125 Ky. 715 | Ky. Ct. App. | 1907
Opinion op the Court by
Commissioner Reversing.
The Tiger Shoe Manufacturing Company was on
Section 517 of the Kentucky Statutes, edition of 1899, which contained the law' applicable to the question we are considering, provided in part that: ‘ ‘ The stockholders of each corporation shall be liable to creditors for the full amount of the unpaid part of stock subscribed for by them — the stockholders of corporations * * * shall be individually responsible equally and ratably and not one for the other for
The provisions of the bankruptcy act before cited fully sustain the authorities in declaring that the trustee may, without an order of court or other direction, institute suits for the purpose of collecting and reducing to money the property of. the estate for which he is trustee. Conceding that as to ordinary debts the trustee may, in the absence of an order of court, proceed by suit, it is maintained that when it is sought to recover from a stockholder his unpaid subscription, or to enforce his double liability, an order of court is necessary. It must be kept in mind that the corporation in' which appellee was a stockholder had become insolvent and was adjudged a bankrupt. Its corporate functions were at an end. Its assets and liabilities had been transferred to the trustee, to be administered in the bankrupt court for the benefit of its creditors. The corporation, after its adjudication in bankruptcy, had no right or authority to collect debts, bring suits, or do any other acts that it might have performed as a going concern. The right to collect debts due it passed to the trustee, and he became invested with all the powers necessary to take its place in securing and collecting assets that it might have enforced the collection of before it became a bankrupt. If it be conceded, as it must be, that the trustee without an order of court may sue to enforce the collection of ordinary debts due the corporation for the benefit of its creditors, we are unable to perceive why he may not sue' to enforce the collection of the unpaid subscriptions from stock
Where the assets of an insolvent corporation are not sufficient to satisfy the liabilities, and it is necessary to proceed against the shareholders, the court must fix the amount due by each shareholder before suit can be instituted by the receiver or trustee, when it is not necessary to collect the whole amount that each shareholder might be required to pay, and a partial assessment will satisfy the debts; but, where the total amount which is due and payable from all the shareholders is not more than sufficient to pay the debts of the corporation, no previous assessment, either by the directors or by a court of equity, is necessary as a prerequisite to the bringing of an action at law by the assignee of the corporation against the shareholder for his unpaid balance. If, however, the total amount due by the shareholder would, if collected, be more than sufficient to pay the corporate debts, either an assessment by the' direo
The objection that the trustee 'had not been authorized by or obtained the consent of the court is purely technical, and, in the absence of any statute or line of adjudications forbidding such action by the trustee, we are not disposéd to sustain it. The shareholder has the right to show by answer any good reason why the trustee should not proceed against him, and, if he desires to make meritorious defense to the efforts to require him to pay his unpaid subscriptions, can do so in a pleading. The only question before us on this appeal is the technical and legal right of the trustee to maintain the action to recover unpaid subscriptions, and in this character of proceeding a technical defense interposed by a delinquent shareholder to defeat or obstruct the rights of creditors will not be viewed with favor. The liability for unpaid subscriptions is to and for the benefit of the creditors of the corporation who have the
All the authorities recognize a marked distinction between the powers of a trustee in bankruptcy and a receiver appointed by the "court; it being generally conceded that the latter cannot sue without direction of court given generally in the order of appointment or specially conferred. Clark & Marshall on Private Corporations, section 799; Am. & Eng. Ency. of Law, vol. 23, p. 1122. There is, however, a difference between the right to recover unpaid subscriptions and the right to enforce the double-liability statute. The obligation on the part of the shareholder to pay for the stock subscribed for by him is a direct undertaking upon his part, and the unpaid subscriptions are a trust fund for the benefit of the creditors; whilst his liability for an amount equal to the value of his
We therefore conclude that the trustee in bankruptcy may, without any order or direction of the court, proceed to- enforce the collection of debts due the bankrupt, and the unpaid subscriptions of the stockholders in a bankrupt corporation; but that he cannot maintain an action to recover from a stockholder the individual liability imposed by the statute.
Wherefore, the judgment is reversed for proceedings in conformity with this opinion.