HALE v. HARDON, 95 F. 747

ALDRICH, District Judge. This is an action at law in the Massachusetts district in aid of an equity proceeding in the corporate domicile to enforce a nonresident stockholder’s liability under the laws of Minnesota.

The provision of the Minnesota constitution, and the provisions of the statutes thereunder, are general and comprehensive, but clearly contemplate a proceeding in the nature of an equity proceeding in that state for the benefit of all the creditors, in which all the debts and assets shall be ascertained, including the amounts due and remaining unpaid on subscriptions for stock, and that the avails of the stockholder’s liability to the creditors, where-ever found, shall be ultimately drawn to the parent proceeding, and all for distribution, upon general insolvency principles and upon equitable grounds, among the creditors, without discrimination in favor of home creditors.

The Minnesota law does not specify a particular remedy for regulating and enforcing the statutory right, but provides, in general terms, that a creditor who seeks to charge directors, trustees, or stockholders of a corporation, on account of any liability created by law, may file his complaint for that purpose in any district court: which possesses jurisdiction to enforce such liability! It also provides that “the court shall proceed thereon, as in other cases.’’ and, when necessary, take an account of all property and debts due to and from the corporation, aud that the court shall appoint one or more receivers.

It also in general terms expressly charges ihe court with the duty of causing a just and fair distribution of the property of the corporation and of the proceeds to be made among the creditors, and, if the property is insufficient to discharge its debts, to compel each stockholder to pay the amount due and remaining unpaid on the shares of stock by him held, and then, 7f the debts of the company remain unsatisfied, to ascertain and enforce the liability of the stockholders in the amount payable by each.

Section 3, art. 10, of the Minnesota constitution, declares that: “Each stockholder in any corporation (excepting those organized for the purpose oí carrying on any kind of manufacturing or mechanical business) shall be liable to the amount of stock held or owned by him.” The Statutes of Minnesota of 1894 (chapter 7(5), which, so far as the material provisions are concerned, are understood to be the same as the original statute providing a remedy in this class of cases, declare that: “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. 5900. The court shall proceed thereon, as in other cases, and, when necessary, shall cause an account to he taken of the properly 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 cases. “Sec. 5998.

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. “Sec. 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 judg-' nient 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 hold 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. “See. 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 action, and from any distribution which shall be made under such judgment.” It is especially important to notice

section 5911 of

chapter 76, for it shows the comprehensiveness of the proceeding intended by the statute; provides for calling in creditors other than those bringing the complaint; and regulates the status of creditors, who fail to come in on statutory notice, in respect to their right to participate in the benefits resulting from such proceeding. . In a recent case in this circuit involving the Ohio statute (State Nat. Bank of Cleveland, Ohio, v. Sayward, 33 C. C.

A. 564, 91 Fed. 443), some observations were made as to what the Ohio statute contemplated as to procedure, and what was intended should be done in the home state before liability under that statute could be enforced extraterritorially, without intimating what would have been dime in that case if the joinder and ascertainments contemplated by such statute had been made. Belief was denied therein, for the reason that what was contemplated as to ascertainments and joinder had not been done.

We are now confronted with a statute somewhat similar, but with more comprehensive provisions as to ascertainments, and a remedy for enforcement of liability expressed in broader and more comprehensive terms, where, as a matter of substance, the creditors, but, strictly speaking, a receiver representing the interests of the creditors, claims to have taken all the steps, and secured all the ascer-tainments, in the parent forum, which the statute intended, and who now, in an extraterritorial forum, by an action at law in aid of the parent proceeding in the nature of equity, seeks to enforce the individual liability of a nonresident stockholder.

So far as we know, this is the first instance in which this precise situation has been presented to the courts of a different sovereignty, exercising a distinct and independent jurisdiction. .

The questions presented are — First, as to how far, if at all, this defendant and nonresident stockholder is bound by the action of the Minnesota court; and, second, whether this plaintiff, in his capacity as receiver for the creditors, appointed in the parent proceeding in Minnesota for the purpose of enforcing the liability of stockholders, may, in aid of that proceeding, maintain his action at law for such purpose in- another and a federal jurisdiction, upon grounds of comity or otherwise. ■ We shall take up these questions in the order stated, and consider, first, the binding force of the ascertainments, judgments, and decrees in'the parent proceeding.' We may well observe, at the outset that for many years the steady trend of federal decision has been in the direction of upholding and enforcing1 extratemtorially this class of liabilities according to the fair intendment of the local law in cases properly within the provisions thereof, except where enforcement would unreasonably interfere with local vested creditor interests in states where enforcement is sought extraterritorial],)- on grounds of comity, and perhaps, ill some (tases, where such enforcement would offend the general public policy of the slab', while among the courts of the states there lias been a diminishing diversity of decisions upon questions growing- out of such statutory liabilities.

It does not seem necessary to refer to the numerous decisions of the supreme court, and those of the various circuit courts of appeal and of the circuit courts, so often cited, which sustain this general proposition. We shall, therefore, only refer, in this connection, to the more recent cases in the United states courts, of Rhodes v. Bank. 13 C. C. A. 612, 66 Fed. 512; Whitman Bank, 28 C. C. A. 404, 83 Fed. 288; Elkhart Nat. Bank v. Northwestern Guaranty Loan Co., 30 C. C. A. 632, 87 Fed. 252; Dexter v.

Edmands, 83 Fed. 467; and to the more recent decisions of the state courts, as showing the present tendency of judicial decision in such jurisdictions (Bagley v. Tyler, 43 Mo. App. 195; Guerney v. Moore. 131 Mo. 650, 32 S. W. 1132; Ferguson v. Sherman, 116 Cal. 169, 47 Pac. 1023; Cushing v. Perot, 175 Pa. St. 66, 34 Atl. 447; Bank v. Ellis, 172 Mass. 39, 51. N. E. 207, and the admirable', opinion of Chief Justice Field in that case); and to the exceedingly well-reasoned cases of Bank v. Lawrence (decided in Michigan, July, 1898) 76 N. W. 105; and Bell v.

Farwell (decided by the Illinois supreme court in December, 1838), 52 N. E. 346. It would not he useful to undertake a review of the decisions of the various states, and it is quite needless to say that we must follow the decisions of the supreme court, so far as they cover tin; questions in ibis case, and as to particular questions, if any, not covered by the supreme court decisions, that we should, in a case of this character, be governed by the judicial policy of the federal law, rather than that of any particular state.

Aside from the principle that, in cases of this class, the rights of the parties shall be measured by the local law, the questions presented are not local questions, as some authorities treat them, between citizens of different states, to be influenced and to be settled by different slate policies and local pecuniary interests, and the question of liability is not a question that should depend upon state lines.

In this case the liability was created by the state of Minnesota; the place of the contract is Minnesota; the liability and the rights with respect to which the parties had their contract, their dealings, and their reliance is a statutory liability or a statutory right; and, according to well-understood doctrines, tire law of the home forum mnsi govern. These questions cannot be considered in a federal court upon the view made prominent in a recent New York case (Marshall v. Sherman, 42 N.

E. 419, 422, 423), upon the general question of policy as to enforcement, where it is suggested that these corporate enterprises are promoted in the West, and the money for the prosecution to a large extent borrowed in the East, either in the form of direct loans upon some kind of security, or by inducing many of our citizens to purchase stock in corporations organized for the purpose under local laws; that a vast sum, in the aggregate, has been lost; that while some blame is to be attributed to the financial depression, and the consequent derangement of business, it is in a much greater degree attributable to the gross mismanagement and dishonesty of the managers and promoters; and that in some cases, though the managers well knew they were helplessly involved, they continued to transact business, borrowing recldessly, and pledging the assets in their possession or under their control.

