« ΠροηγούμενηΣυνέχεια »
ants, at and before making of said pretended transfer and conveyance, were, and still are, creditors of the said John W. Broughton, and that the amount due each of them respectively, including interest to this date, is as follows: Dunham, Buckley & Co., ten thousand two hundred and twenty-two 50-100 dollars, ($10,222.50;) Edwin Bates & Co., four thousand three hundred and ninety-one 8-100 dollars, ($4,391.08;) John I. Adams & Co., seven hundred and six 37-100 dollars, ($706.37;) and Katz & Barnett, nine hundred and thirty 82-100 dollars, ($980.82.) Total, sixteen thousand two hundred and fifty 77-100 dollars, ($16,250.77.) It appears to the court that the defendant John W. Broughton is insolvent, and without property or means, and that the defendants Stewart Bros. & Co. had in their hands and possession, at the time of filing the bill of complaint in this cause, and still have, property, assets, and money, being the same fraudulently transferred and conveyed to them by the defendant John W. Broughton, as aforesaid, and the proceeds of the same, amounting to a sum largely in excess of the said sum of $16,250.77, due complainants as aforesaid. It is therefore ordered, adjudged, and decreed, that the defendants John W. Broughton, and Andrew Stewart, Andrew D. Gwynne, and P. H. Haley, composing the firm of Stewart Bros. & Co., do pay to the complainants the above-mentioned sums respectively due them, with interest thereon at the rate of six (6) per cent. per annum from this date until paid, that is to say: To Dunham, Buckley & Co., ten thousand two hundred and twenty-two 50-100 dollars, ($10,222.50); to Edwin Bates & Co., four thousand three hundred and ninety-one 8-100 dollars, ($4,391.08;) to Katz & Barnett, nine hundred and thirty 82-100 dollars, ($930.82;) and to John I. Adams & Co., seven hundred and six 37-100 dollars, ($706.37;) for which amounts and costs executions in favor of said creditors respectively may issue as at law." The appeal is from this decree.
The appellants assign as error that the court proceeded to decree, after admitting Katz & Barnett and John I. Adams & Co. as co-complainants, alleging that, as the case then stood, it was without jurisdiction, as the controversy did not appear to be wholly between citizens of different states. This, of course, could have furnished no objection to the removal of the cause from the state court, because at that time these parties had not been admitted to the cause; and their introduction afterwards as co-complainants did not oust the jurisdiction of the court, already lawfully acquired, as between the original parties. The right of the court to proceed to decree between the appellants and the new parties did not depend upon difference of citizenship; because, the bill having been filed by the original complainants on behalf of themselves and all other creditors choosing to come in and share the expenses of the litigation, the court, in exercising jurisdiction between the parties, could incidentally decree in favor of all other creditors coming in under the bill. Such a proceeding would be ancillary to the jurisdiction acquired between the original parties, and it would be merely matter of form whether the new parties should come in as co-complainants, or before a master, under a decree ordering a reference to prove the claims of all persons entitled to the benefit of the decree. If the latter course had been adopted, no question of jurisdiction could have arisen. The adoption of the alternative is, in substance, the same thing. It is, however, objected by the appellees Edwin Bates & Co., Katz & Barnett, and John I. Adams & Co. that, as to them respectively, this court has no jurisdiction of the appeal, for the reason that the decrees in their favor are several, and that the amounts adjudged to be paid to them respectively do not exceed the sum or value of $5,000. On the authority of Seaver v. Bigelows, 5 Wall. 208; Schwed v. Smith, 106 U. S. 188; S. C. 1 SUP. CT. REP. 221; Farmers' Loan & T. Co. v. Waterman, 106 U. S. 265; S. C. 1 SUP. CT. REP. 131; Adams v. Crittenden, 106 U. S. 576; S. C. 1 SUP. CT. REP. 92: Hawley v. Fairbanks, 108 U. S. 543; S. C. 2 Sup. CT. REP. 846; and Fourth Nat. Bank v. Stout, 113 U. S. 684; S. C., ante, 695, the motion
to dismiss the appeal as to all the appellees, except Dunham, Buckley & Co., must be granted.
