.:lliEVELAND 'O!TY FORGE mON ;00. v. TAYLOR BROS. mON-WORKS CO., Limlted. BRElNTISS.TOOL & SUPPLY CO. v. SAME. NILES TOOL >WORKS v.SAME. "(C1rcQit Court, E. D. LoulslaIl8.
Nos. 12,154, 12,:ui2, 12,153.
RIGHTS OIl' CREDITORS-ATTAOIDIENTS.
A provi8l.0n'1n the charter of acorpl>ration, requiring the advertisement of 10 days' notice of a. stockholdel'lil'. meeting for the purpose at altering or amendlp.g the cJlarter, is so far for the benefit of creditors that a resothe corporation,pil.ssed at a meet;l.n.g called without such notice, inefrectual to prevent a subsequent attachment of the corpora· ,tion's' :property by exlsting creditors. .
These were three a:etionS commenced by attaohments brought, the Cleveland Clty ]forge Iron Company, thePnmtis$ TOOl & Supply Company, and the Niles Tool Works Company, Linlited.. Heard on the of the defendant coworation to dissolv.e the attachments anddism.i1os the suits. Denied. '.' The motion to dissolve the attachments was baaed upon the ground tbatthe defendant corporation had been dissolved before the attachments were levied, and' the. was as to whether thedi.I!&Qlution had taken pllWeas creditors. . A resolution purpol"tingto dissolve. the corporation in fact been pailsed at a meethJg of the stockholders hellI ;November but this meeting :was held without any advertisement of notice thereof. Article5 tof.the corporation's charteJ:"required 10 days' notice should be ,given of anYJDeeting Wbeheld for the purpQse of altering 01", amending the charter; a,nd article 7 declared that whenever the corporation was dissolved. its affairs should. be, wound up by three stockholders, to be appointed as liquidators at a general meeting of the stockholders, convened after 30 days'advertised notice. Denegt.e,'Bayne & Denegre, for plaintiff Cleveland City Forge . Iron W. S. Ptll'kerson, for plaintiffs Prentiss Tool & Supply Co. and Niles Tool WorkS. T. J. &:inm.es, B. K. Miller, and A. H.Wilson, for defendants. BILLINGS, District Judge. In' all these casell the same question is presented. In each the suit was commenced with an attach· ment of the property of the defendants. In the first the attachment was levied and the citation served befMe fany steps were taken on the part of the defendants towards recording the dissolution. In the last two cases the meeting of the stockholders of the defendant corporation had been held, and the resolution to dissolve had been passed, but not recorded before the filing of the euit. According to the return of the marshal in all of the cases, service was made on December 7, 1892, and according to the certificate of the recorder of mortgages the resolution of the
CO. fl. TAYLOR BROS. IRON-WORKS CO.
'stockholders. recorded till January 6, 1893. But these dates do· not, . in my opinion, vary the. rights of the: respective plaintiJIs. In each case the parties WAO appear are the liquidating commissioners, elected by the majority of the stockholders pf the defendant corporation, who appear only for the purpose of moving that the attachments be dissolved and the suits dismissed, for this: that the corporation of the defendants has been dissolved. I find as a fact that at a general meeting of the stockholders, of. which there was no advertised notice, a majority of them voted to dissolve the corporation, and elected the above-named liquidating commissioners, and agreed to waive the notice of the meeting called for by the seventh section of the charter. Some question was made by the plaintiffs as to whether the waiver applied to. the notice required by the fifth section, as the waiver specified for notice called for by section 7, and aJso that no evidence was submitted showing that the meeting was called for the purpose of effecting the dissolution. But, in my' opinion, it is not necessary to decide whether the waiver waf! intended to apply to the advertised notice of 10 days as well as to the 30-days notice, and, in the absence of proof, I think, prima facie, the call was for the purpose for which the meeting acted. This brings me to the question whether the provision in the defendant corporation's charter that at a general meeting called for that.· purpose upon a notice of 10 days, published by advertisement in one of the daily newspapers, is so far for the benefit of the creditors of the corporation that they can insist that there must be the advertised notice for tlie period of 10 days,and therefore, if at a meeting called without such advertised notice, though the proper majority vote for a dissolution, the corporation, so far as the creditors are concerned, is not dissolved. It is to be· observed that this meeting in question was to be advertised in one of the daily newspapers. It was therefore to be a notice to stockholders, and to creditors, if the latter were interested in the meeting. The question turns upon the ulterior one whether they could have been affected by such a notice. I think it must be conceded that even as to future credits the existing creditors were interested, for such a notice would almost preclude credits of that sort. No corporation could get credit that had advertised its meeting to dissolve. The amount of debt might, therefore, be kept down by the advertisement. Again, existing creditors might be induced by such an advertisement to take proceedings in equity to preserve their interest in the assets of the corporation, and to take or hasten proceediIlgB at law against the corporation before it Should become dissolved. If the creditor, in consequence of the advertisement, commenced suit, non constat but that the corporntion might confess judgment, or, if he had already commenced suit, he might obtain judgment in such suit. In the absence of precedents in the books upon this question, I concur in the opinion of Judge Theard in Simon v. Taylor Bros., Limited, that, if a corporation puts into its charter such a provision, which is required to be recorded, and parties give credit to the corporation upon its recorded charter, so far as concerns creditors, the
vol. 54. '
stockholders cannot waive this; claue. Article 5 '. of the defendants' charter is iii the nature not only of an internal'regulation, but also of an external obligation; and, 80' far as creditors are concerned, there can be no dissolution without the advertisement, for the prescribed period of time. My conclusion is that in any case, whether the liquidators can present this question in tbis cause or not, upon the facts proved. and found above there has been no dissolution,by reason of the absence of the advertisement of the meeting, and therefore the motion of the liquidators in each of the cases must be refused. I append to this opinion a copy of article 7 of the charter of the defendant corporation and of the proceedings of the meeting of stockholders at which the resolution to dissolve was passed. "Art. 1. Whenever this corporation is dissolved, either by limitation or from
any 'other cause, its affairs shall be liquidated under the superintendence of three stockholders, to be appointed for that purpose at a general meeting of the convened atter thirtY days' prior notice shall have been publlshOO- in one of the dally: newspapers of the city of New Orleans, and with the assent ,of a majority in amount of the entire capital stock. Said commissioners 'shal1 remain in oflice until the affairs of said corporation shall have been fully liquidated: and, in case or the death of one or more commissioners, the survivor or survivors shall continue to act."
