Horner v. Carter

• Decision Date: 14 April 1882
• Citation: 11 F. 362
• Parties: HORNER v. CARTER and another. [1]
• Court: U.S. District Court — Eastern District of Missouri

11 F. 362

HORNER v. CARTER and another. ^[1]

United States Circuit Court, E.D. Missouri.

April 14, 1882

S Herman, for plaintiff.

Hayden & Glover, for defendants.

TREAT D.J.

The proposition involved arises under section 744 of the Revised Statutes of Missouri. That section is in these words:

'Upon the dissolution of any corporation * * * the president and directors, or managers of the affairs, of said corporation at the time of its dissolution, by whatever name they may be known in law, shall be trustees of such corporation with full powers to settle the affairs, collect the outstanding debts, and divide the moneys and other property among the stockholders, after paying the debts due and owing by such corporation at the time of its dissolution as far as such money and property will enable them; to sue for and recover such debts and property by the name of trustees of such corporation, describing it by the corporation name, and may be sued by the same; and such trustees shall be jointly and severally responsible to the creditors and stockholders of such corporation to the extent of its property and effects that shall have come into their hands.'

The plaintiffs have sued, under an alleged demand against a dissolved corporation, the two defendants, on the ground that at the date of the dissolution they were directors or managers of said corporation. Is such a case maintainable at law? In courts where state statutes have not commingled law and equity proceedings, and where there are no statutes controlling or subverting recognized proceedings in equity, no question would be debatable in a case like the present. Does he statute quoted subvert the recognized rules in equity, or substitute therefor a new mode of proceedings, or merely give an additional remedy?

A corporation is liable for its debts. If it is dissolved, its directors and managers must, under the statute, as trustees proceed to wind it up. They must, as such trustees, apply the assets in their hands to the payment of said debts in the first instance, and are 'jointly and severally responsible' to the extent of assets which have come into their hands for its faithful administration. If the corporation is dissolved, it may be that no need exists under the statute for a suit against it to establish the supposed debt before proceeding further, as would have ordinarily been the case in equity against an existing corporation; that is, first obtain judgment against the corporation. The Missouri statute does not contemplate that suits at law may be brought by each creditor against such statutory trustees, and judgment had accordingly against them personally, irrespective of the extent of assets in their hands, and of the many demands that may exist against the same for pro rata distribution. It may be, if no demand save plaintiff's exists, and the assets are equal thereto, he may pursue the trustees therefor at law. To do so at law his averments must be accordingly, and must be such as to show by facts stated what will enable the court to determine as a matter of law that a dissolution...