Court Opinion

ID: 7003602
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:46:29.588904+00
Date Added: 2024-06-11T16:09:49.120820
License: Public Domain

Mr. Justice Adams delivered the opinion of the court. The only questions argued by counsel are whether section 15 of chapter 83 of the statute which limits actions therein mentioned to five years, applies, and whether the complainants are guilty of laches. The contention of appellee is that, it appearing by the bill that May 20, 1895, a receiver of all the assets and effects of the Interior Building Co. was appointed on bills filed by creditors of the company, and that the said assets and effects were, by the receiver and under the final decree of the court, entered October 31 1899, applied to the judgment of the Lincoln National Bank of Chicago, after payment of the expenses of the receivership, etc., and all the assets of the company having been in the possession of the receiver from the time of his appointment, May 20, 1895, until the final decree, October 31, 1899, or more than four years, it sufficiently appears that the defendant company had ceased doing business, leaving debts unpaid, and that, when the Company ceased doing business, leaving debts unpaid, namely, May 20,1895, appellants’ right of action accrued under section 25 of the corporation act, and, consequently, their bill filed May 25, 1901, was too late; that appellants having failed to file a bill in apt time, under said section 25, can not sustain their bill, as a creditor’s bill, under section 49 of the chancery act. If the bill states a case within the statute of limitations, at law, the objection may be raised by demurrer to the bill (Story’s Eq. Pl., 9th Ed., Sec. 484), and in such case equity follows the law, by analogy. Ib.; Angell on Limitations, Sec. 25 et sequens; School Directors v. School Directors, 105 Ill. 653. It is contended by counsel for appellants that only judgment creditors can maintain a bill under section 25. In Butler Paper Co. v. Robbins et al., 151 Ill. 588, the Butler Paper Company filed a bill under section 25 of the corporation act. The company was a simple contract creditor and it was contended by counsel for one of the defendants that the company, being a simple contract creditor, could not maintain the bill. Green’s Brief for Tenney, Ib. 593. In respect to this objection the court say : “ It is insisted that there was a want of jurisdiction in the Circuit Court to entertain the complainant’s bill. We think this objection is not well taken. The printing company was incorporated under the general act of April 18, 1872, and had ceased doing business, leaving debts unpaid, and complainant was one of its creditors and stockholders, and, under section 25 of said act, had the right, we think, to file this bill. In Hunt v. LeGrand Roller Skating Rink Co., 143 Ill. 118, the court said : ‘It is provided in said section that suits in equity may be brought against a corporation and its stockholders, and all persons liable in any way for the debts of said corporation, but it is not stated, in express terms, by whom such suits in equity may be prosecuted. It is manifest, however, that the statute provides a remedy in the nature of a creditor’s bill, and is designed to aid creditors in the collection of their debts.’ ” See, also, Cohn v. F. S. Waters & Co., 83 Ill. App. 387. It follows, therefore, that appellants might, under section 25 of the corporation act, have filed a bill about May 20, 1895, when the defendant company ceased doing business, leaving debts unpaid, although their respective claims had not then been reduced to judgments, and on such bill they would have had a remedy against all the stockholders, including those made defendants to the present bill. Appellants’ counsel contends that the liability of the stockholders did not accrue at the time the company ceased doing business, leaving debts unpaid. We think the question solved by section 25, which, provides : “ If any corporation or its authorized agents shall do, or refrain from doing, anv act which shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record for a payment of money, after demand made by the officer, to be returned ‘ no property found,’ or to remain unsatisfied for not less than ten days after such demand, or shall dissolve or cease doing business, leaving debts unpaid, suits in equity may be brought against all persons who were stockholders at the time, or liable in any way, for the debts of the corporation, by joining the corporation in such suit; and each stockholder may be required to pay his own pro rata share of such debts or liabilities, to the extent of the unpaid portion of his stock, after exhausting the assets of the corporation,” etc. The section clearly authorizes the bringing suits in equity against a corporation and its stockholders jointly, upon the corporation ceasing to do business, leaving debts unpaid. It clearly contemplates liability of the stockholders, for the purpose of bringing suit against them, immediately on the company ceasing to do business, leaving debts unpaid. Appellant’s counsel, relying, apparently, on the words “ after exhausting the assets of the corporation,” contends that the exhausting of such assets is a condition precedent to the liability of the stockholders. It is clear, however, that the exhaustion of the assets of the corporation is not a condition precedent to the bringing suit against the corporation and its stockholders jointly, because section 25 expressly authorizes such suit, and the exhaustion of the assets of the corporation is not made a condition precedent thereto. A stockholder is entitled to have the corporate assets, in possession of the corporation, applied to the payment of the corporate debts, before, in