Court Opinion

ID: 7967916
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:52:21.526144+00
Date Added: 2024-06-11T16:34:41.813110
License: Public Domain

Giliillan, C. J.
This is an appeal from an order of the district court making a call upon the unpaid subscriptions to the stock of a corporation, in proceedings upon an assignment by such corporation for the benefit of its creditors.
The return is somewhat short in several particulars. It does not disclose distinctly whether the assignment was under 1878, G. S. ch. 41, or Laws 1881, ch. 148, but we infer that it was under the latter. It does not make it appear very satisfactorily at what stage of the proceedings the assignee applied to the court to make or direct the call; that is, what had been done in the proceedings prior to the application. But we infer that the claims to satisfy which the call was applied for had been presented to, and allowed by, the assignee, or accepted by him as valid, and that nothing else had been done in respect to them.
When a court has charge, through its receiver or assignee, of collecting and converting the assets of a corporation, and applying the proceeds to the satisfaction of its debts, the court’s call for the unpaid subscriptions to stock stands precisely"as .does a call made by the directors of an operating corporation. Such a call does not determine absolutely the liability of the stockholders. It has not the effect of a judgment. Its effect is to make whatever the stockholders are liable for, within the call, become due and payable, so that suit may be brought to enforce such liability. Though the order, in this case, directs the stockholder to pay the unpaid subscriptions within ten days after they shall be called for by the assignee, it has no other effect.
There can be no question of the power of the court, in insolvency proceedings, under Laws 1881, ch. 148, to direct the collection of unpaid subscriptions, and the application of the proceeds in payment of the debts of the corporation. What remains unpaid on the subscriptions are debts due the corporation, and are its assets. When it is insolvent, they constitute a fund for the payment of its *428debts. It is true that, as the primary purpose of the proceedings in insolvency is to apply the assets to payment of the debts, the power of the court to make or direct calls for the unpaid subscriptions, and direct the enforcement thereof, must be limited to cases where 'it is necessary to resort to that fund for the purpose, and the extent of the call must be determined by the amounts of the debts and of the other assets.
According to the petition of the assignee, on which the application for the call was made, from the other assets not more than $200 can be realized; and this seems admitted by the answer of the objecting stockholders, and it also seems admitted that the aggregate of the unpaid, uncalled subscriptions is $13,335, and of the claims filed with the assignee, $S,906.73. The assignee alleges in the petition that so many of the stockholders are insolvent, others being dead, and leaving no estate, and many having left the state, and gone to parts unknown, that he believes not more than one-half of the amounts unpaid on the stock are collectible. The answer does not attempt any showing as to this, but it alleges that, upon calls made by the directors before the assignment, there is uncollected $9,178, which is good and collectible. In response to this allegation the assignee states in an affidavit that, as attorney for the corporation before the assignment, and, since then, as the assignee, he has many times demanded payment of such unpaid subscriptions, and has endeavored to collect all thereof, and that all the subscribers refuse to pay, claiming that they owe the corporation and 'its assignee nothing; that nearly all whom he considers responsible have been sued, and the actions are now pending; that the amounts are so small that in only two or three cases can statute costs be recovered; and that the costs and expenses of recovery will absorb a large part of the proceeds.
The answer also disputes the validity of the claims filed with the assignee, and asks that the holders thereof be required to prove their claims, and that the court, before making a call, ascertain what, if any, claims there are, having any legal or equitable right to be paid by a call upon the subscribers to stock.
Assuming that a case was made for a call, we think it was proper to make it for the whole of the unpaid subscriptions, it. was the duty of the court, so far as it could do so, to make the call *429produce enough to pay the debts of the corporation, and, in determining how much it might be necessary to call for, to take into account that a call upon some subscribers would, either from death, insolvency, removal from the state, or other causes, produce nothing, and that to enforce the call upon others would be attended with costs and expenses large in comparison with the sums collected. It had information enough to justify it in concluding that, to produce net the amount required to pay all the claims filed with the assignee, it was necessary to call in all the unpaid subscriptions, so far as they could be collected.
But the chief objection to the call is that the claims against the corporation had not been ascertained and determined, and, as we understand the appellants, that upon the application for the call the court ought to have first proceeded to ascertain and determine those claims, making it a part of the proceedings to determine whether the call should be directed.
Whatever may be the proper mode for finally determining the validity of claims against the estate of an insolvent assignor, it would seem that the orderly way would be by a direct proceeding for that purpose alone, not making it collateral to some other proceeding, as, for instance, to an application for an order directing á dividend among the creditors, or to any proceeding for collecting the assets.
The consideration of how the claims shall be determined in insolvency proceedings requires an examination of some of the provisions of the act of 1881, ch. 148. That act was so badly drawn that, in order to prevent it failing altogether, we have frequently been obliged to apply to it the most liberal rules of interpretation, and to derive from it by implication meanings which its terms failed directly to express. The matter of the proof of claims is one of those upon which the terms of the act are inadequate. It clearly intends that a claim shall be presented to, and, in the first instance,, allowed or disallowed by, the assignee or receiver. Section 8:. “Any creditor whose claim is disallowed in whole or in part by any assignee or receiver appointed or selected under this act, or under the provisions of the assignment laws of this state regarding the assignment of debtors, may appeal from such disallowance to the district court, and there have such claim tried as other civil actions.” The section then provides how, and within what time, such *430appeal shall be taken. . What is to be done by a creditor to secure a judicial hearing in case of a disallowance is clear enough. But there is in the act no express provision securing such a hearing to the debtor, or to any person interested in the assets and their distribution, when the assignee or receiver improperly allows a claim. Yet it is hardly conceivable that the legislature intended the decision of the assignee or receiver — an administrative, and not a judicial, officer — to finally and conclusively determine the rights of any of the parties interested, except by their consent. That he should determine them in the first instance, and that his determination should become final, through the acquiescence of the parties, is well enough, and the act undoubtedly intends as much. But, as the act makes no direct provision for a judicial hearing upon claims except at the instance of a creditor whose claim is disallowed in whole or in part, the authority and duty to provide such a hearing, when asked for by others, may be found in the general power of the court over the insolvency proceedings, — a power large enough to secure their just rights to all parties interested. The power given it over the matter of proof of claims is sufficient for the purpose. Section 2 provides, among other things, for distribution among creditors who shall file releases, and "who shall come in and prove their respective claims within such time, and in such manner, as the court or judge shall direct.” This, of course, is to be taken in connection with the manifest intent of the act, that the proof in the first instance is to be made to, and passed on by, the assignee or receiver, and that, if acquiesced in by all interested, his decision is to be final. The clause authorizes the court to direct what proofs shall be presented to the assignee or receiver, but the court’s power in the matter of proving claims cannot stop there. It must extend to giving to parties interested (where not expressly given by the act) an opportunity to prove or disprove claims upon a judicial examination, and have such claims determined in a judicial way.
We do not know what general rules the district court has on the subject, but we shall assume that it either has general rules adequate to give a complaining party proper redress against an erroneous allowance of a claim, or, if it has no such general rule, that it would, upon seasonable application, make such order as would *431give such party an opportunity for a judicial examination of the claim.
As we have said, we assume that the claims mentioned in the petition were allowed by the assignee, and, as it does not appear that any proper application has been made for a judicial hearing upon them, it is to be deemed that the. allowance has been acquiesced in, and become final. An application by the assignee for leave to call in the assets is not a proceeding in which it is proper to institute what would be, in effect, an appeal from the assignee’s allowance of claims.
Order affirmed.
Vanderburgh, J., took no part.
(Opinion published 55 N. W. Rep. 598.)