We cannot adopt this view, for the reason that in judicial proceedings, except where the 'question of fraud or reckless management is made an issue, such considerations are contrary to principle, in the direction of repudiation, subversive of judicial right and of justice, and fraught with danger to the idea of permanent and uniform rule. A judicial result influenced by such considerations can stand neither the test of the rule of right nor of the requirements of prudence. In the next decade the stockholders may reside in the West and the creditors in the East.

In the next case, the creditors .may reside in the East as well as the stockholders; or, as in the present case, the creditors may be scattered over many states. It is not a question where the pecuniary interests are, but a question of right, — a question whether an unquestioned liability shall be enforced outside of the parent forum, after all has been done there that can be done, or whether the unquestionable right shall exist without a remedy. Oases of the class to which we have just referred seem to overlook the fact that the stockholders in the primary and in the ultimate sense are the corporation.

The corporation is the enterprise of the stockholders. The’ corporate existence is created by the stockholders under permissive laws. The business is the business of the stockholders, and the profits, where there are profits, belong to the stockholders. The officers and agents of the corporation who deal with the public are, in a sense at least, the agents of the stockholders, and the superadded stockholders’ liability is designed as an additional security and as an inducement to the public to deal with the enterprise in which the stockholders are engaged. As said by the supreme court in Sanger v. Upton, 91 U.

S. 56, 59, a stockholder is an integral part of the corporation, and/ in view of the law, is before the court in all proceedings touching the body of which he is a member; and in Hawkins v. Glenn, 131 U. S. 319, 329, 9 Sup. Ct. 739, a stockholder is so far an integral part of the corporation that, in the view of the law, he is privy to the proceedings touching the body of which he is a member; and,'in effect, in Vanderwerken v. Glenn, 85 Va. 9, 6 S. E. 806,; Lewis’ Adm’r v. Glenn, 84 Va. 947, 6 S. E. 866; Hamilton v. Glenn, 85 Va. 901, 9 S.

E. 129,—stockholders are a part of the corporation, and represented by it. See, also, Gluck & Becker, Rec. (2d Ed.) p. 188.

Corporate enterprises and investnients, logically enough, result from the growth of the country and the natural and necessary ex-¡¡ansien of business, regardless of state lines, and the newly-created statutory liability in the several states has grown out of the modern development of interstate dealings; and, as said by a recent author: “The complexity oil our system of government, the intimate business relations of citizens of ¡be respective states, and the great tide of interstate commerces, as well as enlightened public policy demanding an equitable distribution of the assets of insolvent corporations, properly compel the courts to recognize the existence of a broad and liberal rule under the name of ‘comity,’ and the justice of its enforcement.” In the recent case of Dexter v.

Edmands, 89 Fed. 467, 470, Judge; Lowell remarked: “Indeed, I find it difficult to imagine what would be the condition of this government if the federal courts should refuse, on any of the grounds just 'mentioned, to recognize and enforce the rights arising under a state statute; which had been formally adopted, and was not contrary either to the constitution of the United States or to that of the state adopting it.” In view of the present exigencies of business between corporations and citizens of different states, and the various rights incident thereto, ihe remark of Judge Lowell is not an unwarrantable suggestion of (he uncertainty, confusion, and danger which would result from a rule of nonenforcement in respect to this class of statutory liabilities.

In (he course of the proceeding in Minnesota in which the Northwestern Guaranty Loan Association ivas adjudged insolvent, a receiver was appointed, who took charge of all the property and effects belonging to the eompany. There were several proceedings in the Minnesota court, hut, as we understand it, those subsequent to the parent insolvency proceeding were in aid thereof, and were, in effect, in that cause, and invoked for the purpose of doing the things in Minnesota which the statute contemplated should he done1.

All tin* Minnesota stockholders were brought in, and the corporation and, rlie officers thereof were parties, as well as the general receiver of the assets of the corporation after liis appointment'; and the proceedings contemplated by the law for the purpose of bringing the creditors into the corporate domicile, to the end that they should participate in the ascertainments and receive their statutory pro rata rights, were had for that purpose, and, so far as appears, as provided by the laws of the state.

After such comprehensive proceedings in the corporate domicile, it was there decreed, among other things, as shown by the special findings of the circuit court, that the sums owing by the Northwestern Guaranty Loan Association to its creditors, which include bo tween 6G0 and 700 different persons and corporations, widely scattered, in the aggregate were $3,367,394.34 It was also found and decreed that the total assets and property of the company in any wise applicable to the payment of the indebtedness were $450,000, and that the total capital stock of the company was 12,500 shares, of the par value of $100 each.

The names of the several stockholders, and the amount of stock held by each, were found, and it was declared that each stockholder was liable upon such stock to the creditors therein ascertained to an amount equal to the par value of the stock held by him. It was also decreed “that plaintiff, and said intervening creditors so ascertained, recover, accordingly, from each of the several stockholder defendants within said state of Minnesota, a sum equal to the par value of the stock held by such stockholder.” It was also decreed “that W. E.

Hale [who is this plaintiff] be appointed receiver for collecting and enforcing, for and in behalf of said ascertained creditors, said judgments against such Minnesota stockholders, and for the purpose of collection, by such proceedings as might be proper, the liability of nonresident stockholders of said Northwestern Guaranty Loan Company over whom the court, by reason of nonresidence, had not acquired jurisdiction for the purpose of rendering personal judgment.” It was also decreed that the liability funds collected by Mr.

Hale as receiver should be held for the purpose of equal and pro rata distribution among the ascertained creditors, and subject to the order of that court, and that the court retain jurisdiction of the cause for the purpose of making such other and further orders and decrees in the matter of distribution as might be necessary to protect the rights of the several creditors in the premises.

It will be seen that while the court in the parent proceeding undertook to find the names of the several stockholders and the amount of stock held by each, including nonresidents, and to declare the amount for which each was liable, as will be seen by paragraphs 6 and 7 of the special findings of the circuit court, it only undertook to render personal judgment against the Minnesota stockholders, and expressly exempted nonresident stockholders from any supposed operation of a personal judgment by authorizing and directing the receiver to take such proceedings as might be proper for the purpose of collecting the liability of the nonresident stockholders over whom, as the Minnesota court declared, by reason of nonresidence, it had not acquired jurisdiction for the purpose of rendering personal judgment.

The general rule of equity, which requires all parties to be joined, means all necessary parties within reach of the process where the proceedings must be had. To require joinder and service upon all the stockholders, resident and nonresident, in a proceeding in the parent forum to make the statutory ascertainments in a case like this, would be simply requiring an impossibility, and would thus operate as a denial of the intended statutory liability to all the creditors. The rule of joinder is not so imperative in the absence of an express statute requiring it.

The ascertainments of the debts and assets of the corporation, and the judgments against the' resident stockholders, in the parent forum, are in no sense personal judgments against the nonresident stocldiolders, but are necessary preliminaries to a recovery in an extraterritorial proceeding against nonresident stockholders. To enforce extraterritorially the individual stockholder liability created by statute, and to entitle the creditors, or the parties representing them, to judgment, it is incumbent upon plaintiffs to show that the ascertainments intended by. the statute have been made.

If A. guaranties payment by B. to C., but expressly provides that lie shall not be liable until all reasonable efforts have been made by C. to collect of B., A. need not necessarily be made a party to tiie attempts to collect of B.; but, in an action to enforce the liability of A., the reasonable efforts to collect of B., which A. made a condition of his lialnliiy, must be shown.

So, in this case, the liability, if any, of nonresident stockholders to the creditors or their representatives is under the constitutional provision and the statutes, not under the judgments in Minnesota or the declaration of the court of Minnesota that they were stockholders and that they were liable.

