be deemed to have had full notice of its contents. This knowledge it possessed when Fish was appointed receiver for it, December 31, 1896. Notwithstanding this knowledge and its obligations as a trustee to keep the trust fund of $1,955.35 separate and distinct, it wrongfully mingled it and that of other creditors with its own funds, and thus placed it where it could not be identified and separated. Now, can the receiver of the trust company, as such, evade the liability it had incurred to pay this as a preferred claim?

It is to be observed that this money converted by the trust company was not the property of the state. It was the money of the bank, but, when assigned, held in trust by the trust company, as assignee for the benefit of the, bank's creditors; and, because the claim of the state was a preferred one, the title to the assets did not rest in the state. How far this fund might be followed by Hunter, the substituted assignee of the bank, or might have been followed by the state in a proper case and upon a complete trial, we need not here determine. In the recent case of Bishop v. Mahoney, supra, page 238, some of the rules applicable to this right of following trust funds are laid down; but it is unnecessary to repeat them here. The defendant receiver denied that he had any of the $1,955.35 fund in his hands, and alleges that no such fund ever came into his hands. This question was submitted to the court, and we see no reason to disturb the finding of the court thereon, as no evidence of any kind was introduced to contradict or impeach it. The state is therefore concluded by this finding. It had its day in court upon this identical question, and is bound by the decision. The state did have a preferred claim against the trust company, amounting to $15,669.71, for money it deposited with it directly, which the state filed as a preferred claim, and the amount was allowed and paid by the receiver; but it never presented this claim as a preferred claim, and the receiver, without notice of this claim, has disbursed nearly all of the funds which have come into his hands.

Although the state is concluded by the proceeding before the district court of Hennepin county from presenting this claim as a preferred one, we find no reason why it should not be permitted to

file a claim as a general creditor, which it has a right to do without being prejudiced by any prior proceedings herein.

The order of the trial court is therefore affirmed, with leave to the state to apply to said court to fix a time within which said claim may be filed with the receiver by the state, as a general creditor of said trust company; but the extent of the liability of said receiver on such claim if so filed is not here passed upon or determined.

Order affirmed.

CANTY, J.

I concur. An order was made in the assignment proceedings of the insolvent bank, declaring the state to be a preferred creditor, and ordering the trust company, as assignee of the bank, to pay the claim. If this order amounted to a final judgment or decree in favor of the state, and against the trust company, so that it was a legal obligation on which the state could sue the trust company in an independent action or proceeding, then the state would in law be a creditor of the trust company, and therefore, under G. S. 1894, §§ 4234, 4251, a preferred creditor. But it was not such an order. Except as hereinafter stated, it was enforceable only in the assignment proceedings, and the money of the bank in the hands of the trust company as assignee did not, by virtue of that order, become in law the money of the state until paid over to the state. But equity regards that as done which should be done, and if this money in the hands of the trust company as assignee (which should have been paid over to the state) could be traced into the hands of the receiver of the trust company, and there identified, the state would, in my opinion, be a preferred creditor, not by virtue of said sections 4234 and 4251, or section 5898 (see State v. Bell, 64 Minn. 400, 67 N. W. 212), but by virtue of the rules of equity applicable to such cases.

There are two successive steps to be taken in arriving at this conclusion: First, that equity regards that as done which should be done, and therefore the state has an equitable claim against the trust company; second, that, by reason of the equitable doctrine of following trust funds, the state may, if it can, follow the fund into

the hands of the receiver of the trust company. This last step, the state was not able to take. Therefore it is not in equity a preferred creditor, but its equitable claim still remains, which, in my opinion, it may enforce as an equitable claim in the receivership proceedings against the insolvent trust company. But, as the state has no standing as a creditor of the trust company except with the assistance of a court of equity, that court will not declare it to be a preferred creditor as long as it cannot trace the trust fund into the hands of the receiver.

MITCHELL, J.

I concur in the result, on the ground that the state is not a creditor of the trust company. As a preferred creditor of the bank, the state is possibly entitled to be subrogated to the rights of the bank against the trust company, so as to enable it to apply the proceeds of the claim of the former against the latter on its demand against the bank. But, at most, this is the extent of the state's rights in the premises.

STATE OF MINNESOTA v. BANK OF NEW ENGLAND and Others.1

December 8, 1897.

Nos. 10,851-(28).

Insolvent Bank-Liability of Stockholders-Holding Stock as Security-G. S. 1894, 2501.

Under G. S. 1894, § 2501, the stockholder of a bank or banking corporation is individually liable in an amount equal to double the amount of stock standing on the books of the corporation in his name and held by him, as collateral security for a debt, for all the debts of such bank, during the time he so holds said stock; and this liability continues for one year after any transfer or sale of such stock by the stockholder, if the bank becomes insolvent and suspends payment within one year after such sale or transfer.

