nonresident stockholder for the purpose of reaching his property within the-state, and the court held that it would not, because it could be át-tached and sequestered in the original suit. The original suit in that case was Harper v. Carroll, where, as we have seen, the court fully considered the principles governing a final settlement of all the rights.and equities arising between the creditors and stockholders. In the opinion, however, in Hanson v. Davison, the majority of the court gave a construction, respecting the remedy in case of a nonresident stockholder under the Minnesota statute, which was-certainly new, and, it would seem, in conflict with former decisions-of the court. That portion of the opinion may be summarized as-follows: The remedy for enforcing the liability must, in the first instance, from the nature of the liability, be an equitable action., Chapter 76 indicates and regulates, to some extent, the remedy,, leaving to the court the duty of making the remedy effectual by an application of the principles of equitable procedure. This statute prescribes the exclusive remedy only to the extent that an equitable action of the character therein indicated must be first instituted for the enforcement of the liability of stockholders. Such an action, though provided by statute, is essentially an equitable proceeding, and the rules of equity are to be followed, unless inconsistent with the statute. If chapter 76 were repealed, equity would find an adequate remedy for the enforcement of the liability. There is nothing in the statute which justifies the conclusion that, if a stockholder’s liability is not enforced in the original action because he is a nonresident, an ancillary action may not be brought against him alone after the amount for which stockholders are individually liable has been determined in the original action. Equitable considerations and the statute require that an action of the character prescribed by chapter 76 be brought by and on behalf of all the creditors, and against the corporation and all of the stockholders of whom the court has jurisdiction, to determine the amount remaining due to such creditors, respectively, after the assets of the corporation have been exhausted; thereby providing a basis for determining the extent of the liability of the respective stockholders. The judgment in such original action, determining the amount of the corporate debts remaining unpaid, is binding on all of the stock *783 holders, whether parties to the action or not, unless impeached for fraud. A judgment against the corporation is, in effecL, a judgment against the sioddioldei-s in their corporate capacity. They are represented by the corporation in the action. In principie, there can be no difference in this respect between an action to enforce an unpaid subscription and one to enforce a stockholder’s liability. The action required to be brought by chapter 76 is the original action for the sequestration and distribution of the fund to be derived from the stockholders’ liability, and the decree entered therein is a final and conclusive determination of the amount (unless impeached for fraud) for which the stockholders are liable. As the amount and par value of the stock issued and outstanding is a matter of record, and readily proven in any action, there is nothing to prevent: the prosecution, after such decree is entered, of an ancillary action in another jurisdiction by the receiver appointed to collect and distribute its funds arising from the stockholders’ liability in the original action, or by any other parly or person who may be appointed by the court for that purpose, against any stockholder who was not made a party to the original action, to collect from him the amount of his liability on account of the debts of the corporation, for the benefit of all the creditors. The only objection, in justice, such stockholder could make to such a procedure, would be that his right of contribution could not be worked out in such ancillary action. If he were called on to pay only his pro rata share of the deficiency, treating all the stockholders as solvent, the objection would wholly fail; but it would seem that his right to contribution, in case he was required to pay more than his share as between himself and the other stockholders, is subordinate to the equities of the creditors, as he can secure such contribution by appearing in the original action. Judge Oanty (who wrote the opinion in Harper v. Carroll) died a dissenting opinion, in which lie said:
“A judgment taken against the corporation while it was a going concern is conclusive against the stockholders. Holland v. Development Co., 65. Minn. 324, 68 N. W. 50 . But a judgment in an action commenced after the assets of the corporation have been sequestered in insolvency proceedings is of no effect, as against the stockholders. Danforth v. Chemical Co. (Minn.) 71 N. W. 271 ; Schrader v. Bank, 133 U. S. 67, 77 , 10 Sup. Ct. 238. * « * When the corpora I ion is a going concern, it represents ail oí its stockholders in defending actions brought against it, and that is the reason why the stockholders are bound by a judgment taken against it a,t such a time. But, after the corporation goes into liquidation, it ceases to represent its stockholders, — at least, as to their superadded liability. The majority admit this by admitting that all of the stockholders within the jurisdiction are necessary parties to an action to enforce that liability. It is the first time I have ever heard