Bristol Iron & Steel Co. Et At v. Thomas

• Decision Date: 16 July 1896
• Citation: 93 Va. 396,25 S.E. 110
• Court: Virginia Supreme Court
• Parties: BRISTOL IRON & STEEL CO. et at. v. THOMAS et al.

93 Va. 396

25 S.E. 110

BRISTOL IRON & STEEL CO. et at.

v.THOMAS et al.

Supreme Court of Appeals of Virginia.

July 16, 1896.

Creditors' Bill against Corporations—Parties —Mechanic's Lien—Assignee op Contractor.

L The stockholders of a corporation are neither necessary nor proper parties to a bill by a creditor, on behalf of himself and all other creditors who may choose to join, alleging the insolvency of the corporation, and asking that its property may be administered as a trust fund for the benefit of its creditors, where no relief is asked against the stockholders.

2. An inchoate right to a mechanic's lien, existing under Code, § 2475, in favor of a contractor, passes by an assignment for the benefit of his creditors; and the assignee may, on completion of the contract, perfect and enforce the lien, though the statute contains no provision for the assignment of such right

Appeal from hustings court of Bristol; W. F. Rhea, Judge.

Bill by Alexander Thomas, as assignee of James P. Withrow, and others, against the Bristol Iron & Steel Company. From the decree the defendant and Flat Top Coal & Coke Association appeal. Affirmed.

H. G. Peters, C. R. Vance, and J. H. Wood, for plaintiffs.

Fulkerson, Page & Hurt and R. A, Ayers, for defendant Bristol Iron & Steel Co.

Watts, Robertson & Robertson, for defendant Flat Top Coal & Coke Ass'n.

KEITH, P. James P. Withrow entered into a contract with the Bristol Iron & Steel Company for the construction of a complete blast-furnace plant in accordance with certain plans and specifications. When the work had been partially completed, Withrow, becoming embarrassed, made a general assignment for the benefit of his creditors, including therein the contract with the steel and iron company and whatever might be due him from the said company for work performed and supplies and material already furnished. After the assignment, Thomas, the assignee, went on, with the assent of the iron and steel company, to complete the work, and in order to secure what was due him filed a mechanic's lien, complying with all the provisions of the statute law applicable in such cases. In due time he filed his bill in the hustings court of the city of Bristol, which was afterwards transferred to the hustings court of Radford city, to enforce the lien thus acquired. Numerous other lien creditors of the Bristol Iron & Steel Company filed bills, also, to enforce their demands. The defendant company answered, the several suits were brought on to be heard together, and a decree was entered for an account of all liens upon the property and franchises of the defendant corporation. Upon the coming in of the report of the com-missioner, exceptions were taken by the Bristol Iron & Steel Company, but the court, without passing upon them, recommitted the report to Commissioner Honaker, who returned his second report on the 2d day of December, 1S93. To this report numerous exceptions were filed, which the court by its decree disposed of, and with respect to them no question is here made, except as to those taken by the Bristol Iron & Steel Company, all of which were overruled, and the exceptions of the Plat Top Coal & Coke Association, which will be separately considered The court, having by its decree disposed of the exceptions to the master's report, entered a decree appointing commissioners of sale, and directing them to sell the property of the Bristol Iron & Steel Company unless it paid all the creditors whose debts had been reported the respective amounts due them within 120 days from the rising of the court Thereupon the Bristol Iron & Steel Company applied for and obtained an appeal and supersedeas from one of the judges of this court

The first error assigned is that the court failed to pass upon the exceptions to the first report of Commissioner Honaker. None of the exceptions to either the first or second report of Commissioner Honaker on the part of the defendant corporation are well taken, and, as none of them present any question of interest there is no occasion to discuss them at length. Had the court below considered them, they should have been overruled, and its failure to pass upon them is harmless error.

The next assignment of error is to the action of the court in decreeing the sale of petitioner's real estate in default of the payment of the unsecured debts of the company. It is contended that the real estate of a corporation, like that of a natural person, may be subjected to sale for the enforcement of liens thereon, but cannot be sold in order to satisfy the claims of creditors who have not acquired liens. The petitioner, however, admits that the affairs of an insolvent corporation may be settled and its property be sold for the satisfaction of its debts of every description, whether secured by liens or not but insists that it must be upon a bill filed for a settlement of Its affairs in which its insolvency is made to appear. It is admitted in the petition for appeal that Cadwallader & Co. in their petition in their suit did aver the insolvency of the corporation, and prayed that the court should administer its property as a trust fund for the benefit of all creditors, and that they sued for the benefit of themselves and all other creditors who may choose to come in and contribute to the expense of the litigation. The appellant insists, however, that this petition of Cadwallader & Co. was never treated as an amended bill, and that, even if it were considered as a bill to distribute...