Converse v. Hamilton - 224 U.S. 243 (1912)
U.S. Supreme Court
Converse v. Hamilton, 224 U.S. 243 (1912)
Converse v. Hamilton
Nos. 42, 43
Argued November 7, 1911
Decided April 1, 1912
224 U.S. 243
This Court looks to the constitution and statutes of a state and the decisions of its courts to determine the nature, extent, and method of enforcing the liability of stockholders of a corporation of that state.
The provisions of the Minnesota Constitution imposing double liability on stockholders of corporations other than those carrying on manufacturing or mechanical business is self-executing, and under it each
stockholder becomes liable for the debts of the corporation in amount measured by the par value of his stock.
The liability of stockholders under the Minnesota Constitution is not to the corporation, but to the creditors collectively, is not penal but contractual, not joint, but several, and the means of its enforcement are subject to legislative regulation.
Under § 272 of the Laws of Minnesota, the receiver of a corporation, the stockholders whereof are subject to double liability, is invested with authority to sue for and collect the amount of the assessment established in the sequestration suit provided by the statute.
A receiver to collect the double liability of stockholders of a Minnesota corporation is more than a mere chancery receiver; he is a quasi-assignee, invested with the rights of creditors, and he may enforce the same in any court of competent jurisdiction.
As the statute of Minnesota providing for determining whether stockholders of a corporation of that state are subject to statutory double liability does not preclude a stockholder from showing that he is not a stockholder or from setting up any defense personal to himself, it is not unconstitutional as denying due process of law, but is a reasonable regulation, and the jurisdiction of the court is sustained by the relation of the stockholder to the corporation and his contractual obligation in respect to its debts.
While an ordinary chancery receiver cannot exercise his powers in jurisdictions other than that of the court appointing him, except by comity, one who is a quasi-assignee and invested with the rights of his cestuis que trustent may sue in other jurisdictions, and his right so to do is protected by the full faith and credit clause of the federal Constitution.
While there are certain well recognized exceptions to the full faith and credit clause, especially in regard to the enforcement of penal statutes, the right of a receiver of a Minnesota corporation to sue in the courts of another state to recover the double liability imposed on the stockholders is within the rule, and the courts of the latter state are bound to give full faith and credit to the laws of Minnesota and the judicial proceedings upon which the receiver's title, authority and right to relief are grounded.
136 Wis. 589 reversed.
The facts, which involve the recognition to be given, under the full faith and credit clause of the federal Constitution, in the courts of a state of a receiver appointed by the courts of another state, and the right of such receiver
to enforce double liability against the stockholders in the former state, are stated in the opinion.