the doctrine laid down by a court that you may neglect to bring in a necessary party to (he action, and yet bind him as conclusively by the result as if he hud been brought in. It seems to me that this is a most extraordinary doctrine. Neither can I concur in that part of the opinion which holds that there is no difference between a suit against a stockholder for an unpaid subscription and a suit against him on his superadded liability, so far as the conehisivenoss of the judgment obtained against the corporation is concerned. * * * The case of Hawkins v. Glenn, 131 U. S. 319 , 9 Sup. Ct. 739, cited by the majority, is merely a case of an assessment on unpaid subscriptions; and the proceeding is npheld on the ground that the debts due the corporation on these subscriptions were corporate assets, and the court had all the power *784 ration itself to make an es: parte assessment on suck sukscriptions. Suck, also, are tke cases of Marson v. Deitker, 49 Minn. 423 , 52 N. W. 38 , and In re Minnehaha Driving Park Ass’n, 53 Minn. 425 , 55 N. W. 598 ; and tkese assessments were made in proceedings in wkick tke stockkolders’ superadded liability could not ke enforced at all. Prom tkese suggestions it will ke readily seen tliat it does not follow at all tkat, because tke judgment against tke corporation is conclusive in an action to collect an unpaid subscription, it is conclusive in an action on tke stockkolders’ superadded liability. Neither can I concur in tkat part of tke opinion wkick assumes to hold tkat an ancillary action may be maintained in another jurisdiction by tke receiver appointed in tke original action in this state. This court has several times held tkat a receiver appointed under chapter 76 has no authority to enforce tke stockholders’ superadded liability. See Minneapolis Baseball Co. v. City Bank, 66 Minn. 441 , 69 N. W. 331 ; Palmer v. Bank, 65 Minn. 90 , 67 N. W. 393 . I am unable to see how this court can lay down a rule or edict to govern proceedings in courts of other states contrary to tke rule it lays down to govern proceedings in tke courts of this state.”
The. opinion of the majority of the court in Hanson v. Davison concerning the remedy under the Minnesota law for the enforcement of the double liability of stockholders involves the following propositions: First. In such a proceeding, all resident stockholders are necessary parties, and nonresident stockholders are not necessary parties, so far as the determination of the liability of all the stockholders is concerned. Second. The judgment in such original action against the corporation, determining the amount of corporate debts unpaid, is binding on all stockholders, whether parties to the action or not, unless impeached for fraud. Third. As the amount of stock outstanding is a matter of record, there is nothing to prevent the prosecution, after the decree in the original action, of an ancillary suit in another jurisdiction against any stockholder who was not made a party in such action, to collect the amount of his liability already determined in a proceeding in which he was not made a party. Fourth. Such an ancillary action may be brought against any stockholder who was not made a party by the receiver appointed in the original action to collect and distribute the fund arising from the stockholders’ liability, or by any other person or party appointed by the court. Fifth. The right of contribution which a stockholder not made a party might have is subordinated to the rights of creditors, and can be secured by his appearance in the original action. Briefly stated, the conclusion of the court was that the remedy provided by chapter 76, supplemented by the application of equitable principles, contemplated two actions: A parent suit, in which the corporation and all resident stockholders are necessary parties, and an ancillary suit brought by a receiver or any other person appointed by the court to collect the stockholders’ liability, in a foreign jurisdiction against any nonresident stockholder; that in such ancillary suit it is only necessary to prove that the defendant was a stockholder and the number of shares he owned, which are matters of record. The fundamental objection to this doctrine is that it discriminates in favor of resident stockholders and against nonresident stockholders to such a degree that no rule of comity should permit of its recognition. It makes a resident stockholder a necessary party to the action, and entitles him to be heard on the question which determines his liability, namely, the *785 ascertainment of the debts and assets of the corporation. It holds the nonresident stockholder is not a necessary party, and that the ascertainment of the amount of his liability in such a suit is binding upon him in his absence. It gives to the resident stockholder, who must be made a party, the right of contribution from other stockholders. It denies any such right to the nonresident stockholder, unless he chooses to appear in the original action. It holds that the resident stockholder, under the Minnesota law, contracted as to one kind of remedy, and the nonresident stockholder as to another kind of remedy. Its effect is “to subject stockholders residing out of the state to a greater burden than domestic stockholders,” as stated by the supreme court in Hank v. Francklyn, supra. In substance and effect, though not in form, it renders judgment against a nonresident stockholder tor his personal liability in bis absence and without a hearing'. Supposing (here had been no resident stockholders, or a single resident stockholder, and the corporal ion and its receiver had made default (as in the Kogers suit) in an action brought by creditors to enforce the superadded liability of stockholders under the remedy provided by chapter 76, as expounded in Allen v. Walsh and Harper v. Carroll; could it be said that a judgment against the corporation in such a case would determine the superadded liability of every stockholder under the Minnesota law, unless Impeached for fraud? To a doctrine which leads (o such results, upon whatever theory of corporate rights and obligations it may be worked out, I cannot assent. If the Minnesota statute, in providing a remedy for the enforcement of the double liability of stockholders, had declared that a suit might first be brought in behalf of all the creditors against the corporation or its receiver for the purpose of ascertaining the amount of corporate debts and assets, and fixing the superadded liability of the stockholders, and that, having made such ascertainment, an ancillary suit might be brought by a receiver appointed by the court to collect and distribute the fund, against any stockholder in any jurisdiction, the case would be different. If such were the statute, it could, at least, be said that all stockholders were placed upon the same plane of equality. But, as we have seen, sneli is not the Minnesota statute, whether we look at its express language or the uniform interpretation of it by the highest court of the state for many years, although, lo maintain the present suit, it would seem that some construction of this character must he adopted. And in this connection it must be borne in mind that this case is to be determined by the remedy provided by the Minnesota statute, and without reference to the special statutes of any other state. The theory upon which it is maintained that the Minnesota proceeding is binding on this defendant with respect to the determination of his liability as stockholder is that the judgment against the corporation in that action, and after it had been adjudged insolvent in a previous proceeding, concludes all the stockholders, whether or not they were made parties. This doctrine was never promulgated by the Minnesota state court, except in the case of Hanson v. Davison, and, so far as shown, no case has been found in which such a doctrine has been even partially rec *786 ognized, unless based upon some special state statute. The answer to this contention is that the 'Bogers suit in Minnesota was primarily an action brought by creditors against stockholders to enforce their superadded statutory liability. It was not a suit instituted to obtain a judgment against the corporation. The statute provides other forms of remedy for that purpose. Fundamentally and essentially it was a suit to enforce the personal liability of stockholders under the statute. It was instituted for that purpose and no other. It was not a corporate matter. It did not involve a corporate duty. The assets do not belong to the corporation. The receiver of the corporation cannot bring such a suit. The corporation is made a party because, as incident to this remedy, there may be a sequestration of the corporate assets. In re People’s Live-Stock Ins. Co., 56 Minn. 180 , 57 N. W. 468 ; Minneapolis Baseball Co. v. City Bank, 66 Minn. 441 , 69 N. W. 331 ; Olson v. Cook, 57 Minn. 552 , 59 N. W. 635 .
In the case of In re People’s Live-Stock Ins. Co., the court (page 185, 56 Minn., and page 470, 57 N. W.) observed: “The constitutional or statutory, liability is directly to the creditors. The corporation cannot enforce it. It is no part of its assets.”
In Olson v. Cook, in speaking of this remedy, the court (page 559, 57 Minn., and page 637, 59 N. W.) said it is “primarily to enforce that [the stockholders’] liability, but as incident to which there may be a sequestration of the corporate asséts.”
In support of the position that the Minnesota judgment is binding upon nonresident stockholders who were not made parties to the action, it is contended that the present case is analogous to actions for unpaid subscriptions to stock, like Hawkins v. Glenn, 131 U. S. 319 , 9 Sup. Ct. 739; Glenn v. Liggett, 135 U. S. 533 , 10 Sup. Ct. 867; Glenn v. Marbury, 145 U. S. 499 , 12 Sup. Ct. 914; and Telegraph Co. v. Purdy, 162 U. S. 329 , 16 Sup. Ct. 810. In the Glenn Cases it appeared that by the statute of Virginia the balance of unpaid subscriptions to the stock of a Virginia corporation was payable as called for by the president and directors, and it wa's held .that, as the corporation was a party to a suit in a court of Virginia making a call, it sufficiently represented the stockholders; and that as the suit in the court of Virginia was properly brought, and the court had jurisdiction as to the subject-matter and parties, its adjudication cannot, be reviewed or impeached in a collateral suit on the call against a stockholder, brought in another jurisdiction, except for actual fraud. In Hawkins v. Glenn, Mr. Chief Justice Fuller, speaking for the court (page 329, 131 U. S., and page 742, 9 Sup. Ct.), said:
“Under the charter of this company a call [for balance of unpaid subscriptions on stock] could only be made by the president and directors,'and was a corporate question merely, and in the situation of the company’s affairs it was a duty to make it, failing the discharge of which, by the president and directors, creditors could set the powers of a court of equity in motion to accomplish It.”