"New OrlelUlS, NOT. 16192"A general meeting of the stlJckhoiders of this company was held this day, Vice Prest. J. O. Meyer in the chair. The following stockholders were represented either personally or by proxy: J. O. Meyer, Goo. Taylor, Jas. O'Rourke, W. A. Taylor, J. C. Meyer,Jr., C. Wedderin, and J. C. Finney, Jr. ":Mrs. Jesllie A. Taylor, absent, repl'e.Elented b.v Geo. Taylor, 101 shares: W. R. Taylor, absent, re-presented by C. Wedderin, 229 shares, "On motion of Mr. O'Rourke It Was resolved that this company do hereby dissolve, and proceed to a liquidation of its affairs, and the appointment of three liquidating coIIUDillsioners, under section No. 7 of the charter. Carried unanimously. ""l'here were filed with the Sect'. the written consent of the absent stockholders to waive the notice and publication· required by section 7 of the charter. "The toUo:wing stockholders were .elected liquidating commissioners of the company: Oarl Wedderin, Walter A. Taylor, and J. C. Finney, Jr. ''1.'here being no further business before the meeting, same was adjourned. "J.C. Meyer, Vice Prest. "W. A. Taylor, Secty." "Personally appeared Walter A. Taylor, who, being duly sworn, deposes and says that the foregoing is a true and correct copy of the minutes of a general mlleting of stockholders of the Taylor Bros. Iron-Works Company, Limited, held November ,16th, 1892. , , W. A. Taylor. "Sworn to :and subscribed before me this 6th day of J&huary, 1893. , "Jas. D. Rankin, "[Seal.] Deputy Clerk; CivU District Court for the Parlsh ot Orleans. · ''Recorded in margin of Book 444, fo. 222, in mortgage oWce. ''Now OrlellDS, January $th, 1893. " [ S e a l . ] J o s . Batt, a. M. "Recorder Roo'd. Jan. 6,1893, 12:10 P. M. Mortgages."
CLEVELAND CITY FORGE IRON CO. V. TAYLOR BROS. IRON-WORKS CO.
CLEVELAND CITY FORGE mON CO. et at. rwORKS CO. et at. (Circuit Court, E. D. Louisiana.
TAYLOR BROS. moNo
February 22, 1893.)
CORPORATlONS-DISSOLUTION-NoTICE-RIGRTS Oll' CREDITORS-ATTACHMBNT.
Where the charter of a corporation provides that notice of a meeting to alter or amend the charter shall be advertised for a stated time, the di&solution of such corporation by its stockholders before the expiration 01. its charter period is as to existing creditors an alteration of an important character, which cannot be effected at a meeting held without such notice, so as to prevent them from levying an attachment. 54 Fed. Rep. 82, tollowed.
SAME-INJUNCTION AGAINST DISSOLUTION.
Creditors with attachments against a corporation cannot enjoin. the stockholders thereot from dissolving the corporation, In the absence ot fraud or of damage other than that caused by previous gross IuiBll1allage)llent, and that which will result trom the dissolution. l<'isk v. Railrood Co., 10 Blatchf. 518, distinguished.
In Equity. Bill by the Cleveland City Forge Iron Company,· the Prentiss Tool & Supply Company, and the Niles Tool Works, attach· ing creditors, against the Taylor Bros. Iron-Works Company, Limited, to enjoin the dissolution of defendant. Injunction denied. Motions made in the attachment suits to dissolve the attachments were heretofore denied. See 54 Fed. Rep. 82, where additional facts are -stated. W. S. Parkerson and Denegre, Bayne & Denegre, for complainants. Thomas J. Semmes. for defendants. BILLINGS, District Judge. This cause is submitted on an appli· cation for an injunction pendente lite. The defendanbl are a corporation, limited, organized under the laws of Louisiana, and the stock· holders therein. The complainants are plaintiffs in this court, who have commenced suit, two by attachment, and the other by sequestration. The chief object of the injunction sought is to restrain the stockholders from dissolving the corporation. Two points are involved in this application, and must be considered: First, has the corporation been already dissolved? and, second, if not, does the bill make a case for an injunction? 1. As to the claimed dissolution. In the suits at law a suggestion of the dissolution was made. An agreement was made to waive a trial by jury, and the court found against the dissolution. It has been insisted in the argument of this application that the proposition of law upon which the court founded its decision, viz. that the stockholders could not waive the clause in the charter of the corporation requiring the advertisement in the papers of the meeting called to dissolve the corporation, was erroneous. The whole matter turns upon whether the creditors had an interest in >receiving such a notice. For the reasons I gave in the law cases, ,my opinion, notwithstanding the second argument, is unchanged.. It seems to me they had interests to protect which gave them the