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a party holding a note secured by mortgage sells the note, guaranteeing its collection, and at the same time, and as part of the same transaction, assigns the mortgage, thereby furnishing the purchaser the means of obtaining payment, in whole or in part, the plain import of the guarantor's contract is that he will pay the debt, provided, on due diligence, it cannot be collected out of the debtor or out of the mortgage. Construed in the light of the facts, this must have been the understanding of the parties. A person guaranteeing such a debt, and assigning the mortgage with it, must have contemplated a collection by means of the mortgage, and that he would not be looked to until the creditor had resorted to that, if available: Barman v. Carhartt, 10 Mich. 338; Johnson v. Shepard, 35 Mich. 115; Borden v. Gilbert, 13 Wig. 670; Brainard v. Reynolds, 36 Vt. 614. We have found no case to the contrary, except Day v. Elmore, 4 Wis. 190, which is silently overruled in Borden v. Gilbert, 13 Wis. 670. Jones v. Ashford, 79 N. C. 172, is really not an authority; for in that case the purchaser positively refused to take an assignment of the note and mortgage, saying that he preferred the guaranty alone, and no formal assignment of the mortgage was ever made. Cases of sureties and guaranties of payment are, of course, not in point.
GUARANTY OF COLLECTION is an andertaking by the guarantor that a debt will be paid, if proper measures to collect it are taken within a reasonable time after it becomes payable: Craig v. Parkis, 40 N. Y. 181; 100 Am. Dec. 469; and that the payee shall diligently prosecute the maker without success: Jenkins v. Wilkinson, 107 N. C. 707; 22 Am. St. Rep. 911; Tobin Canning Co. v. Fraser, 81 Tex. 407. It cannot be enforced until legal proceedings to col. lect have been instituted and proved ineffectual, although the principal may have been insolvent: Bosman v. Akeley, 39 Mich. 710; 33 Am. Rep. 447. Contra, Brackett v. Rich, 23 Minn. 485; 23 Am. Rep. 703. The distinction between guaranty of payment and guaranty of collection is, that the former is an absolute unconditional undertaking on the part of the guarantor that the maker will pay the note, while the latter is an undertaking to pay, if payment cannot, by reasonable diligence, be obtained from the principal debtor: Coroles v. Peck, 55 Conn. 251; 3 Am. St. Rep. 44, and note. In an action on a guaranty of payinent, indorsed on a non-negotiable instrument, it is not necessary, in order to fix the guarantor's liability, to prove demand of payment from the principal debtor, and notice to the guarantor of nonpayment, nor the use of due diligence in pursuing the principal by legal process: Carroll County Sav. Bank v. Strother, 28 S. C. 504, in which case there is a full review of authorities; Hungerford v. O'Brien, 37 Minn, 306.
AN. 87. REP., VOL XXXI. – 40
WILLIS V. MABON.
[48 MINNESOTA, 140.) CONSTITUTIONAL LIABILITY — CORPORATE LIABILITY OF STOCKHOLDER
Under a provision of a state constitution declaring that each stockholder in a corporation shall be liable to the amount of the stock held by him, each is liable for corporate debts, in addition to the risk of losing the
amount of his stock, though he has paid therefor in full. CONSTITUTIONAL LAW - CORPORATE LIABILITY OF STOCKHOLDER, PROVIS.
ION CONCERNING, IS SELF-EXECUTING. - The clause in the state constitution of Minnesota declaring that each stockholder shall be liable for the debts of the corporation to the amount of the stock held by him is
self-executing. CONSTITUTIONAL LAW. – A PROVISION OF A STATE CONSTITUTION MUST BE
REGARDED AS SELF-EXECUTING, if the nature and extent of the right conferred and the liability imposed are fixed by the constitution itself, so that they can be determined by an examination and construction of its terms, and there is no language indicating that the subject is referred
to the legislature for action. STATUTORY REMEDIES. — Every statute made against an injury, mischief, or
grievance impliedly gives a remedy for it; if no remedy is expressly
given, the party has an action upon the statute. CONSTITUTIONAL LAW - REMEDIES. - IN A STATE CONSTITUTION DECLARBS
THAT A LIABILITY SHALL Exist in certain specified circumstances, an action may be maintained to enforce such liability, without there being any legislation upon the subject. Otherwise the legislature, by its inaction, might deprive the parties of rights guaranteed to them by the
constitution. CONSTITUTIONAL LAW. – SUBJEOT OF AN AOT IS SUFFICIENTLY EXPRESSED
in its title when it is to amend a pre-existing act, the title of which is recited verbatim in the title of such amendatory act, but without men.
tioning the year of its enactment. LNSOLVENCY OF CORPORATION - EFFECT ON LIABILITY OF STOCKHOLDERS.
- If a corporation is adjudged to be insolvent upon the petition of its creditors, and a receiver is appointed, who administers its assets and distributes their proceeds among those creditors, who executed releases as required by statute, such releases do not affect the personal liability of the stockholders, if the statute declares that a release executed there. ander shall not operate to discharge any other party liable as surety, guarantor, or otherwise, for the same debt. ACTION against Mabon and others, who were stockholders in the St. Paul Sanitation Company, a business corporation, to enforce their personal liability under section 10, article 3, of the constitution of Minnesota, declaring that "each stockholder in any corporation (excepting those organized for the purpose of carrying on any kind of manufacturing or mechanical business) shall be liable to the amount of stock held or owned by him." The defendants in their answer averred that the corporation was adjudged insolvent, July 17, 1889, on peti
tion of its creditors; that a receiver was thereupon appointed, who converted its assets into money, and that plaintiff was one of the creditors who proved their claims, received dividends, and filed releases. To this answer the plaintiff demurred, and the demurrer being sustained, the defendants appealed.