Tn such cases the court laid down the rule “that the stockholder is bound by a decree of a court of equity against the corporation in *787 enforcement of a corporate duty, although not a party as an individual, but only through representation by the company.”
The Glenn Gases decided that a decree or “order of assessment” against a corporation, in a suit where the stockholders were not made parties, was binding in a collateral suit against a stockholder for the enforcement of such order, on the ground that it was a corporate matter merely and the carrying out of a corporate duty. In these cases, the assets belonged to the corporation, and the collateral suits were brought by the receiver or assignee of the corporation. These cases differ from a suit brought by creditors to enforce the superadded liability of stockholders under the Minnesota statute, because such suit is not a corporate matter; it is not the duty of the corporation to enforce it; the assets do not belong to the corporation; and neither the corporation nor its receiver could institute such an action. But, even in the case of stock assessments, it is well to notice how far a decree or “order of assessment” against the corporation, in a prior suit in which the stockholders were not made parties, operates as a judgment against a stockholder in a subsequent collateral suit brought by the receiver against a stockholder to enforce the call.
The supreme court, by Mr. Justice Gray, in the latest case of Telegraph Co. v. Purdy, 162 U. S. 329, 336, 337 , 16 Sup. Ct. 810, 813, said:
. “The order of assessment, whether made by the directors as provided in the contract of subscription, or by the court as the successor in this respect of the directors, was doubtless, unless directly attacked and set aside by appropriate judicial proceedings, conclusive evidence of the necessity for making such an assessment, and to that extent bound every stockholder, without personal notice to him. Hawkins v. Glenn, 131 U. S. 319 , 9 Sup. Ct. 739; Glenn v. Liggett, 135 U. S. 533 , 10 Sup. Ct. 867; Glenn v. Marbury, 145 U. S. 499 , 12 Sup. Ct. 914. But the order was not, and did not purport to be, a judgment against any one. It did not undertake to determine the question whether any particular stockholder was or was not liable in any amount. It did not merge the cause of action of the company against any stockholder on his contract of subscription, nor deprive him of the right, when sued for an assessment, to rely on any defense which he might have to an action upon that contract.”
Further, it is a general rule that, after the assets of a corporation have been sequestered in insolvency proceedings (as in the Eogers suit), a judgment against a corporation is not binding on the stockholders. Schrader v. Bank, 133 U. S. 67, 77 , 10 Sup. Ct. 238; Danforth v. Chemical Co. (Minn.) 71 N. W. 274 .
In Schrader v. Bank, the corporation was liable as guarantor on certain notes before it went into liquidation, and afterwards judgment was obtained against it. The supreme court held that the judgment was not binding on the stockholders. The court said:
“But as the suit in which that judgment was recovered was not commenced until the 20th of October, 1876, more than three years after the Manufacturers’ Bank went into liquidation, the judgment against tlie corporation was not binding on the stockholders, in the sense that it could not be re-examined.”
In Danforth v. Chemical Co., the supreme court of Minnesota held that a judgment against a corporation on default for want of answer, in an action on a contract, which was brought after the corporate property and assets had been sequestered, and a receiver appointed, *788 under the provisions of Gen. St. 1894, c. 76, for the benefit of all its creditors, is not entitled to be exhibited and allowed as a claim against the estate without further proof of the existence and bona fide character of the claim on which such judgment was predicated.
