Court Opinion

ID: 6272560
Source: CourtListenerOpinion
Date Created: 2022-02-18 15:49:59.073207+00
Date Added: 2024-06-11T08:59:57.313607
License: Public Domain

Opinion by
William W. Portee, J.,
The garnishees were stockholders of the defendant company. There remained on the subscription of each an unpaid balance of $250. By the articles of incorporation of the company it was provided that- “ the common or general stock shall not be liable to assessment by the company or board of directors thereof or other authority of the company, but shall be assessable only in the event of insolvency of the company and upon the legal demand of outside creditors.” It is conceded by the appellee that the foreign attachments, issued by the appellants, were in date prior to the appointment of the appellee as receiver for the East-lake Woolen Company, and that if the liability of the garnishees was a debt to the company at the time the attachments were issued, and as such subject to attachment under the laws of the state of Pennsylvania, the judgment should have been entered for the appellant. This narrows the subject of inquiry materially. „
Under the conditions imposed by the terms of subscription the unpaid portion thereof was not due and therefore not attachable unless the company was legally insolvent at the time of the service of the writs. It is claimed that the company was insolvent because its notes (upon which the plaintiff’s claim was founded) had already gone to protest. This was evidence of insolvency but it was not such an ascertainment of the fact of insolvency as the terms of the charter contemplated. These required that the insolvency should be legally determined by a court of competent jurisdiction. This was done by the court of *324chancery of New Jersey on December 2,1895. The insolw therefore was not ascertained until after the levy of the wn„ and by the same judicial act the unpaid subscriptions became payable, not to the company, but to a receiver whose duty it was to collect and apply them,with the other funds in his hands, to the payment of the debts of the company generally. In this view of the case the unpaid subscriptions were never, under the contract of subscription, debts due the company which might be seized by attachment.
There was however, a further condition precedent to liability for unpaid subscriptions by the articles of incorporation, namely, that the liability should be imposed by “ assessment.” This assessment could not be made “ by the company, board of directors thereof or other authority of the company.” It was made possible only in case of insolvency and on the “ legal demand of outside creditors.” Granting that the insolvency existed, it was not in the power of attaching creditors to “ assess ” the particular stockholders. It required the direction of the court to the receiver based on “the legal demand of outside creditors” to make the “ assessment ” contemplated by the articles of incorporation. This act of assessment did not make the unpaid subscriptions debts due “ the company ” but to the receiver by whom they were to be administered as part of the trust funds held for all the creditors alike. The creation of the indebtedness was simultaneous with its appropriation to this use. This marks a clear distinction between this case and Hays v. Fire Ins. Co., 99 Pa. 621, cited by the appellant where the debt was due when attached but not ascertained in amount. All that has been said is sustained by the elaborate opinion of Mr. Justice Green in Lane’s Appeal, 105 Pa. 49.
The act of the garnishees in voluntarily paying the money into court does not change the status of their obligation as respects the creditors of the company. To hold otherwise would be to put it into the power of certain stockholders to prefer by their act particular creditors of the company to the detriment of the trust fund for the creditors generally. Neither does the fact that the company is a foreign corporation and that the receiver has been appointed by a court of another state affect the question before us. Such appointment will be recognized by our courts upon the doctrine of comity to which our state courts *325lend their aid when not in conflict with the rights of our own citizens: Bagby v. Atlantic R. R. Co., 86 Pa. 291.
By the recognition of the appointment of the receiver by the court of New Jersey no rights of the attaching creditors are prejudiced in this case. There was no liability fixed upon the garnishees until the imposition of the assessment by the court of New Jersey. By this judicial act the debt became due to the receiver and not to the company. The attaching creditor had therefore acquired no prior right which will be prejudiced by payment to the receiver.
The judgment is therefore affirmed.