Court Opinion

ID: 9302423
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:13:30.338246+00
Date Added: 2024-06-11T17:13:44.180824
License: Public Domain

ROWERR, District Judge.
This bill is founded on the general equity of creditors to reach and apply dividends made to stockholders when the corporation is insolvent, on the equity to reach corporate assets fraudulently concealed, and on Rev. St. Me. 1857, c. 46, § 34, giving a judgment creditor a bill in equity in the supreme judicial court to reach dividends improperly paid. In so far as the allegations are that the defendant Hill is indebted to the corporation itself, I am much inclined to think the objection is well taken that the trustees are the only persons who can bring him to an account. It has been held by many respectable courts that, if the trustees or assignees of a bankrupt will not interpose, the creditors themselves may file a bill. But this notion has been entirely exploded in England, and at the last session of the supreme court the English law was followed. It is undoubtedly a sound proposition that the assignees have the sole right to prosecute demands against third persons; and, if they will not do so, the remedy is either to have them removed, or to obtain leave to file a bill in their name. Glenny v. Langdon, 98 U. S. 20, 25 L. Ed. 43; Rochfort v. Battersby, 2 H. L. Cas. 388; Beck v. Parker, 65 Pa. 262, 3 Am. Rep. 625; Cook v. Rogers, 31 Mich. 391; Tanqueray v. Bowles, L. R. 14 Eq. 151; Collins v. Burton, 4 De Gex & J. 612. The creditors may sometimes bring a bill against the assignees and others to compel the assignees to get in assets due from the other defendants. Davis v. Newton, 6 Metc. (Mass.) 537. But when it comes to special remedies against third persons, such as *530the officers and stockholders of a company, the assignees can only pursue those claims which are of a general nature, — that is, which accrue to all the creditors (as, for example, general assessments on the shares, or at least such as accrue to a distinct class of creditors); and therefore if the recovery depends on the equities of particular creditors, or upon the date when their debts were contracted, etc., those creditors must necessarily enforce their own special rights. See Wall v. Balcom, 9 Gray, 92; Ex parte Sheen, 6 Ch. Div. 235; Bristol v. Sanford, 12 Blatchf. 341, Fed. Cas. No. 1,893; Dutcher v. Bank, 12 Blatchf. 435, Fed. Cas. No. 4,203.
In the case of this corporation, the act of 1867, accepting the surrender of the charter, was not as broad as many bankrupt laws are, and it expressly reserved and excepted special remedies against officers and stockholders; and the supreme judicial court dismissed a bill brought by the trustees against this defendant to recover some of the quasi assets for which this suit is instituted, on the very ground that the rights of creditors against stockholders and officers were untouched by the surrender, and must be prosecuted by the creditors-themselves. Insurance Co. v. Hill, 60 Me. 178. Enough in value of special assets of this character are shown by the bill to save it from being demurrable on this ground. That the defendant’s remedies at law are inadequate is shown by the allegations of bill, and by Bowker v. Hill, Id. 172.
I have no doubt that this court has jurisdiction of a bill under Rev. St. Me. 1857, c. 46, § 34, when the allegation of the citizenship of the parties is sufficient. That statute gives a remedy by bill, and very properly fixes the tribunal; but it does not intend to say that the United States, or a citizen of another state, may not sue in the circuit court.
The question whether the bill was filed too late depends upon whether the cause of action accrued before the return of nulla bona. This is the question, because the suggestion of laches, which might, in equity, shorten the time of limitation, is met by the proof which is contained in the reports of the state court, that the plaintiff and the trustees for him and others tried to attain the result by a different mode of proceeding. Bowker v. Hill, 60 Me. 172; Insurance Co. v. Hill, Id. 178. The statute of limitations of the state, though not binding proprio vigore upon this court sitting in equity (that is, though not positively adopted by any statute of the United States, as it has been adopted in respect to actions at law), is yet equally binding upon the conscience of the court in ordinary suits between party and party. Bank v. Daniel, 12 Pet. 32, 9 L. Ed. 989; Knox v. Gye, L. R. 5 H. L. 656.
I find that the plaintiff had the right to issue execution and try to levy it before bringing this suit, and therefore his bill is seasonable. The distinctions between those cases in which an execution must be sued out, simply, and those in which it must be both sued out and returned unsatisfied, before bill is filed, may be somewhat nice, in some jurisdictions. I understand the general rule in Maine to be that the execution must be returned unsatisfied before a bill will lie. Webster v. Clark, 25 Me. 313; Webster v. Withey, Id. *531326; Griffin v. Nitcher, 57 Me. 270; Howe v. Whitney, 66 Me. 17. And moré especially I find that this statute is to be so construed. The original act (St. 1848, c. 64, § 2) expressly required the bill to contain an allegation that the judgment remained unsatisfied by reason of the plaintiff’s inability to find corporate property wherewith to satisfy the same. The Revised Statutes are much more condensed in phraseology, but there is no reason to suppose that the law was intended to be changed; and, as the remedy is given only to judgment creditors, I apprehend the section to mean that the judgments must remain unsatisfied, notwithstanding an attempt to reach corporate property. It is true that the corporate property was in the possession and charge of the trustees, and that the form of trying to levy an execution became a mere form; but, considering the strictness with which statutory forms are often required to be followed, I am by no means sure that if this form had been neglected the defendant might not have objected, with effect, that the plaintiff had not brought himself within the category of the statute. In the case of McKay v. Hill (decided in this court by Shepley and Fox, JJ., in Sept, term, 1870) Fed. Cas. No. 8,845, I find, by a copy of the able and careful opinion of Judge Fox, that the court passed upon some of the principal points of this case, and held this defendant liable to the. then plaintiff under another section of the same statute, giving an action at law to judgment creditors in certain cases. There all the forms of the statute appear to have been followed, and the court sustained the action; deciding, among other things, that this chapter of the Revised Statutes was a re-enactment, and not intended as an alteration, of the act of 1848.
It does not appear by the bill that there are any other judgment creditors of the corporation, and on demurrer the court is not bound to take that fact for granted, and therefore it is not necessary now to decide whether the decree must be for the benefit of all. 'See Ogilvie v. Insurance Co., 22 How. 380, 16 L. Ed. 349; Marsh v. Burroughs, 1 Woods, 463, Fed. Cas. No. 9,112; Hendricks v. Robinson, 2 Johns. Ch. 283; and other cases cited by the plaintiff.
My order, therefore, must be: Demurrer overruled.