Court Opinion

ID: 7133792
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:21:46.028584+00
Date Added: 2024-06-11T16:14:27.230865
License: Public Domain

JUDGE HAZELRIGG
delivered the opinion op the court.
The appellee bank having obtained a judgment at law against the appellant Monarch Company — a corporation —followed by a return of nulla- bona, brought this action in equity for the appointment of a receiver to take charge of and collect the assets of the insolvent concern. It set up its judgment and return of execution and averred *280that M. Y. Monarch was indebted to the company in a large sum, and was fraudulently diverting the assets of the company from their proper channel and placing them among the assets of other alleged corporations to defeat the claim of appellees, and other creditors. That large storage fees due the Monarch Company were being used by other corporations and that there were unpaid subscriptions to the capital stock of the company remaining due from M. V. Monarch; that the company’s indebtedness amounting to more than half a million dollars was largely in excess of its assets and that M. V. Monarch as the owner and manager of the Monarch Company, was selling, disposing of and transferring the whiskies and assets on hand, which in fact belonged to him though in the name of various corporations, to some of his creditors and to his own uses and was preferring some of his creditors to others and resorting to various schemes and devices to defeat the creditors, etc.
Other specific averments are made respecting Monarch’s attempted disposition -of assets under his control.
To defeat the appointment of a receiver as asked for in the petition of appellee, and in the petition of another creditor who joined in the action, the Monarch Company pleaded that after the institution of the action it made a deed of assignment of all its property to J. A. Lyddane for the benefit of creditors generally, and Lyddane had executed bond and undertaken the trust. The court sustained the motion for appointment of a receiver and directed that officer to take charge of the assets of the *281companj'-. It is of this order ’that the company now complains.
We are of the opinion that the motion, was properly sustained. The averments of the petition are sufficient to give the chancellor jurisdiction over the corporation and its assets. The usual remedy afforded creditors of corporations having judgments and return of “no property found,” is to apply to the chancellor for a receiver, who shall, under direction of the court, take charge of the property and collect by suit or otherwise the assets-of the corporation. (2 Morawetz on Private Corporations section 867; Smith on Receivership, page 354.)
It can not be that the chancellor having obtained juris diction is to surrender it at the instance of the debtor who prefers a different method of settling his affairs, and turn the complaining creditor out of court. There is no reason why the affairs of the corporation may not be fairly settled by the receiver who represents all the creditors under the directions of the chancellor, and we perceive no reason why the other corporations alleged to be merely different trade names of M. Y. Monarch, may not be made parties. Whether these averments be true or false, there is no reason why a settlement may not be had in this suit of all matters growing out of the business of the M. Y. Monarch Company and M. V. Monarch as well as the business of the various, trade and corporate names under which M. Y. Monarch was trading.
In justice to all creditors, such a settlement is inevitable. The averments as to these other corporations are *282somewhat indefinite and the court properly sustained demurrers to the petition.
The judgment is affirmed.
The court delivered the following response to a petition for rehearing on June 23, 1898:
We do not construe the judgment below appointing a receiver as in any way fixing or affecting the priorities of creditors; and the opinion was intended to leave all such questions open for adjustment by the chancellor when directing and controlling the receiver in his settlement of the insolvent concern.
Petition for rehearing overruled.