Marshall-Wells Hardware Company v. New Era Coal Company
| Decision Date | 19 October 1904 |
| Citation | 100 N.W. 1084,13 N.D. 396 |
| Court | North Dakota Supreme Court |
Appeal from District Court, Cass county; C. A. Pollock, Judge.
Action by the Marshall-Wells Hardware Company against the New Era Coal Company and others. Judgment for plaintiff, and the Second National Bank of Minot appeals..
Reversed.
Action reversed in part. Affirmed in part. Appellant recovered its costs and disbursements in both courts.
Le Sueur & Bradford, for appellant.
A court cannot restrain proceedings begun in pursuit of a statutory right. This would place the judicial above the legislative branch of the government. High on Injunctions, section 29; Brown's Appeal, 66 Pa. 155.
Section 4796, Rev. Codes, having provided a remedy against the property, it was error to enjoin the use of it.
Section 5046, Rev. Codes, 1899, subdivision 1, makes a single exception to the rule, that injunction must not issue against judicial proceedings pending when the injunction suit was begun. Wilson v. Baker, 2 P. 253; Buell v. San Francisco Savings Union, 4 P. 14; Rickett v Johnson, 8 Cal. 34; Uhlfelder v. Levy, 9 Cal 608; Crowley v. Davis, 37 Cal. 268.
The statute of California under which the above were rendered is like that of North Dakota, and it may be regarded as settled that, except to avoid multiplicity of actions, a court cannot restrain proceedings in a court of co-ordinate jurisdiction. Injunction can only issue against a party to the cause in which it is granted. Foreman v. Healey, 11 N.D. 563 93 N.W. 866.
The test of the right to sequestrate the property of a corporation is, that the action therefor must be begun by a judgment creditor, whose execution is returned unsatisfied. Minkler v. The United States Sheep Company, 4 N.D 507, 62 N.W. 594; 33 L. R. A. 546.
The plaintiff asks for a receiver. It would be an abuse of discretion to issue an injunction to restrain interference with property without at the same time appointing a receiver to preserve it. It was error to enjoin without a bond and appoint a receiver upon the showing made. A receiver takes the property subject to the rights of parties having liens thereon. High on Receivers, section 138; Van Roun v. Superior Court of San Francisco, 58 Cal. 358.
In New York, under statutes similar to ours, a creditor of a corporation before judgment is not entitled to a receiver in an action for its dissolution and sequestration of its effects, upon the ground of insolvency, suffering other creditors to obtain a preference. Galway v. U. S. Steam Sugar Refining Co., 13 Ab. Pr. 211; High on Receivers, section 301.
Statutory lien can be enforced only by the statutory mode, if one is provided, i. e. action, judgment and sale on execution. Equity cannot enjoin the prosecution of an action at law to enforce a lien of the same kind, because the holder of the latter is not made party in a suit to foreclose another lien. Nor does the equitable doctrine of equality among lien holders apply to such a case. Hall v. Hinckley et al., 32 Wis. 362; High on Injunctions, section 336, 472.
Newman, Spalding & Stambaugh, for appellants.
The action is to enforce the liabilities accruing under sections 2877 and 2902, relating to personal liabilities of stockholders of a corporation. The action is statutory, and is warranted by sections 5767 and 5769, Rev. Codes 1899, and the injunction issued is governed solely by section 5773 of Rev. Codes. The action is equitable, providing fully for the sequestration of all the property of the insolvent corporation, and its application to the payment of all debts, and distribution to creditors, preserving liens and their priorities, without preference except such as are due to valid liens. Rev. Codes, 5571, 5572, etc.; Arthur v. Willius, 46 N.W. 851.
Without statute equity can restrain all proceedings by creditors other than those who bring the action. Pfhol v. Simpson, 74 N.Y. 137.
The statute extends the jurisdiction so that an action can be brought in the first instance against a corporation, its stockholders, directors and other officers. Section 5767, Rev. Codes 1899, and section 5773 authorizes an injunction against creditors without making them parties. Similar statutes are construed in Johnson v. Rossie Galena Co., 9 Paige 599; Rankine, receiver, v. Elliott, 16 N.Y. 377.
In cases of this character a court of equity can restrain proceedings in another court of co-ordinate jurisdiction. Erie Ry. Co. v. Ramsey, 45 N.Y. 637; Adler v. Milwaukee Brick Co., 13 Wis. 57.
