145 Ky. 443 | Ky. Ct. App. | 1911
Opinion of the Court by
Reversing.
Section 439 of the Code is as follows:
“After an execution of fieri facias, directed to the county in which the judgment was rendered, or to the county of the defendant’s residence, is returned to the proper officér, either as to the whole or part thereof, in substance, no property found to satisfy the. same, the plaintiff in the execution may institute an equitable action for the discovery of any money, chose in action, equitable or legal interest, and all other property to*444 which, the defendant is entitled, and for subjecting the same to the satisfaction of the judgment; and in such actions persons indebted to the defendant or holding money or property in which he has an interest, or holding evidences or securities for the same, may be also made defendant.”
David F. Bowman brought this suit under this section against William L. Breyfogle, William L. Breyfogle as executor and trustee under the will of Zerelda C. Breyfogle, deceased, John W. Breyfogle and the Peerless Manufacturing Company. He alleged these facts: On June 18,1906, he recovered a judgment in the Jefferson Circuit Court against William L. Breyfogle for $17,-367.60, with interest from that day subject to a credit of $9,052.50, as of April 15, 1897, together with $18.70, his cost in that action; and in April, 1911, he had an execution issued from the clerk’s office of the Jefferson Circuit Court on the judgment directed to the sheriff of Jefferson County and returnable on June 5th, 1911; the execution came to the hands of the shériff on April 22, 1911, and was returned by him on April 25th, 1911, no property found; no part of the judgment has been paid. William L. Breyfogle was and is a member of the firm of Winstandley & Company, composed of William L. Breyfogle and Isaac S. Winstandley, now deceased, and as such was the owner of a three-fifths interest in all the assets of the firm. The firm of Winstandley & Company owned 1,450 shares of the stock of the Peerless Manufacturing Company, a manufacturing corporation duly organized and existing and having its principal office, its books and records, its manufacturing plant, its stock books and all its assets in Louisville, Jefferson County. It pays all its dividends on its capital stock at its office in Louisville. Some of the stock referred to has been transferred by William L. Breyfogle to his wife, Zerelda C. Breyfogle, since deceased, and some to his son, John W. Breyfogle; but these transfers were made wholly without consideration and for the sole purpose of defeating the payment of the plaintiff’s debt. The capital stock of the Peerless Manufacturing Company now standing in the name of William L. Breyfogle, trustee, or William L. Breyfogle, trustee for Zerelda C. Breyfogle, is the property of Winstandley & Company, and three-fifths thereof belongs to William L. Breyfogle. Zerelda C.'Breyfogle died December 27, 1910, a resident of Warren County, New York. Her will was duly admitted to
The circuit court appears to have based his judgment on the case of New Jersey Sheep Company v. Traders Deposit Bank, 104 Ky., 90, in which it was held that a court of this State has no jurisdiction to subject to the plaintiff’s debt stock held by the defendant in a foreign corporation doing business in this State through local agents. That case is in accord with th.e great weight of authority. (See 2 Cook on Corporations, section 485, 5 Thompson on Corporations, section 5832, 19 Cyc., 1338, and cases cited.) But this case differs from that and the other cases cited in the text books above referred to in this, that here the corporation which is made a defendant to the action is itself the holder of 250 shares of the stock which have been transferred to it without consideration and for the fraudulent purpose of defeating the collection of the plaintiff’s debt. . The corporation is made a defendant to the action. The purpose of the action is to subject these 250 shares of stock to the plaintiff’s debt. The case would not be different if it was charged that Breyfogle had turned over to the corporation any other real or personal property in fraud of the plaintiff’s rights. The fraudulent grantee being before the court by actual process, the fraudulent grantor may be brought in by constructive service, and the fraudulent grantee may be required by the court to give up the property thus fraudulently acquired. In the case referred to the New Jersey Sheep Company was simply summoned as a garnishee; but in this case the corporation is a defendant to the action and the purpose of the action is to subject to the plaintiff’s demand the property which is in the hands of the corporation and held in its own name. In Pittsburg, &c., R. R. Co. v. Bartels, 108 Ky., 216, we held that a court in this State has jurisdiction to subject by garnishment a debt due to a non-resident defendant by a non-resident corporation doing business in this State. In Goodwin v. Clayton, 107 Am. St. Rep., 479, practically the same view was taken by the Supreme Court of North Carolina. In that case a foreign corporation doing business there was garnisheed on account of salary due to one of its salesmen on whom process was served by publication, who was a resident of Virginia, and whose services were performed in that State. In Simpson v. Jersey City Contracting Company,
“No corporation organized outside of the limits of this State shall be allowed to transact business within the State on more favorable conditions than are prescribed by law to similar corporations organized under the laws of this Commonwealth.”
