161 Mich. 415 | Mich. | 1910
Lead Opinion
I am of the opinion that the circuit judge reached a correct conclusion in this case. The maintenance of the plaintiff’s suit depends upon whether or not the provisions of section 8534, 3 Comp. Laws, apply to proceedings for the voluntary dissolution of a corporation under chapter 300 thereof. I think that section does not apply. It is a familiar rule of construction that—
“When, after an enumeration, the statute employs some general term to embrace other cases, the other- cases must be understood to be cases of the same general character, sort, or kind with those named.” Brooks v. Cook, 44 Mich. 617 (7 N. W. 216, 38 Am. Rep. 282).
See, also, Macumber v. Booming Co., 52 Mich. 195 (17 N. W. 806); Roberts v. City of Detroit, 102 Mich. 64 (60 N. W. 450, 27 L. R. A. 572); People v. Shurly, 124 Mich. 645 (83 N. W. 595). In accordance with this rule of construction, the words “or otherwise” in the provision of section 8534 that “all corporations whose charters shall expire by their own limitation, or shall be annulled by forfeiture or otherwise,” etc., should be referred to termination of the corporate existence by circumstances or acts not dependent upon the voluntary action of the corporation and not to voluntary proceedings in behalf of the corporation. Heap v. Manufacturing Co., 97 Mich. 147 (56 N. W. 349). In that case it was held that a forfeiture of the charter of a manufacturing corporation could only be adjudged at the suit of the State through its attorney general. The provisions of section 8534 are reasonable and beneficial as applied to a corporation whose charter has expired or whose charter has been adjudged forfeited at the suit of the attorney general. The provisions of the section, if sought to be applied to proceedings under chapter 300, would be in conflict with the plain provisions of the chapter and introduce great eonfu
“All the subsequent proceedings go upon the basis that there is no longer any corporation, and they are intended to secure the collection and distribution of the assets in complete analogy to proceedings concerning the estates of deceased persons and concerning insolvent estates. The receivers are put by two different sections on the footing of trustees of insolvents, and it is the insolvent law that gives the rule concerning references which are to be had under ‘the same power’ and with the like effect.” Cady v. Manufacturing Co., 48 Mich. 133 (11 N. W. 839).
Furthermore, the provisions of chapter 300 relative to the voluntary dissolution of corporations were enacted later in point of time than the three-year clause, which “ was adopted when all corporations were created by special charter and when no power had been reserved to repeal any charter, except for cause.” Bewick v. Alpena Harbor Co., 39 Mich. 700. Sections 10886-10889, appear to me to support my conclusion, since these provisions are unnecessary so far as corporate litigation is concerned, if section 8534 applies. That section provides:
“All corporations whose charters shall expire by their own limitation, or shall be annulled by forfeiture or otherwise, shall nevertheless continue to be bodies corporate, for the term of three years after the time when they would have been so dissolved, for the purpose of prosecuting and defending suits by or against them, and of enabling them gradually to settle and close their concerns, to dispose of and convey their property, and to divide their capital stock; but not for the purpose of continuing the business for which such corporations have been or may be established.”
The section contemplates the existence of the company for the purpose of gradually winding up its affairs with all the powers it had prior to the annulment of its charter, except those relating to the continuance of the business.
“Upon the coming in of the report of the master, if it shall appear to the court that such corporation is insolvent, or that for any reason a dissolution thereof will be beneficial to the stockholders, and not injurious to the public interest, a decree shall be entered, dissolving such corporation, and appointing one or more receivers of its estate and effects; and such corporation shall thereupon be dissolved and shall cease.”
