Buchanan v. Barnes

• Citation: 34 S.W. 425
• Parties: BUCHANAN et al. v. BARNES et al.
• Decision Date: 21 December 1896
• Court: Tennessee Supreme Court

34 S.W. 425

BUCHANAN et al. v. BARNES et al.

Supreme Court of Tennessee.

December 21, 1896

Appeal from chancery court, Sumner county; J. S. Gribble Chancellor.

Bill by O. E. Buchanan and others against W. E. Barnes and others to wind up the affairs of the Union Roller Mills & Elevator Company, as an insolvent corporation, to enjoin the enforcement of judgments against it, and to have its assets distributed pro rata among all the creditors. From a decree of the court of chancery appeals, affirming the decree of the chancellor giving the judgments preference, Charles Baker executor of Rhoda Baker, one of the general creditors appeals. Affirmed.

Dismukes & Seay and B. D. Bell, for appellant.

J. J Turner, for appellee McClaren. Wilson & Pardue, for appellees Buchanan et al.

McALISTER J.

This bill was filed by certain stockholders and directors of the Union Roller Mills & Elevator Company for the purpose of winding up its affairs as an insolvent corporation. Two days prior to the filing of this bill, to wit, on the 15th of February, 1893, certain creditors of the corporation had obtained judgments against it before a justice of the peace, and impounded the proceeds of certain fire insurance policies, which were due and payable on account of the destruction by fire of the mill property. The bill was filed for the purpose of enjoining these judgments, and having the entire assets distributed ratably among the general creditors of the corporation. The contention of complainants is that the Union Roller Mills & Elevator Company, at the time the garnishments were served by the defendant creditors, was an insolvent corporation, and that there had been such overt acts of insolvency as to convert the assets of the corporation into a trust fund for the benefit of all the creditors. On the other hand, the defendant creditors insist that, at the time their judgments were obtained, and the insurance fund impounded, the said corporation was still a going concern, and that they were, therefore, entitled to pursue all the ordinary legal and equitable remedies for the enforcement of their claims. They therefore insist upon the priority of their liens as against the general creditors of the corporation. The chancellor, upon final hearing, decreed that the defendant creditors, by virtue of their garnishments, acquired priority over the other creditors of the corporation, and ordered the payment of their judgments in full out of the fund due from the Phoenix Insurance Company. Complainants appealed. The court of chancery appeals affirmed the decree of the chancellor, and the case is before this court upon the appeal of Charles Baker, executor of Mrs. Rhoda Baker, one of the general creditors.

The only question we are called upon to decide, as conceded by appellant's counsel at the bar, is whether, upon the facts found by the court of chancery appeals, the Union Roller Mills & Elevator Company was, at the date of the garnishment judgments, a going concern. The general principle is well settled that the property of a private...