To summarize: The proceedings in the Minnesota state court are, in my opinion, in ho way binding on this defendant for the following reasons: (1) The double liability of the stockholder is wholly statutory. (2) The remedy provided by statute is exclusive. (3) The Minnesota statute contemplates a single action of an equitable nature, in which all the creditors and all the stockholders are parties, and the rights, equities, and liabilities of all parties in interest are finally determined. (4) To hold that the resident stockholders are necessary parties to such action, and the nonresident stockholders are not necessary parties, works an unjust discrimination against the latter, in that it fixes their liability in their absence, and without notice, and excludes the right of contribution from other stockholders. (5) Such a construction of the Minnesota statute amounts, in substance and effect, to rendering judgment against a non-resident stockholder in an action where he was not made a party. (6) Such a construction of the statute prescribes one form of remedy for resident stockholders, and another form of remedy for nonresident stockholders. For a resident stockholder it prescribes an equitable proceeding, in which the rights, equities, and liabilities of all parties in interest may be finally adjudicated; for a nonresident stockholder it prescribes an action at law in a foreign jurisdiction, in which, his superadded liability as stockholder having already been determined in a prior action in his absence, his only defénse is to show that he was not a stockholder. (7) A suit brought by creditors to enforce the double liability of stockholders under the Minnesota statute is not analogous to a suit for the assessment of unpaid stock subscriptions, because the latter is a'corporate matter merely, involving ,a corporate duty, where the assets belong to the corporation, and where the liability may be enforced by the corporation or its receiver; whereas, the former is not a corporate matter, involves no corporate duty, the assets are not corporate assets, but a trust fund for the payment of creditors after the corporate assets have been exhausted, and the liability cannot be enforced by the corporation or its receiver. A suit for assessment of unpaid stock subscriptions is primarily and fundamentally a corporate question, while a suit for the superadded liability of stockholders is primarily and fundamentally a question between creditors and stockholders; and while, in the former proceeding, it may properly be said that the corporation represents the stockholders, where a judgment for a call is obtained, in the latter proceeding it cannot be so held, without a violation of the essential and inherent nature of the action. (8) A judgment against a corporation, after insolvency proceedings and the appointment of a receiver, is not binding on the stockholder, and can be inquired into in a proceeding to enforce his superadded liability.
The second question is whether the plaintiff is entitled to maintain this action in a foreign jurisdiction. The plaintiff was appointed *789 receiver by the Minnesota court in the Rogers suit for collecting and enforcing the judgments in that suit, in behalf of the creditors, against the Minnesota stockholders, and for the purpose of collecting by such proceedings as might he proper, the liability of nonresident stockholders over whom the court had not acquired jurisdiction for the purpose of entering personal judgment. The authority to appoint receivers is derived from section 5900 of chapter 76 of the Minnesota Statutes:
‘The court shall proceed thereon, as in other cases, and when necessary, shall cause an account to be taken of the property and debts due to and from such corporation, and shall appoint one or more receivers.”
Then follows section 5907:
"If, on the coming in of the answer or upon the taking of any such account, it, appears that, such corporation is insolvent, and that it has no property or effects to satisfy such «-editors, the court may proceed, without appointing any receiver, to ascertain the respective liabilities of such directors and stockholders, and (mforce the same by its judgment as in other cases.”
The receiver contemplated by section 5906 is a receiver of an insolvent corporation appointed to collect and distribute the “corporate” assets. This is apparent from the following' section, which provides that, where there is no corporate property or effects, the court may proceed without appointing any receiver. This is also the construction of the statute by the court in Allen v. Walsh, supra, where it is said: .
“Authority is given in such actions, whenever necessary, to take an account of the property and debts due to and from the corporation, to appoint one or more receivers to collect and convert into money the corporate demands and property, and make just and fair distribution of the proceeds among its creditors, and, in case its assets prove insufficient to satisfy its debts, the respective liabilities of the stockholders are to be ascertained, and the amount payable from each is to be adjudged, and its payment enforced as in other cases.”
While the court had undoubted authority to appoint the plaintiff receiver for the purpose of • enforcing judgment against, resident stockholders or for any other matter incident to that litigation, it was under no obligation so to do, since he was not the receiver of corporate assets mentioned in sec lion 5905. He was apj)ointed a so-called “receiver” merely in aid of the court, and to help work out the litigation. He was not the successor of the corporation, as in Relfe v. Rundle, 103 U. S. 222. He was not an assignee or trustee of the property and effects of the corporation, as in Hawkins v. Glenn, supra. He was a mere officer of the courts, or a commissioner, as in Hazard v. Durant, 19 Fed. 471 , appointed as an aid to the court.
It was said in the opinion in Hanson v. Davison, supra, that an ancillary suit like the present one may he brought by the receiver appointed to collect and distribute the fund arising from the stockholders’ liability, or “by any other parties or persons appointed by the court:.” And, as a matter of fact, the person directed by the court 1o bring the ancillary suit in that case against a nonresident stockholder, for the sequestration of his property within the jurisdiction of the court, was not the so-called “receiver” of the fund *790 derived from the stockholders in the original action of Harper v. Carroll, supra, but one of the intervening creditors in that suit. This shows that the court may appoint any person to bring a suit like the present one, and that the present plaintiff derived no title to this fund under the statute, or by assignment or conveyance; that he is acting merely as an officer or servant of the court; and that his only title is derived from his appointment by the court.