By Act No. 96, Pub. Acts 1905, section 10862 was so amended as to confer upon the receivers power to continue the business of the corporation “ for a period not exceeding sixteen months and to sell the property and assets of such corporation at private sale in the usual course of its business,” etc. The corporation cannot cease and be in existence at the same time. It cannot have the right to prosecute and defend suits itself when the only provisions in this regard in chapter 300 require that pending suits must be conducted by the receivers, although they may use their own names or the name of the corporation, and also that new suits must be conducted by the receiver in his own name or the name of the corporation. In either case it is the receiver that gives vitality to the prosecution or defense, whether he uses his own or the corporate name. As Mr. Justice Campbell remarked, the corporation in relation to the receiver occupies the position of a dead person to his executor. The shadow of the name alone remains. Section 10889 is not in conflict with section 10859, and should be construed in harmony with it. The fact that the court in which a suit is pending against the corporation may make an order for its continuance until final judgment affords no justification for wiping out the provision that after the appointment of a receiver the corporation “ shall cease.” Section 10865 indicates, as do all of the other essential sections, that the corporation does not have control of its defense. It provides that, after the filing of the petition for a dissolution,—
*420 “All judgments confessed by such corporation after that time, shall be absolutely void as against the receivers who may be appointed on such petition, and as against the creditors of such corporation.”
As the receivers become vested with “all the estate, real and personal, of such corporation,” how is the corporation to defend itself ? Manifestly, I think, through the receiver, who has its assets, and therefore the means of making a defense, and he will conduct the defense just as he may prosecute the suit of the corporation under section 10886 in the name of the corporation. Again, the appellant is not claiming the right to prosecute to final judgment a suit pending, against the receiver, at the time of its dissolution, for which provision is made by section 10889, but to institute an entirely new proceeding against the corporation after the receiver has been appointed, and he has presented his claim against the estate in his hands. And, if he may do this, he and all the other creditors may wait until the estate has been settled and the receiver discharged, provided the three years have not elapsed. No one, I think, would have the hardihood to contend that the corporation could continue after the appointment of the receiver “gradually to settle and close their concerns, to dispose of and convey their property, and to divide their capital stock.”
I am also of the opinion that the receiver has full power to reach all assets of the dissolved corporation which could be reached by any creditor, and that such assets ought to be disclosed to such receiver by any creditor who has knowledge of them, for the benefit of all the creditors. 3 Comp. Laws, § 10866; Osgood v. Laytin, 48 Barb. (N. Y.) 463; 22 Enc. Pl. & Prac. 1286; Attorney General v. Insurance Co., 77 N. Y. 272; American Steel & Wire Co. v. Eddy, 130 Mich. 266 (89 N. W. 952).
The judgment is affirmed, with costs to defendant.
Dissenting Opinion
(dissenting). Plaintiff brought assumpsit against defendant to recover a judgment on four certain promissory notes, amounting, without interest, to $2,666.58, executed by defendant to certain parties and duly indorsed to plaintiff. Defendant was a Michigan corporation, and the defense .interposed was that, under and by virtue of the provisions of chapter 300 of the Compiled Laws of 1897, the defendant corporation by its directors took proceedings to be dissolved, and on May 6, 1905, a decree was entered by the circuit court for Ingham county, in chancery, dissolving the corporation, and appointing the Detroit Trust Company permanent receiver. These notes were presented during the course of these proceedings and the claim allowed, and plaintiff subsequently participated in dividends paid, to the amount of 20 per cent, of the claim. This suit was begun after said claim was filed and before any dividends were paid. The validity of the notes is not in dispute. The court held that by reason of the proceedings had under chapter 300, 3 Comp. Laws, the suit could not be maintained and rendered judgment in favor of defendant. Plaintiff brings error.
