Lamkin v. Baldwin & Lamkin Mfg. Co.

• Decision Date: 08 June 1899
• Citation: 43 A. 593,72 Conn. 57
• Court: Connecticut Supreme Court
• Parties: LAMKIN v. BALDWIN & LAMKIN MFG. CO.

43 A. 593

72 Conn. 57

LAMKIN

v. BALDWIN & LAMKIN MFG. CO.¹

Supreme Court of Errors of Connecticut.

June 8, 1899.

Reservation from superior court, New Haven county; Sails A. Robinson, Judge.

Action by Guy Lamkin against the Baldwin & Lamkin Manufacturing Company. Application by the town of Milford, in a receivership suit, for the allowance of certain taxes alleged to be due from the defendant corporation as a preferred claim, brought to the superior court in New Haven county, and reserved by that court, upon a finding of facts, for the consideration and advice of the supreme court of errors.

The finding stated these facts: The defendant is a corporation, organized under the general law, in February, 1898, to take up and carry on the business theretofore conducted by a partnership. The members of this partnership were the principal subscribers to the capital of the corporation. One of them, Albert A. Baldwin, conveyed his interest in the firm assets, real and personal, to the other, Guy Lamkin; one of the conveyances stating as part of the consideration that Lamkin agreed to assume and pay all the partnership debts and liabilities. Lamkin then conveyed to the corporation, upon the same consideration, pursuant to a vote of the directors that such conveyances, together with $17,060 in cash, should be received in full payment of 80 per cent. of his subscription to 632 out of the 750 shares of $100 each, which constituted its capital, and should be taken subject "to obligations of said partnership of Baldwin & Lamkin in amount $61,000, which said obligations the Baldwin & Lamkin Manufacturing Company assumes and agrees to pay." This vote recited that the partnership property to be so conveyed was "appraised at the actual value" of $94,500, leaving, after deduction for the obligations assumed, its "actual value" $33,500. Of the property so bargained for, a part, to which a value of $69,500 was thus assigned, was worth less than half that sum, and the rest, valued at $15,000, was worth several hundred dollars less than that; while the partnership liabilities were several thousand dollars in excess of $61,000,—all of which Lamkin then well knew. The partnership business had been run at a loss for several years prior to the transfer. A suit is pending against Lamkin in favor of the receiver to recover an alleged balance due on his stock subscription, on the ground that what the corporation accepted in payment was not payment in fact. The claim of the town presented to the receiver was for taxes assessed against the partnership, in 1894, 1896, and 1897, on property, real and personal, which passed to the corporation and came into his hands, and also for taxes assessed against the corporation upon its real estate in 1898, pending the receivership. No tax liens had been filed by the collector. The town offered evidence that when the transfers from Baldwin to Lamkin, and also those from Lamkin to the corporation, were made, the partnership was insolvent; that Lamkin never paid anything on his stock subscription, except by said transfers, save that he agreed to pay, and did pay, $23,500 of the firm indebtedness which the corporation had assumed, and also paid $4,900 for the running expenses of the business from January 19 to February 14, 1898, to which former day the books of the corporation were dated back; that most of the other stock subscriptions were made by creditors of the partnership, who paid no cash upon them, but took the stock in liquidation of the debts so due them; and that an organization certificate was duly executed and recorded February 16, 1898, stating that the corporation had a capital stock of $75,000, of which $15,000 had been actually paid for in cash. This evidence was objected to by the receiver as immaterial and irrelevant, because the facts stated did not affect the existence of the corporation, because they were not in issue or relevant to this proceeding, and because the claimant was estopped from attacking the validity of the corporation, especially at this stage of the proceedings. The court found that, if the evidence was admissible, the facts were established which it went to prove. A time was limited for the presentation of claims against the corporation, which has expired. During the time so limited no claim, except that now in question, was presented for any liability incurred before February 14, 1898. Claims amounting to $28,000 have been presented and allowed for debts incurred by the corporation since that date. The receiver was appointed in a suit brought by Lamkin against the corporation, under the statute, as the principal stockholder, to wind up its affairs and dissolve it on account of its financial embarrassment. The receiver claimed: As to the taxes assessed against the partnership, (1) that they were not a claim against the corporation, and could not be proved in this proceeding; (2) that they were not a preferred claim, being, if anything, for a debt assumed, and not for taxes assessed against it; (3) that any claim was for the taxes upon the personal property only; (4) that the evidence objected to by the receiver as hereinbefore set out, was inadmissible. As to taxes assessed against the corporation, (1) that they should not be allowed, being laid upon property in custody of the law; and (2) that they did not constitute a lien against the property, and that the same could be sold by the receiver, free from any such lien. The town claimed (1) that the receiver, having taken into his possession all the property upon which the taxes were assessed, was bound by the contract upon which said property was sold; (2) that said taxes were privileged claims; (3) that the payment of said debts, including said taxes, was the consideration upon which said property was conveyed, and the receiver was bound to perform the contracts; (4) that said contract was for the benefit of the town, and could be enforced by it; and (5) that said corporation was never legally organized, and that the receiver was in fact the receiver of said partnership, and could not avoid the partnership agreements to the injury of the town and benefit of said corporation. All questions arising on these claims were reserved for the advice of this court.

William B. Stoddard, for town of Milford.

E. P. Arvine and George E. Beers, for receiver.

BALDWIN, J. (after stating the facts). A corporation known as the Baldwin & Lamkin Company acquired, in payment of subscriptions to its capital stock, certain real and personal property formerly belonging to the firm of Baldwin & Lamkin, under conveyances, part of the consideration for which was its undertaking to pay certain of the partnership debts. The company is now in the hands of a receiver, who holds the property. But one claim against the partnership has been presented to him for allowance, and that is a bill for taxes due the town of Milford. Other claims to a large amount have been presented for liabilities contracted by the corporation in the course of its business after receiving the conveyances in question. The corporation stepped into the shoes of the...