41 Conn. 506 | Conn. | 1874
The respondent corporation, prior to the year 1874, had been engaged in the manufacture and sale of sewing machines. The business proving unsuccessful, the fcompany determined to discontinue it, and in July, 1874, sold and conveyed all its assets, real and personal, to the respondent Hull, a stockholder of the company, for the purpose of obtaining money for the payment of all its indebtedness. The petitioner claims to be a creditor of the company.
With regard to this sale, the petition contains the following allegations:
“That the said Bartram & Fanton Manufacturing Company, through and with the agency of Frederick A. Hull, of said Danbury, on ihe 3d day of July, 1874, fraudulently bargained, sold and conveyed, by an instrument of that date, at a grossly inadequate and insufficient price therefor, all the assets and estate, both real and personal, of said company, of every name and nature whatever, to said Hull, for the benefit of said Hull and certain directors and stockholders of said company, who were to unite with him in paying for and purchasing said assets; and said Hull and said company
"With regard to the matters so alleged, the report of the committee finds as follows :
“ The respondent corporation did, July 3d, 1874, sell and convey all its assets and estate, both real and personal, to the respondent Hull. Mr. Hull, at the time of this conveyance, was, as alleged in the petition, a stockholder and one of the eleven directors of the company. He was also its secretary, and had been treasurer up to July 2d, and had also been its general agent in the conduct of its business so long as it was in business. He was also, as alleged in the petition,- well acquainted with the assets, rights, interests, franchises, liabilities and pecuniary condition of the company, and of the, value of the assets, rights and interests bargained and sold to' him. He expected and intended, upon transfer of the. property to him, to form a new association to carry on business with him, and before the purchase was completed had spoken to several persons, and among them to some who were directors of the defendant corporation on that subject, and they had given him encouragement that they would unite with him in forming a new company, the understanding being that the new company should purchase from Mr. Hull the property transferred to him by the oH,d company, at the price Mr. Hull paid for it. The parties to this arrangement and the terms were not definitely settled, and nothing was done binding upon Mr. Hull or upon any others, and no other person than Mr. Hull was legally or equitably interested in the purchase.
“ On the 20th of June, 1874, a protest was received by the secretary and communicated to the company, signed by several stockholders, protesting against the directors selling the company’s property to themselves at $60,000, and the petitioner did, as alleged in his petition, before the sale, cause the proper officers of the company to he reminded of the matters alleged in said petition and informed Mr. Hull of all the matters so alleged and of the petitioner’s right in the
“ The conveyance is not in fact in fraud of the stockholders or of the creditors of the company, nor in prejudice of the rights of stockholders or creditors. The respondents intended to apply the proceeds of the sale to the payment of the company’s debts, not treating the petitioner’s claim as a preferred debt and not admitting it to be a debt at all, but they made what they then believed to be adequate provision for its payment in the event that it should be adjudged a valid demand. Upon the question whether the property was sold at an adequate price it is difficult to form an opinion. The real estate and machinery was unsaleable and could not be said to have any market value. The company was involved in a debt which it must pay or go into bankruptcy; in any event a forced sale was inevitable. The property cost more than double what it sold for. It had been inventoried by the respondent Hull, as late as the preceding April, at $135,000, exclusive of patents. It is the opinion of the committee that its intrinsic value is somewhat greater than $63,000, but that if the sale should be set aside in conformity with the prayer of the petitioner, it could not be again sold for so much money as Mr. Hull has agreed to give for it. Under these circumstances the committee cannot find that the sale was for an inadequate price.”
From the facts reported to the court it is difficult to discover any sufficient reason for asking the aid of a court of equity. The respondent corporation was in the performance of the first duty of a debtor ; it was endeavoring to provide means for the speedy payment of all creditors equally ; and it was judiciously converting its assets into money for that
The petitioner also alleged in his bill that he was a preferred creditor, and that his debt became a first lien on the assets of the corporation after the payment of certain debts existing March 15th, 1869 ; but the finding of the committee is adverse to this claim, and places him in the position of a general creditor, if indeed he is a creditor at all. He has proved no fact which wrould give him the right to impeach the sale to Hull.
A court of equity will not, upon the petition of a general creditor, restrain a corporation from converting its assets into money by a sale thereof to a stockholder, when such sale is not in fact in fraud of the stockholders or of the creditors, nor in prejudice of the rights of either; when no stockholder objects ; and when the sale is made for an adequate price, with the intent to apply the proceeds thereof to the payment of the full amount of the debts of the company, or an equal proportion of every debt.
We advise the Superior Court to dissolve the temporary injunction and dismiss the bill.
In this opinion the other judges concurred.