U.S. Supreme Court
Taylor v. Bowker, 111 U.S. 110 (1884)
Taylor v. Bowker
Argued March 12-13, 1884
Decided March 24, 1884
111 U.S. 110
If a statute enacts that when a corporation has unlawfully made a division of its property, or has property which cannot be attached, or is not by law attachable, any judgment creditor may file a bill in equity for the purpose of procuring a decree that the property shall be paid to him in satisfaction of his judgment, the right of action thus conferred, being an equitable right, does not accrue until the issue of execution on the judgment and its return unsatisfied.
If a statute confers upon a judgment creditor of a corporation an equitable remedy on the issue of an execution on the judgment and its return unsatisfied, and in a revision of the statutes the same equitable remedy is given, but without mention of the issue and return of execution, it is not to be presumed that the legislature intended by the omission to abrogate or modify an established rule of equity; that when it is attempted by equitable process to reach equitable interests fraudulently conveyed, the bill should set forth a judgment, issue of execution thereon, and its return unsatisfied.
By chapter 46 of the Revised Statutes of Maine of 1857, reenacted in the Revised Statutes of 1871, it is, among other things, provided that
"When the charter of a corporation expires or is terminated, a creditor or stockholder may apply to the Supreme Judicial Court, which may appoint one or more trustees to take charge of its estate and effects, with power to collect its debts and to prosecute and defend suits at law. The court has jurisdiction in equity of all proceedings therein, and may make such orders and decrees, and issue such injunctions as are necessary,"
§ 19; also that
"The debts of the corporation are to be paid in full by such trustees when the funds are sufficient; when not, ratably to those creditors, who prove their debts as the law provides, or as the court directs. Any balance remaining is to be distributed among the stockholders, or their legal representatives, in proportion to their interests,"
§ 20; further, that
"When such a corporation has unlawfully made a division of any of its property, or has property
which cannot be attached, or is not by law attachable, any judgment creditor may file a bill in equity in the Supreme Judicial Court, setting forth the facts, and the names of such persons as are alleged to have possession of any such property or choses in action, either before or after division. Service is to be made on the persons so named, as in other suits in equity. They are, in answer thereto, to disclose on oath all facts within their knowledge relating to such property in their hands, or received by a division among stockholders. When any one of them has the custody of the records of the corporation, he is to produce them and make extracts therefrom, and annex to his answer, as the court directs."
§ 34. Still further, that
"The court is to determine, with or without a jury, whether the allegations in the bill are sustained, and it may decree that any such property shall be paid to such creditor in satisfaction of his judgment, and cause such decree to be enforced as in other chancery cases. Any question arising may, at the election of either party, be submitted to the decision of a jury under the direction of the court."
These statutory provisions being in force, Bowker, the appellee, on the 7th day of June, 1866, brought his action against the Piscataqua Fire and Marine Insurance Company in the Supreme Judicial Court of Maine for the County of York to recover the sum due him on a policy issued by that company, in the sum of $5,000, upon his interest in a certain vessel. It was duly entered at the September term, 1866, of that court. Before judgment was obtained, the Legislature of Maine, by an Act approved February 28, 1867, accepted the surrender of the charter of the company, declaring therein that
"Its affairs shall be wound up in the manner provided in sections nineteen and twenty of chapter forty-six of the Revised Statutes, and the organization of the company shall continue for the purposes provided for in said sections, provided that so much of said acts, or the act incorporating said company, or the act amending the same, as confer any special remedies against officers or stockholders of said corporation shall not be affected hereby; nor shall this act relieve them from any personal liabilities under any of said acts, or under any of the statutes of this state, or prevent any creditor from pursuing any remedies conferred
by chapter one hundred and thirteen of the Revised Statutes."
§ 1. Also, that
"Actions pending against said company when trustees are appointed as provided in said sections may be discontinued without payment of costs, or continued, tried, and judgment rendered, as in other cases. Actions may be also maintained upon claims disallowed in whole or in part by the trustees. All judgments shall be satisfied in the same manner as other claims against the company are satisfied by the trustees."
In the action instituted by Bowker, judgment in his behalf was entered April 4, 1868, and execution thereon was issued April 8, 1868. It was returned July 8, 1868, with an endorsement by the officer that after diligent search he had been unable to find any property of the corporation wherewith to satisfy it.
Before that judgment was rendered, the Supreme Judicial Circuit Court for York County, in accordance with the provisions of the Revised Statutes, appointed trustees to take charge of the estate and affairs of the company, with power to collect its debts, and to prosecute and defend suits at law.
The present suit was instituted April 11, 1874, by Bowker -- he being a citizen of Massachusetts -- in the Circuit Court of the United States for the District of Maine, to enforce the rights given to him as a judgment creditor by the statutes of Maine. The defendants were William Hill the testator of appellants, and the trustees, to whom had been committed the custody of the property of the insurance company. Hill was the treasurer and a stockholder of the company. The bill proceeds upon the ground that the company, prior to the surrender of its charter, had, in violation of the statute, made a division of portions of its property. The bill avers that it had, and that its corporators still have, property which cannot be attached; that Hill at the commencement of the suit, had possession of part of the property so unlawfully divided, which could not be attached. The prayer of the bill is that the complainant's judgment be satisfied from the property so divided, transferred, and delivered to Hill or from its proceeds. The trustees answered that there were no assets in their hands chanroblesvirtualawlibrarychanroblesvirtualawlibrary
with which to satisfy the judgment. Hill demurred upon the ground that the bill made no case entitling complainant to the discovery or relief asked. The demurrer was overruled, and Hill answered. One of the defenses is that the complainant's cause of action was barred by the statutes of limitations of Maine. Upon final hearing, a decree was entered against Hill for the amount of his judgment against the barred by the statutes of limitations of Maine. Upon final hearing, a decree was entered against Hill for the amount of his judgment against the barred by the statutes of limitations of Maine. Upon final hearing, a decree was entered against Hill for the amount of his judgment against the company. An appeal was taken from this judgment.