152 Ind. 232 | Ind. | 1899
Appellee is the receiver of the G. T. Roots Company, a foreign corporation, incorporated under the laws of the state of Ohio, and, prior to the suspension of its business, as hereinafter stated, its principal office was located at the city of Cincinnati, Ohio. The purpose for which this corporation was created was to manufacture, purchase, and deal in flour, grain, salt, and other merchandise, for profit. To further the object of its incorporation, it became the owner of and operated a large flouring mill and cooper shops, situated on certain described real estate in the city of Lawrenceburg, Dearborn county, Indiana. In 1893, Samuel Strasburger, a resident of Cincinnati, Ohio, loaned to this company, at different times, money amounting in the aggregate to $14,000 and over. This money was used by the company ’in carrying on its business.. These several loans were evidenced by certain promissory notes executed by said company to Strasburger in 1893, payable to him at the city of Cincinnati, Ohio. In 1894, the company also borrowed of Rosa E. Levi, a resident of Cincinnati, Ohio, and one of the appellants in this appeal, money to the amount of $5,000 which was also used by the company in its business, and, for the several sums so loaned by her, the company executed its promissory notes, payable to her at Cincinnati, Ohio. On August 6, 1895, these notes of Strasburger and Levi were unpaid, and on that day the G. Y. Roots Company was insolvent, having contracted debts and liabilities amounting to $400,000, while its assets, at the same time, amounted in value to $140,000. On said day, it had virtually ceased to be a going concern, hut was still in the possession and control of all of its property, but contemplated making a voluntary assignment for the benefit of its creditors.
All the parties appeared to this action and filed their answers thereto, and the matters and things involved under the issues so joined were submited to the court for its judgment. The only question, however, which the court adjudicated upon this complaint of the receiver was that which related to the validity of the deeds of assignment, so far as the same affected the property situated in Dearborn county, Indiana, an4 embraced in the mortgages of Strasburger and Levi. Upon this question, the court found and adjudged that the said deeds of assignment were invalid, and did not convey any right, title, or interest to the assignee in or to the property of the company situated in Dearborn county, Indiana, and further decreed that the said deeds of assignment be set aside and held for naught, and that the title to the said property be held to be as fully and effectually in said company, at the time of the appointment of the receiver by the Dearborn Circuit Court, as if such deeds of assignment had not been made. After the rendition of this judgment, Strasburger and Levi each filed a cross-complaint in the said action against the receiver, wherein they set up the notes which each held against the said Roots Company and also the mortgage executed by it to each of the cross-complainants, on the 6th day of August, 1895, to secure the payment of said indebtedness.
The relief which each sought by his respective cross-complaint, was to enforce the mortgage lien against the pro-premises; and each cross-complainant prayed that the respective lien of each, under his mortgage, be protected by the court in the distribution of the proceeds arising out of the
The answer of the receiver to each of the cross-complaints was held sufficient upon demurrer, and the. said complainants replied by the general denial, and the cause being at issue between the said parties, was submitted to the court for trial and upon the evidence the court found for the receiver upon the issues joined upon the cross-complaints of Strasburger and Levi, to the effect that the mortgages in controversy were invalid, and did not constitute a lien upon the real estate therein described, nor a valid charge against the proceeds arising out of the sale of the mortgaged premises, and, over the separate motions of appellants for a new trial, wherein they each assigned, among others, as reasons therefor, that the finding of the court was contrary to law and also contrary to the evidence, the court adjudged and decreed the mortgages to be invalid, and that they be set aside and held for naught.
