4 S.D. 173 | S.D. | 1893
The^plaintiffs, now appellants, are judgment creditors of the Pierre Fire & Marine Insurance Company^ a corporation of this state, whose oiganization is conceded. ( The action is in the nature of a creditors’ bill, and is brought in behalf of these plaintiffs and all other creditors who may choose to come in and seek relief by it. j The(defendants,^respondents here,(are said insurance company, and parties alleged to have been holders of the capital stock, except defendant Coon, who is alleged to have possession of assets of the company under & 'void appointment as receiver.) The.complaint alleges that' upon each of plaintiffs’ judgments executions have been returned wholly unsatisfied, and that said company is insolvent. It further alleges that' each of said defendants, except Coon, subscribed for and received a certain number of the shares of the capital stock of said corporation stating particularly the amount so taken and held by each; that some of said defendants, naming them, paid in full for their said stock, and that others, naming them, paid 12 per cent of the amount of their said stock, and made and delivered to the company mortgages on real estate to secure the other 88 per cent; that subsequently all of said defendant stock holders, with a full knowledge that said company was insolvent, and for the purpose of avoiding liability thereon, conveyed said stock each to an irresponsible transferree, naming him in each case, whose insolvency was fully known to such defendant at the time; and that afterwards, through fraudulent collusion with the officers and directors of said company, and with knowledge that the company had debts outstanding that it was unable to pay, and after suits were commenced against it by these plaintiffs, the said defendants withdrew from the moneys and assets of said company the several amounts which they had so paid for and on their said
Respondents contend in support of the demurrer that, a receiver having been appointed, as shown by the complaint, the action could only be maintained by him, and that he should have been plaintiff instead of a defendant. Appellants, on the other hand, insist that statutory proceedings supplementary to execution are not available against a corporation debtor, and that, consequently, the appointment of Coon as receiver in such proceedings was void. The question thus presented starts two constituent inquiries. Would the right to pursue these stockholders upon the facts alleged in the complaint pass to a receiver? And, if so, was the order of the circuit court efficacious to make Coon such receiver? It is alleged in the complaint that certain of these defendants had fully paid for the stock
This is not an action under Section 2933, making stockholders individually and personally liable to creditors of the corporation. That section provides that “any creditor” may bring such against one or more stockholders severally or jointly. It does not contemplate or allow a number of creditors, each having a distinct and independent claim, to unite them in one
The(complaint alleges tha/b the appointment was made in proceedings supplementary to execution, and appellants insist that such proceedings do not apply to a corporation debtor, and therefore afford no cover for the appointment made in this case, and that it is void.) This has been held in several cases in New York cited by appellants, but the reason for such holding is not left in doubt. It is placed distinctly on the ground that the statutes of that state provide a specific proceeding for the sequestration of the assets of corporations against which execution has been returned unsatisfied. Hinds v. Railroad Co., 10 How. Pr. 487; Corning v. Insurance Co., 11 How. Pr. 190; 4 Waite, Pr. 134. But see McBride v. Bank, 28 Barb. 476. For the same reason it was held in Morgan w Railroad Co., 10 Paige, 290, that an ordinary creditors’ bill would not lie against a corporation after execution returned unsatisfied; that such action might be construed as a proceeding under the statute for the sequestration of the property of the corporation, if the bill stated the requisite facts, and a receiver might be appointed; but that the proceeding and its effect would be controlled by such special statute. We have no such statute in this state, and consequently the reason for so holding does not exist here, as to either remedy.
¡We discover nothing in the terms of our statute authorizing proceedings supplementary to execution (Section 5174, Comp. Laws,) inapplicable to, or which indicates any legislative intent that such proceedings should not be available against, a corporation debtor. It provides in general terms that, ‘ ‘where an execution against property of the j adgment debtor * * * is returned unsatisfied, * * * the judgment creditor * * * is entitled to an order from a judge of the court requiring such judgment debtor to appear an answer concerning his property, ”
It is suggested as against the applicability of these proceedings to a corporation, that a corporation cannot appear and answer under oath as to its property. We do not think this is a substantial objection. A corporation may make a statutory assignment for the benefit of its creditors, and may verify its inventories, although the statute requires the same to be verified by the oath of the assignor, who is in such case the corporation. The oath of its general officer, acquainted with the facts, is sufficient. Wright v. Lee, 2 S. D. 596, 51 N. W. Rep. 706. By Section 5176, being a part of the law under consideration, corporations are expressly named as liable to be required to appear and answer concerning property alleged to be in their possession, but belonging to the judgment debtor. It is difficult to perceive how or why a corporation could make more full and exhaustive answers as a garnishee than as a debtor. It is generally held that a public or municipal corporation cannot under any law, unless expressly so providing, be subjected to these proceedings, but such rule is always, I think, put on the ground of public policy. These views lead to the conclusion that the appointment of Coon as receiver was valid, and is directly in the way of the maintenance of this action by the judgment creditors in their own name. If the allegations of the complaint are true, a change should be made. The ruling of the circuit court sustaining the demurrer is affirmed.