Court Opinion

ID: 6558764
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:06:03.877388+00
Date Added: 2024-06-11T15:56:26.897750
License: Public Domain

Heisel, J.
I concur in the opinion of the court, excepting as to the claims of Mr. Taft and Mr, Chapin.
Briefly and without argument I desire to state my conclusions as to those claims. Mr. Taft was a director and promoter of the company from its beginning and was fully advised of all actions taken in issuing the common stock as bonus for *451the preferred stock and participated therein. He knew that the preferred stock was being sold at par and the common stock, which had been declared by him and the other directors of the company to be“ full paid and non-assessable,” was being issued as a bonus to purchasers of said preferred stock who had nothing to do with the management of the company, to induce them to purchase the preferred stock. He could not, therefore, in good faith, have relied upon any assessment from such holders of common stock to repay advances made by him to the company in the event of the failure of the company to repay him'such advances. Mr. Chapin was counsel for the company and advised and directed the steps taken by Mr. Taft and the other directors in pursuing the course they did pursue. He directed them in the action they took to make the common stock, as he thought, “full paid and non-assessable,” and knew that as such, it was being issued as a bonus to purchasers of the preferred stock, who had no part in the management of the company, as an inducement to purchase that stock. He now claims the right to have this same common •stock assessed in order that he may be paid for his services. Excepting in the State of New Jersey, where the proceeding was under a statute which the court there said put the creditor’s right on a different basis from that under the general law, the overwhelming weight of authority is opposed to such proceeding. Whether the proceeding in the case at bar for the purpose of assessing the stockholders is under the liability imposed by section 20 of the Incorporation Act, or is under the liability that existed prior to that section, can be of no importance, because section 20 imposed no new liability upon the stockholder, but simply stated or declared a liability that existed prior to its passage.
Therefore, it seems to me that the law as generally applied "by the courts outside New Jersey should be applied here.
The decree entered by the Supreme Court is as •follows: •
“And Now, To-wit, this twenty-first day of November, A. D. 1918, the above causes having been duly argued by counsel for the parties respectively,
*452■ “And it Appearing to the Court here that there is no error in the record and proceedings in said causes in the Court of Chancery of the State of Delaware, in and for New Castle County, except in the particulars hereinafter stated,
“It is, Therefore, Adjudged and Ordered that the decree of said Court entered in said causes on the fourth day of August, A. D. 1917, be and it is hereby affirmed, except as follows:
“l. That the estimatedintereston the aggregate amount of claims of creditors of the said Arlington Hotel Company filed and allowed by the Chancellor shall be calculted from the date, of filing in said cause of the petition to assess stockholders, to-wit, the twenty-fifth day of October, A. D. 1916, to an estimated date of the payment of said aggregate sum, and that the sum of one-hundred and forty thousand dollars calculated for that purpose in the Court below shall be accordingly reduced by the sum of fifty-six thousand dollars.
“2. That the estimated costs and expenses of the receivership, including the costs of collection of said claims shall be reduced by the amount of fifty thousand dollars, and that the total amount necessary to satisfy the claims of creditors of said corporation and said costs and allowances shall be reduced by the reductions herein provided for.
“3. That the said sum as so reduced shall be assessed and levied upon said shares of stock and. upon the holders thereof, or the legal representatives of such of them as may be dead, as provided in said decree of the Chancellor, entered in said cause below on the fourth day of August, A. D. 1917, and for said purposes an assessment shall be levied in the same manner as provided in said decree in such proportion as will realize the aggregate sum resulting after making the deductions hereinabove ordered.
“And it Appearing to the Court, that while the Chancellor had power in said cause to require the resident stockholder to pay the entire 'assessment, it would be inequitable under the circumstances of this case that the Receivers should be ordered at this time so to do, before they have endeavored to collect' every assessment that they find is collectible and would justify the expense of collection,
“It is, Therefore, Adjudged and Ordered that so much of said decree of the Chancellor entered in said cause on the fourth day of August, A. D. 1917, as directs the Receivers to demand and require the said T. Coleman duPont to pay to said Receivers, in addition to the amount in said decree assessed against him, the balance of the total sum for which the said assessment is made, or so much thereof as may remain unpaid by reason of the failure on the part of other stockholders to'pay upon notice, and within the period specified in said decree, the amounts thereby assessed upon or against the share or shares of said stock, preferred or common, owned or held by them, or upon or on account of which' they are severally liable, be and the same is hereby reversed.
*453“And it is Further Adjudged and Ordered, that said Receivers shall be directed to demand and require the said T. Coleman duPont to pay to them in addition to the amount assessed against him on account of the shares held by him the balance of the total sum of said assessment only in the event that after reasonable effort to collect the several amounts assessed against the several stockholders it shall appear to the Chancellor that every collectible assessment which will justify the expense of collection has in fact been collected.
“And it is Further Adjudged and Ordered, that no dividend shall be paid in the course of the distribution of the fund realized after the assessment herein ordered on the claim of Frederick E. Chapin for services as counsel for the Arlington Hotel Company until after notice to the stockholders assessed upon common stock, which shall be established that said claim is just, reasonable and equitable, and the validity of the same found and determined; and the inclusion of such claim in the amount for which the assessment is levied shall not be deemed to foreclose such question, or estop any stockholder assessed upon such common stock from contesting the validity or dispute the right of said Chapin to participate in the proceeds of the assessment upon said stock. And if said claim be disallowed in whole or in part, the sum so disallowed shall be repaid to the persons paying the assessments on such stock in the event that the total fund shall be otherwise sufficient to satisfy in full and discharge the allowed claims with interest, costs and expenses.
“And it is Further Adjudged and Ordered that the appellants pay the costs of said causes in this Court, which are hereby taxed at the sum of One Hundred and Ten Dollars and Twenty-three cents, within 90 days, or attachment.
“And Further, that the Clerk of this Court remit to the said Court of Chancery a duly certified copy of this decree with the opinion of this Court filed in this cause, in order that such further proceedings may be had in said Court in said cause in conformity with this decree as may be necessary.
“James Pennewill, C. J.
“ Wm. H. Boyce, J.
“Herbert L. Rice, J.
“T. B. Heisel, J.
“Henry C. Conrad, J.”
Note. Subsequent to the entry of the. amended decree by the Chancellor, Coleman duPont having acquired by assignment all claims of creditors of the Arlington Hotel Company, paid all the administration expenses, costs of the cause, and the receivers, at his request, having discontinued all suits brought by them against stockholders, the receivers were, at his request, discharged;