Court Opinion

ID: 6993239
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:28:38.385931+00
Date Added: 2024-06-11T16:09:41.096590
License: Public Domain

Pleasants, J. The bill herein was filed by appellee on the 26th of January, 1889, against appellants together with John M. Earl and the Eagle Packet Company, a corporation organized under the laws of Missouri. It was taken as confessed as against Earl for want of an answer, and the decree does not go directly against the Packet Company. They did not join in the appeal.- The case made by the pleadings and proofs is briefly this: In July, 1873, the Eagle Packet Company was incorporated under the laws of Illinois, with its principal office at Quincy, for the purpose, among others, of erecting freight houses and buildings and equipping steam boats and barges for use in navigation on the Mississippi river, and did build or acquire certain steam boats, barges and freight'ho uses for that purpose. Appellants and Earl were the directors and principal stockholders. Williams was president, Hill was secretary and treasurer, and Henry Leyhe, superintendent. In June, 1877, Samuel Grucll, being indebted to the company in about the sum of §1,500, to secure its payment assigned and delivered to Earl, as agent of the company, a quantity of cord wood and fence posts, the value of which largely exceeded that indebtedness together with the liens upon the property and expenses of handling it, and provided by the instrument of assignment that the proceeds remaining after reimbursing the company for those liens and expenses and paying said indebtedness, should be paid over to the assignor. These proceeds were all paid over by Earl as the property was sold, to Hill, the treasurer of the company. Of the terms of this assignment-, and the proceedings under it, all the appellants were at the time fully apprised. In April, 1878, the officers of the company were directed by vote of the stockholders to sell and transfer to the Eagle Packet Company, of St. Louis, which was incorporated «n the 7th of that month under the laws of Missouri, all its boats, barges and freight houses for §13,000, which they accordingly did, and thus, to that extent, dissolved the Illinois company. We copy from the abstract of the amended answer of these appellants sworn to, the following: “ And they further say, that at the time of the dissolution of the Eagle Packet Cortipany of Illinois, the property of said company consisted of the steamers Spread Eagle and Little Eagle, Ho. 2, and two wharf boats, one at Quincy, Illinois, and one at St. Louis, Mo., and three warehouses, one at Keokuk, Iowa, and one at Grafton, Illinois, and one at Alton, Illinois; all of which property was sold and transferred, to the Eagle Packet Company of St. Louis, said property being valued at §13,000. “ Fourth. These defendants, Henry Leyhe, William Leyhe, Grandison W. Hill and John E. Williams, say that all of said property of the Eagle Packet Company, of Illinois, was disposed of for the consideration of §13,000 to the Eagle Packet Company, of Missouri, as above set forth; that the names of the stockholders of said Eagle Packet Company, of Illinois, before and at the time of the dissolution of the said company, were C. Albers, who was the owner and held 18£ shares, par value, $ 1,875 J. E. Williams, 120 shares, par value, 12,000 Henry Leyhe,-120 shares, par value, 12,000 William Leyhe, 129 shares, par value, 12,000 Grandison W. Hill, 120 shares, par value, 12,000 C. Eagle, 81 shares, par value, 875 J. M. Earl, 72| shares, par value, 7,250 Hat. Morehead, 65 shares, par value, 6,500 E. E. Hill, 5 shares, par value, 500 Total number, 650 shares, and amt. capital stock, $65,000 “And the following were the stockholders in the Eagle Packet Company, of Missouri, on or about April 18, 1878: C. Albers, 7-£ shares, par value, § 375 J. E. Williams, 48 shares, par value, 2,400 Henry Leyhe, 48 shares, par value, 2,400 William Leyhe, 48 shares, par value, 2,400 G. W. Hill, 48 shares, par value, 2,400 C. Hagle, 3£- shares, par value, 175 J. M. Earl, 29 shares, par value, 1,450 Hat. Morehead, 26 shares, par value, 1,300 E. E. Hill, 2 shares, par value, 100 Total, 260 shares. Amt. capital stock, $13,000 “ All of said persons above named being the stockholders of said Eagle Packet Company, of Missouri. “ And that all the property or assets and effects of the Eagle Packet Company, of Illinois, was, on or about the 18th day of April, 1878, transferred to the Eagle Packet Company of Missouri, the stockholders being identically the same in both companies.” To the October term, 1879, of the Adams County Circuit Court, Samuel Gruell filed his bill in equity against Earl and the Illinois Company for a statement of the account and enforcement of the trust in his favor, created by the assignment; and pending the suit, on the 20th of October, 1881, for value received, assigned all his interest in the claim and in whatever decree or judgment he might recover, to Joseph M. Gruell, the appellee here. For reasons not particularly shown, that litigation was protracted until the March term, 1888, when a final decree was rendered for the complainant, for $1,419.25; in which decree it was further ordered that in default of its payment within thirty days a fieri facias execution be issued to enforce it. Default was made and execution issued; the first directed to Adams County, on June 13, 1888, which was returned by order of the plaintiff’s attorney, August 31st, and an alias to Madison, on September 3d, and returned “ demand made and no property found to make all or any part thereof,” December 28, 1888. Thereupon this bill was filed, setting forth the facts above stated, to charge the defendants as trustees for complainant, to the extent of his claim, of the property of the Eagle Packet Company, of Illinois, which they obtained in the manner above stated, and appropriated to their own use, with notice of that claim. And upon final hearing on the pleadings and proofs, the court rendered a personal decree against