But such constitutional and statutory liability, in contemplation of law, is conditioned upon certain equitable proceedings, which, sjieaking generally, mean proceedings to ascertain all the indebtedness, property, and assets of the corporation, to pay out of the assets, if possible, and, if not possible to pay all, to ascertain bow far the assets will go, and the relation which the remaining indebtedness sustains to the maximum liability limit of all stockholders, or perhaps of all solvent stockholders; and, in order to recover upon the liability, it must be shown that the contemplated statutory condition has been performed. iáo, as has been said, in effect, in an ancillary proceeding like the one at bar, (lie statute contemplates that the plaintiff, before recovery, shall show, by record or otherwise, that the ascertainments in respect to the creditors and the asseis of the corporation, including the debts due the corporation, have been made in a comprehensive proceeding in the parent forum, with the necessary parties to that end.

As to these ascertainments in which the corporation is interested, in a proceeding in which the corporation or its successor is a party and for such purposes representing the stockholder, who is a part of the corporation, the stockholder is bound by the adjudications in Minnesota.

But, as has been said, a nonresident stockholder, who is sued extraterritorially on the ground of individual liability under the constitution and statutes of Minnesota, cannot lie treated as represented by the corporation to the extent of being concluded upon the question of personal liability by the judgments or decrees of a court in a proceeding to which he was nót a party, thick liability is not like that of being assessed for nonpayment of the full amount of subscription to stock, for the reason that it is not an asset of the corporation.

The Minnesota law was a part of the contract which resulted from the defendant becoming- a stockholder, and, as a stockholder, he is bound by such equitable and legal proceedings in the local courts, and such ascertainments as to purely corporate matters, as (he statute contemplated. As a part of the implied contract, the stockholder agreed that the ascertainments, which the statute intended and which the si (nation resulting from insolvency required, should be made in accordance with the usual and ordinary course of legal and equitable procedure in that state.

It was not understood that the statutory liability should have no force unless the nonresident stockholder was made a party to the proceedings as to corporate affairs which the statute intended and expressly provided should be had in the district courts of Minnesota, Making a nonresident stockholder a party to the contemplated legal and equitable proceeding for such purposes was a thing impossible, and a construction requiring it would render the statutory liability inoperative at its inception.

The creditors’ claims were claims against the corporation, and, so far as stockholders’ interests are concerned in the indebtedness, they were represented-by the corporation and its successor, the general receiver. When a corporation becomes insolvent, and the affairs of the corporation are being settled in the ordinary course of insolvency proceedings, and a general receiver is appointed for such purpose, all the rights and powers of directors in an existing corporation, to answer for the interest of stockholders, are necessarily centered in such receiver.

Speaking generally, he is subrogated to all the powers and rights of the directors, in respect to corporate affairs, by virtue of which directors can answer and act for stockholders. What the directors or other officers may do, like representing stockholders in defending actions involving the rights and obligations of the corporation, in the absence of fraud or collusion (Heggie v. Association, 107 N. C. 581, 590, 12 S.

E. 275), when the corporation is doing business, may be done by the courts or their receivers of the assets and interests of the corporation; and where the corporation may be served with process, and answer in proceedings as to corporate interests, such as the indebtedness thereof, and bind the stockholders, the general receiver may be served with process and answer.

Otherwise, the corporate affairs of an insolvent corporation could not be settled in insolvency, whereas they can be settled by binding adjudications, if not insolvent; and it would therefore follow that the corporate affairs could be concluded where an individual creditor interest requires it, and under a single individual necessity, while, in a situation where the general and several creditor interests require it, and the necessity is general, it cannot be concluded, although the stockholder interests are represented and protected by the general receiver under appointment, and by virtue of the duty and responsibility which result therefrom.

It is difficult to perceive that there can be any distinction, in respect to the rule of conclusiveness as to the corporate affairs, between a proceeding to establish the corporate indebtedness against the corporation, where the directors or other proper officers are served, and a proceeding against the general receiver thereof upon service, who is the successor of the corporation in respect to all the interests involved in its affairs. Indeed, as said by Mr. Justice Gray, in respect to an order of assessment, in Telegraph Co. v. Purdy, 162 U. S. 829, 336, 16 Sup.

Ct. 810, 813: “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,” — citing 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.

As said, we fail to discover any reasonable distinction between the rule of conclusiveness, in respect to a judgment for indebtedness against a going corporation represented by directors, which is established by repeated authorities, and a judgment or decree against an insolvent corporation represented by a general receiver, who is (he quasi judicial successor of the corporation and its interests, and whose duty it is, under the power and authority of the court, to protect and care for the corporate estate, and, as an incident thereto, to resist unwarrantable claims against the corporation, in the interest of all the creditors and all the stockholders.

In the one case the stockholder is represented by the officers of the corporation, and in the other by the general receiver, who, under the authority and the decree of the court, has become the lawful and controlling successor of the corporation and its interests.

We cannot conceive that (.here can he any reason for a different rule in respect to the ascertainment of the corporate indebtedness, and the conclusive establishment of the fact of indebtedness by judgment, and the ascertainment of the necessity for an assessment upon the stockholders, and the establishment of such fact by judgment or decree, without notice to the stockholder. Indeed, Holland v. Development Co., 65 Minn. 324, 68 N.

W. 50, a well-reasoned case, holds that a judgment: against a corporation is conclusive upon the question of corporate indebtedness in a subsequent action against a stockholder to enforce individual liability. The indebtedness against a corporation is as much a corporate affair as an assessment upon the stockholders, for the indebtedness relates to the corporate interests as well as an assessment.

When an assessment is made and paid, the money becomes a corporate asset, and increases the corporate estate; and, if indebtedness is found, it becomes a corporate liability, and reduces the corporate estate. , The conelusiveness of the-assessment upon the stockholder, whether made by the directors of the corporation or by the court as its successor, is sufficiently established by the decisions of the supreme court in Telegraph Co. v. Purdy, 162 U. S. 329, 336, 16 Sup. Ct. 810, and the eases there cited.

To the same point, that orders of assessment by the court, upon stockholders in insolvent corporations, in the course of insolvency proceedings, wherein the court is the successor of the corporation, are binding without notice, are Marson v. Deither, 49 Minn. 423, 426, 52 N. W. 38, and In re Minnehaha Driving Park Ass’n, 53 Minn. 423, 427, 55 N. W. 598.

It lias been repeatedly held, and the great weight of authority is, that: a judgment against a corporation in favor of a creditor, without notice to a stockholder, conclusively establishes the fact, of indebtedness, while, in a comparatively few jurisdictions, it is treated as prima facie evidence only. Flash v. Conn, 109 U. S. 371, 380. 3 Sup. Ct. 263; Hanson v. Davison (Minn.) 76 N. W. 254, 256; Holland v. Development Co., 65 Minn. 324, 68 N. W. 50; Grund v. Tucker, 5 Kan. 70; Ball v. Reese, 58 Kan. 614, 50 Pac. 875; Cook, Stock & S. § 224; Thayer v. Printing Co., 108 Mass. 523, 528; Came v.

Brigham, 39 Me. 35; Milliken v. Whitehouse, 49 Me. 527, 529; Bullock v. Kilgour, 39 Ohio St. 543; Bank v. Warren, 52 Mich. 557, 561, 18 N. W. 356; Henderson v. Turngren (Utah) 35 Pac. 495; Bissit v. Navigation Co., 15 Fed. 353, 361, note; Wilson v. Stockholders, 43 Pa. St. 424; Donworth v. Coolbaugh, 5 Iowa, 300; Bank of Australasia v. Nias, 16 Q. B. 717, 4 Eng. Law & Eq. 252; Borland v. Haven, 37 Fed. 394, 413; Powell v. Railway Co., 38 Fed. 187; Tabor v. Bank, 10 C. C. A. 429, 62 Fed. 383, 388; McVickar v. Jones, 70 Fed. 754; Mortgage Co. v. Woodworth, 79 Fed. 951; Guerney v. Moore, 131 Mo. 650, 666, 32 S.

