Hunt v. Columbian Ins.

| Me. | Jul 1, 1867

Barrows, J.

In both these cases the plaintiffs are resident citizens of this State, as are also the parties who are summoned as trustees of the principal defendant, a corporation located, at the time of the commencement of the action, in the city of New York, and doing an extensive business in the taking of marine risks here, by means of its agents.

In the first named case, which was entered at the April term, 1866, the trustees appeared at the return term and filed their disclosure, admitting a considerable amount of funds in their hands, which they said was claimed by the receivers of the insurance company; and the defendant corporation also appeared by respectable and well known counsel, members of this bar, and there was a continuance to the October term, previous to which the principal defendant regularly filed specifications of defence, and the cause was thereupon continued from term to term to the April term, 1867, when the principal defendant was defaulted, and the receivers appeared and filed their claim to the moneys oí the company in the hands of the trustees, put in copies of the proceedings in the New York Supreme Court, showing a decree of dissolution of the Columbian Insurance Company and the appointment of receivers, Feb. 6, 1866, within a month after the attachment of the funds of the company in the hands of these trustees. The plaintiff thereupon pud in certain extracts from the statutes of the State of New York, and the case was reported to this Court, upon the stipulation that the trustees should be charged for $2382,30, less their costs, unless, upon the matters appearing in the report, the claim of the receivers should prevail, or unless, by reason of the proceedings in the New York Court, the plaintiffs are precluded from taking judgment in this suit against the principal defendant.

I. As to the effect of the judgment in New York upon the status of the corporation, which is the principal defendant here, and consequently upon the right of the plaintiff to pursue this action to final judgment — it is plain, that we should have had a materially different question presented for our decision, so far as this point is concerned, if the effect in New York were what is claimed for it here.

But certainly, such judgment cannot have any greater force or effect here, upon the condition and existence of the corporation, than it has by law in the State where it is rendered. The utmost that can be required in this respect is that the records of judicial proceedings there, duly authenticated, shall have such faith and credit given to them here as they have by law or usage in the Courts of the State from whence they are taken. Such is the tenor of the Act of Congress, passed May 26, 1790, § 1, in pursuance of the power given by the first section of the fourth article of the constitution of the United States.

To substantiate the position that the plaintiff cannot take judgment in this suit against the Columbian Insurance Company, whose credits were duly attached in the hands of the trustees, and who appeared and answered, and filed their specifications of defence, and subsequently submitted to a default, it must be shown that the corporation is not merely prohibited from the customary exercise of its corporate functions, but is actually extinct. It is not merely a perpetual paralysis but an unqualified dissolution, alone, that can defeat the plaintiff’s right to a judgment. If, by law or usage in the Courts of the State of New York, where the judgment was renderéd, the corporation may still be a party of record, and suits maintained or defended in its name, though its affairs there are under the guardianship of the servants of the Court, it must be considered as having a qualified existence so long as judgments can be rendered for or against it in the Courts of that State.

Looking now to the extracts from the laws of New York, which are made part of the case, we find many provisions which seem to recognize the existence of a corporation, in favor of and against which suits may be prosecuted and judgments rendered after the passage of the decree for what must be deemed only a quasi dissolution, which is entered at an early stage of the proceedings, in order to prepare the way for certain proceedings against the stockholders, which can only be had after such decree. But, notwithstanding such decree, it seems judgment may'still be rendered in pending suits for or against the corporation, as well as in suits in favor of or against the receivers appointed by the Court; in certain cases moneys are to be retained in the hands of the receivers, to be applied according to the event of the suit, or otherwise distributed on a second or third dividend; (Revised Code of N. Y., vol. 2, p. 492, §§ 78 & 84,) and finally, (vol. 3, p. 674, c. 295,) by § 4, it appears that " the Court in which any suit or proceeding against a corporation which shall have been dissolved by the decree of the Court of Chancery, or by the expiration of its charter or otherwise, shall be pending at the time of such dissolution, shall have power, on the application of either party thereto, to make an order for the continuance of such suit or proceeding, and the same may be thereafter continued until a final judgment or decree shall be had therein, which shall have the like effect upon the rights of the parties as if such corporation had not been dissolved.”

The dissolution of the Frankfort Bank, which was under consideration in the cases of Merrill v. Suffolk Bank, 31 Maine, 57, and Rankin v. Sherwood, 33 Maine, 509, (cited for claimants,) reaffirming Reed v. Frankfort Bank, 23 Maine, 318, and Whitman v. Cox, 26 Maine, 335, was effected by an Act of the Legislature, passed March 29, 1841, repealing the charter, and followed, April 16, 1841, by an additional Act requiring all creditors to present their claims to the receivers, and make proof of them on or before the 1st day of July, 1842, on pain of being forever barred. The corporation in that case was utterly extinguished ; a different remedy was provided for creditors, and it was rightly held throughout the subsequent litigation, that judgments rendered against the bank, after such a dissolution, were erroneous.

In Leathers v. Shipbuilders’ Bank, 40 Maine, 386, in place of such provisions as we have above incited from the statutes of New York, we find, assigned as one of the grounds of the decision, the statute of March 16, 1855, expressly forbidding the maintenance of any action against a bank after the appointment of receivers.