appellants and Earl, in favor of complainant, for the sum of $1,762, being the amount of the former decree, with interest thereon at the rate of six per cent per annum and the costs. The principal objections urged to it are based on what we think a misapprehension of the character of the bill. As a creditor’s bill, or in the nature of such, it is said the return of the execution on the first decree to Adams county, “ by order of the plaintiff’s attorneys,” is not sufficient to support it. Gaule v. Wohler, 12 Ill. App. 594. As a proceeding under the statute, Sec. 25, Chap. 32, declaring the liability of stockholders where a corporation or its authorized agents “ do or refrain from doing any act which shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record for a payment of money, after demand made by the officer, to be returned ‘no property found,’ or to remain unsatisfied for not less than ten days after such demand,” it is said there is no proof that the stock of appellants was not paid in full, and that not all the stockholders were made parties defendant. As a proceeding under Sec. 33 of the same statute, for distributing the assets without first filing an affidavit that all the corporate debts have been paid, it is said that section refers to corporations organized not for pecuniary profit. Hamsker v. Hamsker, 132 Ill. 273. In can hardly be necessary to cite authority for the proposition that corporations are trustees of their assets primarily for their creditors; that the right of stockholders, upon a dissolution, is limited to their proportionate shares of the assets remaining after the payment of all the corporate debts; that of whatever they receive on distribution before such payment they thereby become like trustees; that a creditor may charge as such any or all into whose hands he can trace assets so distributed; that a creditor, for that purpose, is any one who has a valid claim against the corporation arising on contract express or implied, whether legal or equitable, a lien or not a lien, due or becoming due, ascertained or to be ascertained; and that a court of equity in this State has power as such and independent of statute, to enforce that trust according to its practice in like cases. Clapp v. Peterson, 104 Ill. 26, and cases there cited. The bill here is based on these doctrines of equity. It seeks to charge the defendants, not as stockholders, but as trustees, though that character was assumed by their action as stockholders. All the facts above stated were found by the decree, and are so recited in it. The finding was fully warranted by the evidence. They were all proved hy records or other documents, or hy their admissions under oath, and for the purposes of this case, of the appellants themselves and the testimony of Earl and Hill. By their own showing they voluntarily took a responsible and leading part in the corporate action of the Illinois Company, by which it undertook, in form, to transfer to another company certain of' its assets specified and identified, of the value of §13,000, and received for themselves individually, as did the other stockholders, a part of the proceeds proportioned to the amount of their stock, respectively, and thereupon to dissolve the corporation. This, in purpose and direct effect, was a dividend and distribution of these assets by the company to its own stockholders pro rata, the constituents of the two ■companies being precisely the same; and of this dividend each of the appellants received more than was sufficient to pay the claim of appellee. This claim arose before the attempted dissolution, which, therefore, could have no effect to prejudice any right of the creditor. Sec. 12 of the Statute. That its exact amount was not then ascertained is immaterial. The duty to ascertain it rested upon the company. Before the last of May, 1878, the property assigned to its agent had all been sold, the sales reported and proceeds paid over by him to its treasurer, soon, doubtless, after the attempted dissolution in April. The company then knew the amount of its claim against the assignor, of the liéns it had discharged, and of the expenses it had incurred. Its neglect to ascertain and pay, when it had the means, compelled the suit to enforce the duty. The court ascertained it and ordered payment. Of the demand upon its president on execution and its result, appellants were hound to take notice; for he was still its president, for all the purposes of that demand, and they were still its directors. They knew the company then had no means with which to make payment, having themselves, with others, .appropriated its assets. They therefore became liable, jointly and severally, as trustees, to pay it, since each had received of the assets enough for that purpose; and their failure to pay it was a breach of that trust, whether fraudulent in fact or not. It will be for them to adjust their equities when they acquire any as against other parties also liable. The case, then, is one of original equity jurisdiction, which would be properly exercised though there were a concurrent remedy at law. But we know of no adequate remedy at law. Appellee’s claim, being as assignee of a chose in action, is purely equitable; and the contention of counsel is that none of the remedial provisions of the statute would apply to the facts of this cause. On the day it was set for hearing and heard, appellants filed their petition for a change of venue, which the court denied for the reason that their co-defendant, Earl, did not join in nor consent to it; and this ruling is assigned for error, on the ground that Earl was only a nominal and unnecessary party, since there was already a judgment against him for the same claim. This view overlooks the fact that this bill seeks to charge him as trustee of the assets he received. In that character he was as much a real party as either of the appellants. We think the ruling was right (Sec. 9, Chap. 146, R. S.), and that the decree was right. It will therefore be affirmed. Decree affirmed.