Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1895-04-18
NSOLVENT CORPORATIONS
The Law for Distribution of
Their Assets.
\ RADICAL CHANGE PROPOSED
By a Bill Now Before the
Legislature.


II will be observed by the following |
ypinion recently rendered by Chancellor |
Wolcott, in the matter of the receiver |
hip of the Lord and Polk Chemical Co.,
That it was decided that the assets of an |
lnsolvent corporation, upon which there |
were no liens by executions or other
wise, at tue time of the appointment of
lhe receiver, should be distributed pro
rata among all the creditors alike
whether such debts were evidenced by
Judgments, notes, book accounts or 9TH
wise. There Is now pending before the
Legislature an act by which it is pro-
posed to alter this distribution as estab.
lished by the following opinion:
In Re: Receivershp oft the Lord and Polk
Chemical Co.
On the 23d day of April A. d, 1898, John
il. HoifeCker, on the application of the
Fruit Growers National Bank of Smyrna,
was appointed receiver OF the Lord and
Polk Chemical Co.. a corporation existing
under laws of the State of Delaware--said
company at that time being insolvent. Its
assets consisted of certain real estate. goods
and chattels, and bills receivable on out
Standing accounts.
Prior TO the appointment OF the receiver,
certain of the creditors of the debtor cor
poration obtained liens against it in the
following order: A mortgage in favor of
the petitioning creditors embracing all its
real estate for the real debt OF ten thousand
five hundred and thirty dollars, with
Interest from October 10th, 1850 judg-
ment in favor of The New Castle County
National Bank of Odessa, for the real
debt OF 6,676 rs upon which there was due
SS77.22; another in favor Of Ann u. Lord
for the real debt of So, 800 with interest
from July 18th, 1890; and another in favor
of The Fruit Growers National Bank of
Smyrna assignee obtained by confession
on Judgment bond to which said mort
gage is collateral. On these several judg-
ments executions were issued in the order
stated. and leYies made oil the personal
property of the debtor corporation.
There we're also tax liens against the
corporation which were prior in effect TO
the liens of the mortgage, and the TAX col.
lector shortly after the appointment OF
the receiver threatened 10 enforce the pay
nent thereof by legal process il not
promptly paid. The receiver paid them
out of.the funds i'll his hands derived from
the sale of the persona! property, upon
which the liens OF the executions rested.
Subsequently The Fruit Growers
National Bank, after first having obtained
the permission of the Court. instituted
foreclosure proceedings on Its mortgage in
the superior court in and for New Castle
county, which resulted in the sale OF the
mortgaged premises, and the application
of the whole of the proceeds thereof to the
mortgage debt.
There is another Judgment in favor of |.
P. Thomas IL SOM Co., but it was not OBJ
tanned until after the appointment of the
receiver and therefore does not take rank
among the judgment or mortgage liens
The goods of the debtor corporation con-
sisted largely of phosphate material. The
receiver deeming it eXpedient TO work this
raw material up into commercial fertll
N
market at hand, obtained permission of
the Court to do so, and realized ont OF il
and other articles of personal property
the gross sum of S50S2.3 49, Out OF tint
remainder of the personal assets consist
ing entirely of the outstanding accounts ht
collected S5,792.7G.
These two sums aggregating SIC, $3.50!
constituted the total assets of the insolven
corporation. On the 9th day of August
A. b., 1884, the receiver passed Il first anC
final account, which showed net balance
in his hands alter dedncting ali incidenta
costs, charges and eXpences, OF s7,633Ol
which ne paid into the registry of th
court, to be disbursed under the order ant
direction OF the Chancellor. An order wa
then procured, publication whereof wa
duly made requiring all the creditors Il
prove their claims III court on the LIST ia.
of May, A. d., 1891, SO that each on
should have the opportunity to be hear
fund. At the same time. upon the petition
of The New Castle County National BAN
of Odessa, it having had the first levy oil
the personal property, an order wa
granted directing the payment OF S577.22
il the amount due on its execution, whlc
left balance in the registry of ST, 75O. u
The petition ON which the receiver oil
tanned leave to pay into court the nj
balance i'll mis- hands, sets forth that tn
amount of costs and expenses includill
taxes was So, 2i2,09, which being duly al
portioned between the two classes of asset
and deducted therefrom would have le
81, S93 10 as the amount applicable to I'll
execution of Aun II. Lord, out oil the fun
which represents the personal propert
upon which she had the second lev!
Barring the taxes paid by the receiver, II
objection has been raised rs to the amour
thus applicable to her execution.
Petitions were filed by the several cred
tors praying the apportionment of Il
fund remaining in court according TO Il
very right aud equity OF the matter.
The first question presented by the fac
in this case is; what was the effect of Il
payment OF the real estate taxes nut of Il
money produced by the sale of the pc
sonal property, upon which the execute
creditors held liens?
These taxes, whether prior or subseque
to the mortgage and Judgments. were
statute made paranount-llens On the re
estate of the debtor corporation from u
first day of March OF each year in whit
they were respectively levied, for the peri
of two years thereafter. They were lie
at the time OF their payment by the
Ceiver.
Not so, however, as to its PERSONAL
There is no common law rule which max
the levy and apportionment OF the tag
ex proprio vigore liens on the property
the taxable. Such liens can only
created by statute. There is no statute
this State declaring real estate taxes to
liens on personal property, without !
intervention of some kind OF eXecuti
process
them to such liens is by distress. No
the tax collector never having made
legal seizure, either in fact or law, the ta'
in question, consequently, never were liz
on The personal property of this copo
ton. The fact that personal property
made primarily liable for payment OF tn!
does not change or alter the princll
The mere regulation of the order in viii
several kinds OF property shall be tai
in payment of the taxdemand, posses
no significance whatever in the matter
determining whether they are liens or u
10 admit the primary liability OF
pefsonal property Tor the payment
taxes TO be equivalent to the force Of lie
would give 10 every Judgment simi
effect, as the plaintiff therein must
haust the personal property of the dete
ant before recourse can be hud TO the
estate to compel the payment of the saI
While 1t Is true that tax is prefer
debt or obligation due from the citizer
the government, yet II the governm
desires to secure such preference agar
individual lien creditors, Unjust clothe
dues with the force and dignity OF