a suit against him and the corporation jointly, he can be decreed to pay anything, and the meaning of the language is that in such a suit it must be ascertained, in thei first instance, how far the corporate assets, if any, will go toward paying the claims of the complainant or complainants; which may be done by ordering a sale of such assets, when, if the proceeds of the sale are not sufficient to pay the claims, the defendant stockholders may be decreed to pay the deficit, to the extent of their legal liability; and so the court, in Chicago Steel Works v. Ill. Steel Co., 153 Ill. 9, 15, cited by counsel, say : “ The collection and disposition of these assets, through the medium of a receivership, must necessarily precede the final determination of the liability of the stockholders.” This is a mere marshaling of assets. In the present case it affirmatively appears by the bill that the Interior Building Co., after May 20, 1895, had not sufficient assets to pay the claim of the Lincoln National Bank; that its assets were exhausted. The averment is, in substance, that the company’s assets, after payment of the expenses of the receivership, were applied to the payment pro tanto, of the judgment of said bank. But appellants’ counsel contend that the bill is distinctly a creditor’s bill under section 49 of the chancery act, and that appellants’ right to file a bill did not accrue until after executions issued on their judgments had been returned unsatisfied; citing cases. But it seems to be the law that when there are two remedies, pursuing either of which a party may have the same relief, and the rights to the two remedies accrue at different times, the statute begins to run from the time when the right to pursue the earlier remedy accrues. Conklin v. Furman et al., 8 Abbott’s Pr. Rep. N. S. 161, was an action against Furman and others, as stockholders of the Newton & Hempstead Plank Road Co., commenced June 24, 1862. The statute limiting the action to six years was pleaded. The indebtedness in question in the case accrued due January 1, 1855, and a suit was commenced against the company and Furman and others, stockholders, June 1, 1855, but was dismissed as to the stockholders, and judgment was recovered against the company August 9, 1860. The statute of New York authorized a separate suit against stockholders for the debts of the corporation, but provided that such suit should not be brought until after judgment on the demand against the corporation, and so the separate action was not barred, if it was the only remedy. But, by another statute, suit might be brought against the corporation and any one or more of its stockholders, as soon as the indebtedness of the corporation accrued due, and the court held that the statute commenced to run when the debt sued for fell due, viz., January 1, 1855, and that as suit was not brought till June 24, 1862, it was barred by the statute. The judgment was affirmed on appeal. Conklin v. Furman, 48 N. Y. 527. A similar decision was rendered in Cottrell v. Manlove, 58 Kansas, 405. As far as creditors of a corporation are concerned, the object of section 25 of the corporation act and section 49 of the chancery act, is the same, namely, to aid creditors in the collection of their debts. Butler Paper Co. v. Robbins et al., 151 Ill. 621, and cases cited. The statute of limitation is a statute of repose. It is intended for the protection of the alleged debtor, against demands brought forward after so long a time from the transaction involved, that evidence formerly within the power of the defendant to produce may have been lost, destroyed or otherwise placed beyond his power or control; and it seems reasonable that the statute should commence to run from the time when the plaintiff had a-remedy, pursuing which he could have had all the relief which he was entitled to. The bill alleges that May 20, 1895, a receiver “ of the property, things in action and effects of the company ” was appointed, on the former bills against the Interior Building Co. and its stockholders, etc., and, as against the pleader, it must be presumed that the receiver, as soon as practicable, took possession of such property, things in action and effects; and it is apparent that, after the appointment of the receiver, the Interior Building Co., having no property or effects which it could use in carrying on its business, must have ceased to do business; and that it left debts unpaid is sufficiently manifest from the bill. The complainants not having tiled their original bill until May-25, 1901, six years after the time when they might have proceeded under section 25 of the corporation act, and have obtained, if entitled thereto, the same relief which they now seek, we must hold that their bill is barred by the statute. The appellant, the Martin Barris Co., was made a party complainant June 10, 1901, and it is averred in the bill that that company had no knowledge of the former bills, or the proceedings thereunder, until May, 1901. This is no answer to the defense of the statute of limitations. Section 22 of the statute provides: “If a person liable to an action fraudulently conceals the cause of such action from the knowledge of the person entitled thereto, the action may be commenced at any time within five years after the person entitled to bring the same discovers that he has such cause of action, and not afterward.” This is the only provision in the statute excusing strict compliance with its terms, on account of want of knowledge, and impliedly excludes want of knowledge arising from any other cause than the fraudulent concealment mentioned, as an excuse for not bringing suit within the time limited by the statute. See, also, Connor v. Goodman, 104 Ill. 366. The decree will be affirmed.