Marion Phosphate Co. v. Perry

• Decision Date: 17 February 1896
• Docket Number: 433.
• Citation: 74 F. 425
• Parties: MARION PHOSPHATE CO. v. PERRY.
• Court: U.S. Court of Appeals — Fifth Circuit

74 F. 425

MARION PHOSPHATE CO. v. PERRY.

No. 433.

United States Court of Appeals, Fifth Circuit.

February 17, 1896

A. R Lawton and T. M. Cunningham, Jr., for appellant.

Before PARDEE and McCORMICK, Circuit Judges, and BOARMAN, District judge.

PARDEE Circuit Judge.

The appellee, Rachel Perry, a citizen of the state of Florida brought her bill in the chancery court of Marion county state of Florida, against the Marion Phosphate Company, a Georgia corporation, and therein alleged that on the 16th day of December, 1892, she obtained a judgment on the common-law side of that court, for the sum of $2,158.38, against the Chatham Investment Company, a body corporate created under the laws of the state of Georgia; that the Chatham Investment Company was the owner of large bodies of land in the state of Florida, some of them lying in Marion county, which were in 1891, by divers deeds, conveyed by the said Chatham Investment Company, for the consideration of $5,000,000, to the Marion Phosphate Company; that soon after such conveyances, and before the aforesaid judgment was obtained, the Chatham Investment Company dissolved, and surrendered its charter; that both of the above-named corporations were organized and chartered by the same stockholders, the said Chatham Investment Company being organized for the purpose of purchasing said lands and holding them in trust for the Marion Phosphate Company; that the consideration paid by the Marion Phosphate Company to the said Chatham Investment Company was the defendant's certificates of capital stock, based upon said lands, the persons holding stock in said Chatham Investment Company surrendering their certificates in that corporation for certificates of defendant's capital stock, at the ratio of ten shares of defendant's stock to one in said Chatham Investment Company; that in reality the organization of the defendant company was only the reorganization of said Chatham Investment Company, with the same capital, same stockholders, same land, and about the same officers; that the defendant company took the lands and property of the Chatham Investment Company subject to all claims, debts, liens, and obligations then existing against it; and that defendant is not a bona fide purchaser of the lands of the said dissolved company, as against complainant's judgment. Certain lands are described in the bill, lying in Marion county, Fla., to which complainant asserted that she had an equitable lien for the satisfaction of the above judgment, wherefore she prayed, etc. To the bill was attached an exhibit showing that on the 16th day of December, 1892, the said Rachel Perry, in the circuit court of Marion county, Fla., recovered a judgment by default against the Chatham Investment Company, a body corporate under the laws of the state of Georgia, for the sum of $2,154, principal and interest, and $4.38, costs of court. The Marion Phosphate Company removed the case to the circuit court for the Southern district of the state of Florida, on the ground of diverse citizenship. In the circuit court the Marion Phosphate Company filed a demurrer to the said bill, for want of equity, particularly charging that the bill, upon its face, discloses that the judgment against the Chatham Investment Company was recovered December 16, 1892, and that the said Chatham Investment Company was a corporation created under the laws of Georgia, and that the said corporation became dissolved, and surrendered its charter, in 1891,-- long prior to the rendition of said judgment. This demurrer was overruled by the court, and thereafter the Marion Phosphate Company was driven to answer, and other proceedings were had, resulting in a decree in favor of Rachel Perry against the Marion Phosphate Company to the effect that the judgment obtained by the complainant in the circuit court of Marion county against the Chatham Investment Company was a valid judgment; that the Marion Phosphate Company held the lands of the Chatham Investment Company in trust for the payment of the complainant's debt; that the complainant had an equitable lien on the said lands,-- and condemning the Marion Phosphate Company to pay the amount of said judgment, in default whereof the lands mentioned in the bill should be sold to pay the same. The proceedings had after overruling the demurrer are not necessary to recapitulate, except to notice that it was fully shown in the answer, and established by undisputed evidence, that more than six months prior to the institution of the suit at law by Rachel Perry against the Chatham Investment Company in the circuit court of Marion county, Fla., the Chatham Investment Company, under and in accordance with the laws of Georgia, had, as a corporation, surrendered its charter, and had been legally dissolved as a corporation. The appellant makes nine specific assignments of error, the last one being that the court erred in overruling the demurrer of the defendant to the complainant's bill.

The vital question in the case is whether the judgment at law rendered against the Chatham Investment Company, a corporation which at the time was legally dissolved, and which judgment is the base of this suit, is a valid judgment. We think this question is sufficiently presented by the demurrer to the bill. That a dissolution of a corporation abates all suits against it is familiar law of the text-books. Mor. Priv. Corp. Sec....