Selig v. Hamilton, 234 U.S. 652 (1914)
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Selig v. Hamilton
No. 361
Argued May 6, 1914
Decided June 22, 1914
234 U.S. 652
ERROR TO THE DISTRICT COURT OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK
Syllabus
The legislation of Minnesota with respect to the liability of stockholders, as construed by the courts of that state, has heretofore been reviewed and its constitutional validity upheld by this Court in Bernheimer v. Converse, 206 U.S. 516, and Converse v. Hamilton, 224 U.S. 243.
A stockholder cannot, under the statutes of Minnesota, even by a bona fide transfer of his stock, escape liability for debts of the corporation theretofore incurred.
Bankruptcy proceedings against a Minnesota corporation do not stand in the way of a resort to the statutory method of enforcing the liability of a stockholder which is not a corporate asset.
Congress has not yet undertaken to provide that a discharge in bankruptcy of a corporation shall release the stockholders from liability.
A foreign stockholder of a Minnesota corporation is not concluded by an order of the state court in sequestration proceedings under the statute, and in which he was served only by publication without the state, as to any matter relating to his being a stockholder or as to other personal defense.
When his ownership of the stock ceases, a stockholder in a Minnesota corporation ceases to be liable for debts of the corporation thereafter incurred, although liable for debts previously incurred.
Under the state statute, the Minnesota court, in a proceeding to assess stockholders for liability, may assess persons who previously were stockholders for liability for debts incurred during the period they owned the stock.
While a stockholder not personally served may urge his personal defenses in a suit to recover the assessment made in sequestration proceedings of an insolvent Minnesota corporation, he may not reopen the amount of the assessment or the question of the necessity therefor.
What the Minnesota court determines as to the nature of the assessment and its application to present and former stockholders must be ascertained from the order itself.
Whether a former stockholder is ratably or otherwise liable with present stockholders is not a question which goes to the jurisdiction of the Minnesota court making the order, but a question to be submitted for correction, if any, to the court making the order, and not to another court in a collateral attack.
In a proper judicial proceeding to determine the amount of indebtedness of an insolvent corporation and the dates of origin of such indebtedness, the individual stockholders are sufficiently represented by the presence of the corporation itself, and the decree establishing such indebtedness is admissible as evidence thereof in a suit against a stockholder.
Bernheimer v. Converse, 206 U.S. 516, followed to the effect that § 394, New York Code of Civil Procedure, does not apply where the corporation is not a moneyed one or a banking association and that the six-year period does apply under § 382 to the claim of a receiver of a foreign business corporation for personal liability of a stockholder assessed under the state statute.
The facts, which involve the validity of a judgment of the District Court of the United States for the Southern District of New York enforcing the liability of a stockholder of an insolvent Minnesota corporation, are stated in the opinion.