James H. Foote, for the appellant.
MITCHELL, J. 1. This was an action brought by a creditor of an insolvent corporation to recover from certain of its stockholders on their individual liability for the corporate debts, under what is commonly called "the double liability clause" of the constitution, which provides that “each stockholder in any corporation (excepting those organized for the purpose of carrying on any kind of manufacturing or mechanical business) shall be liable to the amount of stock held or owned by him": Art. ten (10), sec. three (3). The principal question in the case is, whether this provision of the constitution is self-executing, or whether it requires legislation to carry it into effect. The same question is also involved in the two cases of McKusick v. Seymour, 48 Minn. 158, 172, submitted at a later day of the present term, and has been exhaust ively argued in both cases. Some points were made by coun sel in one case that were not urged in the other; but as the question is common to both cases, and as there was an understanding among counsel that all arguments presented in either should be considered in both, we shall endeavor to fully determine the question in the present opinion. In addition to this main question, counsel for the appellants in the first case, infra, urged that this constitutional provision is not intended to impose any “double liability" upon stockholders, but simply means that they shall be bound to pay for their stock once its "face amount," any device or agreement to the contrary notwithstanding, and that, having once paid for their stock in full, they are not further liable. Except for the eminence of the counsel who have advanced this view, we would not deem it entitled to serious consideration. While no fixed form of words bas been adopted to express the idea, yet provisions couched in more or less similar language have been frequently incorporated into constitutions and statutes, and have been uniformly understood and construed as providing for an individual liability of stockholders for corporate debts, in addition to this risk of losing the amount of their stock. This is the meaning which has been invariably attached to this provision of our constitution. It is the one attributed to it by this court in numerous cases, although never in the form of a direct and authoritative decision; and we do not believe that the construction now sought to be placed upon it ever occurred to, or was ever advanced by, any one, until suggested by counsel in the present case. Any such construction would render the provision, meaningless and useless, for all that would be accomplished by it was already fully covered by the law. If a person had subscribed for stock, and had not paid for it the amount agreed, of course he was liable to the corporation, and, through it, to its creditors; and if the stock had been issued' to him as paid-up stock, when not in fact paid for, under such circumstances as to operate as a fraud upon creditors, he was, upon well-settled principles, liable to them as for unpaid stock subscriptions. The construction contended for would give the public no security beyond what they already had under the existing law. Its absurdity is rendered apparent when considered in connection with the amendment of November 5, 1872, inclosed in parentheses; for then the whole section would mean, that while the stockholders in all other corporations should be liable to pay once for their stock at its face amount, yet stockholders in manufacturing corporations need not be required to do so. The obvious intention of the provision was to add to the ordinary liability of a corporation for its debts the individual liability of the stockholders, to a limited amount, and that the measure of that liability should be a sum equal to the amount of stock owned or held by them. This stock is not the subject of the liability, but the measure of it; in other words, the stockholders are liable, not for the stock, but, in addition thereto, for a sum measured by the amount of the stock.
2. This brings us to the main question, viz., whether this provision of the constitution is self-executing. That such has been tbe general understanding of the bench, bar, and business men in this state is conceded. This court has, in a long line of cases, assumed that such was the fact: Dodge v. Minnesota Plastic Slate Roofing Co., 16 Minn. 368; Allen v. Walsh, 25 Minn. 543; State v. Minnesota Thresher Mfg. Co., 40 Minn. 213; Mohr v. Minnesota Elevator Co., 40 Minn. 343; Arthur v. Willius, 44 Minn. 409; Densmore v. Shepard, 46 Minn. 54. And, so far as we are aware, the correctness of this view bas never been questioned or doubted in any court, until one of the counsel in this case interposed a brief in Arthur v. Willius, 44 Minn. 409, in which he took the position for which he now contends. Of course it is true, as counsel suggests, that this court has never before been called on to decide the question, and that mere assumption on the part of either bench or bar does not make a thing law; but, on the other hand, it is also true that a construction which has for a third of a century been accepted by every one as so obviously correct as never to have been questioned or doubted is much more likely to be right than a newly discovered one, suggested at this late day by the emergencies of present litigation. The fact that no such view ever before suggested itself to the minds of court or counsel in the numerous cases where the point might have been made, and where it was to the interest of counsel on one side or the other to make it, certainly raisos a strong presumption against it. Moreover, as the generally accepted view has doubtless long been the basis of the credit of corporations, it ought not now to be disturbed, unless clearly wrong. But if the question was entirely one of first impression, 'we bave no doubt as to how it should be determined. A constitution is but a higher form of statutory law, and it is entirely competent for the people, if they so desire, to incorporate into it self-executing enactments. These are much more common than formerly, the object being to put it beyond the power of the legislature to render them nugatory by refusing to enact legislation to carry them into effect. Prohibitory provisions in a constitution are usually self-executing to tho extent that anything done in violation of them is void. But instances of affirmative self-executing provisione are numerous in almost every modern constitution. For instances of this, Bee State v. Weston, 4 Neb. 216; Thomas v. Owens, 4 Md. 189; Reynolds v. Taylor, 43 Ala. 420; Miller v. Marx, 55 Ala. 322; People v. Hoge, 55 Cal. 612.
Without stopping to specify, it will be found, on examination, that our own constitution abounds in provisions that are unquestionably self-executing, and require no legislation to put them into operation. The question in every case is, wliether the language of a constitutional provision is addressed to the courts or the legislature, — does it indicate that it was intended as a present enactment, complete in itself as definitive legislation? or does it contemplate subsequent legislation to carry it into effect? This is to be determined from a con