W. 1132; Heggie v. Association, 107 N. C. 581, 12 S. E. 275; Warrington v. Ball, 62 U. S. App. 413, 417, 33 C. C. A. 609, 90 Fed. 464; Mor. Priv. Corp. § 886; Thomp. Liab. Stockh. § 337; Thomp. Corp. §§ 3392-3395, and numerous cases cited in note 1 to

section 3392, including Bradley v. Eyre, 11 Mees. & W. 432; Freem. Judgm. § 177. There is nothing in the record of the case at bar to show that any part of the indebtedness, upon which the ascertainments and decrees of the Minnesota court were made, was founded upon tort, and there is nothing to show that any part of the indebtedness was contracted by the corporate officers subsequent to the insolvency proceedings, as in the case of Schrader v. Bank, 133 U. S. 67, 10 Sup. Ct. 238; and the statutory ascertainments in question do not stand like the judgment in favor of the plaintiff' in Danforth v.

Chemical Co. (Minn.) 71 N. W. 274, where the creditor brought suit directly against the corporation, after sequestration proceedings had been taken against it and a receiver appointed, who had become vested with the title of the corporate property, and who was-in charge of the corporate interests as the successor of the corporation, and after the notice provided by the Minnesota statute had been given to creditors to come in and prove their claims. In view of the rule, which accords value, and ordinarily controlling force, to the decisions of the highest courts of the states in respect to the construction and

interpretation of their own statutes and remedies, we consider the local case of Hanson v. Davison, 76 N. W. 254, as, at least, entitled to great weight. In that case there was an authoritative and comprehensive

interpretation of the statute in question by the supreme court of Minnesota, and a full explanation of the nature and scope of the remedy contemplated, which fully sustains the grounds and reasoning on which we base the decision of the case at bar, both as to the remedy intended and the right of the creditor receiver to sue and maintain his action.

It is true that, in that case, the judgment of dismissal was affirmed; but it was upon the distinct ground that the rights of the creditors under the statute were involved in the original case, and that “no one creditor can maintain an action at law to enforce the liability for his exclusive benefit.” It was further said that, after the statutory ascertainments had been .made, and the proper decrees as to corporate affairs, there was “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 party 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.” It is also pointed out in that case that, if stockholders are only proceeded against for their pro rata share of the deficiency, treating all of the stockholders as solvent, the objections that inequitable conditions might result from rights of contribution wholly fail.

It is urged that the proceedings against the general receiver of the Minnesota corporation and the resident; stockholders, in which the ascertainments as to indebtedness were made, were in substance proceedings for the purpose of enforcing individual stockholder liability, and therefore were essentially and in effect proceedings inter alios as to stockholders not summoned nor appearing.

The same may be said of a proceeding against a Kansas corporation to establish corporate indebtedness, which is a necessary preliminary to an extraterritorial proceeding on a judgment against a stockholder to enforce the statutory stockholders’ liabiliiy. 11 is difficult, as already observed, for us to see any distinction between the conclusiveness, in respect to indebtedness, of a judgment against a Kansas corporation, and the decree in this case establishing the indebtedness of the Minnesota corporation.

Under the Kansas statute, although a nonresident stockholder is not a party to the proceeding against a corporation, as ’seen by the authorities heretofore cited, the federal authorities hold, and the weight of state authority is, that the judgment, in respect to indebtedness, is conclusive against a nonresident stock-bolder, although not a party. In neither case is the preliminary proceeding directly against ihe nonresident stockholder, but in each case the nonresident stockholder liability may he ultimately affected by the local judgment or decree of corporate indebtedness. In tlie case of Flash v. Conn, 109 U.

S. 371, 3 Sup. Ct. 263, which involved the Kansas slaluie, the court laid down a rule, in respect to the conclusiveness of the assessment, which goes as far as it is necessary to go in the present case. It is there said, at page 380, 109 U. S., and page 260, 3 Sup. Ct.: “But in this case the statute makes every stockholder Individually liable for die debts of the company, tor an amount equal to the amount of his stock.

This liability is fixed, and does not depend on the liability of other stockholders. * * * Any creditor who has recovered judgment against the company, and sued out execution thereon, which lias been returned unsatisfied, may sue any stockholder.” This theory of the conclnaiveneas upon the stockholder of the ascer-tainments or decrees or judgments against the corporation is not novel or extraordinary. It is based, in all the cases cited, upon the idea that the stockholder is so far an integral part of the corporation as to be privy to the proceedings against it, and bound by representation. See, also, Thomp.

Corp. § 3395; Hawkins v. Glenn, 131 U. S. 319, 9 Sup. Ct. 739; Lewis’ Adm’r v. Glenn, 84 Va. 947, 6 S. E. 866; Glenn v. Liggett, 135 U. S. 533, 10 Sup. Ct. 867; Sanger v. Upton, 91 U. S. 56, 58; Glenn v. Williams, 60 Md. 93, 316; Hamilton v. Glenn, 85 Va. 901, 9 S. E. 129. Somewhat analogous is the theory that judgments against towns or counties (Freem. Judgm. § 178; Clark v. Wolf, 29 Iowa, 197) are binding upon residents or citizens, although they are not parties to a suit.

We need not enlarge the discussion of this question by referring to the line of authorities which establish the rule of conclusiveness of proceedings by the comptroller of the treasury in respect to national banks, which bind stockholders as to the necessity for an assessment, the amount of the assessment, the necessity and the action involved in closing banks, and as to appointment of and suits by a receiver, all of which are sustained on the ground of contract, although without notice to the stockholder, and without the exercise of judicial function.

According to the record (pages 30, 52): “On the 20th flay of May, 1893, said defendant, Northwestern Guaranty Loan Company, was, and now is, insolvent; [and] that in insolvency proceedings pending in this [that] court, on said 20th day of May, 1893, said Northwestern Guaranty Loan Company was duly adjudged, by the district court of the Fourth district, in and for the county of Hennepin, state of Minnesota, to be insolvent; and, under and pursuant to the general laws of the state of Minnesota, relating to assignments in insolvency proceedings for the benefit of creditors, and.for the appointment of receivers, said Minneapolis Trust Company is duly appointed the receiver of said Northwestern Guaranty Loan Company.” The findings in respect to the corporate affairs, and the decrees and judgments based thereon, were in this proceeding and in others incident to and in aid thereof; and we have no hesitation in holding that the findings and decrees of the Minnesota court as to the amount of corporate indebtedness, and the amount of indebtedness proven or established in the parent proceeding, and that the findings and decrees as to the rights of the creditors, are evidence in the proceeding at bar against a stockholder, although no service was made upon him, or notice given of the proceeding in Minnesota; and we have no hesitation in saying that the doctrine is established upon principle, and by an-overwhelming weight of authority (which, among other considerations, involves the idea of the constitutional guaranty that full force and credit shall be given to the judicial proceedings of every state, and also of enforcement according to the law of the home forum), that such findings, judgments, and decrees are conclusive, in the absence of fraud or collusion.

There was service upon the general receiver, and the fact that the record shows that the general receiver of the corporation in the Minnesota proceeding suffered ascertainments and a decree by default does not impair the conclusive character of such decree, there being no pretense of fraud or collusion. It is just as conclusive as “a record estoppel that the corporate body has no just defense, and can say nothing in bar of the claim preferred against it,” as would be a judgment or decree rendered after litigation. Freem. Judgm. § 177; Belmont v. Coleman, 21 N. Y. 96, 101; Bradley v.