From this judgment appellants have appealed to this court, and their separate assignment of errors calls in question the ruling of the court upon the demurrers to the answer of ap
The contention of counsel for appellee, in the main, is that, as the G. Y. Roots Company was an Ohio corporation, it was governed by the laws of that state; that the laws of Ohio prohibited it from executing the mortgages to appellants, under the circumstances, as it did; and that these laws must be given force and effect by the courts of Indiana. Hence it is insisted that the right of appellants to enforce the mortgages in dispute was properly denied by the lower court. Th'e question, as counsel for appellee propounded it, is, can this foreign corporation prefer appellants, in the execution of these mortgages, over its other creditors, when its right to do so is denied by the laws of its domicil and where, as in this case, the persons seeking to enforce their rights, under the preference given, are citizens of the same state
Counsel for the respective parties in this appeal have favored us with able and elaborate briefs in which they have cited numerous authorities which, as it is insisted, support the proposition which each advances. It would, however, unnecessarily extend this opinion were we to review or comment upon all of the cases referred to; hence, we content ourselves with such authorities as support the principles which, in our opinion, are controlling upon the questions involved in this cause. It is a well affirmed general rule, that the laws of a sister state, which either give or deny the power to contract, have no extra-territorial force or effect where the particular contract involved relates to the conveyance or encumbrance of lands situated in another state or jurisdiction. Cochran v. Benton, 126 Ind. 58,and authorities there cited. Such conveyances or encumbrances are'considered as being governed by the law of the situs of the realty, and all questions relating to the validity thereof are to be determined according to that law and not according to the law of the place of the contract or of the domicil of the contracting parties. 6 Thompson on Oorp., section 7721; Jones on Mort., section 823; Wharton on Conflict of Laws, sections
Another rule is that it is the restrictions or prohibitions contained in the charter of a foreign corporation or those of the governing laws of the state where it is organized, in relation thereto, which follow it into another state. It is such restrictions or prohibitions, as a general principle, and these alone, which, under the rules of comity, are recognized and enforced in other jurisdictions, and not the general legislation or judicial decisions of the state in which such corporation is organized. 'The general laws, regulations or decisions of the courts of a sister state are controlling only within its own limits, and such state has no power to give them force or effect in other jurisdictions. 2-Morawetz on Corp., section 967; Warren v. First Nat. Bank, 149 Ill. 9, 38 N. E. 122, 25 L. R. A. 746, and cases there cited; Boehme v. Rall, supra; Borton v. Brines-Chase Co., 175 Pa. St. 209, 34 Atl. 597.
We have examined the statutes of Ohio, introduced in evidence, 'which relate to corporations organized thereunder, and we discover nothing therein which can be said to forbid or prohibit an insolvent corporation of that state from mortgaging its corporate property or assets to secure a Iona -fide antecedent indebtedness of its own and thereby prefer one or more of its creditors over others. If it appeared in this case that the mortgages in question were executed in violation of the express provisions of any of these statutes or that the power or right of the company to execute the mortgages depended upon a construction placed upon a statute of that state by its highest court, quite a different question would be presented for our decision. That an insolvent corporation, in lite manner as an insolvent natural person, may, at common law, execute a mortgage upon its property to some of its creditors, and thereby create a preference, is a well settled proposition. See Coot on Stock and Corporation Law, section 779; Angelí & Ames on Corp., section 187, page 168; 2
While we may and do yield great respect to the decisions of the supreme court of Ohio, still we are not bound to accept them as governing us in the administration and application of legal or equitable principles. It is true that the construction placed upon a statutory law by the courts of its own state, will, by virtue of the rules of comity, be followed by the courts of a sister 'state in cases in which such statute may be involved, but, as heretofore stated, the construction of a statute was not involved in the Rouse case, but the question presented to the court in that appeal depended for its solution upon the view which the court might take in regard to the equitable rule or trust fund doctrine. It is certainly manifest and well supported by authority that neither the principles of equity nor the common law,, as they may be expounded by the supreme court of Ohio, are binding upon this court, but, in the administration of justice, we must adhere to and follow our own decisions or precedents in which such principles' are exposed or expounded so far, at least, as we consider such decisions sound and correct. This rule is well affirmed by the courts of other states. St. Nicholas Bank, etc., v. State Nat. Bank, 128 N. Y. 26, 27 N. E. 849, 13 L. R. A. 241, and cases there cited.
The fact that the creditors in this cause are nonresidents of this State, and citizens of the state of Ohio, can exert no influence over the question as here presented. By the* rule approved by this court in. Catlin v. Wilcox, etc., Co., 123 Ind. 477, 8 L. R. A. 62, it is asserted that when a citizen of another state is once properly in court and accepted as a suitor, neither the law nor the court administering- the law, will admit any distinction between such a suitor and -one who is a resident or a citizen of its own state. “Before the law and its tribunals, there can be no preference of one over the other.”
Baker, J\, did not participate in this decision.