Bernheimer v. Converse

These are writs of error to the circuit court of the United States for the southern district of New York.

The actions were brought (January 28, 29, 1904) by Theodore R. Converse as receiver of the Minnesota Thresher Manufacturing Company, a corporation of the state of Minnesota, to enforce an alleged stockholders' liability under the Constitution and laws of the state of Minnesota. The court below held the executors of Simon Bernheimer and Isaac Bernheimer, both having died before the suits were brought, liable as such stockholders.

The record discloses that the Minnesota Thresher Manufacturing Company was incorporated under the laws of the state of Minnesota on the 5th of December, 1884, the objects for which the corporation was formed being the purchase of the capital stock, evidences of indebtedness, and assets of the Northwestern Manufacturing & Car Company, also a corporation under the laws of the state of Minnesota, and for the further purpose of manufacturing and selling steam engines, farm implements, machinery, etc., and the manutacture and sale of articles, etc., and the manufacture and sale of articles, wood and iron form the principal parts.

The Northwestern Manufacturing & Car Company was in the hands of a receiver, carrying on its business under the orders of a court, and, on October 27, 1887, the property and plant of that company, including all its bills receivable, farmers' notes, and assets were sold under decree and purchased by the Minnesota Thresher Manufacturing Company. The last-named company continued in business until December, 1900. On December 14 of that year the property and business of the thresher company were placed in the hands of a receiver by the order of the circuit court of the United States for the district of Minnesota, in a suit for the foreclosure of a mortgage upon its property, and this receiver carried on the business until the mortgaged property was sold under a decree of foreclosure on May 25, 1901.

On May 6, 1901, the Merchants' National Bank of St. Paul obtained a judgment in the district court of Ramsey county, Minnesota, against the thresher company, and executions thereon having been returned unsatisfied, the judgment creditor brought suit against the thresher company for the appointment of a receiver and the enforcement of the individual liability of its stockholders in the district court of Washington county, Minnesota. In that suit Theodore R. Converse, defendant in error in these cases, was appointed receiver. On the petition of the receiver, for the purpose of providing funds for the payment of the expenses of the receivership in the enforcement of the stock liability and payment of indebtedness, an order was made, December 22, 1902, reciting, among other things, that copies of an order of April 16, 1902 (not in the record), had been published, mailed, and served as therein required, and that due notice of the hearing had been given to the defendant company and to each stockholder of record, as directed by the order, and, on a hearing duly had, an order of assessment of 36 per cent of the par value of each share of the capital stock of the thresher company, to wit, § 18 per share, was §§ essed against each and every share of the capital stock, and against each and every person, corporation, or party liable as such stockholder, and each such person, corporation, or party was directed to pay to the said receiver, at his office in the city of Stillwater, Minnesota, within thirty days after the date of the order, the said sum of $18 a share; and, further, upon failure to pay said sums, the receiver was authorized to prosecute actions or proceedings against the persons liable in any court having jurisdiction in the state of Minnesota or elsewhere. On appeal to the supreme court of the state of Minnesota this order was affirmed. 90 Minn. 144, 95 N. W. 767. Subsequently, as stated, these actions were brought and judgment rendered against the executors of the Bernheimers.

Mr. Laurence Arnold Tanzer for plaintiffs in error.

[Argument of Counsel from pages 519-522 intentionally omitted]

Messrs. William G. Wilson and C. A. Severance for defendant in error.

[Argument of Counsel from pages 522-524 intentionally omitted]

Mr. Justice Day delivered the opinion of the court: