64 Tenn. 101 | Tenn. | 1875
delivered the opinion of the court.
The assignment was made on the 4th of May, 1866,. to Samuel Watson, with preferences as directed by the Legislature. On the 16th of May, 1866, the State- and Samuel Watson filed a bill in the Chancery Court of Davidson, to carry out the assignment, reciting the act of the Legislature, and the assignment made thereunder, and stating that Samuel Watson, the trustee-named in said assignment, was unable to give the bond required by law, and prayed for an injunction against all the creditors of the bank, and the execution of the assignment under the decrees of the court, making all the creditors parties defendants. The injunction was granted on the 21st of May, 1866. The court appointed Samuel Watson receiver, who executed bond as such, which was by the court accepted. To this bill there were several answers. On the 24th of May, 1868, Mark R. Cockrill, on behalf of himself and all other creditors, filed a cross-bill, as did, also,, some other' depositors, in which they attacked the act of the Legislature of 16th February, 1866, and the assignment thereunder. On -the 3d of December, 1872, T. A. Atchison and W. M. Duncan answered the original bill, claiming an indebtedness on the part of
The charter of the Bank of Tennessee expired by
It is next insisted for respondents that rhe statute of three years as to the personalty of the bank, and
Upon a dissolution of the bank, its control of its assets ceased, and the Legislature had no power to direct their appropriation, for, as we have just seen, by express legislation its assets became trust property, and whoever had them in charge became trustee for the statutory beneficiaries. ■ Samuel Watson, upon the dissolution of the bank, came into possession of its assets under an assignment made by the bank under the direction of the General Assembly, while the assignment was valid to convey the legal title to the property; yet, as far as thje act of the Legislature and the terms of the assignment, which sought to give-preference as against the statutory beneficiaries, the same was invalid and a nullity, and has been so held by this court in this case. We are of the opinion that Watson, the trustee, held the funds charged with the same trusts as they were in the hands of the officers of the bank before or at the time they were assigned
Again, Watson having failed to give bond as trustee,, was appointed as a receiver by the Chancery Court, and he has held the property, not as a trustee, but as a receiver. The property has been in custodia legis, and he is estopped from setting up title under the statute of limitation, either' for himself or any one else than those who may be declared entitled to the fund,, under the orders and decrees from which he received his appointment, and by which his possession was acquired and continued. 10 Hum., 367.
The next and last plea relied upon is that petitioners did not present their claims within five years after the-expiration of the charter of the bank, and can, therefore, have no relief.
Sec. 1493 of the Code gives to dissolved corporations, for five years after dissolution, corporate power to prosecute and defend suits by or against them, settling their business, disposing of their property, andi dividing their capita! stock; but not for the purpose-of continuing their corporate business. And by sec.. 1496 of the Code, it is provided, that on application to the Chancellor, and making a proper case, the power of such trustee, or any person appointed receiver of such dissolved corporation, may be continued for such length of time beyond five years as the Chancellor may adjudge necessary for the purposes contemplated in secs. 1493, 1494, and 1495. The object and purpose of these several sections of the Code is to protect the funds of such dissolved corporations for the
But again the most that can be claimed for this section of the Code is, that for five years after the dissolution of the corporation the power is given in the corporate name to sue and be sued. Prior to this act no such power existed. No suit could be maintained by or against a dissolved corporation in its ■corporate name, but if the corporate assets had been assigned in trust for the benefit of others, the beneficiaries could, notwithstanding the death of the corporation, come into a court of equity and enforce the collection of the assets in their own name. 11 Hum., ■576-7. And this right in equity existed long prior ■to the adoption of the act of the Legislature granting
Angelí & Ames on Corporations see; 779a, says: ■“The sound doctrine of equity is that the capital or
In the late case of Upton, Assignee, v. Tribilcock, 1 Otto, 45, Justice Hunt delivering the opinion of the Supreme Court, says: “ The capital stock of a moneyed corporation is a fund for- the payment of its debts. It is a trust fund, of which the directors are the trustees. It is a trust to be managed for the benefit of its shareholders during its life, and for the benefit of its creditors in the event of its dissolution. This duty is a sacred one and cannot be disregarded. Its violation will not be undertaken' by any just minded man, and will not be permitted by the courts.”
But it is insisted that in this State it has been held that when a corporation expires or is dissolved, its personal estate vests in the State, its real estate reverts to the original grantor and his heirs, and the debts due to and from it are extinguished, and 'the case of White v. Campbell et al., 5 Hum., 38, is relied on to sustain this proposition. The only question settled in that case, is that a note executed by a dissolved corporation, and deed of trust to secure such debt, are both void Ho question as to what become of the assets of a dissolved corporation could be properly raised in that case, arid any opinion of the Judge upon that question was a mere dictum.
In the case of Marr v. The Bank of West Tennes
Now the assets being trust funds, and the Chancery Court having jurisdiction thereof, does the act of the Legislature, giving such dissolved corporations five years to sue and be sued in the corporate name, interfere with, impair or take away the jurisdiction which the Chancery Court had prior to the passage of such an act? Clearly not. The Code, secs. 1495 and 1496, authorized the trustees to sue for the assets in the corporate name, (giving them a remedy at law which before they did hot have,) and this power was continued for five years, and, if necessary, a Chancellor, upon a proper application, might extend the power for
In the case of Foster et al. v. Essex Bank, 16 Mass., 244, the Supreme Court had under service, as to its constitutionality, an act of the Legislature, almost identically the same as sec. 1493 of the Code,, except that the time given to such dissolved corporations to sue in their corporate name was limited to three instead of five years, and Chief 'Justice Parker, in delivering the opinion of the court, says: “It is in the nature of an administration upon their own estate, and is only doing in a more convenient form what a court of equity might do, viz: making the common fund answerable for the debts which were created on the credit of that fund.”
This act of our Legislature is not, and does not purport to be a statute of limitation, but simply to continue the corporate existence, and is an additional, remedy to the equitable one, which, however, is unimpaired, for the principle is too familiar to require reasoning or citation of authorities, that the jurisdiction of a court of equity is not taken away by supplying the defects in the legal remedy, on account of which equity originally assumed jurisdiction. And this act itself does not purport to interfere with the chancery jurisdiction. When the additional remedy expires, resort must be had to equity just as they must have done originally in such a case, before the more convenient legal remedy was given. We are therefore of
Opinion by
The first, question is, whether the claims of debts ■of the petitioners are. barred by any statute of limitation operating against the debt.
I am of opinion that any defense which wpuld be ■available, were this a suit by the creditor against the bank in its corporate capacity, would be likewise available in this proceeding in equity by the creditor against the trust fund; as, for instance, if the claim of any petitioner was founded upon a demand upon which .a suit against the bank would be barred by the statute of six years, his claim in equity in the present form against the trust fund, would also be barred. I am also of opinion that although petitioners come in as co-complainants with Mark R,. Cockrill, yet, as to the statute of limitations, the commencement of their suit dates from the filing of their petitions, and not from the date of the filing of Cockrilks bill. It was held, however, in the F. & M. Bank of Memphis v. Joseph White, 2 Sneed,, that the statute of limitations applicable to notes in general did not apply to bank notes issued and put in circulation as money until demand of payment at the counter of the bank and refusal, and that the suspension of the bank did not change this rule, so as to start the statute of limitations from the suspension of the bank. Following this, sec. 2779 of the Code, in the chapter on
The next ground of defense is, that the claims must be rejected because they, were not presented within five years next after the expiration of the charter of the bank, in accordance with sec. 1493 of the Code. This section enacts “ that all such corporations whose charters expire by their own limitation, or are annulled by forfeiture, or dissolved for any other cause, exist as bodies corporate for the term of five yeárs
It is argued, in the first place, that it was a well settled common law rule, that upon the dissolution of a corporation, all debts due to and from it were extinguished, and all suits abated, and of course no new suits could be brought; and the effect of this section was to modify the common law only 'to the extent of continuing the corporate existence five years, but at the end of that time all the consequences follow that otherwise would have ensued upon the dissolution of the corporation. by the expiration of the charter or from other cause.
It is certainly true that the effect of this section is, that for certain purposes the corporate life is extended for five years, but if not still further extended under sec. 1496, the corporation then ceases- to exist; and from this it does certainly result, that after that, time no new suit could be brought by or against the corporation, and all existing suits would abate. At the time these petitions were filed the Bank of Tennessee as a corporation was extinct, and no suit could be brought by or against it. But it does not follow that a creditor might not, in equity, seek satisfaction of a just debt out of the assets of the bank still remaining either in the hands of its officers and managers or of its assignees, even conceding the bank entirely out of existence. The assets of a bank are a
Sec. 1494 of the Code enacts that, “upon the dissolution of any such corporation, the managers of the business of such corporation at the time of its dissolution, by whatever name known, are the trustees of the stockholders and creditors, unless other persons are appointed by the General Assembly or by a court of competent authority, and are authorized to settle the affairs of the corporation, dispose of such property as is necessary to pay its debts, and divide among its stockholders the money and property remaining after the payment of such debts and the necessary expenses.” This, without more, is a revocation of the common law contended for. And it would seem clear that if the assets are held by trustees under a general assignment, they would stand in the same attitude, unless their attitude be changed by different trusts lawfully declared by the deed of assignment. The trust declared by the above statute could certainly be enforced after the bank ceases to exist.
So I do not think the fact that the bank had •ceased to exist when the petitioners begun their proceeding, was of itself fatal to their claim; if so, it would perhaps be as fatal to one class of creditors as •another.
Again, sec. 1496 provides that the time may be extended beyond five years upon application to a chan
The reason, therefore, that no action can be maintained at law after the expiration of the time of five years being not because the statute is one of limitation, cutting off the demand, but because the bank is no longer in existence to be sued or to defend a a suit. It follows that, as in proceedings in equity to reach the trust fund the corporate 'existence of the bank is not essential, the proceeding is not affected by this statute.
The next ground of defense is, that the assets of the bank in the hands of Watson, the trustee, at the time these petitions were filed, are beyond the reach of the, petitioners, because Watson’s title for the benefit of the beneficiaries declared by the trust deed is-perfect by the statutes of limitations of three and seven years — the title to the realty by the statute of seven years, and of the personalty in three years. This is said to be upon the principle that adverse possession for the period fixed by the statutes of limitations under a conveyance for the benefit of one set of beneficiaries in fraud of others who are creditors, will perfect the title of the fraudulent vendee for the benefit of the beneficiaries named.
The execution and delivery of the deed of assignment in this case vested the naked legal title to the assets in Watson, the trustee. The assignment was
This court has decided that the act in question was a nullity so far as it undertook to declare certain claims valid and certain others void; that the trustee shonld hold the assets for the benefit of the ■creditors entitled by law, and that the distribution should be declared according to the legal rights of the parties, and not according to the trusts declared by the deed. Moreover, the trustee did not qualify us such, but took charge of • the assets, and at once filed his bill asking to be appointed receiver, and to have the fund administered under the direction of the court. He was appointed receiver, and . afterwards held the assets in this capacity. Pending the litigation the assets have been in the custody of the court, the receiver being an officer of court. .
Bills and answers were filed by some of the excluded creditors, and among them creditors of the same class of the present petitioners (Duncan & Atchi-son) came in by answer, and by the decree heretofore rendered by this court, their claims were determined to be valid, and their right to share in the trust fund declared. This decree in favor of Duncan
The question, then, is, are the rights of the present petitioners lost • because they failed to come in uotil the expiration of the time after the assignment necessary to perfect the title to property by the statutes of three and seven years.
The principal creditor preferred was the “school fund” — $1,500,000. This has been declared not to ■be a void debt. No notes of the bank, which would have been entitled to payment by the act of 1866 and by the deed of assignment, have been presented. The contest is now practically between the depositors and the holders of the notes called the new issue— 'both classes being excluded by the. act of 1866 — that is, depositors after May, 1861, were excluded, which, it' is said, embrace the greater part. So that if the statutes of three and seven years has protected the assets in the hands of the receiver against the claims of tlmse petitioners, it is not in favor oí the creditors declared by the assignment, but practically in favor of any other class of creditors who were also excluded. It would be reversing the rights of priority between the depositors and the noteholders, because the former came in first, although the latter came in before any statute of limitations barred their claims. I suppose the present petitioners might have been cut
There seems to be an apparent hardship in the result, in the fact that the long, laborious litigation by which the assets of the bank have been recovered for the benefit of the creditors has been conducted by others than the present petitioners, and that the benefits will now, in a great measure, be taken by those who did not bear their part in the contest. But I do not see in this a legal ground for changing the result.