50 S.E. 650 | N.C. | 1905
Lead Opinion
This is a proceeding under Laws 1901, ch. 2, sec. 73, instituted by the plaintiffs as creditors of the Gold Hill Copper Company to have a receiver appointed to take charge of its assets and apply them under the orders and directions of the court to the payment of its debts. It is alleged in the complaint that the company has suspended its ordinary business for want of funds to carry it on; that attachments have been *179 levied upon its property, and sundry judgments have been (249) docketed against it, some of which are alleged to have been satisfied, though the fact does not appear upon the record; and that owing to the different dates and priorities of the liens and to the mixed character of the company's assets and the contest as to the payment of some of the aforesaid judgments, and generally to the complicated condition of its affairs, and the consequent difficulty of ascertaining the rights and preferences of creditors, it is necessary that a receiver should be appointed to preserve the property and save it from sacrifice by forced sale under executions. The answer denied some of the allegations of the complaint, but it is not necessary at present to do more than make a passing reference to the fact, as it does not affect the matter in dispute. The court appointed a receiver, and he has taken possession of the assets of the company, and, under an order of the court requiring him to do so, he has notified all creditors to come in and prove their claims, to the end that they may be passed upon and scheduled and then reported to the court. Numerous claims were presented and proved, and among others one in behalf of the State of New Jersey for the sum of $12,000 for what is called in its statute "a franchise or annual license fee" due for each of the years 1901, 1902, and 1903, that is, $4,000 annually. The defendant company was incorporated by the State of New Jersey, though it seems to have transacted all of its business in this State, where its assets are situated. A statute of New Jersey requires a corporation, receiving its charter from that State, to pay annually a license fee or franchise tax of a certain per centum on its capital stock, the amount in each case to be ascertained in the manner therein prescribed. It is further provided as follows: "Such tax, when determined, shall be a debt due from such company to the State, for which an action at law may be maintained after the same shall have been in arrears for the period of one month; such tax shall also be a preferred debt in case of insolvency." The receiver refused to (250) allow this claim of the State of New Jersey, upon the ground that "as a matter of law the claim of said State for $12,000 and interest, imposed for taxes upon the Gold Hill Copper Company for the years 1901, 1902, and 1903, is not provable in this jurisdiction." Counsel for the State of New Jersey excepted. This exception came on to be heard by Judge Cooke, who reversed the decision of the receiver in principle and made the following ruling: "The court finds that the State of New Jersey is entitled to prove a claim of $8,000, with interest from the date of this judgment, and it is so ordered and adjudged, and this claim has no priority over other claims proved against this corporation."
The defendant, the Gold Hill Copper Company, and two of its unsecured creditors, James Phillips and Walter G. Newman, excepted to *180 this judgment upon the ground that the claim is not provable in this proceeding, it being a claim of a foreign creditor or nonresident against a foreign or nonresident corporation, and the court has no jurisdiction, as the cause of action did not arise and the subject of the action is not situated in this State, within the meaning of section 194 of The Code, forbidding such actions to be brought in the courts of this State.
The State of New Jersey excepted to the judgment, upon the ground that it was entitled not only to prove its claim and have it paid in this proceeding, but was also entitled to priority in payment out of the assets of the company over all of its creditors, whether holding liens by attachment, judgment, or otherwise, it being by the very terms of the statute a preferred debt.
Having thus excepted, the said parties appealed to this Court, the Copper Company and its two creditors above named uniting in their appeal.
APPEAL OF NEWMAN AND PHILLIPS.
