Henry v. Sisianton

• Decision Date: 10 February 1903
• Citation: 64 N.J.E. 572,54 A. 153
• Parties: HENRY et al. v. SISIANTON et al.
• Court: New Jersey Court of Chancery

54 A. 153

64 N.J.E. 572

HENRY et al.

v. SISIANTON et al.

Court of Chancery of New Jersey.

Feb. 10, 1903.

Bill for relief by Abbie I. Henry and the South Bend Chilled Plow Company of indiana, as creditors of the Musconetcong Grange, No. 14, a voluntary association, against William M. Simanton and another, defendants. Decree appointing a receiver and granting an injunction.

Martin Wyckoff, for complainants.

I. W. Schultz and S. C. Smith, for defendants.

REED, V. C. This bill is filed by two creditors for themselves and such others as may come in. The relief is sought under the provisions of an act passed in 1899 (P. L. 1899, p. 485), entitled "An act for winding up voluntary associations, and associations with partnership liabilities." The act provides that whenever a voluntary association, carrying on business with partnership liabilities, shall become insolvent, or shall suspend its ordinary business for want of funds to carry on the same, it shall be lawful for any creditor or member of such association to apply to the chancellor for a writ of injunction and the appointment of a receiver, for the winding up of the business and the payment of the debts of such association. It empowers the chancellor to proceed in the manner provided for winding up insolvent corporations, under the corporation act of 1875. It makes it the duty of the trustees or managers of such association who are served with subpoena to file with the clerk of this court a verified statement of the names of all the members of the association. After the filing of this list, an order is to be made requiring all such members to show cause why the prayer of the bill, namely, that an injunction should not be allowed and a receiver appointed, should not be granted. Any member, upon the return of such notice, may file his or her answer, and proceed to a hearing. The remaining parts of the statute deal with the procedure after the receiver is appointed. In the present case the trustees filed a list of members, and upon the return of the rule to show cause 55 members out of 106 filed answers, and against the remaining 51, who failed to file answers, decrees pro confesso have been taken.

In addition to the answers, a demurrer was interposed to the bill. The first ground taken by the demurrant is that the act of 1899 provides that the chancellor in this proceeding may proceed in the manner provided for the winding up of insolvent corporations under the act concerning corporations approved April 7, 1875. It is insisted that there is no act concerning corporations now in existence approved April 7, 1875, because it was repealed by the act of 1896 (page 317). The act of 1875 is repealed by the act of 1896 only so far as the provisions of the act of 1875 are not expressly re-enacted in the act of 1896. The repeal therefore operated only upon those provisions in the act of 1875 which are inconsistent with the provisions of the act of 1896. The methods of procedure in winding up insolvent corporations, contained in the act of 1875, are substantially re-enacted in the revision of 1896. The effect of the revision was to continue them in force. Sunderland on Statutes, § 161. The act of 1875 was usable as a standard of procedure, and became a legal rule, apart from its own virtue, by reason of the vitality imparted to it by the legislative reference to it in the later act. I am of the opinion, therefore, that this ground of objection to the bill is not tenable.

The second ground of attack is that the bill, while setting out that the association filed a certificate of incorporation at a certain date, does not state whether the debts due to the two complainants arose out of the dealings with the association before or after its incorporation. The point of this objection is that, unless the debts of the complainants accrued before the date of filing the certificate of incorporation, they are not debts of a voluntary association; and that it was the pleader's duty to state as a fact that the debts were incurred while the grange was still unincorporated. But the theory of the bill is that the certificate of incorporation did not protect the members of the grange from liability for debts incurred in the business conducted by the grange, even after its incorporation. The bill asserts that no notice of the intention to incorporate was given at a previous regular meeting of the grange, and, further, that these debts were not contracted in the transaction of the corporate business of the grange. If these facts are so, as I must assume them to be, then any debts incurred by the grange at any time confer upon the creditor a footing to file a bill.

The third ground taken is that one of the complainants, the South Bend Chilled Plow Company, is shown to be disentitled to stand as a creditor, because the bill describes it as a foreign corporation, without showing that it has become equipped to do business in this state. Admitting this to be true, this complainant is not the only complainant. There remains another creditor who was entitled to file the bill. But, indeed, it does not appear from the bill that the South Bend Chilled Plow Company is disentitled to stand as a creditor. It does not appear from the bill that the contract out of which the debt arose was made in the state of New Jersey; and, if it did so appear, a single transaction would not amount to doing business in this state. For these reasons I think the general demurrer challenging the equity of the bill must be overruled.

Upon the hearing upon the bill and answers filed, the following facts appeared: The Musconetcong Grange was organized in February, 1893. Its primary purpose was to establish a store, where general...