Fisk v. Keeseville Woollen & Cotton Manufacturing Co.

Majority

p. 592

Fisk and others vs. The Keeseville Woollen and Cotton Manufacturing Company and others.

1844. March 5.

Headnote

Where a bill was filed to close up the concerns of a manufacturing company, which was alleged to have been dissolved, in fact, upon a particular day, and a decree was made for the benefit of creditors as to all debts which were due on the day of the alleged dissolution; Held, that a creditor who had commenced suits to recover debts due from the corporation, and who had obtained judgments therein before the decree, but after the time of dissolution mentioned in the bill and in the decree, was equitably entitled to his costs in those suits up to the time when he could have come in under the decree ; but that, l.y the terms of the decree, the master was not authorized to allow costs which had accrued subsequent to the day upon which the corporation was alleged to have been dissolved in fact.

The bill in this case was filed against a manufacturing corporation and its stockholders, by the complainants, in behalf of themselves and all other creditors of the corpo

p. 593

ration, to close up its concerns; and to charge the stockholders to the extent of their several interests in the capital stock, or to so much thereof as might be necessary to pay the debts of the corporation. The bill alleged that the corporation became dissolved in fact, on the 24th of March, 1843. And in September of the same year a decree was entered accordingly, upon the bill taken as confessed, referring it to a master to take an account of the debts of the corporation due at the time of its dissolution on the 24th of March, 1843, and allowing all the creditors to come in and prove their debts under the decree. Two judgments were recovered against the corporation in May, 1843,-upon suits commenced about the first of March, for debts then due and owing by the corporation. And the question which arose in this case, upon a petition to correct the master’s report, was whether the costs of the suits in which such judgments were obtained could be proved, under the decree, as a part of the debts due from the corporation at the time of its dissolution; the master having allowed the petitioners the amount of the original debts and interest but rejected the costs.

A. K. Hadley, for the petitioners.

S. J. Cowen, for the complainants and stockholders.

Upon the argument of this case I had a very strong impression that the decision of the master was wrong, notwithstanding the decision of the supreme court in Bailey & Storm v. Bancker, (3 Hill's Rep. 188.) In that case, the decision is put upon the particular phraseology of the statute under which the personal liability of the individual stockholders was created. And Mr. Justice Bronson, in his opinion, admits that the construction which the court has been compelled to put upon the statute is contrary to the justice of the case. So in this case, at the time when the suits at law were commenced against the corporation by the petitioners, it does not appear that the corpo

p. 594

rate property had been exhausted, or its business so interrupted as to authorize the petitioners to file a bill against the company and its stockholders for the recovery of their debts. They were in justice and equity, therefore, entitled to their costs, at least up to the time when they could have proceeded in this court. And if the fact of the recovery of these judgments had been known at the time of the making the decree in this cause, I think a provision should have been inserted, in the decree, allowing creditors thus circumstanced to come in and prove for their costs at law, as a proper charge upon the corporation and its stockholders.

But upon examining the terms of the decree under which the petitioners and other creditors have' come in to prove their debts, I think the master was not authorized to allow for costs which were not an actual debt against the corporation on the 24th of March, 1843. The decree declares that the corporation became insolvent and was dissolved on that day; and it directs the master to take an account of the complainants’ debts against the corporation and of the debts due at that time to all other creditors of the corporation who should elect to come in under the decree. This necessarily precludes the master from allowing any thing to a creditor coming in under that decree, except what can fairly be considered a debt at the time when the decree declares the corporation to have been dissolved. For he could not go beyond the decree of the court and provide for a case which had been overlooked in drawing up the decree. The complainants’ solicitor, to whom the claims of the petitioners were entrusted, was therefore right in supposing that the decision of the master was correct, and that it would be improper to subject them to the risk of being charged with further costs by excepting to the master’s report. He also had reason to suppose, from the decision of the supreme court in the case before alluded to, that these costs, which were adjudged to the petitioners, in their suits against the corporation, subsequent to the time of its dissolution as stated in the bill, could in no event be charged upon the stockholders individually, upon

p. 595

the facts which the stockholders had admitted by suffering the bill to be taken as confessed.

The application to correct the report must therefore be denied, upon the merits, without reference to the form of the application. But under the circumstances of this case I shall not charge the petitioners with the costs of opposing such application.