Eyre, 11 Mees. & W. 432, 450; Holland v. Development Co., 65 Minn. 324, 68 N. W. 50. These judgments against a corporation are not only treated as binding upon stockholders without notice, but as a necessary preliminary to recovery against a stockholder under a statutory liability; and Bank v. Francklyn goes so far as to say that proceedings in bankruptcy against a corporation do not so far dissolve the corporation, or discharge it from its debts, as to prevent any creditor from suing it for so much debt as remains unpaid, and recovering a judgment against it, for the purpose of charging its stockholders. Bank v.

Francklyn, 120 U. S. 747, 757, 7 Sup. Ct. 757. The fact was found below that all the stockholder liability and corporate assets are less than the sum due all the creditors. It is not, however, affirmatively found by the circuit court that, such assets and liabilities are less than the sums due creditors who have entitled themselves to dividends under the statutes and proceedings in Minnesota.

Section 5911 of the Minnesota Statutes requires all creditors of corporations 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 it also provides that, in default of their coming in, they shall “be precluded from all benefit: of the judgment which shall be rendered in such action, and from any distribution which shall be made under such judgment.” It is true the supreme court of Minnesota, in Spooner v. Bay of St. Louis Syndicate, 48 Minn. 313, 51 N.

W. 377, held that creditors might be allowed to come in after the time stated in the publications; but we do not think recovery should go on indefinitely, on grounds of comity, against stockholders, without regard to the fact whether there are creditors in the Minnesota proceeding to take the dividends.

Under the line of reasoning which we have adopted as to the binding force of the local constitutional provision, the local statutes, and the local proceedings, if the stockholders are bound the creditors are; and if the creditors are bound they a.re held to all the provisions of the local law with respect to the rights in question. If they contracted with reference to the Minnesota statute, they must be held to have contracted with reference to the whole of it,

section 5911 as well as the other provisions. Therefore, if the whole or some part of the creditors failed to take advantage of the opportunity to appear and hike

part in the distribution of the assets and the avails of the liabilities, they are precluded by the terms of the statute; and it cannot be said that a receiver for the creditor interests should go on recovering indefinitely, without regard to whether there are creditor interests in the parent proceeding entitled to dividends. The finding of the Minnesota court as to the ultimate question of nonresident stockholder liability, and that of the measure of such liability, not being conclusive, these questions must be treated as open questions, to be determined below, upon the grounds herein stated.

As to the last question, it is true the Minnesota record, which is doubtless conclusive, in the absence of fraud, sets out that the creditors did avail themselves of the privilege of presenting their claims in the parent proceeding, in pursuance of

section 5011 of

chapter 76 of the General Statutes of 1894; but such fact, as shown by the Minnesota record, as has been said, was not distinctly found by the circuit court. We must consider this case upon the findings of the circuit court. This court cannot go to the Minnesota record, however conclusive it may be, and determine the question of fact as to the status of creditor interests entitled to dividends. That question is in the first instance for the circuit court, and for that reason we cannot say that the plaintiff is entitled to recover the full amount of the statutory liability.

It will therefore be open to the plaintiff, on a new trial, if one be granted, to show, by the Minnesota record or other competent evidence, the relation which the creditor interests entitled to dividends sustained to the assets and stockholder liabilities, and, of course, open to the defendant to direct his competent evidence, if any, to the same point.

We do not undertake to state the measure of damages in this case; but, if the plaintiff is entitled to maintain his action at law in aid of the parent proceeding to enforce the stockholder liability, the stockholder’s liability would be his ratable proportion of a sum sufficient to meet the creditor interests entitled to dividends, not to exceed, of course, in any event, the amount of his stock. So it is not a question of the entire corporate indebtedness or creditor interests, but a question as to the creditor interests entitled to dividends in the Minnesota proceeding. While we consider the cases of Hawkins v.

Glenn, 131 U. S. 319, 9 Sup. Ct. 739; Telegraph Co. v. Purdy, 162 U. S. 329, 336, 337, 16 Sup. Ct. 810; Hanson v. Davison (Minn.) 76 N. W. 254; and Relfe v. Bundle, 103 U.

S. 222,—authorities to the extent that the stockholders are bound by the action of the corporation, or its successor, in the exercise of corporate powers essential to the collection of debts, in respect to corporate matters like requiring the payment of unpaid subscriptions to stock, which are part of the assets, and as to ascertainments in which the corporation is interested, like the ascertainment of the indebtedness of the corporation, we do not think they go to the length claimed by the,plaintiff in this case, for the reason, as has already been said, the individual liability is not an asset of the corporation.

Indeed, the Minnesota court did not undertake to render judgment upon the nonresident stockholders’ liability, nor against the Minnesota stockholders upon their individual liability, otherwise than upon service, which is a prerequisite to judgments in personam. Pennoyer v. Neff, 95 U. S. 714; Hekking v. Pfaff, 33 C. C. A. 328, 91 Fed. 60, 50 U. S. App. 484.

So, in an ancillary proceeding like this, to enforce individual liability to the creditors, it must be made to appear by the records in respect to the parent proceeding, or otherwise, that the proper statutory ascertainments have been made as to the domiciliary matters; and since the question of fact whether the nonresident party was a stockholder, and, as such, liable individually under the statute, could not be concluded in a proceeding in which he was not a party except as a member or as an integral part of the corporation, it is an open question, to be determined by the proper tribunal, in a case to which he is a party, — it being open, of course, to the defendant stockholder to point out that the domiciliary adjudications and ascertainments were not sufficiently comprehensive to answer the requirements of the statutes, and to show that he was not a stockholder, or that the proceedings were fraudulent.

There is no question of fraud or collusion here. The fact is found by the court below that all the supposed stockholder liabilities, together with the assets, are less than the sums due the creditors.

The fact was also found below that the defendant was a stockholder at the date of the adjudication of the insolvency of the corporation; and as our conclusion is that the proceedings in Minnesota were sufficiently comprehensive as to domiciliary adjudications and ascertainments, and such as the constitution and statutes of Minnesota contemplated, and such as the statutes required, it follows that the defendant’s liability results by force of the constitutional provision and the statutes in respect to which he, by implication, contracted by becoming a stockholder, and that the plaintiff is entitled to recover, provided he is entitled to maintain his action in this jurisdiction as a receiver or representative of the creditor interests in aid of the parent proceeding in Minnesota.

We will now consider the question whether this receiver, as the representative of the creditor interests, may maintain his action ex-traterritorially. in aid of the parent proceeding and for the purpose of enforcing (lie stockholder liability. The case of In re People’s Live-Stock Ins. Co., 56 Minn. 180, 57 N. W. 468, holds that unpaid stock subscriptions were corporate assets, and might be recovered by the receiver, which, in that case, was a general receiver in respect to the assets of the corporation. It is also said in the same ease: “The constitutional or statutory liability is directly to the creditors.

The corporation cannot enforce it. It is no part of its assets.” See, also, Olson v. Cook, 57 Minn. 552, 59 N. W. 635; Minneapolis Baseball Co. v. City Bank, 66 Minn. 441, 445, 69 N. W. 331; Smith, Rec. § 78. So, it follows that the common-law receiver or the statutory receiver of the effects of a corporation, unless expressly authorized by statute, has no authority to enforce the individual liability of stockholders for the purpose of paying the debts of the corporation.