If stock in a domestic corporation was transferred to the corporation by a. debtor in fraud of his creditors, it might be reached by a proceeding of this sort in an action against him and the corporation. The foreign corporation must do business within the State on conditions no more favorable than domestic corporations, and when it comes into the State and does business here, it makes itself subject to the laws of the State just as a domestic corporation. It inay be required to give up property improperly acquired just as a domestic corporation may be required to do. We are, therefore, of opinion that as to the 250 shares of .stock held by the corporation, the circuit court erred in holding the plea to the jurisdiction good, and that to this extent the plea should have been held insufficient.
It is insisted for Bowman that he had a right to attach the dividends on the stock though he could not reach the other shares of Stock; that the dividends when once declared are but a debt due from the corporation to the stockholder, and like any other debt, may be subjected by garnishment. It is insisted that any interest in property is subject to attachment under section 439 of the Code above quoted. It. is true that any chose in action may be attached under that section or any property „ right, but there is no right to a dividend unless it is declared. It is not a case of a debt not due but there is no debt at all. The dividend has no existence until it is declared, and there is nothing for an attachment to reach in a case like this, so far as the prospective dividends are concerned.
“The words ‘residence,’ ‘reside,’ mean, with reference to a corporation, its chief office or place of business.”
While the Peerless Manufacturing Company is incorporated in Delaware, it has its principal office, its books, its manufacturing plant, its stock books and all its assets in Louisville, Kentucky, and pays all its dividends on its capital stock there. It is, therefore, not a non-resident of the State within the meaning of the Code, but is a resident of Jefferson County. While our statutes do not declare it a domestic corporation as was done in Tennessee, they dp provide that its residence is at its chief office or place of business, and when a corporation has its chief office in this State and all its assets in this State, transacts all its business relating to the stock here, and pays its dividends here, it is difficult to see upon what prim
The rule is that stock owned by a non-resident debtor in a domestic corporation may be attached where the statutes allow the attachment of the property of an nonresident; and makes the shares of stock subject to attachment, and in such a case it is immaterial that the certificates of stock are not within the jurisdiction of the court. (National Bank v. Lake Shore R. R. Co., 21 Ohio St., 221; C. & O. Ry. Co. v. Payne, 29 Grat., 509; Young v. South Tredeger Iron Co., 85 Tenn., 189.) As the stock books of this corporation are kept at Louisville, the stock is issued there, the dividends are paid there, and the corporation under the statute has established its residence there, the stock of this company has a situs within the State as fully as the stock of a domestic corporation. In New Jersey Sheep Company v. Traders Deposit Bank, 104 Ky., 90, the corporation was only doing business in the State by local agents. It had not established its residence here, and so far as we have seen all the cases holding as in that case were based on similar facts. In Daniel v. Gold Hill Mining Co., 28 Wash., 411, the stock had been sold at a sheriff’s sale, and the opinion is rested on the ground that the sheriff was without authority to sell the stock. This is a proceeding in equity under a statute to enforce the satisfaction of a judgment. It was the plain purpose of the statute to
Judgment reversed and cause remanded for further proceedings consistent herewith.