Court Opinion

ID: 8811622
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:05:00.773163+00
Date Added: 2024-06-11T17:04:18.802352
License: Public Domain

WADE, District Judge
(dissenting). I cannot concur in the majority opinion, for the reason that, as I view the case, the plaintiff (in the trial court) had an adequate remedy at law, and that resort to the extraordinary remedies here sought in a court of equity cannot be had, in any event, until such legal remedies are exhausted.
If this judgment is a “debt”, as held by the majority, it is certainly covered by the express language of the contract by which the Pierce Oil Corporation assumed “all debts, obligations, and liabilities of the Waters-Pierce Oil Company,” and the plaintiff could have proceeded in an ordinary suit at law to recover upon such covenant.
It may be true, as stated in the majority opinion that “the assumption by the vendee company of the debts, liabilities, and obligations of, the Waters-Pierce Oil Company does not relieve the stockholders, who have received the proceeds of the sale of the assets of their corporation, from responsibility to a creditor”; but the creditor is only interested in getting his money, and, if he can get it by an ordinary law action, he cannot invoke the powers of a court of equity. I can also agree that “the remedy [against vendee] is not exclusive”; but I hold that resort must first be had to the ordinary remedy at law, and that plaintiff can come into equity only when that fails. Not only this, but in equity and in justice the vendee should pay this judgment, if any one does. Eor a valuable consideration it agreed to pa3r this judgment (if it is a debt, obligation, or liability), and the stockholders, who received nothing except what they were legally entitled to, should not be held primarily liable.
I agree- with the majority that the assets of a corporation constitute in a sense a trust fund, which under certain circumstances may be subjected in the hands of stockholders to the payment of corporate debts. But this is- not an action to reach certain “assets” of the corporation; it is an action for a personal judgment against the stockholders. It is not averred that they now have any of the assets, nor is it sought to trace these “trust funds” into anything that defendants now own. So far as the record discloses, these defendants did not have, at the time of the trial, a dollar or a share of stock received at the time of the distribution. Under these circumstances, if liable, why are they liable? Their liability can rest only upon the fact that they are wrongdoers, because by fraud (actual or constructive) they have been parties to the dissipation of the assets of the corporation which the corporation should have first applied to the payment of its obligations.
The plaintiff is in no position to refuse to proceed at law. There are no equities in its favor. The indictment rested untried for six years before the transfer of the property was made. It was not brought to trial for nearly a year after the transfer. It is in no position to «appeal for special relief, certainly not against < men who, as stockholders of the old and of the new corporations, made specific provision for the payment of all debts, obligations, and liabilities.
*519Furthermore, the record shows that on February 4, 1916, before this action was commenced on February 18, 1916, the plaintiff had brought suit at law in Louisiana to enforce against the vendee the. covenant of assumption to pay all the “debts, obligations, and liabilities of the Waters-Pierce Oil Company,” and that such action at law is still pending. I do not hold that this is an absolute election of remedies, but I do hold that, having so elected and proceeded, and it not being claimed that the remedy in that court is not adequate, this court should grant no relief.
If these defendants are liable, such liability is only secondary; if the judgment can be enforced against the Waters-Pierce Oil Company or its vendee, the defendants are not liable at all.