The errors assigned are upon the holdings of the court in deciding the case, as expressed in the opinion, which is made a part of the record, and which reads as follows:
“The facts in this case are not in dispute. The defendant was a domestic manufacturing corporation, and on May 6,1905, this court in a proceeding under chapter 300, 3 Comp. Laws, entered a decree dissolving the corporation and appointed a receiver under the statute to wind up its affairs. The plaintiff at the time the decree was made held the promissory notes set up in plaintiff’s declaration, and there was due upon such promissory notes from the said E. Bement’s Sons to said plaintiff the amount of such notes, with interest thereon. The plaintiff as such creditor presented his claim to the receiver, which claim was allowed at the amount of said notes, with interest thereon, and he has participated in the declaration of dividends paid creditors, receiving $266.66 on October 24, 1907, and $266.66 on January 8, 1908. August 13, 1907, plaintiff*422 commenced this suit against E. Bement’s Sons as though it had not been dissolved, and now asks judgment against it for the amount due him. The suit was commenced by-declaration, and service was made on Arthur O. Bement, president of the corporation. Can this suit be maintained ? It is claimed by plaintiff that section 8534, 3 Comp. Laws, gives him the right to bring this suit. In this I am of the ’ opinion he is mistaken. If this statute gives him the right to sue the corporation within three years after the court’s decree dissolving it, then the rest of the same section of the statute applies, and the corporation can bring suits, and, for the purpose of enabling it to gradually settle and close its concerns and dispose of and convey its property, the corporation itself continues after the decree dissolving it and the appointment of a receiver. If the officers of the corporation after the appointment of the permanent receiver upon the order of dissolution had attempted to do any of the things mentioned in section 8534, they would have been made to feel the heavy hand of the court, and have been punished for interference with the power of the court under chapter 300. The decree dissolving the corporation ended its existence and never since that decree have its former officers had power to act for or in any way manage the estate left by such defunct corporation. A reading of chapter 300 so clearly indicates that no such suit as this can be maintained that no other authority for refusing judgment need be cited. Counsel for defendant, however, does cite other authority, and the case of Adams Cotton Mills Co. v. Dimmick, 96 Ala. 238 (11 South. 428, 17 L. R. A. 375), was so near in principle like this that the reasoning of the court in that case might well be adopted as the opinion in this case. Chapter 300, 3 Comp. Laws, being the law of Michigan when plaintiff commenced his dealings with the corporation, he cannot now be heard to say that the provisions of this law impair the obligations of the contracts of the corporation. Contracts are usually made having in mind existing law, and, as it must be understood that the provisions of law may be invoked by either party, such provisions, when invoked, do not fall within the prohibition of the Constitution against impairing the obligation of contracts. Section 8534, 3 Comp. Laws, does not permit this suit to be brought. Chapter 300, 3 Comp. Laws, to be effective, prohibits such a suit as this. Judgment for defendant.”
The question involved in this case is whether suit may
“All corporations whose charters shall expire by limitation, or shall be annulled by forfeiture or otherwise, shall nevertheless continue to be bodies corporate, for the term of three years after the time when they would have been so dissolved, for the purpose of prosecuting and defending suits by or against them, and of enabling them gradually to settle and close their concerns, to dispose of and convey their property, and to divide their capital stock; but not for the purpose of continuing the business for which such corporations have been or may be established.”
The entire section has been quoted for the reason that the argument has been presented that, if applicable at all to such cases, the entire section is in force. The section quoted is one of the general provisions relative to corporations, and will be held to control in the case at bar unless the provisions of chapter 300, supra, ave so repugnant to its application that we must hold that it is repealed by implication as far as corporations which have been dissolved- by virtue of such chapter are concerned. The provisions of this section relative to the time within which suits by or against corporations whose charters have expired or been annulled by forfeiture or otherwise must be commenced, have been included in our statutes since 1838. A history of it is given at length in Bewick v. Alpena Harbor Co., 39 Mich. 706-708; and, although the question now before the court was not involved, the decision in that case, and in other cases, in which this three-year term has been discussed cannot be construed as indicating that it would not apply to voluntary.dissolutions. See Bewick v. Alpena Harbor Co., 39 Mich. 700; Empire Manfg. Co. v. Stuart, 46 Mich. 484 (9 N. W. 527); Montgomery v. Merrill, 18 Mich. 338. In chapter