As to the remaining appellees, the cause must be disposed of on the merits. An outline of the transactions involved in the controversy is as follows. Broughton carried on business as a merchant in Rodney, Mississippi, and became indebted, by reason of advances made on account of cotton purchases, to the appellants Stewart Bros. & Co., merchants in New Orleans, in about the sum of $34,000. Being pressed for payment, on May 26, 1881, he gave his two promissory notes therefor, payable one in six, the other in eight, months after date, with interest at the rate of 8 per cent. per annum; and, to secure the payment of the same, a written instrument of that date was executed, by which Broughton conveyed to C. J. Pintard all his stock of merchandise and assets and property, in trust, in case he should make default in the payment of the principal or interest of the notes, to sell the property conveyed, at public auction, for cash, to the highest bidder, at the request of the holder of the notes, on 20 days' notice. The instrument also contained the following provision: "It is understood and agreed between the parties hereto that the said party of the first part shall have the right to carry on the business as heretofore, for the purpose of selling off the stock of goods and collecting in the notes and accounts due and to become due, and, in order to enable said party of the first part to carry on said business, the said parties of the third part hereby agree to advance to him the further sum of one thousand dollars, which last amount is also understood and agreed to be included in and covered by this deed in trust, and to be due and payable six months after this date, the maturity of the first note." This paper, executed by all the parties, was recorded on May 27, 1881.
On June 13, 1881, having been advised that this conveyance was probablyg ineffectual and void as to other creditors, by reason of its form and contents, Broughton and Pintard, the trustee, united in a conveyance of the same property unconditionally to Stewart Bros. & Co., in satisfaction of the debt represented by the notes, and the latter took possession of the property conveyed; and on the same day Broughton executed also a bill of sale, for the same property, upon the same consideration, to Stewart Bros. & Co.
It is contended by the appellees that these conveyances, the last as well as the first, are fraudulent against creditors, per se, and void on their face; and such was the ground of the decree appealed from, as stated in the opinion of the court. To this we cannot accede. Assuming that the conveyance to Pintard, in trust, was of that character, according to the law of Mississippi, it does not follow that the subsequent sale and transfer, followed by delivery of possession, is tainted by the vice of the original transaction. The objection we are considering assumes that the whole transaction, from the beginning, was free from actual and intended fraud, and was meant to be a mode of securing and paying an actual debt, in good faith, without any design injurious to other creditors, beyond that implied in obtaining a preference, which is not forbidden by law. In this view, the admission that the conveyance to Pintard was illegal does not affect the subsequent sale, which, on the contrary, being free from objection, on account of its own nature and form, served to remedy the defects in the original security. It was quite competent for the parties to rescind and cancel the first conveyance, and unite in the execution of another, free from objection. This is all they did.
It is further urged, however, that the sale to Stewart Bros. & Co., however formally correct, and technically legal on its face, was made in pursuance of a design, participated in by both parties, actually to hinder, delay, and defraud the creditors of Broughton. On this point we have examined and weighed the evidence with attention and care, and are of opinion that it does not sufficiently establish the case of the appellees. It would not be profitable to rehearse the testimony, and point out the facts and circumstances relied on,
on the one hand, to established the fraud charged, and those, on the other.. adduced to rebut the suspicions of dishonest and unlawful combinations to defeat the claims of honest creditors. It is sufficient, we think, to say that the proof falls short of that which the law requires to establish so grave a charge.
It follows that the decree in favor of James H. Dunham, William T. Buckley, and Charles H. Webb, partners as Dunham, Buckley & Co., must be reversed, and the cause remanded, with directions to dismiss the bill as to them; and it is so ordered. As to all the other appellees, the appeal is dismissed.
(115 U. S. 116)
GRAY, Adm'x, etc., v. NATIONAL STEAM-SHIP CO.1
(May 4, 1885.)