Upon the application of the state of Minnesota, one of its creditors, a receiver for the insolvent Bank of New England was ap

1 Reported in 73 N. W. 153.

pointed in December, 1893, by the district court for Hennepin county. In 1895 an order was made allowing one J. A. Hanson, on behalf of the creditors of the bank, to intervene in the receivership action for the purpose of enforcing the statutory liability of the stockholders, and he filed a supplemental complaint against the several stockholders. From a judgment entered pursuant to the findings and order of Elliott, J., John F. Calhoun appealed. Affirmed.

Bartleson & Paul, for appellant.

One who takes stock in a corporation as collateral security for a debt, when the stock stands in the name of the debtor and is not transferred to the creditor on the books of the company, does not become liable as a stockholder, but the liability remains in the pledgor. 3 Thompson, Corp. § 3213, and authorities cited. One who thus accepts stock as collateral security, and causes it to be transferred to himself on the books of the company, incurs all the liability of a stockholder. Cook, Stockh. (2d Ed.) § 247, and authorities cited. Pullman v. Upton, 96 U. S. 328; National Bank v. Case, 99 U. S. 628. One who accepts a certificate of stock issued directly by a corporation, upon the agreement that it is to be held only as collateral security, is not thereby rendered liable as a stockholder either to the company or its creditors. Burgess v. Seligman, 107 U. S. 20; Union v. Seligman, 92 Mo. 635; Griswold v. Seligman, 72 Mo. 110.

C. H. Childs and W. S. Dwinnell, for respondent.

Stockholders are, and necessarily must be, those who hold the evidence that they are the owners of the stock-they are called the stock holders and not the stock owners-and they are generally those who appear upon the transfer books of the company to be stockholders. Rosevelt v. Brown, 11 N. Y. 148, 151. As a stockholder Calhoun was liable for the debts of the bank. G. S. 1894, § 2501; Harper v. Carroll, 66 Minn. 487; Olson v. State, 67 Minn. 267; Dunn v. State, 59 Minn. 221. He is not relieved from his liability as a stockholder because he held the certificate of stock in question as collateral security for a debt. Harper v. Carroll, supra; Adderly v. Storm, 6 Hill. 624; Rosevelt v. Brown, supra; In re

Empire, 18 N. Y. 199; McGruder v. Colston, 44 Md. 349; Wheelock v. Kost, 77 Ill. 296; Hale v. Walker, 31 Iowa, 344; Pullman v. Upton, 96 U. S. 328; National Bank v. Case, 99 U. S. 628; Thompson, Stockh. § 223. His denial of ownership is inconsistent with the representation he has made. National Bank v. Case, supra. BUCK, J.

J. A. Hanson, as intervenor and as plaintiff, in his own behalf and in behalf of numerous other creditors of the defendant bank, brought this suit against the stockholders thereof to enforce their statutory liability.

The Bank of New England was incorporated under the laws of this state in the month of January, 1892, with a capital of $50,000. In June, 1892, the stockholders voted to increase the capital stock to $100,000, and it is a part of this increased capital stock that was claimed to have been held by the defendant Calhoun. There was no dispute but what the bank was hopelessly insolvent and suspended payment on June 26, 1893, and made a general assignment of all its property, under the insolvency laws of this state, on July 6, 1893, and ever since has been insolvent. The main facts as to this claim and Calhoun's liability are embraced in the finding of the trial court as follows:

"The court further finds that certificate No. 98, for fifty shares of the capital stock of said bank hereinbefore found to have been issued to J. Frank Calhoun, was made out in the name of said Calhoun and dated the 1st day of July, 1892; that said certificate was not delivered to said Calhoun until the 14th day of September, 1892, and probably was not actually issued until about that time, at which time A. J. Blethen, who was then president of the bank and manager of its business, requested a loan of $4,500 from said Calhoun, and agreed to secure said loan with a certificate of the stock of the Bank of New England of the par value of $5,000; that on said day said Calhoun made said loan to said Blethen, and said Blethen thereupon executed his note for $4,500, payable to said Calhoun, and at the same time delivered to him said stock certificate No. 98, made out in said Calhoun's name and bearing date July 2nd, 1892, as aforesaid; that on the 23d of November, 1892, said Blethen paid said note of $4,500 and said Calhoun thereupon surrendered to him said certificate No. 98, the same having been indorsed in blank by him, and said certificate was returned to said bank and canceled; that during said time from the 14th of September to the 23d day