Black v. Sullivan Timber Co.

• Decision Date: 20 April 1906
• Citation: 40 So. 667,147 Ala. 327
• Parties: BLACK v. SULLIVAN TIMBER CO. ET AL.
• Court: Alabama Supreme Court

40 So. 667

147 Ala. 327

BLACK v. SULLIVAN TIMBER CO. ET AL.

Supreme Court of Alabama

April 20, 1906

Appeal from Chancery Court, Mobile County; Thomas H. Smith Chancellor.

"To be officially reported."

Suit by John W. Black against the Sullivan Timber Company and others. From a decree annulling the appointment of a receiver of defendant company, and overruling a motion for the appointment of a receiver, plaintiffs appeal. Affirmed.

L. H. &amp E. W. Faith, for appellants.

Stevens & Lyons and Blount & Blount, for appellee.

HARALSON J.

This bill was filed by the appellant, John W. Black, against the Sullivan Timber Company and several stockholders of the same seeking the appointment of a receiver of the defendant company, a Florida corporation, but having all its property in Alabama. Upon the filing of the bill the register appointed the complainant, as such receiver, without notice to the appellees. The order of the register, making the appointment, was appealed from, and upon such appeal, the chancellor reversed and annulled the same, and also overruled and denied a motion, then made before him, for the appointment of a receiver. This appeal is prosecuted to reverse that decree of the chancellor.

Before the institution of this suit, April 1st, 1905, the circuit court of Escambia county, Florida, rendered a decree at the request of a majority of the stockholders,--the complainant himself, being one of the stockholders, joining in the petition for such dissolution,--dissolving said corporation. All the defendants except the Sullivan Timber Company, together with the complainant, were the directors of the said corporation, at the time the decree of the said Florida court was rendered.

Section 2155 of the Revised Statutes of Florida of 1892 provides, "All corporations shall continue bodies corporate for the term of three years after the time of dissolution from any cause, for the purpose of prosecuting or defending suits by or against them and enabling them to gradually settle their concerns, to dispose of and convey their property, and to divide their capital stock, but for no other purpose."

By section 2157 of said statutes, it is provided, "Upon the voluntary dissolution of any corporation already created, or which may hereafter be created, by the laws of this state, the president and directors, at the time of its dissolution, shall be trustees of such corporation, with full power to settle its affairs, collect its outstanding debts, and divide the money and other property among the stockholders, after paying the debts due and owing by such corporation at the time of its dissolution, as far as such money and property will enable them; they may sue for and recover such debts and property by (in) the name of the trustee of such corporation, and may also be sued by the same, and such trustee shall be jointly and severally responsible to the creditors and stockholders of such corporation, to the extent of its property and effects that shall come into their hands, but in the event of dissolution from any other cause a petition may be filed in the circuit court by any three or more creditors or stockholders of said corporation, praying that a receiver be appointed, and the court or judge thereof at chambers, shall hear and consider said petition, and for just and reasonable grounds shall grant said petition and appoint a receiver, and unless the president and directors of such corporation shall swear that the corporation is solvent and exhibit proof of the same satisfactory to the court or judge, such petition shall be granted and a receiver be appointed, but no voluntary dissolution shall be made or permitted after the institution of any suit or proceeding against any corporation for an involuntary or forced dissolution."

The petition for dissolution of the corporation was asked, as stated, by a majority of the stockholders including complainant, in all respects as provided by the statute of Florida, and that it was a voluntary dissolution, cannot be questioned.

In Alabama, we have kindred statutes. Code 1896, §§ 1291-1300. The dissolution is to be decreed by the court of chancery. Section 1293. Upon a decree of dissolution, a receiver is to be appointed, of all the assets and property of the corporation, and the chancellor shall direct him to collect, by suit or otherwise, all the debts due the corporation, and sell property real or personal, belonging to the corporation, and how he shall make the title thereto to the purchaser, etc. Section 1294.

Section 1298 provides: "All corporations whose powers expire by limitation, all which are dissolved by forfeiture or any other cause, exist as bodies corporate for the term of five years after such dissolution, for the purpose of prosecuting or defending suits, settling their business, disposing of their property, and dividing their capital stock, but not for the purpose of continuing their business."

"Upon the dissolution of any corporation, unless other persons are appointed by the general assembly, or by a court of competent authority, the managers of the business of the corporation at the time of its dissolution, by whatever name known, are the trustees of the stockholders and creditors, authorized to settle the affairs of the corporation, dispose of such property as is necessary to pay its debts, and divide among the stockholders the money and property remaining after payment of such debts and the necessary expenses." Section 1299.

"Such persons have authority to sue for and recover the debts and property of the dissolved corporation, in its corporate name, and are jointly and severally responsible to its creditors to the extent of the property which may come into their hands." Section 1300.

The statutes of the two states are so nearly alike, that the proper construction of those of one state, applies alike to those of the other. In the case of Weatherly v. Capital City Water Co., 115 Ala. 156, 22 So. 140, we had under consideration the construction of sections 1690 and 1691 of the Code of 1886, which appear also in the Code of 1896 as sections 1298 and 1299, where it was said, as the conclusion of the court: "Upon dissolution, the corporation is essentially dead except for the general purpose of collecting its assets, paying its debts and dividing its property and money remaining after the satisfaction of its liabilities among its stockholders. For the purposes of the enterprise or business which it was chartered to carry on, it is as essentially dead as if we had no statute continuing its life for the other specified purposes, as if, indeed, it had never existed at all; and this by the words of the statute which declare it to be non-existent for the purpose of carrying on its business. Code 1886, § 1690 (Code 1896, § 1298). Suits may be brought by its trustee and against it in its corporate name, but such suits only as pertain or are necessary or incident to the settlement of its affairs as of a business which absolutely cessed on the instant of its dissolution. The corporation as such has no more concern with or interest in the property once owned by it after dissolution than a dead man has in the estate he owned at the moment of death. The property after dissolution is in equity the property of the shareholders charged with the payment of debts, and by the statute committed to certain trustees to satisfy this charge and divide the residue among such shareholders. The trustees are invested with the legal title for the purpose of...