Graff v. Minnesota Flint Rock Co.

BeowN, C. J. Action to enforce the constitutional stock liability of the stockholders of defendant corporation. There was a demurrer to the complaint by the individual defendants, stockholders, and they appealed from an order overruling the same; the court having certified that'the question presented was important and doubtful. The only question involved is whether the company is a manufacturing or mechanical corporation within the meaning of the constitutional provision exempting such corporations from the stock liability there imposed. (Article 10, section 3, of the Constitution.) The rule is settled by our decisions that to bring a particular corporation within the exception it must be exclusively manufacturing or mechanical. If the corporation under the authority reserved to it by its articles of incorporation lawfully may engage in any business or occupation other than manufacturing, not incidental to nor allied therewith, the constitutional exemption from liability does not apply. 1 Dunnell, Minn. Dig. § 2080; Cowling v. Zenith Iron Co. 65 Minn. 263, 68 N. W. 48, 33 L.R.A. 508, 60 Am. St. 471. Such is the rule generally where this class of corpora [60] tion is thus favored by the law. 14 C. J. 86. We have then only to inquire whether, by the authority reserved to it by its articles of association, defendant corporation is exclusively a manufacturing or mechanical corporation. The authority so reserved is in the following language: “The general nature of the business of the corporation shall be the mining, quarrying, crushing and marketing of any kind of stone, ore or other mineral substances, and the manufacturing or in any other manner .utilizing any of said articles or minerals, and generally the. doing of all acts necessary for carrying on such business, including the buying and selling or leasing of real estate.” A manufacturer is one who by labor, art or skill transforms raw material into some kind of a finished product or article of trade. Operating a stone quarry is not manufacturing within the rule, except when coupled with the additional work of shaping the blasted material into form for use as building material, street curbing or other finished product. Likewise the mining of mineral is not manufacturing unless so connected with or the mineral be used in some allied manufacturing enterprise as to make it a necessary part of the one industry. Cowling v. Zenith Iron Co. supra. The authority of the corporation in the case at bar, as above set out, clearly takes it out of the class of manufacturing corporations which are exempt from stock liability. The corporation may, under the authority thus reserved, engage in stone quarry work, and use the blasted material in some allied manufacturing enterprise, or it “may utilize the material in any other manner.” It could, and be within the power and authority so expressed, blast the rock and sell the raw material in car lots to the trade, or engage in mining for mineral and sell and dispose of the mineral taken from the earth without any attempt to transform it by labor, skill or otherwise, into any kind of finished or even unfinished article of trade. It is therefore neither an exclusive manufacturing corporation, nor a mechanical concern within the rule stated in the Cowling case, which we follow and apply. The suggestion on the oral argument that there is a defect of parties defendant, raised by the demurrer but not discussed in the brief, is not considered. It is not an important matter at this time. The primary purpose of the action in its first stage is the determination of the question of insolvency of the corporation and the existence of creditors. The ques [61] tion of who are the stockholders, and liable as such, will come np iñ its order, if a receiver shall be appointed and it becomes necessary to resort to the stock liability. The stockholders will then be in position to present any defense that may be available to them in snch cases. Finch, Van Slyck & McConville v. Vanasek, 132 Minn. 9, 155 N. W. 754. Our conclusions are therefore in harmony with those of the learned trial court and the order appealed from must be and is affirmed.