In Relfe v. Rundle, supra, the plaintiff was the person designated by law to take, hold, and dispose of the, property of the corporation. Mr. Chief Justice Waite, in the opinion of the court, said:
• “Section 6043 of the Revised Statutes of Missouri is as follows: ‘Upon the rendition of a final judgment dissolving a company, or déelaring it insolvent, all the assets of such company shall vest in fee-simple and absolutely in the superintendent of the insurance department of this state, and his successor or successors in 'office, who shall hold and dispose of the same for the use and benefit of the creditors and policy-holders of such company, and such other persons as may be interested in said assets.’ Relfe is not an officer of the Missouri state court, but the person designated by law to take the property of any dissolved life insurance corporation of that state, and hold and dispose of it in trust for the use and benefit of creditors and other parties interested. The law which clothed him with, this trust was, in legal effect, part of the charter of the corporation. I-Ie was the statutory successor of the corporation for the purpose of winding up its affairs. As such, he represents the corporation at all times and places in all matters connected with his trust. He is the trustee of an express trust, with all the rights which properly belong to such a position.”
In Hawkins v. Glenn, supra, the defendant, ’Glenn, was the trustee or assignee of the corporation. The corporation, by its deed, first assigned and transferred to three trustees, for the benefit of its creditors, all its property and effects, in trust for the payment of the debts of the company. The creditors brought suit against the trustees and officers of the company. In that suit it was decreed that Glenn be appointed trustee to execute the trusts of the deed of trust in place of the original trustees created by the deed, and it was further ordered that an assessment of 30 per cent, be made upon the stockholders for unpaid subscriptions to stock. Glenn subsequently brought suit in another jurisdiction against a stockholder, the plaintiff in error, Hawkins. It will be observed that Glenn in that case derived title to the property and rights of the corporation through a deed of assignment. In Hawkins v. Glenn the question was not raised as to the right of Glenn to sue in his own name as trustee; but in the subsequent case of Glenn v. Marbury, 145 U. S. 499 , 12 Sup. Ct. 914, the court declared that suit would not lie in his own name as trustee by virtue of the authority conferred upon him by the Virginia court, and that a suit instituted in the District of Columbia, where the common law prevails, must be brought in the name of the corporation. In the later case of Telegraph Co. v. Purdy, supra, the suit was brought in the name of the corporation by its receiver. But, aside from this question of procedure, it can hardly be contended that this plaintiff belongs to the class of receivers found in Relfe v. Rundle and Hawkins v. Glenn. As pointed out by the court below, the plaintiff is a mere officer of the court, deriving his powers solely from the court, and *791 with no title to the fund except such as is conferred upon him by the court. It seems to me established by the supreme court in Booth v. Clark, 17 How. 322 , and in this circuit by Hazard v. Durant, 19 Fed. 471 , that a receiver of this class caimol, in his own name, maintain a suit in another jurisdiction. In Booth v. Clark a judgment creditor filed a creditors’ bill against the debtor in the state of New York, and a receiver was appointed. There came into the receiver’s hands a claim against Mexico, which was subsequently paid, and the fund was in the hands of the secretary of the treasury. The receiver obtained authority from the New York court to proceed and collect the fund. Thereupon he filed a bill in the circuit court for the District of Columbia. The debtor, Clark, answered the bill. It was held that a receiver is an officer of the court which appointed him, and that he cannot sue in a foreign jurisdiction for the property of the debtor. The court (pages 330-335) said:
“The leading point in the ease is the effect of the proceedings under the last Ltho creditors’ bill] 10 give a right to the receiver, in virtue oí a lien which he claims upon the properly of the debtor, to sue for and to recover any part of It, legal or equitable, without the jurisdiction of the state of New York. * ~ * It is true that the receiver in this case is appointed under a statute of the state of New York, but that only makes him an officer of the court for (hat state. He is a representative of the court, and may, by its direction, take into his possession every kind of property which may be taken in execution, and also that which is equitable, if of a nature to be reduced into possession. * * * He is an officer of the court; his appointment is provisional. * * * It is the court itself which has the care of the property in dispute. The re-coma- is but the creature of the court. Ho has no powers, except such as are conferred upon him by lhe order of his appointment, a.nd the course and practice of the court. * *• ” Indeed, whatever may be the receiver’s rights, under a creditors’ bill, to the possession of the property of the debtor in the state of New York, or the permissions which may be given him to sue for such property, we understand (lie decisions of that state as confining- his action to the state of New York. * * * Our industry has been tasked unsuccessfully to find a case in which a receiver has been permitted to sue in a foreign jurisdiction for the property of the debtor. So far as we can find, it has not boon allowed in an English tribunal. Orders have been given In the English chancery for receivers to proceed to execute their function in another jurisdiction, but we are not aware of its ever having been permitted by the tribunal of the last. We think that a receiver has never been recognized by a foreign tribunal as an actor in a suit.”