It is urged repeatedly that, after such dissolution, a corporation is dead, and all rights to sue are therefore cut off, and creditors cannot recover judgment against a corporation, although debts are not paid in full. Such construction can be founded upon nothing except the theory that chapter 300 is an insolvency law. No court has ever so held. To do so would open the door to the grossest fraud upon creditors, and would be contrary to abundant authority which holds that all State insolvency laws are suspended while a Federal bankruptcy law is in force. Sturges v. Crowninshield, 4 Wheat. (U. S.) 122; Boese v. King, 108 U. S. 379 (2 Sup. Ct. 765). It is not contended that chapter 300 is without any effect, but invalid only in so far as it operates to discharge a corporation for future liability to creditors. This was held in the case of Boese v. King, supra, as to creditors who came in under an assignment and participated in a distribution of assets. The construction contended for by defendant would apply to all the creditors in any ease where the assets of a corporation were insufficient to pay creditors in full. It cannot be that such a construction can be founded either upon sound reason or authority. The following authorities have followed the Federal decisions, and have held that insolvency laws were suspended and not in operation, although no proceedings in bankruptcy were instituted:
Upon another ground in this case it would seem that plaintiff is entitled to be permitted to pursue his remedy within the time limited by section 8534, and that is that plaintiff as a judgment creditor may reach assets which a statutory receiver appointed under chapter 300 is not able to reach; i. e., to recover from individual stockholders of defendant corporation assets distributed as dividends while the capital stock was impaired. The powers given to receivers appointed under chapter 300 and their duties and obligations are the same as are given and imposed by law on trustees of insolvent debtors. If the insolvent corporation in this case could not question the matter of unlawful dividends paid its stockholders, by what principle of law can its voluntary assignee or trustee do so? This court has held that he could not attack a chattel mortgage transfer of his assignor; that he did not represent the creditors in such a manner as to entitle him to do so; that creditors could raise the question only in proceedings brought to enforce their claims ( Wakeman v. Barrows, 41 Mich. 363 [2 N. W. 50]); and that none but a judgment creditor can attack a transfer on the ground that it is fraudulent as to creditors (Millar v. Babcock, 29 Mich. 526). It is held that claims for dividends unlawfully declared belong to creditors, and not to the receiver. Butterworth v. O’Brien, 39 Barb. (N. Y.) 192; Farnsworth v. Wood, 91 N. Y. 308.
Counsel for defendant urges that a careful examination of these New York cases shows that they are not applica
“This statute provides a new procedure, permitting one who has exhausted his remedy against the corporation (if not others) to sue the stockholder in an action at law. It is contended that this cannot have been contemplated, and that the collection should have been made by an assignee for the benefit of all creditors. We have no doubt that a court of equity, under its general powers, might take custody of all assets for the purpose of distribution, and cut off the personal remedy of the creditor, under this statute, as in other cases; but we have not such a case. We are not advised that any court has taken control of the assets of this corporation, or is in any way attempting their collection and distribution.”
The question in the case at bar of the powers, duties, and rights of a voluntary receiver under chapter 300 was in no way before the court or considered by it. The general powers of a court of equity to authorize a general receiver to get possession of all of the assets of a corporation for the benefit of all creditors was recognized, and nothing more. The case cited is therefore not helpful in the case at bar. In this case the ample powers exercised by general receivers in chancery must be distinguished from
These proceedings under chapter 300 were instituted for the purpose of dissolving a solvent corporation, when, in fact, it was insolvent, as this court found in the case of McIntyre v. E. Bement’s Sons, 146 Mich. 74 (109 N. W. 45). This is of importance, as showing that in fact these proceedings were undertaken to wind up and distribute the assets of an insolvent. This law authorizing the appointment of a receiver to collect, receive, and distribute the assets of an insolvent corporation is an insolvency law, although it does not provide for the discharge of the debtor. Moody v. Development Co., supra, and cases cited. If the construction contended for is given to this statute, it is contrary to the decision of this court in Town v. Bank of River Raisin, supra. If section 8534 does not apply to corporations which have instituted proceedings under chapter 300, and plaintiff is prevented from beginning suit and obtaining judgment against defendant upon a valid and subsisting obligation by the only way possible to begin such a suit, he is not only deprived of his right of action, but such law operates to discharge the debt against the corporation, and is an
Taking this view of the law applicable to this case, it follows that the judgment of the circuit court should be reversed, and, as there is no disputed question of fact presented, no new trial should be granted. A judgment should therefore be entered in this court in favor of plaintiff for the amount of the notes sued upon with interest to date, deducting payments as of the date received; and also costs of both courts.
The term of Mr. Justice Grant having expired after this case was reargued, by consent of counsel Mr. Justice Stone, his successor, took part in its consideration and determination. Chief Justice Montgomery did not sit.