JUDGMENT AGAINST A DEFUNCT CORPORATION-LIABILITY OF THE SUCCESSOR BY PURCHASE. A new company, which has purchased the property of a company formerly existing, cannot be made to satisfy a judgment subsequently recovered against the old company by name.
Appeal from the Circuit Court of the United States for the Southern District of New York.
John Fitch, for appellant. John Chetwood, for appellee.
*FIELD, J. This was a suit in equity to charge the defendant, the National Steam-ship Company, with the payment of a judgment recovered against another company, known as the National Steam Navigation Company. Both of the companies were English corporations, formed under the English statute, known as the companies act of 1862. The National Steam Navigation Company continued in business until August 15, 1867, when it went into liquidation. On the following day, it sold its ships and its other property, and delivered the same to the National Steam-ship Company. This latter company was incorporated on the first of July, 1867, under the name of the "Steamship Company, Limited." The change of its name to the National Steam-ship Company was made August 8, 1867. After the sale of its property the Navigation Company had no power to do business under the companies act, and existed only for purposes of liquidation.
On the twenty-fourth of October. 1867, the steam-tug Princeton was going up the harbor of New York with a tow of 14 canal-boats loaded with coal. When near the mouth of the Hudson river she met the English steamship Pennsylvania, owned by the National Steam-ship Company, and a collision took place between the canal-boats and the steam-ship, by which three of the boats were sunk, and a man by the name of Wilson W. Gray was killed. The widow of Gray took out letters of administration upon his estate, and then brought an action in the superior court of the city of New York, under a statute of the state, for damages caused by the loss of her husband, against the National Steam Navigation Company, evidently supposing that this company continued the owner of the steam-ship as it formerly had been. In May, 1868, she obtained a verdict, and in June following judgment was entered thereon for $3,289.05.
The National Steam-ship Company was formed for the purpose of buying the property of the navigation company, and conducting the same business. The consideration for the purchase was stock of the new company, to such of the old stockholders as would consent to take it, and money to the dissenting stockholders. Provision was made to raise the money necessary to fill up the capital stock to the required sum, and the sale was subject to the debts of the old company on August 16, 1867. The officers of the old company became the officers of the new company.
1 S. C. 7 Fed. Rep. 273.
The widow Gray issued execution on her judgment to the sheriff of the county of New York, which was returned unsatisfied. In December, 1869, she assigned the judgment to one Asa F. Miller, and in January, 1870, he commenced a suit in the supreme court of New York against the National Steam-ship Company, setting forth in his complaint the judgment of the superior court, the return of the execution unsatisfied, the incorporation of the National Steam Navigation Company, and that a short time before the commencement of the action it was engaged in the shipping business between New York and Liverpool, employing steamers, and having a general agency in New York; that at the time of the accruing of the cause of action it was thus engaged in business; that about the time the judgment was obtained, and the execution issued, the company assumed and became known by the name of the National Steam-ship Company; that the sheriff was thereby disabled from levying on the property which, up to that time, had stood in the name of the navigation company; that the change of name was to cure a technical defect; that the steam-ship company was incorporated under a statute limiting the liability of the stockholders, and to that company the navigation company had handed over its ships, and all its other property, to a sufficient amount to pay the judgment; that such property remained under the same control; that the change of name was made fraudulently to prevent a levy upon the property; that the steam-ship company held the ships of the navigation company as trustee for the creditors of the latter company; that the navigation company had not been within the state of New York for a year, and had no property except that standing in the name of the steam-ship company; and that this last company had a steam-ship and other ships in its hands, the property of the navigation company. The prayer of the complaint was that the steam-ship company might be decreed to pay the judgment, and be enjoined from disposing of the property it had received from the navigation company, and for the appointment of a receiver.
