36 N.J. Eq. 436 | New York Court of Chancery | 1883
The bill is filed by a person who is a creditor and stockholder of the New York Silk Manufacturing Company, a corporation under the laws of the state of New York. It states that on or
The first question to be considered is whether the complainant has any standing to maintain this bill. The original bill was, as has been stated, a bill for the appointment of a receiver under the act concerning corporations, to collect, receive and administer the property and assets of the corporation. Under it a receiver was appointed, who was duly qualified. He thereupon became vested as far as practicable, seeing that the corporation
But further, apart from this objection, the suit cannot be maintained on the merits of the case as presented by the bill, if it had been brought by the receiver. The act concerning corporations makes the remedies thereby provided in case of insolvency applicable to foreign corporations, so far as practicable. Its language is, that foreign corporations doing business in this state shall be subject to all the provisions of the act, so far as they can be applied to such corporations. Rev. p. 196 § 103.
Obviously, there are provisions of the act which cannot be applied to such corporations; for example, this court cannot hinder such corporations from exercising their franchises, except as it may enjoin them from exercising them in this state. It can
The efficacy of the above-quoted provision of our statute as to foreign corporations, is in securing to creditors and stockholders, citizens of this state, a just application of the property in this state of those corporations when insolvent. In the case in hand, the bill was filed on the 13th of September, but no injunction was issued upon it until the 21st of October, five weeks afterwards, and then the corporation was not restrained from removing its property from this state to its place of location or elsewhere, but only from receiving any of the debts'due to it, and from paying or transferring any of its debts, moneys or effects. In the meantime, on the 3d of October, the bank sued
After the injunction had been issued, but before the receiver was appointed, the bank issued another attachment out of the same court, under which the same property was attached, and other creditors were admitted. The mere filing of a bill in such case, does not divest the company of its property. The appointment of a receiver under the statute, operates as a transfer. Said Chancellor Halsted, in Corrigan v. Trenton Del. Falls Co., 3 Hal. Ch. 489, 496, “The statute, and the appointment of receivers under it, are a conveyance or transfer of all the property of the insolvent company to the receivers for the benefit of the creditors of the company, to be distributed in the mode pointed out by the statute.” See, also, to the same effect, Freeholders of Middlesex v. State Bank at New Brunswick, 2 Stew. Eq. 268, 274. In the matter of Waterhury, 8 Paige 380, it was held that where a creditor of a corporation, by legal diligence, and without any voluntary assistance from the corporation or its officers, obtained a legal lien on its real or personal estate by judgment, or the levying of an execution, before the order of the court was-obtained for the appointment of a receiver and the dissolution of the corporation, he could not be deprived of the preference he had thus acquired. In the case in hand, the filing of the bill of course did not prevent the corporation from removing its property out of the jurisdiction, and so beyond the reach of its creditors here. And how were such creditors to know that the bill had been filed ? Are the creditors in such cases required to wait before taking steps to secure a lien on the property, until they can ascertain by search of the files of this court,, whether a bill has been filed in insolvency against the corporation? Or, are they at liberty to proceed at law with what dispatch they may, to secure a lien on the property ? Surely the latter. And having obtained the lien, they are entitled to the benefit of their diligence. In this case, it may be remarked, the proceeding at law was by attachment, which, in its nature, is for the benefit of all applying creditors. Moreover, when the
But it is urged that the bill alleges that the president of the company, in fraud of the statute, and with a view to giving to the bank and to the creditors who had been admitted under the attachments a preference, entered the appearance of the company to those suits. The appearance was entered in December, about a month after the appointment of the receiver. The injunction prohibited the company and its president and directors from paying and transferring any of its debts, moneys or effects, but it did not prevent them from appearing to an attachment, and if the effect of the appearance was (as it was in fact) to give to the bank and the other creditors who had been admitted under the attachments a preference, it was the result of a lawful act, and one which was (especially under the circumstances) entirely legitimate. The bill does not allege that the debts thus preferred or the issuing of the attachments were not bona fide.
The bill seeks relief against the auditor in attachment, who is an officer appointed by the federal court. It prays that he may be restrained from selling under the authority of that court. That court has jurisdiction under the attachments, and the jurisdiction under the attachments is prior to that which this court obtained over the property by the proceedings on the original bill in this suit. As between the federal and state courts, the rule is, that that court which first obtains jurisdiction shall retain it to the end. Riggs v. Johnson Co., 6 Wall. 166; New Jersey Zinc Co. v. Franklin Iron Co., 2 Stew. Fq. 422. If the attachments were valid liens as against the receiver, as I think they were, this suit cannot be maintained, and if they were not, the complainant cannot maintain it. The demurrer will be allowed.