22 F. 36 | U.S. Circuit Court for the District of Eastern Missouri | 1884
As the allegations are necessarily taken as true on the demurrers submitted, the question may be briefly stated: A former railroad corporation, being largely indebted, transferred to another corporation all of its assets. The latter corporation proceeded with the contemplated and unfinished work, taking possession of all the railroad bed, etc., of the prior corporation, with notice of the respondent’s demand, not then reduced to judgment. It subsequently issued a mortgage to secure its bonds, and the plaintiff filed his bill to foreclose the same, with an intervening receiver, duly appointed. The bill makes the respondent a defendant, and he has answered, setting up his demand, now reduced to judgment, and by a cross-bill, praying for a decree establishing his demand as a lien prior in right to the mortgagee, as against so much of the property of the old corporation as is included in the mortgage by the new corporation, etc.; that a transfer of the assets of one corporation to another, whereby, through a mere change of name, an attempt is made to defraud creditors, or which would operate a fraud, cannot be upheld against
If is averred that the mortgagee had notice of the existence of the ror.pondoiif’s demand when tho mortgage was accepted, although said demand was not reduced to judgment and a decree thereon had. Tho caso is somewhat anomalous. Cinder tho statute of Missouri, corporations aro readily formed, and, as heretofore stated, often formed lor the mero purpose of enabling an old corporation or private parties to escape liabilities, and at the sa-mo time transfer all assets to a new corporation; thus practically, by a more change of name, defeat creditors and violate obligations. Courts cut through all such contrivances when designed to defeat honest claims, or when they practically look to that end, especially where the stockholders and officers are substantially the same. It has been heretofore held in tin's case that the new corporation was charged with respondent’s demand. Are the subsequent bondholders, pending the judicial determination of plaintiff’s rights, bound by the outcome ? It is averred that they had notice thereof. If that be true, as is confessed, then they took their bonds subject to respondent’s rights, and it may be irrespective of notice under the facts charged. In the answer and cross-bill there are allegations that the amount of unpaid stock would be sufficient, if exacted, to meet all demands, the theory being that the mortgagee and receiver should exhaust the remedies against delinquent stockholders before enforcing the mortgage. That proposition is untenable. The mortgage covers the property named therein, on which, for security, the mortgagee relies, but it does not convey any right for delinquent stock. His demand is solely against tho property specifically mortgaged. Hence, so much of the answer and cross-bill as pertains to delinquent stock is irrelevant to the present issue. Tho respondent may resort thereto, if needed, as a judgment creditor, with which controversy the plaintiff in this suit has nothing to do.
The doctrines laid down in the following cases establish respondent’s claim to priority against the specific property transferred; Thomas v. Railroad Co. 101 U. S. 82; Hibernia Ins. Co. v. St. Louis & N. O. Transp. Co. 13 Fed. Rep. 516; Harrison v. Union Pacific Ry. Co. 13 Fed. Rep. 522; Cass v. Manchester Co. 9 Fed. Rep. 640; Brum v. Merchants’ Co. 16 Fed. Rep. 140; Abbot v. American Co. 33 Barb. 578. There is also another and ■ controlling proposition. The old corporation was created by special act of the general assembly in 1857. Its provisions were minute and specific in many essential
The demurrers are overruled.