Commercial Nat. Bank v. Burch

• Decision Date: 12 May 1892
• Citation: 141 Ill. 519,31 N.E. 420
• Parties: COMMERCIAL NAT. BANK v. BURCH. BURCH v. KALAMAZOO PAPER CO.
• Court: Illinois Supreme Court

141 Ill. 519

31 N.E. 420

COMMERCIAL NAT. BANK

v.BURCH.¹

BURCH

v.KALAMAZOO PAPER CO.

Supreme Court of Illinois.

May 12, 1892.

Appeal from appellate court, first district.

Bill to dissolve the J. L. Regan Printing Company, an Illinois corporation. Charles S. Burch was appointed receiver of the corporation. The Commercial National Bank of Chicago and the Kalamazoo Paper Company filed intervening petitioners, claiming to be creditors of the J. L. Regan Printing Company, and to be entitled to preferences over other creditors. The circuit court dismissed both petitions. The appellate court affirmed the decree as to the bank, and reversed it as to the paper company. The bank and the receiver appeal. Modified.Matthew P. Brady and Cratty Brothers, for appellant Charles S. burch.

Weigley, Bulkley & Gray, for interveners Commercial Bank of Chicago and Kalamazoo Paper Company.

The other facts fully appear in the following statement by SHOPE, J.:

The J. L. Regan Printing Company, a private corporation of this state, doing business in Chicago, became indebted to James J. West in a series of transactions, so that on the 27th of October, 1887, West held the judgment notes of the company for something over $40,000. It was also indebted to the Kalamazoo Paper Company in the sum of $2,576, of which last company West was acting as the agent for the purpose of closing its indebtedness with the J. L. Regan Company. One Yaggy held 130 shares of the stock of the J. L. Regan Printing Company, and also held a note against the company for a considerable amount. It seems that West, believing that Yaggy was unfriendly to his interest, refused to advance more money to the company unless Yaggy's note was paid and his stock purchased. West bought the stock held by Yaggy under an understanding that the purchase was for the company, and the evidence shows that the purchase was made on its account. After the purchase by West, he transferred the stock to the company, and procured therefor the judgment note of the company for $13,000, bearing date September 23, 1887, payable to the order of the maker 90 days after date, with 6 per cent. interest, and which was indorsed by the company in blank. The Regan Printing Company on October 11, 1887, executed to the Kalamazoo Paper Company its promissory note of that date for $2,576.27, payable three months after date, with 8 per cent. interest,-to each of which notes was attached a warrant of attorney, authorizing confession of judgment thereon at any time. October 27, 1887, West procured from the J. L. Regan Printing Company a written assignment of all its book accounts, of every kind, amounting in the aggregate to something over $30,000. This asssignment was absolute on its face, but it is claimed and shown to have been taken as collateral security for the several notes held by West and the note to the Kalamazoo Paper Company. On the same day, West had judgments entered up upon all of his notes except the $13,000 one, before mentioned; the judgments amounting, practically, to $45,000. A few hours after obtaining the assignment of the book accounts, and about 4 o'clock, on October 27, 1887, West had the sheriff take possession of all the property, except the book accounts, belonging to the printing company. West took possession of the books immediately, and carried them away, without the knowledge or consent of the printing company, and deposited them with his attorneys. On the 29th of October, 1887, two days later, West took the $13,000 note given by the company for the Yaggy stock, and said assignment of the book accounts, and delivered the same to the Commercial National Bank of Chicago as collateral security for a debt of $25,000 which he then contracted with the bank. Under the executions issued upon the judgments in favor of West, all the property of the printing company was seized, and its business closed. Thereupon, some of the simple contract creditors filed their bill against the corporation, the officers and directors of the corporation, West, the sheriff, and the Union Trust Company, one of the judgment creditors, praying for the dissolution of the corporation, the appointment of a receiver, and to enjoin the sales under said executions, and for other relief. A receiver was appointed by consent of the corporation, and most of its officers, and the accounts of the company were by order of the court turned over to the receiver. On January 28, 1888, by leave of court, intervening petitions were filed by the Commercial National Bank and by the Kalamazoo Paper Company; the purpose thereof being to obtain an order of court to have the accounts theretofore assigned to West applied, when collected, in discharge of the notes of the interveners, respectively. This upon the ground that, by virtue of the assignment of the book accounts to West, they have a prior equitable lien thereon. The circuit court, at the hearing, dismissed both of said petitioners. From this decree the interveners appealed to the appellate court. That court affirmed the decree as to the national bank, and reversed the same as to the Kalamazoo Paper Company, and from that decree this appeal is prosecuted.

SHOPE, J., ( after stating the facts.)

The original bill was a proceeding under section 25, c. 32, of the Revised Statutes, entitled ‘Corporations,’ to dissolve the corporation known as the J. L. Regan Printing Company, to enjoin the sale of its property, and to procure the appointment of a receiver to wind up its affairs. The objection is made that the original bill fails to show a right in the circuit court to entertain jurisdiction and to appoint a receiver. The objection is based on the assumption that the proceeding is a creditor's bill, which will not lie until the creditor has first reduced his demand to judgment, and exhausted his remedy at law by the return of an execution nulla bona. The propriety of the original decree appointing the receiver is not involved on this appeal. The decree was entered by consent of the corporation and most of its officers, and the receiver was acting under that decree when leave was granted to the Commercial National Bank and Kalamazoo Paper Company to intervene. They each filed their petition, not to vacate any former order or decree, nor questioning the power and jurisdiction of the court in the appointment of a receiver, but for an order directing the receiver to pay the petitioners' claims in full out of the collections made by him, out of the book accounts of the insolvent corporation. This was the relief sought. The court denied this relief and dismissed the petition, and from this order they severally appealed to the appellate court. The appeals will not bring up for review the order appointing the receiver, and directing the property to be turned into his hands. The relief asked by petitioners was in subordination to such orders, and in recognition of their validity. Moreover, the attack is here made collaterally; and, as the court had jurisdiction of the subject-matter and of the parties, its order, no matter how erroneous, cannot be thus attacked. Harris v. Lester, 80 Ill. 307; Wing v. Dodge, Id. 564; Hernandez v. Drake, 81 Ill. 34;Wenner v. Thornton, 98 Ill. 156;St. Louis & S. Coal, etc., Co. v. Sandoval Coal, etc., Co., 111 Ill. 32.

The order dismissing the petitions is sought to be upheld upon the ground that the president and secretary of the printing company were without power or authority to execute the assignment to West, and that it is therefore void. It appears that the board of directors had prior to this assignment passed a resolution as follows: ‘The president and secretary of this company are authorized to hereafter execute judgment notes, chattel mortgages, bills of sale, or other instruments in their judgment necessary to the financial...