Court Opinion

ID: 7927547
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:00:22.840091+00
Date Added: 2024-06-11T16:33:14.698517
License: Public Domain

The Chancellor.
The bill in this cause subsstantially charges the defendants with having combined under the color merely, of the general banking law of this state, for the purpose of defrauding the complainant and other persons, who should receive the notes of said banking association. It not only charges that the original stockholders and officers of the institution, but also, that the persons severally charged with having become subsequent purchasers of the stock, purchased for the purpose of aiding in such fraud and with the intent and design to deceive and defraud the complainant and all the creditors of said association. It purports to charge them and each of them in their individual capacities as members of a fraudulent copartnership, or association. A variety of questions have been raised upon the different demurrers. It will not be necessary to notice all the points raised at the argument, as the grounds upon which the bill is sustained, and the demurrers overruled, will appear in the opinion. *457The complainant in this case seeks to chárge the defendants as a voluntary association, who Under the pretence and color of the general banking law of this state have conspired to defraud the complainant, aijd such others as should receive the notes of said association. The fact that another creditor has seen fit to treat them as a corporation, and has filed his bill and obtained the appointment ofa Receiver of the effects of this corporation, cannot deprive this complainant of his remedy, in this form, if he can establish the truth of the allegations of his bill. The objection that the bill contains a prayer, for the appointment of a Receiver is not a good cause of demurrer;’ it may or may not have been necessary, but is not such an objection as can sustain the demurrer. This is not what is termed a creditors bill ; but on the contrary, it seeks to charge the defendants in an original proceeding as members of a fraudulent association or co-partnership. The objections therefore that the complainant has not in the allegations in his bill, conformed to the rules required in creditors bills, have no application, from the view I take of the scope and objects ot the bill. Another cause of demurrer is that the complainant has an adequate remedy at law, and therefore a court of Chancery has not jurisdiction. The frequent transfers of stock and changes of interest, and the extraordinary manner in which the business has been conducted, according to the showing in the bill, would render the complainant’s remedy at law both difficult and doubtful; this of itself is sufficient to give this court jurisdiction. 1 Paige R. 920. Courts of Chancery have also concurrent jurisdiction in cases of fraud. The objection of multifariousness, that the several directors and stockholders are made parties, notwithstanding they were connected with this association at different periods, and have distinct rights and liabilities is the next and principal remaining question.. From the manner in which the business was conducted, it seems to me that the course the complainant has pursued was the proper one. The stockholders and directors only, are parties, and it is alleged that they all performed different parts in the same drama. A bill may be sustained against different persons relative to matters of the same nature, in which all the defendants were more or less concerned, though not jointly in each act. Should it prove in the event that any of these defendants were not partners in the concern at the time the notes on which the *458complainant prosecutes were issued, they may not be liable to contrito; their payment. But if it proves true that this was a fraudulent combination, merely under the pretence of the statute, in which ^ defendants all participated to defraud the complainant, it is ‘but just that each and all should be held responsible to the creditors who have been defrauded in this way. From the view I have taken of this bill it was not neces? ary that the Receiver should have been .made a party. The complainant is entitled . to his dividend from whatever may be obtained from the property of this concern in the hands of the Receiver, without making him a party, and without a waiver of his rights against the defendants in this form.
Demurrer overruled.