Under such statutes action may be brought without reducing claims to judgment. Cleveland v. Marine Bank of Milwaukee, 17 Wis. 545; Ballston Spa Bank v. Marine Bank of Milwaukee, 18 Wis. 490; Pierce et al. v. Milwaukee Construction Co., 38 Wis. 253.
Newman, Spalding & Stambaugh, on rehearing.
The statute of this state is not identical with that of New York on the same subject. Section 5773 authorizes an injunction to restrain all proceedings by any other creditor, etc. The decision of this court makes it read "all proceedings, except those to foreclose liens upon property of the defendant corporation, by any other creditor, except a creditor holding such a lien." The words "all" and "any" have a well defined meaning; they are entirely unambiguous, and need no interpretation, and no interpretation is admissible. Harrington v. Smith, 28 Wis. 43; Terrance v. McDougal, 12 Ga. 530; Guest v. Updyke, 31 N.Y. Law, 552; Lake County v. Rollins, 130 U.S. 662, 32 L.Ed. 1060, 9 S.Ct. 651.
If words have a definite meaning, involving no absurdity nor contradiction of any other part of the instrument, such meaning must be accepted. Newell v. People, 7 N.Y. 9; Mills v. Chicago, 60 Ill. 86; Denn v. Reid, 35 U.S. 524, 10 Pet. 524, 9 L.Ed. 519; Leonard v. Wiseman, 31 Md. 204; People v. Potter, 47 N.Y. 375; Cooley Const. Law, 57; Story Const. section 400; Beardstown v. Virginia, 76 Ill. 34; United States v. Fisher, 6 U.S. 358; 2 Cranch, 358, 2 L.Ed. 304; Doggett v. Florida R. R. Co. 99 U.S. 72, 25 L.Ed. 301.
This action is brought by the plaintiff on behalf of itself and all other creditors of the New Era Coal Company, a corporation organized under the laws of this state. The plaintiff furnished the New Era Coal Company goods and merchandise, for which payment has been refused. Other claims for merchandise by other persons against this corporation, duly assigned to the plaintiff, are also included in plaintiff's cause of action. The coal company is alleged to be insolvent, and its directors and stockholders are made defendants in this action, and judgment is asked against them for these creditors' claims, pursuant to the liability imposed upon them for all debts of the corporation to the extent of the amount of unpaid stock. The plaintiff is a general creditor only, and its debt has not been reduced to judgment. The Second National Bank of Minot was also a creditor of said New Era Coal Company, and had commenced two actions upon its claims against said corporation. One of these actions was founded on a debt secured by a miner's lien, and the action was brought to foreclose such lien. All other lienholders against the defendant's property were made parties to that action. The New Era Coal Company appeared in that action. The other action against the coal company was a money demand action. Both of these actions were pending when this action was commenced. The relief prayed for in this action is that creditors be required to exhibit their claims and become parties to this action; that all proceedings by other creditors be restrained; that the amount due plaintiff and all other creditors be ascertained; that an account be taken of the property and debts due to and from said company, and if, upon such account, it shall appear that the defendant corporation is insolvent, that the court shall proceed and ascertain the liabilities of each of the defendant stockholders; that a receiver of the property of such corporation be appointed, and such property be converted into cash, and, if the proceeds of the property be insufficient to pay the debts of said corporation, that the stockholders be adjudged to pay the same; and that the court adjudge the amount payable by each of said defendants, Wm. Von Steinwehr, E. C. Cole, E. Y. Sarles, Seth G. Wright, F. B. Mills, O. P. Carter, R. S. Lewis and Harry Richards, and that the proceeds of the corporation's property be distributed among the creditors as provided by section 5779, Rev. Codes 1899.
Before issue was joined in this action, the plaintiff procured an injunction restraining the Second National Bank of Minot from proceeding with its actions. This injunction was procured on notice, and the said bank appeared at the hearing and resisted the granting of the injunction. The injunction was based on an affidavit reciting no facts as grounds for granting the injunction except the commencement of this action on behalf of itself and all other creditors. It recited as grounds for granting the injunction the commencement of this action, and the complaint was made a part of the affidavit. It further stated that, "if said Second National Bank of Minot is permitted to prosecute to a conclusion its said actions, this court will be unable to grant the full and complete relief prayed for in the above-entitled action." The district court granted the injunction, and this appeal is from the order granting the same.
Two questions present themselves for consideration under the facts set forth: (1) Whether a...
To continue reading
Request your trial