The steam-ship company answered, admitting the judgment of the plaintiff, the return of execution issued upon it unsatisfied, and the organization of the navigation company, alleging its own distinct incorporation, admitting the sale, transfer, and delivery of the steam-ships and business of the old company to the new company, August 16, 1867, the conduct of its shipping business and its employment of steamers by the old company, up to such transfer and sale, and alleging that the old company had no property in the state, with a general denial of other allegations. The case was heard upon the pleadings and proofs, and at a special term of the court, on December 12, 1870, judgment was rendered dismissing the complaint. On May 7, 1875, at a general term of the court, this judgment was affirmed. A year after its affirmance an order was entered at a special term, by consent of parties, discontinuing the suit. Before this was done, Asa F. Miller, the plaintiff therein, assigned the superior court judgment to one Morrison, and in February, 1877, Morrison assigned it back to the plaintiff, who soon afterwards commenced the present action in the supreme court of New York. On motion of defendants, it was removed to the circuit court of the United States, and there the the plaintiff filed a bill in equity in place of the complaint filed in the state court. This bill set up the agreement between the two companies of August 16, 1867; alleged the identity of the officers of the two companies; mentioned the recovery of the judgment of the plaintiff, and the various assignments of that judgment, the unsatisfied execution issued thereon, the transfer of the ships and other property of the old navigation company to the new steamship company; alleged that the navigation company had not made a change of ownership of the steamers by sufficient bills of sale, according to British law; mentioned the winding up of the navigation company; and averred that the new company held the property of the old company in fraud of the right of the plaintiff to have his judgment satisfied out of it, and that the naviga
tion company had no property not embraced in the transfer to the steam-ship company out of which execution upon the judgment could be satisfied. The bill prayed for a receiver of the property of the navigation company at the time of its assignment, for an accounting by the defendant of such property, and that the receiver be directed to sell the property and pay the debts of the plaintiff, and for general relief. The defendant in its answer admitted the agreement, the substantial identity of the officers of the two companies, the judgment recovered in the superior court, the unsatisfied execution issued thereon, and the sale and delivery of all the property of the old navigation company to the defendant on the sixteenth August, 1867, for a full consideration; averred that the defendant at that time became owner of all the property, including the steamers; denied the fraudulent transfer alleged, and the ownership of the steam-ships by the navigation company at the time of the recovery of the judgment, or of the return of the execution; reiterated the sale and delivery of the steam-ships to it before the judgment by good and sufficient instruments; and admitted the liquidation of the navigation company, and the winding up of its affairs. It also set up the judginent recovered by the defendant in the case of Miller against it, in the supreme court of New York, as a bar to the present action; denied all fraud in the transfer of the property of the old company; and asked that the bill be dismissed. The case was heard upon the pleadings and proofs, and a decree was rendered therein by the circuit court dismissing the bill. From that decree the case is brought here by appeal.
It is not necessary to consider the position that the judgment of the supreme court of New York, in the case of Miller against the defendant, is a bar to the prosecution of this suit. It is sufficient for the affirmance of the decree of the court below that the judgment of the superior court of the city of New York, which was sought to be enforced against the new company, was recovered against the old company. That company had then ceased to do business of any kind, and was incapable, under its articles of incorporation, of doing any except so far as might be necessary to wind up its affairs. It existed only for purposes of liquidation. It could no more own and run a steam-ship than it could own and manage any other property. There is nothing in the transfer of the property from the old company to the new of which the plaintiff can in any way complain. It took place before the collision occurred which caused the death of the plaintiff's husband. The stockholders of the old company do not complain of that transfer; and it does not appear that complaint comes from any creditors then existing of that concern. The debts of the old firm were assumed by the new; and there is neither reason nor sense in attempting to fasten upon the new company a judgment for damages recovered only against the old. If the plaintiff, by mistake, commenced an action against the wrong company, it is a fault of which she cannot complain. At least the new company is not chargeable as though it had itself been sued, and had its day in court. The navigation company never made any pretense of ownership after its affairs were closed up, and neither the plaintiff nor her counsel were ever misled by the action of the representatives of either company. The case is too plain for further comment.