Ft. Wayne Elec. Corp. v. Franklin Elec. Light Co.

• Decision Date: 13 September 1898
• Citation: 41 A. 217,57 N.J.E. 16
• Parties: FT. WAYNE ELECTRIC CORP. v. FRANKLIN ELECTRIC LIGHT CO.
• Court: New Jersey Court of Chancery

41 A. 217

57 N.J.E. 16

FT. WAYNE ELECTRIC CORP.

v. FRANKLIN ELECTRIC LIGHT CO.

Court of Chancery of New Jersey.

Sept. 13, 1898.

(Syllabus by the Court.)

Bill by the Ft. Wayne Electric Corporation against the Franklin Electric Light Company. Heard on bill for a receiver, answer, and proofs. Order appointing receiver.

David J. Pancoast, for complainant.

Samuel H. Grey and Robert H. McCarter, for defendant.

McGILL, Ch. The complainant recovered judgment against the defendant on the 15th of January, 1898, for $12,443.04, and, as a creditor of that company, asks that it be adjudged to be insolvent, and that a receiver be appointed for it. In March, 1898, it made a similar application, which was determined by a decree dismissing its bill, dated on the 9th of June, 1898, upon the opinion and advice of Vice Chancellor Reed, filed May 28, 1898. 40 Atl. 441. The present bill was tiled June 27, 1898,18 days after the dismissal decree was made, and about a month after the opinion in the former suit was filed. Upon the previous application, as upon the present, it was made to appear that the defendant was engaged in the business of electric lighting at Cape May, where it has a contract for lighting the public streets and places, extending some four years into the future; that it then had a completed plant, consisting not only of the boilers, engines, dynamos, and other apparatus appropriate thereto, but also poles and wires throughout the highways and country adjoining it; that upon the plant something approximating $60,000 J had been expended; that a large part of the machinery had been erected upon the land of one William O. Robb, who held a mortgage upon it, and also a mortgage upon lands belonging to the light company, together securing to him the payment of $13,500; that a judgment had been recovered against the company in April, 1892, for about $1,200, in favor of Russell & Co., which antedates the mortgages, but is said by the defendant to have been paid, but is not satisfied of record; that subsequent to the mortgages, in June, 1896, one Warren recovered two judgments against the company, aggregating about $1,650, which appear to have been purchased for Thomas Robb, who has caused executions to be issued, and levies made, so that he may sell the properties levied upon at pleasure; that in December, 1897, one Tunis recovered a judgment against the company for about $2,100, upon which execution issued and levy was made, and in February, 1898, the complainant recovered judgment against the company for about $12,500. It did not then appear what the value of the defendant's property was, nor that it was not worth all that had been expended upon it, and by reason of its contract with the municipality, and entry upon the actual use of its franchise, perhaps more than that sum. In absence of such proof. Vice Chancellor Reed thought that while technical insolvency was exhibited by proof of a mortgage under foreclosure, unpaid judgments under which levies had been made, and the existence of taxes and unsecured indebtedness unsatisfied which the defendant could not pay, yet it was not a case for the appointment of a receiver, because the attitude of the creditors, except the complainant, indicated a forbearance that would admit of the continuance of the operation of the plant by the defendant, and the execution of a then proposed scheme, ?which appeared to the vice chancellor to be feasible, to retire the entire outstanding indebtedness by the issue of bonds, and because it did not appear that advantage could result to either the creditors or the stockholders of the company in the appointment of a receiver. Upon the present application the opinion of a witness is offered to show that the value of the defendant's property is not equal to the amount of the levies upon it, exclusive of the complainant's judgment. If this opinion should be held to establish the value,—a doubtful proposition with reference to so special a property, —the matter is not new. The proof shows that the same conditions upon which the opinion is based existed at the time of the former litigation. The same proof might have been offered on the former suit. A new case cannot be made out of omitted facts then available.

The material fact urged upon this application, that has come into existence since the case adjudicated, is charged in the bill to be that the defendant "has arranged a fraudulent sale of all its property of every sort, including its franchises, to the said William Oscar Robb, for the pretended sum of fifteen hundred dollars above his said mortgage claims against the company." This allegation offers a very material fact upon the inquiry whether a receiver should be appointed. The vice chancellor's conclusion was based upon his confidence in the integrity of the real managers of the company, and their fidelity to the interest of the company's creditors. He believed that their purpose was, as they represented it to him, to execute a scheme to issue bonds to liquidate the outstanding indebtedness of the defendant, and that the affairs of the company were being managed with economy, and in the...