Court Opinion

ID: 8640192
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:51:56.952593+00
Date Added: 2024-06-11T16:56:04.479890
License: Public Domain

STORY, Circuit Justice.
The principal questions which have been argued in the cause, are: First. Whether the assessment laid by the directors on the shares of the Norfolk Manufacturing Company, on the 25th of October, 1842, was a good and valid assessment? Second. If valid, whether it did not, in contemplation of law, amount to a revocation, or rescission of the prior dividend declared by the directors, and payable on the same day with the assessment, or as a set-off against the same? Third. Whether, supposing the assessment and dividend good, and in full force, the order or agreement of Babcock with the company, for the transfer of his dividend, was not a collusive order or agreement in contemplation of bankruptcy, and therefore void as against the creditors of Babcock, under the bankrupt act of 1841, c. 9 [5 Stat. 440], The latter question can become material only, in case of the failure of either of the other grounds to support the claim made by the assignee. I shall accordingly, in the first place, consider the question, whether the assessment was valid; for if it were not, then the as-signee has a perfect title to the redress sought by him in this court.
The charter of the Norfolk Manufacturing Company was granted by the legislature on the 4th of February, 1824; and it was therein declared that they “shall have all the powers, and privileges, and shall be subject to all the duties, and requirements, prescribed in an act passed on the 3d of March, 1809, entitled, &c., and the several acts in addition thereto.” The only material clause affecting the present case, is the fifth section of the act of 1809, which provides "that any such corporation may, from time to time, at any legal meeting, called for that purpose, assess upon each share, such sum or sums of money, as shall be judged by such corporation, necessary for raising a capital for the establishment and completion of the object of the incorporation, and for defraying the charges and expenses incident thereto, to be paid to their treasurer, at such time or times, and by such instalments, as shall be directed by the corporation.” Now, the present assessment was not laid by the corporation at all; but by the sole authority of the directors. But it is said, that the directors have a co-ordinate power with the corporation, as to the laying of assessments under the by-laws of the corporation, one of which declares that “they (the directors) shall take care of the interests, and manage the concerns of the corporation.” In the first place, it strikes me, that by the very terms of the act of 1809, the power to lay assessments is intended to be vested solely *317and exclusively in the corporation, and to rest in its discretion, as to the time "when, and extent to which it is to be exercised. The power is given in the affirmative, and the maxim, “Expressio unius est exelusio alterius,” seems to me strictly applicable to such a case. It is a very high power, of a summary nature, and may involve a loss or forfeiture of the shares of the corporators, in case of a noneomplianee with the requisition. It is, therefore, founded in a sound public policy, that the corporation, which is to bear the burthen, should be the sole judge of the times and occasions on which assessments should be laid. But it is said, that the corporation may delegate the powers to the directors. That is a proposition, which I am by no means prepared to admit. The general rule certainly is, that the powers confided to a corporation, like those confided to an agent, cannot ordinarily be delegated. “Delegatus non delegare,” is the known maxim as to agents; and when the corporation itself is pointed out as the proper functionary to execute a discretionary power, it seems to me, that the true conclusion is, in the absence of all other provisions, that it must be solely exercised by the corporation, at its legal meetings held for that purpose. And any by-law, made in contravention of the enactments of the charter, is, as well upon the general principles of law, as by the express provisions of the act of 1809, § 1, to be treated as a mere nullity. • But it does not appear to me, that the corporation ever has, or intended by its by-laws, to delegate any authority to lay any assessments. The language of the by-law, on which the whole of this part of the argument rests, is conceived in very general terms, and by no means requires, and in my judgment, does not admit of any interpretation, which shall include any such delegation of authority. It is “to take care of the interests, and manage the concerns of the corporation,” which, must, upon the principles of fair reasoning, be limited to the ordinary interests, and ordinary concerns of the corporation, as general agents of the corporation; and not extend to the extraordinary interests, or extraordinary concerns, expressly confided to the discretion of the corporation itself, by the very terms of the charter. In the most ordinary eases of agency, general language, however broad, when found in the instrument creating the agency, is constantly construed as limited to the .special objects pointed out as the scope and purpose of the agency.2
[For other cases involving the estate of this •bankrupt, see Cases Nos. 696, 697, and 17,886.]
But if this doctrine were at all doubtful, which it does not appear to me to be, the second point made at the bar would be equally decisive in favor of the assignee. And that is, that the assessment, if lawfully laid, was, to all intents and purposes, a com-píete merger, or extinguishment, or set-off of the dividend; and it is immaterial in which light it is received. It was obviously and confessedly laid for the very purpose of controlling the payment of the dividend; it was payable on the same day; and was, in fact, in respect to all the other stockholders-but Babcock, actually applied, as an extin-guishment, or set-off, of the dividend. No other exigency existed, or was contemplated to exist, calling for the assessment, but to recoup the dividend, and indeed to supersede the necessity of paying the dividend. Babcock himself could not have claimed the dividend, without paying the assessment, and the corporation are entitled to take the dividend under the order, or agreement, only sub modo, to discharge the assessment, or subject to the assessment. The order was, in fact, given on the 27th of July, before any dividend was declared; and after it was declared, and before it became due, the assessment was made for the very purpose of preventing the payment of the dividend out of the funds of the corporation, not then properly applicable to the purpose. It seems to me, therefore, that in no respect is the corporation entitled to the dividend, in part payment of the debt due to it, or to set-off the assessment, as a charge pro tanto, upon the shares of Babcock, which have been sold, and the proceeds lodged subject to the order of the court.
This view of the subject renders it wholly unnecessary to consider the other point, viz. whether the agreement and order to transfer the dividend was a collusive transfer in the sense of the bankrupt act. That transfer was after the failure of Babcock, and, under the circumstances, is not a question wholly free from difficulty, and I desire, therefore, to express no opinion respecting it. But I am of opinion, upon the other grounds, that the whole proceeds of the shares sold of the bankrupt ought to be paid over to the assignee, for the benefit of the bankrupt’s estate, without deducting any sum for the assessments thereon, and that an injunction do issue accordingly.

 See Story, Ag. §§ 21, 62-68, and the authorities there cited.