After stating the facts in both appeals: The Copper Company and the two creditors who have appealed contend that the claim of the State of New Jersey is not provable in this suit, as its cause of action did not arise in this State and the subject of its action is not situated here, and they rely on the provision of section 194 of The Code. We do not think that section applies in the way indicated by the appellants. The cause of action in this proceeding is that of the creditors of the Copper Company, and consists not only in the failure of the company to meet its obligations, but in the suspension of its ordinary business, which entitled the creditors to have its assets placed in the hands of a receiver for the purpose of being applied to the payment of its debts. This proceeding is equitable in its nature, and the jurisdiction of the court in respect to the claims of the creditors of the corporation must be determined, not by regarding it as a suit by each one of them for the purpose of recovering his debt, as if he had brought an ordinary civil action wherein the liability would be fixed by judgment and enforced by execution, but the cause of action must be considered as one belonging to the creditors, who have the right under the statute, if not on general principles of equity, to have all the assets of the concern placed in the possession of the court, through its duly appointed officer, to the end that the rights of all parties therein may be ascertained and distribution made accordingly. It has become the settled *181
rule in this country that the assets of an insolvent corporation constitute a trust fund for the payment of its debts, and the remedy of its creditors by action in the nature of a suit in equity, or by what is called a creditor's bill, to have the assets administered for their benefit, is firmly established. Hill v.Lumber Co.,
The ruling of the court that the claim of the State of New Jersey is provable in this case was, in our opinion, correct.
No error.
APPEAL OF THE STATE OF NEW JERSEY.
Addendum
In this appeal the question is presented whether the State of New Jersey is entitled to priority or preference over the other creditors, and especially over the lien creditors, in the payment of the debts of the Copper Company out of its assets which are now in the hands of the receiver. When it was provided by the State of New Jersey that the "annual license fee or franchise tax" should be a preferred debt in case of insolvency, it was evidently the purpose that the words should apply only to such proceedings in insolvency as should be instituted in that State, for we must presume that the Legislature did not intend that the statute should have any force beyond the territorial limits of the State, its operation being restricted to those limits, except in so far as it may be given effect in another State by the law *183
of comity. McLean v. Hardin,
The laws of other governments have no force beyond their territorial limits, and if permitted to operate in other States, it is upon a principle of comity, and only when neither the State nor its citizens would suffer any inconvenience from the application of the foreign law. Dunlap v.Rogers,
The general rule is, beyond question, that one State cannot prescribe a rule of action for another, but each must exercise its sovereign power within its own sphere and without exerting any influence upon the course of procedure or the administration of the law in any other jurisdiction. When the courts of a State give effect to a foreign law, it is by courtesy, or, what we call in the law, comity, and such effect of the law results solely from the exercise of this act of favor, and not from any intrinsic extraterritorial force of the law itself, but because by comity we make it our law. Alvany v. Powell, 55 N.C. at p. 59. Discussing this question, Story in his Conflict of Laws (8 Ed.), sec. 414, says: "If there is in such cases a conflict between our own laws and foreign laws as to the rights of our citizens, and one of them must give way, our own laws ought to prevail. The most convenient and practical rule is that statutable assignments, as to creditors, shall operate intraterritorially only. If our citizens conduct themselves according to our laws in regard to the property of their debtors found within our jurisdiction, it is reasonable that they should reap the fruits of their diligence, and not be sent to a foreign country to receive such a dividend of their debtors' effects as the foreign laws allow. If each government (256) in cases of insolvency should sequester and distribute the funds within its own jurisdiction, the general result would be favorable to *184 the interest of creditors and to the harmony of nations. This is the rule adopted in all cases of administration of the property of deceased persons; and there is no real difference between the principle of those cases and of cases of bankruptcy."
A case very much like ours was presented in Willitts v. Waite,
This Court said by Shepherd, J., in Armstrong v. Best,
The law of comity in its different phases was considered in the following cases: McNeil v. Colquhoon,
There is nothing in the sovereignty of New Jersey as a State which entitles her to any special favor in the consideration of the claim she now presents, or which modifies the general rule of comity so as to confer upon her any greater right or privilege than is possessed by the ordinary suitor in our courts. We will extend to her all possible courtesy in the prosecution of her claim, but we cannot be expected to contravene the settled policy of the State or to sacrifice the interests of our citizens in doing so. Their rights are fixed by the law, which we could not change if we would.
The ruling of the court in this appeal also was correct.
No error.
Cited: Blackwell v. Life Assn.,