It is clear that single creditors could not maintain an action under the Minnesota statute against a single stockholder in the corporate domicile or elsewhere, for the statute contemplates an accounting and pro rata distribution among all the creditors; and it is extremely doubtful, if all the creditors should join, whether an action could.be maintained in their own behalf, subsequent to the insolvency proceeding in the parent forum. Creditors who deal with the corporation are bound by the law governing it and its affairs, as well as stockholders. See Kelfe v. Bundle. 103 U. S. 222; Railway Co. v. Gebhard, 109 U.

S. 527. 3 Sup. Ct. 363. In Relfe v. Rundle it Is said, at page 226: “Every policy holder and creditor in Louisiana is charged with notice oí this charter rigid, which all interested in the affairs of the corporation can insist shall be regarded.

The appellees [who were Louisiana creditors or policy' holders], when they contracted with the Missouri corporation, impliedly agreed that, if the corporation was dissolved under the Missouri laws, the superintendent of the insurance department of the state should represent the company in all suds instituted by them affecting the winding up of its affairs.” In Railway Co. v. Gebhard, it is said (page 537, 109 U. S., and page 369, 3 Sup.

Ct.): “A corporation must dwell in the place of its creation, and cannot migrate to another sovereignty. * * * And whatever legislative control it is sub-. looted to at home must be recognized and submitted to by those who deal with it elsewhere. * * * Such being the law, it fellows that every person who deals with a foreign corporation impliedly subjects himself to such laws of the foreign government, affecting the affairs and obligations of the corporation with which he voluntarily contracts, as the known and established policy of that government authorizes.” Page 538, 109 U. S., and page 370, 3 Sup.

Ct.: “He is conclusively presumed to have contracted with a view to such laws of that government because the corporation must, of necessity, be controlled by them, and it has no power to contract with a view to any other laws with Which they are not in entire harmony. It follows, therefore, that anything done at the legal home of the corporation, under the authority of such laws, which discharges it from liability there, discharges it everywhere.” »

In the case last referred to the rights of the creditors were held to have been merged in a general scheme, in which the public, the creditors, and the shareholders were all interested, for substituting a bonded security for the mortgage indebtedness of an embarrassed railroad, which was legalized by a legislative act of the Dominion parliament; and the defendants in error, who were citizens of the United States, were held bound by the arrangement, and it was also held that their actions could hot be maintained. At page 539, 109 U. S., and page 371, 3 Sup.

Ct., it is said the arrangement is in entire harmony with the spirit of bankrupt law, the binding force of which, upon those who are subject to the jurisdiction, is recognized by all civilized nations; and continuing: “It is not in conflict with the constitution of the United States, .which, although prohibiting states passing laws impairing the obligation of contracts, allows congress ‘to establish * * * uniform laws on the subject of bankruptcy throughout the United States.’ Unless all parties in interest, wherever they reside, can be bound by the arrangement which it is sought to have legalized, the scheme may fail.

All home creditors can be bound. What is needed is to 'bind those who are abroad. Under these circumstances, the true spirit of international comity requires that schemes of this character, legalized at home, should be recognized in other countries.” Tbe Minnesota statute (section 5911) provides for calling in all tbe creditors, and tbe creditors bave by contract submitted tbeir rights to tbe operation of sucb provision of tbe law of tbe corporate domicile. Proceedings were bad- in tbe borne court to that end.

Therefore, by virtue of tbe law of Minnesota and tbe insolvency proceedings in that state, tbe court and its proceedings were subrogated to tbe rights and interests of all tbe creditors, and tbeir right to sue stockholders, if an independent right to sue ever existed under this statute, was, at least for .the time being, merged or suspended by operation of tbe law which involved tbeir interest in sucb proceedings. See Cushing v. Perot, 175 Pa. St. 66, 74, 77, 34 Atl. 447.

And it follows that, unless tbe principle of comity, administered upon equitable and legal principles, is broad enough to afford relief extraterritorially to a receiver representing tbe interests of creditors by appointment in tbe home proceeding, the right must stand without a practical remedy, — in fact, without any remedy, except as against stockholders residing in the corporate domicile. Here is a case where it must be conceded by all that tbe original idea was a superadded stockholders’ liability for tbe better security • of tbe public.

There was a community of interests between tbe local stockholders and those outside the state of Minnesota. There would -therefore seem to be no inequity in holding the outside stockholders to the same responsibility as the local stockholders, and sound public! policy, as well as equity, requires that it should be done. They were all engaged in the same enterprise, their interests were the same, and the only difference in. their standing, and the only reason why one set should pay and the others not, is that of state lines.

Tf this is an effective bar, the nonresident stockholders would be in the corporation with their associates to help divide the profits, and out of the corporation and away from their associates so far as the assumed obligation to the public is concerned. When you get a liability and can found a recovery upon grounds of substantial equity, justice requires it should be done. The court should find a way to do right and equity rather than a way not to do right and equity; hence we should look to the substance of the remedy intended, rather than to the technical meaning of special names" given to forms of remedy.

It is of little consequence whether the person designated as the instrument or conduit through which equity runs from the court to the stockholders, and from recovery from the stockholders to the creditors, is called a receiver, an agent, a trustee, or an assignee.

If some legal and equitable means of recovery was intended and reasonably described, and the statutory agency called a “receiver” is a convenient, safe, and reasonable agency to that end, it is of little consequence whether his duties here, as to the newly-created statutory right, are precisely those which have been heretofore exercised and discharged by the ordinary common-law or equity receiver; provided, of course, he may he said to fairly represent the legal and equitable idea intended by the statute.

If a receiver, or this agency for this purpose, answers the statute, and the name does not offend the general law to such extent that the manifest intended statutory relief should be denied, the action should be upheld in his name for the benefit of the creditors.

It is apparent that a rule which would permit the rights of 700 creditors, scattered throughout the United States, each interested pro rata in the individual liability of every stockholder, to be subro-gated to a single person as the representative of the multifarious interests, would he a more convenient rule for enforcing the statute in question than a rule requiring a joinder of all the creditors as plaintiffs.

The qualification and the bond required in the parent proceeding, and the nature of the function under such circumstances, fairly and reasonably insures payment upon recovery to the parent proceeding, and a distribution by the court having such proceeding in charge according to equity; thus relieving the situation from unnecessary cumbersomeness, and from the dangers and uncertainties incident to recovery by irresponsible and widely-scattered creditors. All agree that where there is a right or a liability there ought to be a remedy.

Some highly respectable authors and authorities suggest that the law is sufficiently elastic and expansive to justify the court'in inventing a remedy for the enforcement of a newly-created right for which there is no known remedy; but, if this were assumed to he true, we should be met with the difficulty arising from contractual relations in this case, where all parties are entitled to have their rights determined hy the law and remedy provided by the statute creating the new liability.

Still, if contractual relations do exist, as the liability is one which it was intended should be enforced, and one which ought to be upheld on grounds of equity and public policy, ought we not to construe the provisions of the statutory remedy liberally rather than narrowly, to the end that that shall be done which ought to be done, and which it was intended should be done? All distinctions between law and equity are abolished in Minnesota, and private rights; whether of a legal or equitable nature, may be settled in one action, with ancillary process in aid thereof. Allen v. Walsh, 25 Minn. 543, 556.

The proceeding there was essentially an equitable proceeding, which would have been the proper proceeding in the federal courts under similar conditions; and, although no specific remedy is provided by the statute, should we not accept with reasonable liberality the idea that the statute with relation to which the parties contracted, and on which the creditors relied, intended an available remedy, and one which conformed to the requirements of the general rules of equity jurisprudence? One of the recognized grounds of equity jurisdiction is the avoidance of multiplicity of suits.

Enlarged remedies may well be accepted if they fairly effectuate a new purpose and enforce a new liability, and do not offend justice or work inequity. Where a thing is done for the security of the public, there of right ought to be some means of effectuating the security; otherwise, it goes without saying that the security intended by the parties and intended by the law is not afforded. Courts are designed by law as instruments for' putting the intentions of parties and of the law into resultant force. Of what security or benefit to creditors is a nonenforceable liability?