This, the court goes on to say, does not apply to assignees in bankruptcy, with powers, privileges, and duties prescribed by the statute for the collection of the bankrupt’s estate for equal distribution among- all of his creditors. Bpeaking of a receiver appointed under the insolvent laws of a state, the court observed at x>age 338:
“Ho 1ms no extraterritorial power of official action; none which the court appointing him can confer, with authority to enable him to go into a foreign jurisdiction to take possession of the debtor’s property; none- which can give him, upon the principle of comity, a privilege to sue in a foreign court or another jurisdiction, as the judgment debtor himself might have done, where his debtor may be amenable to the tribunal which the creditor may seek.”
Hazard v. Durant, 19 Fed. 471 , was a suit in the circuit court for the district of Massachusetts. It was heard before Judge Lowell and Judge Yelson. In that case suit was brought for certain dividends in the hands of the defendant, by the complainant as commis *792 sioner “officially authorized by the Rhode Island court to collect and receive them.” In its opinion (page 477) the court said:
“Tbe plaintiff has no interest in them [the dividends] derived by assignment from the shareholders, and no transfer of the shares has ever been made to him by Dnraut. His claim rests solely upon his appointment as commissioner. Although called a ‘commissioner’ in the decree, it is evident that his powers and duties are solely those of a receiver. * * * It was decided in the case of Booth v. Clark, 17 How. 322 , a decision binding in this court, that a receiver appointed by a court of chancery, being a mere officer and servant of the court appointing him, and having no title to the fund by assignment or conveyance, or other lien or interest than that derived from his appointment, cannot, in his own name, maintain a suit in another jurisdiction to recover the fund, even when expressly authorized by the decree appointing him to bring suits in his own name. This, of itself, is a fatal objection to the suit.”
Tbe rule laid down in Booth v. Clark has never been overruled by the supreme court. Whatever modifications of the rule have been recognized have been based upon the special statutes of the state. Parson v. Insurance Co., 31 Fed. 305 . There is no provision in the Minnesota statute from which it can be inferred that a receiver, like the plaintiff, appointed by the court to collect the stockholders’ liability, is authorized to bring an ancillary suit in a foreign jurisdiction against a nonresident stockholder. For 30 years or more since the statute has been in force it does not appear that the court ever authorized such an action until the Rogers Case, and it seems that tins is the first suit of the kind which was ever brought. The doctrine originated, as we have shown, from the language of the court in Hanson v. Davison, decided in 1898. But in that opinion the court does not base such ancillary suit by a receiver on the statute, or previous judicial decisions, but on general equitable principles. It says:
“Chapter 76, Gen. St. 1878, indicates and regulates to some extent the remedy, leaving the court the duty of making the remedy effectual by an application of the principles of equitable procedure. This statute prescribes the exclu-, sive remedy only to the extent that an equitable action of the character therein indicated must be first instituted for the enforcement of the liability of stockholders.”
Instead of deriving its authority from the statute, the court goes on to declare substantially that, because the statute does not forbid the bringing of such a suit, the court may authorize it. It says:
'“There is nothing in the statute which justifies the conclusion that, if a stockholder’s liability is not enforced in the original action because he is a nonresident, an ancillary action may not be brought against him alone after the amount for which stockholders are individually liable has been determined in the original action.”
It seems to me that the plaintiff receiver derives his authority to bring the present suit solely from the order of a court in another jurisdiction, and not from anything contained in the Minnesota statute; that he has no title to the property by assignment, conveyance, or force of law, and no interest in, or right to, the property other than is derived from the order of the court appointing him; and that, under such circumstances, the law is well settled that the plaintiff cannot maintain the present suit in a foreign jurisdiction. For these reasons I am unable to agree with the opinion of the majority of the court.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8865864. Public record. Not legal advice.