It is manifest that these decisions throw little light upon the effect produced upon the status of the Columbian Insurance Company by the decree of the Court in New York. •

Looking at the statutes of New York, to ascertain the effect which it has by law and usage in the Courts of that State, we find no difficulty in concluding that there is nothing in those proceedings to prevent the plaintiff from taking judgment in this suit against the principal defendant, as a corporation still having a qualified existence, though permanently disabled. Like the apocalyptic church in Sardis, when its existence was recognized and it was addressed in the language of reproof by the apostle, though in some sort it may be said to bo dead, " it has a name to live;” and, for the furtherance of justice, it is best to " strengthen the things that remain that are ready to die.”

II. But hereupon, it is argued for the claimants, with not a little plausibility, that if the corporation is not completely defunct, so that no judgment can be rendered against it, it is kept alive by allowing the remedial laws of New York to operate here, and that, if they operate here for one purpose, they do for all; if their effect is to give authority to prosecute cases against the corporation, it must be through the receivers, and if the receivers as such can be prosecuted here, they must be entitled to the funds in the hands of the trustees, the Act that created them giving them title to the funds. At the first glance this seems but reasonable, but the fallacy creeps in with the assumption that it is only by giving a positive force and operation to the laws of New York here, that the action can be maintained against the principal defendant. Not so. The problem stands thus ; — Given a corporation actually transacting business in this State, appearing and answering generally to this'suit, — the question which we have just been considering is, whether the judgment introduced by the claimants had the effect to annihilate the corporation there. Finding that it'still has sufficient vitality by law and usage in the Courts of New York to be capable of being a party to a judgment there, we have only to answer that question in the negative, and we are left with the presumption arising from the proceedings in our own Court in this suit unimpaired. Another, and, as it seems to us, notwithstanding the ingenious argument of the claimant’s counsel, a totally distinct question is now presented.

The plaintiff, by the service of his trustee process upon the debtor of the principal defendant, has obtained a lien upon the debt, and upon the disclosure is entitled to an adjudication in his favor against the parties summoned as trustees of the Columbian Insurance Company, unless the appointment of receivers in New York has transferred to them the right to control, not only the property of the defendant corporation there situated, but also that which is within our own jurisdiction, in such a manner as to defeat the plaintiff’s previously acquired lien. That an actually subsisting lien, regularly acquired by proceedings in a court of competent jurisdiction, cannot be thus defeated seems too plain to require argument or elucidation, and even the claimant’s counsel prudently declines any futile attempt to support the claim of the receivers, except in the indirect mode before adverted to. The receivers, who assert this claim here, are merely the servants of the Court in New York, having legal authority coextensive only with the jurisdiction of the Court by whom they were appointed. Upon principles of comity, often recognized and always acted on, except when they come in conflict with paramount rights of suitors in our Courts, they might be admitted here to protect the interests and enforce the claims of the corporation, of whose affairs they are the legal guardians thei’e. But comity does not require us to permit the exercise of such privileges to the detriment of our own citizens who are pursuing appropriate legal remedies in this Court.

Chancellor Kent declares that " it may now be considered as part of the settled jurisprudence of this country, that personal property, as against creditors, has locality, and the lex loci rei sitae prevails over the law of the domicil, with regard to the rule of preferences in the case of insolvent’s estates. 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.” See Kent’s Commentaries, 4th ed., p. 406, where the strong current of American authorities sustaining the doctrine, that even " a prior assignment in bankruptcy, under a foreign law, will not be permitted to prevail against a subsequent attachment (by an American creditor) of the bankrupt’s effects found here,” is passed in review, and cases arising in the Courts of the different States and of the United States are cited to show that " our Courts will not subject our citizens to the inconvenience of seeking their dividends abroad, when they have the means to satisfy them under their owm control.”

If an assignment by the creditor himself, in conformity with the laws of another State, or a transfer to assignees in the regular course of foreign proceedings in bankruptcy, cannot avail to prevent a creditor here from pursuing his remedy against property found within this jurisdiction and subsequently attached, there is plainly no ground whatever for the claim that a prior attachment shall be vacated at the instance of receivers appointed in New York, upon summa,.ry proceedings like those in the record before us in this case. Such an excess of comity could neither be expected nor desired.

The view which we have taken of the points raised in the case first abovenamed, enables us to dispose of both cases, without adverting to the particulars wherein the disclosures filed by the trustees in Chase’s suit differ from the others. The same result must necessarily follow in the second case, and it is unnecessary to give any opinion upon the points raised and argued by counsel therein, as distinguished from the case of Hunt against the same defendants.

Holding, as we do, that the proceedings of the Court in New York did not operate an extinction of the defendant corporation, and cannot prevent the plaintiff from proceeding to judgment against it, in a suit commenced here before those proceedings were instituted, and that the claim of the receivers appointed there cannot prevail to defeat the lien previous^ created by the service of the writ here, the proper entry in both cases will be

Trustees charged on disclosure for sum indicated in report.

Judgment for plaintiff.^*

Appleton, C. J., Kent, Walton, Daneorth, and Taplev, JJ., concurred.

* See Boston Iron Co. v. Boston Locomotive Works & Trustees, 51 Maine, 584.—Reporter.