Court Opinion

ID: 3867428
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:01:25.705631+00
Date Added: 2024-06-11T07:41:34.764011
License: Public Domain

I fully concur in the construction given in the majority opinion to certain sections of Chapter 213, General Laws, 1909, and the amendments thereto contained in Chapter 425 of the Public Laws, but find myself unable to agree with the application of these laws to the cause before us. In accordance with the construction which we have given to said statutes, after the receiver of a corporation has paid the debts of the corporation in full, if there is a balance of its funds remaining in his hands, he is bound to pay such balance to the stockholders of the corporation or their legal representatives in case a dissolution of the corporation has been *Page 19 
decreed. If a dissolution of the corporation has not been decreed, then, as is provided in Chapter 425 of the Public Laws, he is to dispose of such balance under the order of the court "according to the course of equity." The word "equity" is undoubtedly used in its broad sense. In the case before us a dissolution of the corporation had not been decreed, the receivers had paid the debts of the corporation in full, and remaining in their hands were funds of the corporation amounting to about $7,630 and outstanding accounts receivable of the face value of about $6,000. It then became the duty of the Superior Court to determine what disposition of said remaining assets the course of equity required and to make its order accordingly. The receivers petitioned the Superior Court that they be directed to pay the remaining assets to the stockholders. The corporation represented to the Superior Court that at a stockholders' meeting it had been voted to apply to the Superior Court to discharge the receivers and to have the remaining funds returned to the corporation. The corporation requested the Superior Court not to pass upon the receivers' petition to pay the assets to the stockholders until the corporation had an opportunity to present the matter fully before the Superior Court. The justice presiding in the Superior Court, however, either did not have Chapter 425 of the Public Laws called to his attention or failed to take the same view of its provisions which this court has done. Said justice felt that he was not to hear the facts and exercise his judgment, but was obliged, by the mandatory language of Section 29, Chapter 213, General Laws, 1909, to order a distribution of said remaining assets among the stockholders. Hence, without hearing any testimony or giving any consideration to the request of the corporation or to the equities involved in the case, the justice entered the order appealed from. This action conformed with the view which he took of the statutes in question. That *Page 20 
view, in accordance with the construction we have given to those statutes, was erroneous. Before entering his order he should have heard the parties, considered the facts and determined where the equities lay. I find nothing in the record to warrant the conclusion that "it seems obvious that the appellant stockholders did not then contemplate a continuance of the business of the corporation." An opportunity was not given the corporation to present to the court its reasons for requesting the return of said remaining assets to the corporation. There was nothing before the Superior Court and there is nothing before us from which it can be determined what the plans or the future prospects of the corporation are. It is hardly to the point to say "there is nowhere a suggestion that fresh capital is to be furnished." This loses sight of the position of the parties before the court. It was not incumbent upon the appellants to make such suggestion or any other until a case had been presented against them. The receivers were the moving parties. It was upon them to establish that equity required that the remaining assets should be turned over to the stockholders, and not returned to the corporation, where such remaining assets naturally belonged. The record shows that this the receivers did not even attempt to do. In argument counsel for the appellees presents to us his conjecture or suspicion that the corporation desires to use some of these assets for the payment of the fee of its counsel and its expenses incurred in the course of the litigation over the receivership. If such expenses were reasonably incurred it cannot be said conclusively, before hearing, that such payments would not be equitable. This is but one of many considerations as to which it is impossible without hearing to say where the course of equity lies.
I am of the opinion that the appeal should be sustained and the decree appealed from reversed. *Page 21 
JOHNSON, C.J., concurs in the opinion of SWEETLAND, J.