A security which is not available is no security. Where substantial security is intended, it should not be denied except upon substantial grounds and for substantial reasons. Where a remedy is intended, it should not fail by illiberal construction and

interpretation of statutes, nor through technical classification of representative agencies, fairly intended to effectuate justice. The aim of law and justice is to establish and make effectual the intentions of parties, and if, through liberal

interpretation by the courts, a remedy can be devised or sustained which accomplishes the aim intended by the parties, a result is reached which the law intended should be reached, if, through technical and illiberal

interpretation of statutes, and by strict construction of questions of terminology, a remedy is not found for the enforcement of an intended security, the result reached is contrary to the purpose of the law, and contrary to the implied purpose of the parties when they contracted.

All remedy was either created by statute o^ invented by courts, under the expansive and elastic principles inherent in the common-law and equity system: “Quia quando aliquid mandatur, mandatur et omne per quod pervenitur ad illud.” Foliamh’s Oase, 5 Coke, 115a. “When statutes are made, there are some things which are exempted and foreprized out of the provisions thereof, hy the law of reason, though not expressly mentioned; thus, things for necessity’s sake, or to prevent a failure of justice, are excepted out of statutes.” “Whenever

an act gives anything generally and without any special intention declared, or rationally to be inferred, it gives it always subject to the general control and order of the common law.” “Whenever a s fa tute gives or provides anything, the common law provides all necessary remedies and requisites.” “Whenever a provision of a statute is general, every tiling which is necessary to make such provision effectual is suxt-piied by the t\ .non law.” Potter, Dwar. St. 123. “Wherever the common law gives a right or prohibits an injury, it also gives a remedy by action.” 3 Bl. Comm. 123; Broom, Deg.

Max. 193. “Whenever a power is given by a statute, everything necessary to the making of it effectual or requisite to attain the end is implied.” 1 Kent, Comm. 404. “So, where the law commands a thing to be done, it also provides whatever may be necessary for executing its commands.” Stief v. Hart, 1 N. Y. 30. “The forms of ihe court are always best used when they are made subservient to ihe justice of the case,” Lord Kenyon in Mara v.

Quin, 6 Term R. 1. “If the plaintiff has a right, he must, of necessity, have a means to vindicate and maintain if. and a remedy, if he is injured in the exercise or enjoyment of it; and, indeed, it is a vain tiling to imagine a right without a remedy, for want of right and want of remedy are reciprocal.” Chief Justice Holt in Ashby v. White, Ld.

Raym. 938, 953. “When the law commands a thing to be done, it puts in requisition the means of executing its command.” “We are not intrusted with the power of infringing substantive rights by withholding the necessary, incident, and appurtenant right of complete remedy; the common-law duty of inventing necessary forms of action, pleadings, trial, judgment, and initial, intermediate, and iinal process, is as imperative now as it was during the ages in whic.lt its performance produced all Ihe common-law procedure that is obsolete and all that is now in use.” "The efficacy of xirocesg does not depend upon the records giving' it a technical name in a dead or living language.

There is no law for turning the plaintiffs out of court on a question of terminology.” Doe, C. J., in Boody v. Watson, 64 N. H. 162, 9 Atl. 794. •‘Sufficient has already been remarked lo show that when a statute confers a right and imposes a liability without providing a distinct remedy for its enforcement, the common law will supply the omission by giving to a. party an appropriate action, by which his right may he enforced.” Mr. Justice Clifford in Morley v. Thayer, 3 Fed. 737, 747. “A general liability created by statute, without a remedy, may be enforced by an appropriate common-law action.” Pollard v.

Bailey, 20 Wall. 520, 527; Bank v. Francklyn, 120 U. S. 747, 756, 7 Sup. Ct. 757; Whitman v. Bank, 28 C. C. A. 404, 407, 83 Fed. 288.

It is not necessary, however, in the case under consideration, to resort to this progressive doctrine, for the reason that the statutes of Minnesota, while general in terms, evidently intend a remedy in accordance with the ordinary course of procedure; and, while the general procedure intended is one of an equitable nature, it may well be aided, when justice requires it, by an action at law. 'These observations, therefore, as to the inherent principle in the law which enables the court to provide an adequate remedy where none is given, are not intended as strictly applicable to the statute in question or to the rights of the parties in the case under consideration; for it must he assumed and held that the parties contracted with reference to the statute creating the liability and the remedy provided by the statute, as found upon reasonable

interpretation. If no specific remedy is expressed or found in the statute, then such, remedy as can he fairly said to exist under the general laws of the state creating the corporation and the liability, and such as it can be fairly said the parties contemplated, would be the remedy. It is not suggested that new forms, processes, or remedies' are required by the exigencies of this case, but, upon analogy, if the inherent and impulsive principles of the common law demand the invention of a remedy for the enforcement of a right where no remedy exists, at least a liberal construction of statutes (Chase v.

Curtis, 113 U. S. 452, 463, 5 Sup. Ct. 554), which clearly undertake to provide a remedy for the enforcement of a right, would seem not only to be justified upon principle, but demanded by justice, which requires that active force shall be given to the liability which the stockholders assumed, and upon which the creditors and-the public had a right to rely. “The object sought to be accomplished exercises a potent influence in determining, not only the principal, but also the minor, provisions of a statute” (Suth. St.

Const. § 292); and, “when the language is general or obscure, the court must construe it, and, as far as it can, make it available for carrying out the objects of the legislature and for doing justice between the parties” (Id. § 431; Phillips v. Phillips, L. R. 1 Prob. & Div. 173).

Though not expressly stated in the Minnesota statute, it is reasonable to presume, and it should be held, that the statute presupposed and the parties intended some active force, in the nature of process or remedy, either known or which might be found according to inherent principles in jurisprudence, and which may be reasonably and equitably used for the enforcement of the newly-created statutory right.

The statutory reference to remedy being a very general reference to procedure “as in other cases,” it must be accepted as contemplating the growing and expanding fundamental force inherent in the system which was invented, and has its existence, for the express and undeniable purpose of ascertaining, regulating, establishing, and enforcing right through remedy. Law exists for the purposes of remedy. A right or a security, without power of enforcement, is a palpable and self-constituting contradiction.- The proposition at once involves a legal and equitable paradox.

Denial of remedy and denial of right are alike denials of justice. The decisions, under the drastic provisions of the Kansas statutes, are to the effect that the stockholder is contractually bound by a particular remedy, though anomalous and harsh in its operation.

It is less offensive to principles of justice and equity to say that a stockholder is contractually bound by a general statutory reference like that in Minnesota to such procedure as is used in other cases, for the reason that such scope permits of an administration of the right, under such a statute, upon general equitable and legal principles, through the inherent remedial power necessarily incident to the active force of jurisprudence.

Thus it is that a statute which contemplates a preliminary accounting, which shall include an ascertainment of all the indebtedness and. all the assets, and apply the assets to reduce the indebtedness, and thereby reduce and limit the extent of the liability of the stockholders, and which provides means for.the ascertainment of the per centum to which each creditor is entitled, is perhaps the best suited to the justice of a situation presented by statutory liability, for the reason that the end intended is that the burden shall fall upon' all alike, and that the benefits shall be equally distributed among all the creditors.

A comprehensive statutory provision like that of Minnesota, which leaves the parties bound by the general legal and equitable remedies which obtain in the state for the enforcement of rights, is more workable and more consonant with justice than statutes which give a right of action to a single creditor against a single stockholder, or such statutes as expressly require a joinder of all the stockholders, — a, thing often impossible.

