111 Ga. 187 | Ga. | 1900
The plaintiffs below, F. Bertock & Co., filed an equitable petition against the Wilkinson Paper Co., a corporation, certain named individuals as its stockholders, and others alleged to be acting in collusion with the officers of that company with a view to hindering, delaying, and defrauding its creditors. Petitioners averred that the Paper Company was indebted to them in the sum of $1,171.57, as was evidenced by two promissory notes which were past due and unpaid ; that it was hopelessly insolvent; and that with intent to defeat the collection of their just debt it had fraudulently conveyed all its visible assets to the Hutcheson Manufacturing Company for the benefit of certain named persons who held mortgages covering the
“The first reason'generally given for the rule denying the right of set-off after a corporation has become insolvent is the theoretical reason which often operates to deny the right of set-off in courts of law, which is, that there can be no set-off unless the debts are mutual and in the same right. Briefly explained, the meaning is, that when the assets have been impressed with the quality of a trust fund for the equal benefit of all the creditors, their custodian, whether the corporation, its directors, a receiver, assignee, or other liquidator, holds them, not in the right of the corporation, against which the set-off is claimed, but in right of the creditors.” Accordingly, this rule obtains as against a stockholder who is at once both a debtor and a creditor of a corporation, when his “liability is for moneys due on account of stock held by him which has not been fully paid. Such a debt, as we have seen, is deemed in equity a part of the capital stock of the company, and is a trust fund to be devoted to the payment of all its creditors; and hence, whilst the com
It is worthy of note that Judge Thompson, before dismissing the subject, adds: “Where the object of the proceeding is to sequester what remains unpaid by the stockholder to the corporation upon his share subscription, and there are no other creditors, then no reason exists why he should not be exonerated to the extent of his demand against the corporation.” Ibid. § 3788, citing McAvity v. Lincoln Pulp & Paper Co., 82 Me. 504, wherein the contest was wholly between the plaintiff and fellow-stockholders, who were represented by an assignee. That is to say, it is eminently just to allow such a set-off so long as the rights of creditors will not be thereby prejudiced. For illustration, when, as in Stinson v. Williams, 35 Ga. 170, a single creditor of a corporation, without regard to its solvency or to the rights of other creditors, seeks through the aid of a court of equity to subject to the payment of his claim equitable assets of the corporation which can not be reached by the legal proqess of garnishment, he necessarily predicates' his action upon the ground that, as a creditor of the corporation, he is entitled to enforce against a stockholder its legal or equitable rights in the premises — not upon the idea that unpaid stock subscriptions constitute a trust fund to be equitably distributed amongst all creditors, for he proceeds in behalf of himself alone
It is not difficult to properly classify the present proceeding. As will have been perceived from the foregoing preliminary statement of facts, the obvious purpose of the petition filed by Bertoclc & Co. was to bring about a speedy and equitable “winding-up” of the affairs of the Paper Company. They alleged it
Upon the argument here, counsel for the plaintiffs in error sought to draw an analogy between the present action and that class of cases in which a creditor of an insolvent corporation, basing his right to recover upon a statute imposing upon each of its stockholders a limited individual liability for its debts, brings a common-law action against one or more of them to enforce such statutory liability. In this connection, the cases of Lane v. Harris, 16 Ga. 217; Robinson v. Bank of Darien, 18 Ga. 65, and Jones v. Wiltberger, 42 Ga. 575, were cited in support of the proposition that where a stockholder, prior to the filing of a suit against him, had voluntarily discharged debts of the corporation equal in amount to his statutory liability, he could not be compelled to pay anything more at the instance of a creditor whose claim remained unsatisfied. The case of Boyd v. Hall, 56 Ga. 563, wherein it was ruled that “ A bona fide judgment debt of a stockholder against the company in which he holds stock may be set off by him in equity against a suit to make him individually liable in proportion to his stock,” was also relied on. None of these cases, or others on the same line which might be cited, can, however, properly be considered as
Judgment affirmed, with direction.