Willius v. Albrecht

Stockholder's Liability — Limitation, of Action. Where two forms of procedure exist to enforce the superadded liability of the stockholder in a corporation, the statute 'of limitations commences to run from the time when suit might have been brought against the stockholder under either form of procedure. Same — Concurrent Remedies. Chapter 272, Laws 1899, did not repeal sections 16 and 17, c. 76, G. S. 1878. It merely provided a cumulative remedy for the enforcement of the superadded statutory liability of stockholders. The two remedies being concurrent, the statute of limitations commenced to run against the cause of action at the time when either remedy became available for the enforcement of the cause of action.

Appeal by defendant from an order of the district court for Ramsey county, Olin B. Lewis, J., overruling demurrers to the com: plaint and to the separate causes of action therein stated. Laws 1899, c. 272, constituted no part of defendant’s alleged “contract” as a stockholder. The fact is that statute was not enacted until long after the last issue of stock had been made by said bank to defendant. Does the remedy, in point of fact, constitute any part of the contract at all? If so, then the receiver was entirely precluded from proceeding against defendant under that statute to enforce a stockholder’s contract made years earlier. The true rule, obviously, is that declared by this court with reference to said act, namely, that “there is no such thing as a vested right to a particular remedy. The legislature may always alter tire form of .administering right and justice.” And this is so, for- the very reason that the remedial right does not constitute’ part of the stockholders’ “contract.” Straw & E. Mnfg. Co. v. L. D, Kilbourne, B. & S. Co., 80 Minn. 125, 137. The right sought to he enforced, and not a mere form of procedure, constitutes the test as to when plaintiff’s “cause of action” accrued. It is conceded that the form of procedure prescribed by the statute cited is not exclusive, but is merely cumulative and supplementary to that under chapter 76 (G. S. 1866); and that the provisions of chapter 76 for the enforcement, of the stockholders’ liability are applicable where receivers have been appointed for insolvent banks in accordance with Caws 1895, c. 145, § 20 (as amended) as in the present case. Anderson v. Seymour, 70 Minn. 358, 376; Ue-land V. Haugan,- 70 Minn. 349; Mercantile Nat. Bank v. Macfarlane, 71 Minn. 497; Somers v. Dawson, 86 Minn. 42; Hunt v. Doran, 92 Minn. 423. The statute of limitations runs from the time when the holder of the right to bring the action can apply to the court for relief, and is enabled to commence proceedings to enforce his rights. Ganser v. Ganser, 83 Minn. 199; Everett v. O’Leary, 90 Minn. 154, 157-. The ultimate issue here involved, namely: When did the receiver’s “cause of action” accrue? must be determined with reference'to these four incontrovertible propositions: (1) The stockholders’ superadded liability is not enforceable more 'than six years “after the cause of action accrues.” ' Hunt v. Doran, supra. (2) “The cause'of action or suit arises, according to the universal -rule in courts of both law and equity, when and as soon.as the party has a right to apply to the proper tribunals for relief,” — when he “is enabled to commence proceedings to enforce his rights.” (3) The receiver had the “right to apply to the proper tribunals for relief” against defendant under the provisions of chapter 76. (4)- Such “right” has existed from the time when the receiver was first able to proceed against defendant directly under said chapter 76, without resorting to an assessment. During all the years intervening since that time, the doors of the courts were wide open to the receiver to enforce any valid claim he might have had against defendant as a stockholder. Laws 1899, c. 272, does not purport to create a separate, independent “cause of action” within the meaning of the statute of limitations. (1) The form’of remedy established by that act, did not ex-1st at any time when defendant is alleged to have contracted for stock with said bank. Hence it may be invoked against him solely because ■“no substantial right is impaired thereby.” Straw & E. Mnfg. Co. v. R. D. Kilbourne B. & S. Co., 80 Minn. 125, 137. (If the act created a new cause of action it would be unconstitutional as against this defendant. Edwards v. Kearzey, 96 U. S. 595; Bronson v. Kinzie, 1 How. 311.) (2) The remedy or relief constitutes no part of the “cause of action.” The cause of action consists of the primary right and duty and the delict or wrong combined. King v. Chicago, M. & St. P. Ry. Co., 80 Minn. 83, and citations; Dunnell, Minn. PI. §§ 286-290. The fact, however, that one of said forms of procedure partakes of the nature of an action at law while the other is governed by equitable principles, affords no ground for regarding them as distinct “causes of action.” Gilbert v. Boalc Fish Co., 86 Minn. 365, 368, and citations. Thompson v. Myrick, 24 Minn. 4. (3) Raws 1899, c. 272, is available and effective only in aid of and accessory to other antecedent insolvency proceedings. It is a mere “supplemental practice act,” a detailed “method of procedure.” Straw & E. Mn'fg. Co. v. R. D. Kilbourne B. & S. Co., supra; Somers v. Dawson, 86 Minn. 42; Hunt v. Whewell, 122 Wis. 33. It follows inevitably that the receiver’s “cause of action” against the defendant in this case, is a single one, incapable of division, and could not possibly have accrued twice in parts or at wholly different times. The statutory language- — -“after the cause of action, accrues” — cannot be construed to mean after the specific form of procedure selected by the plaintiff becomes available. The statute of limitations bars actions by the lapse of stated periods “after the cause of action accrues.” (R. R. 1905, § 4071.) The receiver’s position, in effect, is that this statutory language should be restricted by construction so as to substitute therefor the words, “after the form of procedure selected by plaintiff becomes available.” Such a construction would ■constitute a palpable perversion of the plain meaning of familiar words and would require judicial legislation of the most drastic kind. The respective terms, “cause of action,” and “form of procedure” or “form of' action,” from time immemorial have not been convertible, but have long since acquired definite, precise and fixed legal significations. The code system of procedure, "by ábolishing all forms of actions and substituting therefor a single “civil action,” necessitated that periods of limitation should be classified according to the substance and not the form of remedial rights. Statutes of this kind, under the code system of procedure, while operating on the remedy, limit the time within which it may be pursued according to the nature or subject matter of the “cause of action” and not according to the forms of legal machinery available for its enforcement. Humphrey v. Carpenter, 39 Minn. 115. It is the settled law of this state that the substance of the remedial right, and .not the form of procedure adopted, constitutes the decisive-test as to when-the statute of limitations commences to run. Our statute of limitations being adopted from that of New York, “it may be legitimately inferred that our legislatare, in adopting this statute intended, also, the' construction or meaning given to it in the state from which it was taken.” Ozmun v.-Reynolds, 11 Minn. 341, 351 (459) ; Code Commrs. Rep. (N. Y. 1848) p. 109, § 77; McClung v. Capehart, 24 Minn. 17, '19; Humphrey v. Carpenter, supra; County of Redwood v. WiiiOna & St. P. Land Co., 40 Minn. 512, 527; Bristol v. Washington County, 177 U. S. 133. These Minnesota cases are in harmony with .other decisions elsewhere. Katz v. Belz, 178 Ill. 434; DeHaven v. Bartholomew, 57 Pa. St. 126; Whitman v. Atkinson (C. C. A.) 130 Fed. 759. The law does not place it within the power of a receiver to postpone indefinitely the accrual of his cause of action by his omission to make application for an assessment. Rauserman v. Blunt, 147 U. S. 647, 657, 37 L- Ed. 316, and citations. Bennett v. Thorne, 36 Wash. 253; Ganser v. Ganser, 83 Minn. 199, 202; Litchfield v. McDonald, 35 Minn. 167; Granger' v. Harriman, 89 Minn. 303. The receiver’s right “to commence proceedings to enforce his rights” was complete as soon as he was appointed. The Minnesota cases are in consonance with the general rule that the right of action upon the super added stock liability accrues1 immediately upon the insolvency of the corporation. 3 Clark & M. Corp. § 828b, 2633; Bennett v. Thorne (Wash.) 68 L. R. A. 113,^and numerous citations; Boyd v. Mutual, 116 Wis. 155. The propqsition deducible from these authorities is that when, as in Minnesota, the constitutional provisions imposing the superadded stockholder’s liability are self-executing, the “cause of action” is complete upon the insolvency of the corporation and the appointment of a receiver therefor. In the present case the order for the assessment “does not pertain to the right of action, but only to the evidence required to "establish it”; an order of court cannot create the stockholders’ liability. There are cogent reasons why the construction of the ^national bank act adopted by the federal courts, that the receiver’s right of action does-not accrue until after the assessment has been made, is inapplicable to Taws 1899, c. 272. An assessment ordered by the comptroller differs radically from one ordered by a state court under Taws 1899, c. 272, in the following points, among others: It is made arbitrarily without notice; it does not involve the exercise of judicial powers; its validity is not dependent upon a previous judicial determination of the existence of the bank’s liabilities and of the necessity for the appointment of a receiver; it creates the liability sued on. Bushnell v. Teland, 164 U. S. 684, 41 T. Ed. 598, and citations; Kennedy v. Gibson, 8 Wall. 498, 505; Bennett v. Thorne, 36 Wash. 253. The vital feature, then, which distinguishes the present case from the national bank decisions is that in the latter instance no liability exists until an assessment is imposed, while in the present case the liability exists independently of statute by virtue of the constitution and was enforceable ever since the receiver was first appointed. The present case bears no analogy to that class of cases relating to» the extra-territorial enforcement of the stock liability. In that line of authorities it is held that the right to sue a-foreign stockholder extra-territorially does not accrue until the domiciliary court has first determined the necessity and extent of enforcing the stock liability-The rule of these cases, the receiver argued, should also be applied by the domiciliary court in actions to enforce the stock liability against domestic stockholders. The fallacy of this position is obvious. In the foreign jurisdiction the form of action is necessarily one at law against only a single stockholder or a limited number of stockholders. Owing, therefore, to a lack of jurisdiction over necessary parties and its inability to adjust equities between them, the foreign court is unable to- entertain an action to enforce the stock liability extra-territorially until after the domiciliary court has first passed upon the insolvency of the corp^^tion^, .the existence of a deficiency of assets and the necessity of purguífig the stockholders. These preliminaries constitute essential prerequisites to the maintenance of an action against stockholders in á -foreign jurisdiction, and such action will not lie, under the doctrine. of comity, until it is apparent that no discrimination or injustic’e^ydlLresult therefrom to the stockholder within the jurisdiction of ,the..-foreign court. None of these, considerations are applicable to 'an-, action against a domestic stockholder in the domiciliary court. 'Hanson v. Davison, 73 Minn. 454; Howarth v. Lombard, 175 Mass. -'£>70. ■ Finally, the question of the acijf-ual- of 'the receiver’s cause of action against the defendant in this ■Jst’ate, cannot be decided with reference to the principles governijig-'the.extra-territorial enforcement of the stock liability because such’ extra-territorial enforcement thereof is purely a matter of public policy testing entirely in the discretion of the foreign tribunal and not at all a matter of legal right. It has been so held with reference to said-Laws 1899, c. 272. Hunt v. Whe-well, 122 Wis. 33; see Finney y.’Guy, .189 U. S. 335; Hale v. Al-linson, 188 U. S. 56; Great Western M. & M. Co. v. Harris, 198 U. S. 561. . r L