Under the first class of statutes, the single creditor may get more than he would be entitled to upon ascertainments, and a stockholder may he compelled to pay more than his just proportion, while other stockholders may go free.

Under die other class, it is possible that the express provision requiring joinder of all stockholders places upon the creditors’ rights a practical disability, on the ground that they contracted with reference to the liability and remedy specifically expressed by the statute, while under a more general provision, as has been already said, the common legal and equitable remedies, as used and practiced in legal and equitable procedure in the state creating the liability, must be understood as the remedy intended for the establishment and enforcement of the right; and this means in Minnesota, where distinctions between proceedings at law and equity do not exist, that where, from the nature of the right and the character of the inquiry, justice requires it, a proceeding called “a civil action,” which in fact is in the nalure of a proceeding in equity, may be had in aid of an action at law, or, if justice so requires, that an action at law may be had in aid of such proceeding in the nature of equity.

It must he luid that the stockholders contracted with the creditors for a reasonable and equitable

interpretation of the remedy; and,, again, where remedy is intended, it is a legal and equitable paradox to say that it was intended to be inoperative. It is expressly provided by the statute of Minnesota that, upon complaint of a creditor, “the court shall proceed thereon as in other cases”; and this means a remedy in harmony with principles of law and equity, and such as may be used in other cases in the administration of justice according to the usual course, and such as may be used as a result of the natural and necessary growth and advancement of legal and equitable jurisprudence.

In the case at bar, the statute and the principles of law and equity are broad enough to justify the court in conforming its procedure and processes to such practical uses as justice and equity require, in order to effectuate the intention of the law and the rights and obligations of the parties. The statute of Minnesota intends a comprehensive proceeding in the corporate domicile. It cannot he had elsewhere.

As has been said, it intends an ascertainment of all the assets and liabilities; it intends that all parties within reach of the home process — creditors, corporation, and stockholders — shall be brought in; it intends that the per centum shall be for the benefit of all creditors, and that after the assets of the corporation are realized, and ihe avails of the stockholders’ liabilities as well, the two results shall be put together, and the per centum to which each creditor is entitled shall be ascertained, and that ah equitable pro-rata distribution shall be made. See reasoning in Gushing v. Perot, 175 Pa.

St. 66, 71, 77, 34 Atl. 447.

The purposes of the statute and of the parties, therefore, cannot be carried out except in the domicile of the corporation, nor there, unless courts of foreign jurisdiction, upon grounds of comity, render such aid by process of an ancillary nature as justice and equity require; and the court of the corporate domicile having the creditors before it for the purposes intended by the Minnesota statute, and their interests subject to the equity proceeding to which, in contemplation of law, they were parties, such court might, in the exercise of inherent and general equity powers, well say: “As you are each and all interested in each and every stockholder’s liability, and as ancillary proceedings in the name of 700 creditors who are here asking for relief would be expensive, cumbersome, and inconvenient, and as circuity of action and multiplicity of suits should be avoided, your community of interests must be centered for the time being in a single representative agency, who shall act for all, and who shall give bonds for the faithful performance of the trust, and pay all moneys recovered into the parent court, which is charged by the statute with the duty of recovering and distributing the assets of the corporation, and the avails of the stockholders’ liability, for the benefit of you all as creditors.” Suppose 700 creditors, from 700 different localities, all interested in the prosecution of a common-law right, should, by proper papers, assign such right to an attorney, an agent, an assignee, or a receiver, for the purposes of enforcement; would there, be any doubt as to the right of such representative to prosecute the claim and to recover, upon proper exemplification of his authority?

If such authority can be centered and made available in a representative agency by the parties, upon what principle can it be said that the court, having the parties before it and their rights to ascertain and establish, cannot, under a statute which requires the appointment of receivers, create such agency, making it binding upon the creditors for the purposes intended by the statute? There are two receivers in the Minnesota, proceeding. One is a receiver of the corporation affairs in the course of settlement in insolvency; the other is a receiver of dues belonging to the creditors, and is the plaintiff here.

The powers, the duties, and the functions of the two are very different. Gluck & B. Rec. (2d Ed.) 183, and cases cited. One, the plaintiffs is appointed for an express and particular purpose, — that of enforcing the personal judgments against the Minnesota stockholders, and of collecting, by such proceedings as may be proper, the liability of nonresident stockholders over whom the Minnesota court expressly disclaims having jurisdiction.

He is therefore unlike a receiver who collects assessments from shareholders who have not paid their shares in full, in which case the recovery is for the estate of the corporation; for the liability which he has in charge belongs to the creditors, not to the corporation, and is to be distributed among the creditors pro rata, after applying pro rata the avails or proceeds of the corporate estate administered by the court through the general receiver. The permanent receiver is the receiver of the corporation, and this plaintiff is (he receiver of the dues from stockholders for the benefit of creditors.

The avails in both cases, it is true, belong to the creditors, but the means for reaching results are quite different in (lie two cases. One is to wind up the affairs of the corporation, like líelfe v. Bundle, supra, having nothing to do with stockholders’ liabilities to creditors, and to pay the proceeds into court for the benefit of creditors; and the other is to collect statutory dues which belong to creditors, — a new statutory agency, having nothing to do with the affairs of the corporation, — and to pay into court for the benefit of creditors.

The receiver of the corporation has no legal righ(. of recovery upon such liability against the stockholders, as such 1 Lability is not an asset of the corporation. On the other hand, the receiver of the dues from the stockholders for the benefit of creditors has no right to recover indebtedness to the corporation. So tlie question is whether the appointment of the special or creditor receiver in the comprehensive Minnesota proceeding is such an appointment as the statute contemplated, and is in accord with the general course of equity and legal procedure in that state.

According to the earlier cases, the receiver, in possession ,of assets, was in most instances a receiver representing the interests of all parties, as an arm of the court, and for the protection of all, and could not begin adversary litigation, except upon leave of court; and many of (he authorities as to the capacity of a receiver to sue spring from such situation, and the lack of capacity resulted in many insi anees from the fact that he was neither clothed with authority to sue, nor charged with duties which made it proper that he should sue.

Ho it is, as a general rule, with perhaps some exceptions, that the authority must come from a statute or by leave of court.

Section 5906 of the Minnesota Statutes not only expressly authorizes the appointment of receivers, but imperatively provides (hat the court shall appoint one or more receivers.

The comprehensive purpose of (lie statute was to create a situation which would enable the courts, by appropriate proceedings, to protect all interests in case of insolvency; and it is reasonable to presume that the lawmaking power, contemplating that the interests might be diverse and adversary, and might involve the necessity of different agencies for (lie care and protection of different interests, intended to confer authority upon the courts to appoint a general receiver of the effects of the corpora lion, and a special receiver of the dues belonging to the creditors.

The present situation demonstrates that such agencies are a necessity; for, as has been said, the assets do not belong to the receiver of the creditors, and the liability of the stockholder does not belong to the receiver of the corporation, and the interests are therefore diverse. The plaintiff is not a common-law receiver, representing the interests of all the parties; he is not a statutory receiver, by express personal or official designation, as in I’elfe v.

Bundle, supra; he is not a receiver who has leave to sue; but he is a receiver appointed by the court, under an express statutory provision, and an imperative requirement that the court shall appoint, and is exercising the functions which the lawmaking power intended he .should exercise, and is exercising such power under the authority of the statute conferred by the court, not by leave, as in the other, class of cases, but by express authority and direction, which charge him with the specific duty.

It being the statutory intent to have the separate and distinct 'interests of the creditors against stockholders represented by a separate and distinct statutory agency, an express provision that “the court shall appoint one or more receivers for the interests of the corporation, and a separate receiver for such interests of

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