In re Tidewater Coal Exchange

274 F. 1008 | S.D.N.Y. | 1921

IJvARNFj) HAND, District Judge

(after stating the facts as above). [1] Both parties approach this question from a mistaken point of. view, in my judgment. They seem to suppose that an association must be an entity, recognized by the law as a legal person, in order to fall within the phrase “unincorporated company.” This is not in the least necessary, and if it were, I should find my jurisdiction extremely doubtful at best. “Associations” in our law have always had a tenuous and ambiguous status. Even partnerships, which are uniformly treated as persons in the civil law, remain with us composed of the separate partners, who are only co-owners of the firm property, and joint obligors of the firm debts. Nor has the Bankruptcy Act under the somewhat blind provisions of section 5g succeeded, in this respect in shaking the extreme conservation of our law. Francis v. McNeal, 228 U. S. 695, 33 Sup. Ct. 701, 57 L. Ed. 1029, L. R. A. 1915E, 706. To the creation of a person vested with rights and-bound by obligations, there is always necessary, so far as I know, some fiat of the state, and such procedural changes as those provided by sections 1919-1922 of the New York Code of Civil Procedure have not done more than change the method by which the joint property of the members may be reached. Even for that purpose there is no integration of the liabilities into a single corporate obligation, but the plaintiff must prove that all the members are liable. McCabe v. Goodfellow, 133 N. Y. 89, 30 N. E. 728, 17 L. R. A. 204.

But the relations between the members are one thing, and means of winding up the joint venture another. It needs no change in the legal relations between the members — internally among themselves, or collectively against outsiders — to give a court power to take over the joint assets, both chattels and choses in action, and finally to dissolve the association. Nor would that be outside the scope of the bankruptcy section of the Constitution if Congress chose to do it. Dissolution proceedings of such associations have been undertaken before this by courts of equity, either as trusts or partnerships, or without any explicit ground. Burke v. Roper, 79 Ala. 138; Henry v. Jackson, 37 Vt. 431; Hodgson v. Baldwin, 65 Ill. 532; Re Printers, etc., Soc. (1899) 2 Ch. Div. 184. If section 4b of the Bankruptcy Act means that such associations shall be adjudicated, there is no objection to taking over the whole tangled congeries of rights into this court, transferring them into the hands of a trustee, through him collecting such claims as the memhers may have as joint obligees, and distributing the whole amount in accordance with the terms of the fundamental agreement of organization. And there is a great procedural advantage in doing so.

It cannot be reasonably doubted that by the words “unincorporated company” Congress did mean to include some sorts of such associations, and the only cases have so held which have dealt with the question at all. Re Order of Sparta (D. C.) 238 Fed. 437; Id., 242 Fed. 235, 155 C. C. A. 75 (C. C. A. 3d); Re Associated Trust (D. C.) 222 Fed. 1012; Re Seaboard Fire Underwriters (D. C.) 137 Fed. 987. No case has been or is likely to be close to another, but the only matter which has been debated, and, as I understand it, the only one here in debate, is whether the phrase “unincorporated company” is to be applied generally to all such associations, or whether the choice of the word “company” indicates a more restricted purpose, and if’ so, what that is. While I am struck with the force of the contrast between the unlimited use of that phrase and the specific limitations added to the word “corporation” (Cleage v. Laidley, 149 Fed. 346, 348, 79 C. C. A. 284), it seems to me unnecessary in the case at bar to commit myself to any general theory in respect of its scope. In this regard it is wiser to follow the admonition of Re Order of Sparta, supra, and decide as little as possible.

In the case at bar the Tidewater Coal Exchange, if it was not a commercial, was certainly a business, association. The objectors assume that there cannot be such an association unless it is organized for the direct profit of the members themselves, but surely this is a harsh and unwarranted limitation to impose upon the word. The purposes of this association were to speed the carriage of coal, to avoid impounding so many cars, and to prevent delays at the wharves. It is true that no dividends would be declared, but these results were none the less commercial advantages which benefited the members individually, as well as the community at large. If anything turns on the choice of the word “company,” and even if the limitations imposed upon the succeeding word “corporation” apply to “unincorporated company,” this association in any view falls within that phrase.

Nor can I see any distinction due to the fact that the association was formed under pressure of war. That mere fact did not change the legal results of men’s conduct, and motives are in any case irrelevant. These persons, whether individuals, firms, or corporations, formed a common purpose, made it articulate in words, and appointed agents to secure its execution. They were in every sense a corporation except for the benediction of a state, which they eventually got, but which did not change their purpose or the relations they meant to establish. It was that common purpose so defined, and so delegated for fulfillment, which created an association, and continued it until the purpose was itself completed. So far as I can see, it is immaterial what determined their decision.

The objection to the jurisdiction of this court seems to me, therefore, ill taken, and is overruled. I understand tha,t this was the only point submitted at the hearing, and therefore I will not direct an adjudication until the parties have been heard again.

[2] The status of the objectors is indefinite, and if the point were pressed I should suppose that they could not be heard. Certainly that is the case if they are debtors of the Exchange. However, I shall assume, as no such point was raised, that they have the status of creditors, and I dispose of the case on that theory.

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