Court Opinion

ID: 6965933
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:53:54.804136+00
Date Added: 2024-06-11T16:08:36.927649
License: Public Domain

Mr. Justice Magruder delivered the opinion of the court: If this case were in a condition to be considered upon its merits, the principal and most important question would be, whether a simple contract creditor, who has not reduced his claim to judgment, can file a bill under section 25 of the Corporation Act. But the consideration of this question, which is ably discussed by counsel on both sides, would be premature at this stage of the present proceeding, in view of the objection which is made to the jurisdiction of this Court. The defendant in error moves to dismiss the writ of error for want of jurisdiction upon two grounds: first, upon the ground that the order sought to be reviewed is not a final order, and, second, upon the ground that no franchise is involved. First, as to the character of the order. It is insisted by the defendant in error, that the order, appointing the receiver, is interlocutory, while the plaintiff in error, the Chicago Steel Works, contends that it is a final order, reviewable on appeal or by writ of error. The Act of June 14, 1887, “to provide for appeals from interlocutory orders granting injunctions or appointing receivers,” provides, “that whenever an interlocutory order or decree is entered in any suit pending in any court in this State, granting an injunction, or overruling a motion to dissolve the same, or enlarging the scope of an injunction order, or appointing a receiver, or giving other or further powers or property to a receiver already appointed, an appeal may be taken from such interlocutory order or decree to the Appellate Court,” etc. (Laws of 1887, page 250). It would seem to be clear, from the language of this statute, that, if the order here sought to be reviewed is an interlocutory order appointing a receiver, its review should have been sought in the Appellate Court, and not in this court. In some of the States orders appointing receivers are held to be final orders as affecting substantial rights ; and it may be, that, when such an order disposes of the case, it should be regarded as final. (Williams v. Field, 60 Am. Dec. 433; 5 Am. & Eng. Ency. of Law, page 374). But in other States such orders are held to be merely interlocutory. (Eaton v. Varnum, 10 Ohio St. 622; Hottenstein v. Conrad,, 5 Kan. 249; State v. Alabama, etc. R. R. Co. 54 Ala. 139; Adams v. Wood, 21 Cal. 165; Chapman v. Hammersley, 4 Wend. 173, and note; Nichols v. The Perry Patent Arm Co. 3 Stockt. 126; see also, Forgay v. Conrad, 6 How. 201; Adams’ Eq.—8 ed.—pages 349, 352; 2 Story’s Eq. Jur. secs. 831-833). In Hottenstein v. Conrad, supra, a motion was made to vacate the order appointing the receiver, but the motion was denied, and the order continued in force ; and it was there held, that the Supreme Court had no authority to interfere. In the case at bar, a motion was made at a subsequent term to vacate the order of appointment, and was overruled. It is sought here to review the order overruling the motion to vacate, as well as the original order of appointment. In this State, it has been held, that an order appointing a receiver, in a case somewhat similar to the case at bar, is a merely interlocutory order. (Coates v. Cunningham, 80 Ill. 467). Although the case of Coates v. Cunningham, supra, was overruled in Wincock v. Turpin, 96 Ill. 135, yet it was overruled upon another point, as will be seen by reference to the latter case, and not upon the question of the interlocutory character of the order appointing the receiver. In the later case of Farson v. Gorham, 117 Ill. 137, we approved of the ruling in Coates v. Gunningham, supra, upon the point now under consideration, in the following words : “In Coates v. Cunningham, 80 Ill. 467, we held that a decree appointing a receiver is interlocutory, and a writ of error will not lie to reverse a decree removing a receiver, as was done by the decree here.” The case of Chicago Life Ins. Co. v. Auditor, etc. 100 Ill. 478, does not present a state of facts similar to that which exists here. The decree, which was there held to be final was rendered upon a hearing of proofs four years after ■the original order appointing the receiver in the cause had been entered; and, after declaring the preliminary injunction to be perpetual and affirming the previous appointment of the receiver, the decree in that case settles the ultimate rights of the parties. Here, however, the order of September 7, 1893, does not settle the ultimate rights of all the parties. The chief object of the suits in equity, authorized by section 25 of the Corporation Act, is to reach the liability of the stockholders after the exhaustion of the assets of the corporation. The collection and disposition of those assets through the medium of a receivership must necessarily precede the final determination of the liability of the stockholders. The suits are authorized to be brought against the stockholders “by joining the corporation in such suit.” The joining of the corporation is preliminary and subsidiary to reaching the liability of the stockholders. The same condition precedent, which must exist to justify the suit in equity under section 25 against the corporation, must also exist to justify the suit against the stockholders. If the suit is brought because the corporation has “ceased doing business leaving debts unpaid,” such cessation of business, “leaving debts unpaid,” is a matter which affects the liability of the stockholders, and must be determined as against them, as well as against the corporation. The