Court Opinion

ID: 6426690
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:04:30.624784+00
Date Added: 2024-06-11T15:52:01.109226
License: Public Domain

Knowlton, J.
It may be well to consider first the defendants’ objections and exceptions to the admission of evidence, and the findings of the master in regard to the official position and the liability of Dakin, president and a director of the corporation. It appeared by the record that in 1886 Dakin was elected president and one of the directors, and that at the same time Murdock was elected treasurer and one of the directors. Oral testimony was admitted agai'nst the defendants’ objection that in January, 1891, there was a meeting of the stockholders at which the same officers were elected, and that the clerk of the company made minutes of the meeting on a piece of paper which has been lost, and made no other record of the proceedings. There was also evidence that since then there has been no other meeting of the stockholders, except one in March, 1894, for the purpose of authorizing a mortgage to the Clinton Savings Bank. It appeared that from January, 1891, to and including December 2, 1896, the defendants Dakin and Murdock had the active management, direction, and control of the business of the corporation ; that Dakin held himself out to the public as president and a director, and Murdock held himself out as treasurer and a director. We are of opinion that this evidence was competent, and that it well warranted the finding that, if Dakin was not president de jure he was president defacto, and that if Murdock was not treasurer de jure he was treasurer defacto, and that if both of them were not directors de jure they were directors de facto.
No exception was taken by the plaintiffs to the finding that Mary A. Parker was not, during any portion of the years 1894, *2471895, and 1896 a director defacto or de jure, and no question is made in regard to the correctness of the finding.
Dealing with the case upon the master’s report, there is no doubt that the defendants Dakin and Murdock, on the second day of December, 1896, the time when the plaintiffs brought their action against the corporation, were liable for the excess of the company’s indebtedness above the amount of its capital stock, which excess is found to have been $13,139.91. Pub. Sts. c. 106, § 60, cl. 3. The preliminaries necessary under the statute to charge them with this liability have been attended to by the plaintiffs. A. judgment has been obtained against the corporation, a demand has been made for payment under the execution, and since the expiration of thirty days from the time of the demand the execution has been returned unsatisfied. Pub. Sts. c. 106, § 64. The liability continues after the death of the officers of a corporation against their property in the hands of an executor or administrator. Pub. Sts. c. 106, §§ 60, 64, 66, 67. Warren v. Para Rubber Shoe Co. 166 Mass. 97, 104.
The next question is whether the plaintiffs have lost their rights by reason of the assignment made by the corporation to the trustee Bancroft, and by the writing of December 31, 1896, in which they gave a qualified assent to the assignment. We think it very clear that they have not. This assignment could have no effect to prevent their- obtaining judgment against the corporation unless an estoppel arose from their consent to it. But the writing which they signed expressly reserved to them all rights necessary to the maintenance of their claims against the officers of the corporation. They were not to be precluded by it from proceeding with their suit against the corporation and obtaining judgment, and then proceeding by a bill in equity against the officers. Their claims were not to he deemed satisfied beyond the amount of the dividend received from the trustee. Notwithstanding the assignment of the corporation and their qualified assent to it, they are entitled to have a decree in equity against the officers for the amount for which they were liable at the time of the commencement of the suit at law against the corporation, less such sum as the plaintiffs receive as a dividend under the assignment of the corporation. Chamberlin v. Huguenot Manuf. Co. 118 Mass. 532. First National Bank of *248Barre v. Hingham Manuf. Co. 127 Mass. 563, 567. Nonantum Worsted Co. v. Holliston Mills, 149 Mass. 853. Haskell v. Hill, 169 Mass. 124. The case is not like Marr v. Washburn & Moen Manufacturing Co. 167 Mass. 35, where a creditor, having an attachment upon the property of individual debtors, consented to an assignment for the benefit of creditors, and gave up his attachment.
It is contended by the defendants that the plaintiffs cannot reach the fund in the hands of Bancroft as trustee under the assignment from Dakin for the benefit of creditors, inasmuch as one of the conditions of the assignment is that only those creditors who signed their assent to it within sixty days should share in the assets. Upon the finding of the master, it does not appear that any of Dakin’s creditors had become parties to the assignment when this bill was brought. If not, then it is plain that the assignment is ineffectual against creditors who, by proper proceedings, seek to avail themselves of the property as the plaintiffs do. The property remains subject to attachment by creditors at common law, and to appropriation in a suit in equity. May v. Wannemacher, 111 Mass. 202, 207. Douglas v. Simpson, 121 Mass. 281. Pierce v. O’Brien, 129 Mass. 314. This court has jurisdiction of the trust to determine the equities of all persons interested in it. Bouvé v. Cottle, 143 Mass. 310. New England Bank v. Lewis, 8 Pick. 113. Ward v. Lewis, 4 Pick. 518. Bryant v. Russell, 23 Pick. 508, 520. Fairbanks v. Belknap, 135 Mass, 179, Little v. Chadwick, 151 Mass. 109. Under the terms of the instrument, which recognizes as creditor's all who have claims that could be proved in insolvency, the plaintiffs, as holders of equitable claims, are entitled to share in the fund, St. 1884, c. 293, Goldthwait v. Day, 149 Mass. 185, 186. Their rights originated and had begun to take form before December 3, 1896, when the assignment was made; for the action at law against the corporation was brought on December 2,1896. But the liability of the directors could be definitely fixed under the statute only by bringing this suit in equity, and the plaintiffs’ right to share in the fund could properly be secured by making the trustee a party. See Noyes v. West, 3 Cush. 423, 428. On the master’s report, we are of opinion that the plaintiffs are entitled to be paid out of this fund *249held by Bancroft under the assignment from Dakin the amount found due by the master, less the amount to which they are entitled as a dividend under the assignment from the corporation. Their claim is in like manner made out against Murdock, who does not now defend, and against the fund in the hands of his assignee and trustee. If other creditors became parties to either of these two assignments within sixty days from their date, and if the respective funds are not enough to pay the creditors in full, including the plaintiffs, these creditors should be made parties to this suit, that their rights and the rights of the plaintiffs in these funds may be determined. If there are adverse claims, these rights cannot properly be passed upon without giving the creditors who bad become parties to the assignment an opportunity to be heard.
We do not think that the defence of multifariousness should be sustained.
The case must be recommitted to the master to ascertain how much the claim of the plaintiffs against the officers is to be diminished on account of the dividend from the assets of the corporation, and to determine such other facts as are material in view of this opinion. Decree accordingly.