87 N.J. Eq. 84 | New York Court of Chancery | 1917
This suit is brought to restrain further proceedings by defendant bank in a pending action at law.
At the hearing of a motion for preliminary restraint it was disclosed that the Sea Isle City Realty Company, a corporation of this state, was dissolved by certificate of dissolution filed in the office of the secretary of state on September 8th, 1916, purT suant to the provisions of our Corporation act authorizing voluntary dissolution of corporations of this state, since which time the persons who were its directors at the time of -its dissolution have been engaged in winding up the affairs of the dissolved corporation as statutory trustees under the act. On january 8th, of this year, an order was duly made by this court on the application of these statutory trustees directing the creditors of the dissolved corporation to present to the statutory trustees within a specified period verified claims against the corporation.
Among the liabilities of the dissolved corporation is a certain promissory note which was made by it prior to the proceedings for dissolution; the note was signed by the corporation as maker and was payable to the order of the corporation as payee and endorsed by it and also endorsed by four of the five directors of the corporation for the accommodation of the corporation, and discounted, while so endorsed, for the benefit of the corporation by the First National Bank of Ocean City, the defendant herein. That note is. now due and pajrable and an action at law for the recovery of the amount due has been brought by the bank against the maker corporation, go nomine, and also against the statutory 'trustees of the dissolved corporation and also against the several endorsers. It is the further prosecution of that action at law which the present bill seeks to restrain. The bill is filed by the statutory trustees and the endorsers of the note.
There is no dispute touching any of the matters above stated. The liability of the corporation and of the directors for the
The bill demands as equitable relief in behalf of the dissolved corporation and its creditors that no judgment shall be entered against it for a debt which is not in dispute, and that defendant bank be required to file its claim against the .dissolved corporation pursuant to the general order of this court heretofore made for that purpose and permit the statutory trustees to allow tire claim; and demands as equitable relief in behalf of the endorsers that the action at law against them be stayed until the assets of the dissolved corporation may be fully administered by the statutory trustees and applied in payment of the debt which is primarily due from the dissolved corporation to defendant bank.
I entertain the view that the,relief which is sought to prevent the entry of a judgment at law against the dissolved corporation must be granted. But while at the argument it was practically conceded that relief to that extent should be awarded, I think the question cannot be. said to be one wholly free from doubt.
Sections 53' to 60, inclusive, of our Corporation act (2 Comp. Stat. pp. 1634-1637) constitute tire directors of a corporation which has been dissolved in the manner in .which this corporation has been dissolved trustees-of the dissolved corporation for the purpose of winding up its affairs by converting its assets into money and paying "ratably, so far as its moneys and property shall enable them, all the creditors of the corporation who prove their debts in the manner directed by the court,” and distributing any balance remaining after payment of the debts and necessary expenses to the stockholders. The court of chancery is also given the power on application of any creditor or stockholder to exercise its discretion whether to continue the directors as trustees or supersede them by the appointment of a receiver or receivers.
It seems to me that the general scope of these several sections of the statute, as well as the detailed provisions of some of the sections, disclose a legislative intent, which is manifest with almost as much .clearness as could be expressed by any specific provision, that at dissolution the assets of the corporation be
In the absence of legislation conferring upon any court other than this court jurisdiction over this statutory trust, it is obvious that this court possesses such jurisdiction in all matters necessary to its proper enforcement and protection by reason of the inherent jurisdiction of this court over trusts; but the several sections of the statute referred to also clearly disclose a legislative intent that this court should exercise that jurisdiction in all necessary matters relating to the execution of the specific trust. If, therefore, it is reasonably apparent at this time that the proper and efficient performance of the duties of these tras
■ If the views already expressed are sound, it is entirely clear that the only effect of the judgment, if entered, will be the ascertainment of the amount due, for such judgment could only rank as a general claim against the assets. But the amount due is not a matter of dispute, and the trustees are willing to allow the claim when it shall be filed pursuant to the order -of this court heretofore made for that purpose. It is accordingly obvious that no injury can be done to the creditor bjr restraining the entry of the judgment and no benefit can be gained by the creditor by such entry.
On the other hand, trouble and inconvenience in the administration of the trust will necessarily flow from the entry of the judgment. The legal title of a great amount of real estate is in the name of the dissolved corporation at this time, and that real estate is its principal asset, and from its sale in small parcels the trustees must realize the funds to pay the creditors of the corporation. While, as stated, the judgment, if entered, cannot be enforced as a specific lien against that real estate, its entry will necessarily afford a cloud of such nature that the trustees will be constantly hindered in conferring upon purchasers marketable titles.
In these circumstances this court should exercise its equitable powers to protect the efficient administration of the trust.
But I am unable to reach the conclusion that the endorsers of the'note held by defendant are entitled to the relief which is here sought by them.
As heretofore pointed out, with reference to the origin of the note on which an action at law has been brought, the, dissolved corporation was the party primarily liable on the instrument and the endorsers were only secondarily liable. While the provisions of section 81 of our Negotiable Instruments act (8 Comp, fítat. p. 8748) is to the effect that when the note was dishonored by non-payment, an immediate right of recourse to all parties
Complainants also invoke in their behalf the provisions of section 94 of the Corporation act. 2 Comp. Stat. p. 1655. That section relates only to eases where officers, directors and stockholders of a corporation are made liable by the provisions of the act, specifically, for the payment of the debts’of the company. Witherbee v. Baker, 35 N. J. Eq. 501.
I will advise a preliminary injunction in accordance with- the views herein expressed.