64 N.J. Eq. 517 | New York Court of Chancery | 1903
In this case I will advise an order authorizing the receiver to call upon the respondents as stockholders for such an amount of their subscriptions, not exceeding sixty per cent, of the subscriptions made by the individual respondents and William S. Ket'cham, Sr., as may be necessary to pay the debts against the company allowed by the receiver, including the costs and expenses of administration. If these amounts are not agreed upon I will settle them. The receiver will also be authorized to enforce payment of the unpaid subscriptions to this amount, by suit, if necessary, against each of the respondents claimed to be stockholders. The order will be made without prejudice to the rights of any of the respondents to any defence they may have to any action, legal or equitable, which might be brought against them for such alleged stock subscription.
The principal defences set up to the application are—first, that the company never became a corporation de jure, and the corporators never became liable on their subscriptions; second, that it never became a corporation de facto; third, that the agreement to incorporate was abandoned and the subscriptions were canceled by the subscribers; fourth, the statute of limitations; fifth, that the claim against the estate of William S. Ketcham is barred by a decree of the orphans court. All of these defences are, in my judgment, defences which must be set up and considered in an action to recover the subscription, and not on this application. In Dorris, Receiver, v. Sweeney, 60 N. Y. 463 (1875), cited 'by respondents’ counsel, the defence of no corporation was sustained in an action by the receiver to recover the subscription.
In reference to the third question to be settled on this proceeding, viz., the amount of the assessment, it is insisted that the receiver has a right of action or claim against the estate of William S. Ketcham for' the subsequent conversion to his own use of the goods and chattels, which, as the receiver claims, were conveyed to the company in payment of forty per cent, of the subscriptions of Ketcham and his two sons to the capital stock, and that he should exhaust this right of action before an assessment is made. There is, in my judgment, no substantial basis for this contention. The claim is disputed, the receiver has no assets for its prosecution, and could not be required to prosecute in aid of the stockholders, except upon their indemnification against the expenses. Kalmus v. Ballin, 7 Dick. Ch. Rep. 290, 295. In the absence of such indemnification and of the stockholders’ assertion of the validity of the claim, the receiver, for the purpose of the speedy settlement of the estate, as required by the general policy of the Insolvent Corporation law, should be authorized to call for the unpaid subscription, leaving to the stockholders the right, if they desire, to prosecute for their own indemnification hereafter in the receiver’s name, if necessary, any claim the company may have against the estate of Ketcham for this conversion of the goods.
The receiver will therefore be directed to make an assessment, and the form of the order will follow the order in Falk v. Whitman Cigar Co., supra.