139 A. 853 | Pa. | 1927
Argued October 4, 1927. The Liberty Clay Products Company, defendant, an Ohio corporation, was duly chartered in April, 1919, with principal office at Youngstown. In May, 1919, it purchased and took over all the property and assets of three several corporations, to-wit, the Youngstown Clay Products Company, the Carbon Brick Company and the Castle Clay Company; the two former being Ohio and the latter a Pennsylvania corporation. The consideration in each case being the payment of all the *286 debts and liabilities of the respective company and six hundred shares of the common stock of the Liberty Clay Products Company. The only one involved in this appeal is the Youngstown Clay Products Company, which attached to its transfer an itemized schedule of its liabilities, including $24,000 to the Struthers Savings Banking Company, — represented by several promissory notes. The contract for the purchase of the property and assumption of the liabilities was expressed in writing enacted by the directors and approved by the stockholders of the Liberty Clay Products Company. Thereafter the last named company provided for an issue of preferred stock and, beginning about June, 1919, sold the same to the par value of $183,000, to diverse parties re siding in Pennsylvania and Ohio. This stock was given a preference over the common stock as to both income and assets; but their right to participate in the management of the company's business arose only when default was made in payment of interest on their stock. While the Youngstown Clay Products Company was an Ohio corporation, its property with its business was largely in Lawrence County, Pennsylvania, where its principal asset, the Volant plant was located. The venture proved unprofitable and in 1920, and for each subsequent year, default was made in payment of interest on the preferred stock. In 1920 the Struthers Savings Banking Company became insolvent and was taken over by the State of Ohio, in which it was located. The $24,000 assumed indebtedness to the bank, with a large accumulation of interest, being unpaid, on December 2, 1924, the Court of Common Pleas of Mahoning County, where defendant's principal office was located, at the instance of the superintendent of banks of Ohio, appointed Osborne Mitchell, Esq., receiver of the Liberty Clay Products Company. On the next day the Court of Common Pleas of Lawrence County appointed P. A. Kanengeiser as ancillary receiver in Pennsylvania. The application for a receiver set out the $24,000 indebtedness and accrued *287 interest, which defendant's answer admitted. This, at least so far as concerned the appointment of the receivers, was ratified at a stockholders' meeting held December 12, 1924. By leave of court the receivers operated the plant for some six months at a considerable profit, but in the early summer of 1925 a responsible party made an offer of $50,000 for the Volant plant, which the Pennsylvania receiver petitioned the Lawrence County court for leave to accept. Pending this proceeding, certain of the preferred stockholders, acting for themselves and others, asked the court for leave to take over the property of the Liberty Clay Products Company in consideration of paying its debts and liabilities. Upon due consideration, this was granted and the property turned over to a trustee for the preferred stockholders; they giving bond to pay therefor $60,000, or so much thereof as might be necessary to liquidate the indebtedness. Of this sum $20,000 was paid. Thereafter the matter of adjusting the indebtedness was brought before the Lawrence County court and from its final decree, allowing, inter alia, the said claim of the State of Ohio, this appeal was taken on behalf of the preferred stockholders.
Notwithstanding the very exhaustive presentation of the case on behalf of appellants we find nothing in the record calling for a reversal. In the spring of 1926, at the instance of the Ohio banking commissioner and upon due notice to the Ohio receiver and to the defendant, the Court of Common Pleas of Mahoning County passed upon and adjusted that state's claim and entered judgment for the full amount, debt and interest. That is a court of general jurisdiction and from the judgment entered no appeal was taken. An exemplification of the record, duly certified according to the Act of Congress, was presented during the hearing in Lawrence County. The court there, however, did not treat it as conclusive, but went into a painstaking investigation and found as a matter of law and fact that the entire *288
claim of the State of Ohio, debt and interest, was an existing legal obligation and decreed accordingly. The defendant being in the court of its domicile where its indebtedness might properly be adjusted, the Lawrence County court might well have rested its adjudication upon the full faith and credit clause of the federal Constitution. Of course, the questions of the court's jurisdiction and as to payment of the judgment are always open, but they are not contested here, and beyond these questions the courts of another state will not go: Tilt v. Kelsey,
Practically the only defense urged to the claim of the State of Ohio was the statute of limitations. That could not have been interposed in Ohio, for the limitation there is fifteen years, as to notes and such contract in writing as defendant gave when acquiring the property of the Youngstown Clay Products Company.
Furthermore, ignoring the Ohio judgment, the claim was not barred under our own statute, for defendant's express written agreement of 1919 to pay this indebtedness would renew it for six years. Meantime, defendant's answer of December, 1924, to the application for a receiver, admitted this indebtedness as an existing liability, and, to facilitate its payment, joined in the application *289
for a receiver. This admission of record was entirely consistent with and in fact was an implied promise to pay and effective as a renewal. An acknowledgment of the specific indebtedness, consistent with a promise to pay it, operates as a renewal (Maniatakis's Est.,
Preferred stockholders are members of the corporation, not its creditors. "Formerly it was a matter of doubt and discussion whether or not a preferred stockholder had any rights as a creditor of the company or was confined to his rights as a stockholder. The law is now clearly settled that a preferred stockholder is not a corporate creditor": Cook on Corporations, 8th ed., vol. 1, p. 910, sec. 271. And see Moy, Exrx., v. Colonial Finance Corp.,
Complaint is also made as to the regularity of the proceedings by which defendant agreed to pay all the liabilities of the Youngstown Clay Products Company on taking over its property. That transaction was of record when the preferred stockholders became such, about eight years ago, and, in view of the long delay and all that has since transpired, it is too late to set that up as a defense to payment of the indebtedness here in question. *291
See Watt's App.,
As the Liberty Clay Products Company took over all the property of the Youngstown Clay Products Company and agreed to pay all its indebtedness, a creditor of the latter may bring suit directly against the former: Beltz v. Garrison et al.,
Complaint is made at the fee of $2,000 allowed the Ohio receiver and of $1,250 allowed his counsel and of $240 allowed appraisers. These were adjusted by the proper court in Ohio and we cannot interfere therewith. If excessive the matter was one for the courts of that state and not of Pennsylvania. The receiver in that state has in his hands ample funds to defray those expenses; the court in Lawrence County, however, received evidence upon that question and concluded the charges were not oppressive. It is the province of the court appointing a receiver to fix his fees and those of his counsel and therewith an appellate court will interfere only to correct an abuse of discretion: Traction M. Co. v. Pgh., M. W. Ry. Co. (No. 1),
The assignments of error are all overruled, the decree is affirmed and the appeal is dismissed at the cost of appellants.
