MCVICKER V. AMERICAN OPERA CO., (NATIONAL OPERA.
(Ctrcuit Court, N. D. nZinois. December 15. 1889.)
CoRl'ORA.TJONS-INSOLVENCy-RIGHTS OF CREDITORS.
Where an insolvent corporation reorganizes under a new charter and a different. though tranaferred to the new corponat:ne, its property is still liable for its ration for a valuable consideratioD.
At Law. Candee « Rose, for plaintiff. Isham, Lincoln « Beale, for defendant.
GRESHAM, J .. On August 5, 1886, James H. McVicker commenced his action in aasumpsit against the American Opera Company for breach of its contract for the use of his theater. On September 8, 1886, at a meeting of the directors of the American Opera Company, the question of forming a National Opera Company was discussed, and the following preamble and resolutions were unanimously adopted:
"Whereas, for the purpose of promoting a higher musical education in the United States, it is desirable that the principal cities should co-operate upon a uniform and equitable plan for establishing a national opera, Resolved that a National Opera Company be formed, in which each city having a local American Opera Company shall be represented by directors in proportion to its capital, and have proportionate ownership and voice in its direction; Resolved that the present American Opera Company, Limited, will co-operate in .this movement by appropriate reorganization, transferring its property to the N ational Company; and· Resolved that a local com pany be formed for New York city on the same basis in the National Company as the local American Opel'a Companies in alrthe other cities."
In pursuance of these resolutions, th'e National Opera Company was under the laws of New Jersey, with a capital stock of $500,000, and a certificate of organization was filed in the office of the secretary of state on November 26, 1886. At a meeting of stockholders of the American Company on November 29, 1886, two contracts, which had been approved at a meeting of the directors on the 22d, were submitted. One of these contracts provided for a lease of the entire property of the Americltn Company to the National Company for one year for $25,000, and the other provided for the sale of the same property to the National Company, at any time within one year, for $375,000, namely, the $25,000 already referred to as rental, and $350,000, to be paid, either in cash, or the stock of the National Company at its par value. On the last-named day, namely, November 29th, at a meeting of the directors of the National Company t a resolution was adopted approving of the' proposed agreements, and authorizing and directing the executive committee to pay the $25,000 under the lease, and take possessi0Il. of the;pro'perty. . The lease was accordingly executed by the offi. lReponoo bY Loliis J3Oisot,Jr., of the Chicago bar. .
cers of the respective companies on the same day, and on the following day.,;the, was.also . -scenery, and other property of the Americ,aQwas embraced In the lease, and the National undertook to perform all the contracts of the American, and for that purpose continued ih its service the eniployes,'singers, artists, etc., of the American. The capital stock of the American was $250,000, ,and with a few itsstockholdel'$ and office-rs became ers and·offioers of theJNationat On December 7, 1886, the general manager of the American Company was at Chicago, with its property, to give an opera, and two days later the lease was presented to him, and he was requested to furnish an inventory of t,he pr()pertyembraced in it, and stencil on the same, or the packag!ls containing it, the numeofthe National Com pany· Up to this' time Gottschalk had been the custodian of the property of the Oompany, and he was now employed to serve in the same for the National. The $25',000 rental was paid at Chicago at orabotit this time. 'On December13, 1886, McVicker sued out an attachment in aid bfhis then pending suit, and the writ was levied on';(>a:rt of the property embraced in the lease, and on the next day he commenced a secQndsuit for breach of another similar contract, and sued out an attachmEmt in aid of that suit, which, on the same day, was levied lease. On Deoember14th the National Company. exercised option to purchase the property, and notified the AIllericanCompany of that fact, and delivered to it $350,000 of the stock of the National. The American Company was insolvent when the resolutions were adopted on September 7th,and the etridence shows that it remained so until March following, when, in al3uitbrought against it in New York, a receiver was .It transacteano business aft,er the National Company was organized, which also became insolvent, and in a suit commenced against it in New York in, the fall of 1887 a receiver was appointed. Instead of its assets as a fund for the payment of credu.ors, it being insolvent, the American Company caused, the National Company to be organize<i for the purpose of transferring to it all of the forDler's property. lndeed, the resolutions adopted on September 7th a reorganization of the American Company under another name, without essenti/U change in object Of purpose, which was done, and the business proceeded just as before. . . The language of the. resgll;ltions· adopted ()n September 7th leaves no room for doubt as to wh,ijt WlJ,S qoiitemplatedby the directors of the ;(\.merican Company. By the seconli resolution it was·declared that the .company "will co-operate in the moyement by appropriate reorganizat,lon, and transfer of its property to the National Opera Company j» and by the third resolution it was declared "that a locd compllny be formed .for New York city, to on the same basis in the National c.ompany the local opera oompanies in all the other cities.". The new cqmpany, organized, was expected to take'the place of theinsolvent American Company, and succeed to all of its rights, and the latter become defunct. If it was contemplated that COIllpany should con-
CLEAVER t'. TRADERS' INS.
tinue in business as a local company in the city of New York, in co-operation with the new company, why'provide in the third resolution for the organization of another local company for the same place? The.evidence clearly shows that after the reorganization of the new company, the American transacted no business. An insolvent corporation cannot thus reorganize, and hold its property against creditors. Even if this scheme was not intended to hinder or delay McVicker in the prosecution of his suit and the collection of his debt,-and I do not hold that it was,-it had that 'effect,and the law presumes that the neeessary consequences of an act are intended. On the theory that the American Company and the National Company were distinct legal entities, the latter was not ignorant of the condition of the .former. By the lease,the American Company disposed of all its property for 12 months; and, whether the $25,000 was a fair rental or not, the insolvent lessor' could not thus place its property beyond the reach of creditors. Instead of holding its assets in trust for creditors, as it should have done, it being insolvent, the American Company endeavored to place them where the creditors, for a time at least, could not so readily reach them. The first appears to have been levied before th 13 sale was consummated under the optionalagreementj but, however that may be, the property was properly seiZed under both writs. Findings have already been announced of the amount due McVicker for breach of the two con-
L CoSTs-IN' F1roEBAL
CoURTS--CoSTS BEFORB RB1(OVAL.
J;lllon .final judgment here.
, The docket fee of $20, taxableul'0D a trial or final hearing, is taxable bJ;lt once, and t4en only uPQ/1 that examinatIOn of the law or facta which resulta in the flnal disposition of the eMe. It ill not taxa.ble where the jury has diBa.greecb
On· Appeal from Clerk's Taxation of Costs. O. P. Bkr,clc, for plaintiff. · L. D. Noms; for· defendant.
BROWN,J. Defenda.nt appeals from the following items of costs taxed against it by,the clerk: ·1. Costs accrued in the state court prior to the removal of the case here.· The action waa :originally begun, in the circuit court for Tuscola county, was tried there twice,was twice carried to the supreme court,' (32 N.iW.:Rep. 660, 39N.W.Rep.. 571,) and reversed, and was then removed· to: this court upon the the defendant, where it was