issue upon that question is an issue, in which the stockholders, as well as the corporation, are entitled to join. It is not pretended, that the order appointing the receiver decides upon the liability of the stockholders ; and if the order can now be reviewed upon writ of error as affecting the corporation, it may be necessary to again review it as affecting the stockholders. But “this Court has often decided that a case cannot be heard here by piecemeal. (Farson v. Gorham, supra). “A cause cannot be reviewed as to one party at one time, and as to another party at another time.” (Thompson v. Follansbee, 55 Ill. 427; International Bank v. Jenkins, 109 id. 219; Hutchinson v. Ayres, 117 id. 558. While the question, whether the order here should or should not be regarded as a final order as to the matters therein found and ordered against the corporation, is not free from doubt, yet, for the reasons already stated, we are inclined to regard it as an interlocutory order under the circumstances of this case. Second, if the conclusion reached as to the character of the order be incorrect, there would be no power in this court to review it as a final -order, unless a franchise is involved. We are thus brought to a consideration of the second ground upon which it is urged that this Court has no jurisdiction. Counsel for plaintiffs in error relies upon the case of Coal and Mining Co. v. Edwards, 103 Ill. 472, in support of the contention that a franchise is here involved. In that case, no one appearing for the corporation, a default was entered, and a decree pro confesso rendered, against it, as well as against all other defendants not answering ; and the court found the allegations of the bill substantially true, and entered a decree dissolving the corporation, and appointed a receiver to take charge of its property. There, the prayer of the bill was, that the corporation itself be dissolved, and the decree was to the same extent. It is true, that the bill in the case at bar not only prays for a receiver, and for a distribution of the assets, and for an account, and for a decree against the stockholders for the amounts unpaid on their capital stock, and for an injunction, etc., but also for a dissolution of the defendant corporation. But the order entered on September 7, 1893, appointing a receiver, does not decree or direct" that the corporation be dissolved. If a decree dissolving a corporation under said section 25 be regarded as involving a franchise, no such decree is shown to have been entered here. Although it is no part of the general jurisdiction of a court of chancery to decree the dissolution of a corporation by forfeiture of its franchises, yet it is within the power of the legislature to confer such jurisdiction upon a court of equity by statute. By the 25th section of the corporation Act, courts of equity in this State are given full power to dissolve a corporation for good cause shown. (Chicago Mut. Life Indemnity Ass. v. Hunt, 127 Ill. 257; Hunt v. LeGrand Roller Skating Rink Co. 143 id. 118). A creditor of a corporation may, after judgment against it and a return of execution by the sheriff unsatisfied, seek satisfaction of his judgment by creditor’s bill against one or more delinquent stockholders, who will have the right, in such case, to file a cross-bill and bring the other stockholders before the court. (Young v. Farwell, 139 Ill. 326; Palmer v. Woods, 149 id. 146). But the power to dissolve the corporation is only a portion of the relief provided for by section 25. Two remedies are therein given. One is to apply the assets in payment of the debts, and, in case of their insufficiency for that purpose, to enforce against the stockholders their liability for unpaid stock. The other is, in cases where a cause for forfeiture exists, to declare such forfeiture and decree a dissolution of the corporation. The court may grant relief by the first remedy* without resorting to the second. It may find it unnecessary to decree a dissolution. (Wheeler v. Pullman Iron and Steel Co. 143 Ill. 197). In the case at bar, the order now under consideration is in line with the pursuit of the first remedy. It appoints a receiver of “the property and assets of the Chicago Steel Works” with “the usual and customary powers of a receiver in a court of chancery,” but does not proceed under the special statutory power to decree a dissolution of the corporation. A bill in chancery may, as does the bill in this case, ask for two kinds of relief, the granting of one of which may involve a franchise, while the granting of the other does not involve a franchise. If the decree entered grants the relief involving a franchise, it may be reviewed in this Court; but if the decree entered grants the other species of relief prayed for, which does not involve a franchise, it is not’subject to review here. It has been held, that, where no objection is made to a decree so far as it settles the freehold, an appeal from another part of the same decree, having no relation to the question of freehold, but merely settling a matter of account, will not lie from the Circuit Court to this Court, but must be taken to the Appellate Court. (Cheney v. Teese, 113 Ill. 444). The question of jurisdiction in such a case must be determined by the question affected by the decree. (Walker v. Pritchard, 121 Ill. 221; Malaer v. Hudgens, 130 id. 225; Moore v. Williams, 132 id. 591). Here, the question affected by the order of September 7, 1893, is not one which, in any sense, involves a franchise, and therefore the order is not re viewable here. The motion to dismiss the writ of error for want of jurisdiction is granted. Writ dismissed.