Merrill v. Cape Ann Granite Co.

• Decision Date: 30 March 1894
• Citation: 161 Mass. 212,36 N.E. 797
• Parties: MERRILL et al. v. CAPE ANN GRANITE CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

161 Mass. 212

36 N.E. 797

MERRILL et al. v. CAPE ANN GRANITE CO.

Supreme Judicial Court of Massachusetts, Suffolk.

March 30, 1894

COUNSEL

Geo O. Shattuck and Frank L. Washburn, for estate of Benjamin F Butler.

Charles Almy and William H. Coolidge, for assignees of Jonas H French.

OPINION

BARKER, J.

The question for decision is raised by the appeal of the administrators, with the will annexed, of the estate of Benjamin F. Butler, from a decree of the superior court upon the petition of the receivers of the Cape Ann Granite Company for instructions as to the division among its stockholders of a considerable amount of money which remains in their hands after having discharged in full all the obligations of the corporation to its creditors. The corporation was organized in the year 1869, and its business was the quarrying and furnishing of granite for buildings and for other purposes. In the autumn of 1891, finding itself unable to obtain money with which to carry on its operations, its stockholders, by vote, directed its president to cause proceedings to be instituted for the appointment of a receiver to take charge of its assets and effects, and the liquidation and closing up of its concerns, and especially to complete certain contracts to furnish stone for the erection of certain buildings. The capital stock of the corporation was divided into 500 shares, of the par value of $100 each, 250 of which shares were held by Mr. Butler, 225 by Jonas H. French, and the other 25 by other persons. The vote mentioned was passed on November 15, 1891, by stockholders representing 475 shares, one of whom must therefore have been French; and the same stockholders united in a request in writing for the appointment of receivers. Thereupon, a petition to the superior court was signed on November 16, 1891, by the firm of E.O. & F.H. Merrill, who were creditors of the corporation to the amount of only $71.24, and by Jonas H. French, praying that receivers might be appointed to take charge of the estate and effects of the corporation, and to manage and control its affairs, and to close up its concerns, and dispose of its property, should such a course become necessary; to carry out the contracts, if found advisable; and to do such things in connection with the estate as the court should decree, and as should be proper and for the benefit of the corporation, its stockholders, creditors, and other persons interested. On November 20, 1891, receivers were appointed to take possession of all the assets of the corporation, and were authorized to carry out its contracts, and to incur and defray such expenses, consistent with the purposes of the corporation and the management of its business, as might be necessary for the protection and maintenance of the property received by them, and the winding up of the affairs of the corporation. At this time, French was himself indebted to the corporation to an amount, as the receivers now allege, exceeding $75,000, and which the agreed facts state is far in excess of the amount now in the hands of the receivers for distribution, and no part of which has since been paid. On November 25, 1891, French made a general assignment to trustees for the benefit of his creditors, to which a great majority of them, in number and amount, have assented, and his indebtedness to them far exceeds the assets of his estate. The receivers of the corporation, in accordance with an order of court granted May 13, 1892, assented to French's assignment, and became parties thereto, before June 1, 1892; and on August 17, 1892, they filed with the assignees or trustees of French a proof of the claim of the corporation against him, to which was annexed a statement that it was "without waiving any rights, in law or equity, which we may have, by way of set-off or otherwise, on account of dividend or dividends or payments from funds in our hands upon stock of the Cape Ann Granite Company standing in the name of Jonas H. French at the time we were appointed receivers of said Cape Ann Granite Company." The assignment executed by French recited that he was unable to pay his debts at maturity, and desirous to convey all his property for the benefit of his creditors, to be distributed in substantial conformity with the provisions of the law concerning insolvent debtors; and it transferred all his property, except that exempt by law from levy on execution, to the assignees, in trust to pay over and distribute the proceeds in the manner provided by the insolvent laws for the distribution of insolvent estates, with a clause providing that for the purpose of distribution all claims were to be made up as if due on November 25, 1891, interest being added or rebated as each case might require, and also with a clause providing that the creditors who should assent and sign should thereby accept and take, in full payment and discharge of their respective debts existing at that date, the dividend payable under the provisions of the assignment, and that they severally released and discharged French from all such demands. The order under which the receivers of the corporation became parties to this assignment was entered upon a petition of the receivers filed April 22, 1892, reciting the facts of the existence of the claim against French, and of his assignment, and that it was necessary for the corporation to become a party in order to share in the dividends, and that it was for the interest of the corporation and its creditors, and of all persons having any interest in the corporation, that the receivers should become a party to the assignment, and accept the dividends thereunder in full discharge of the liability of French to the corporation, and praying that the receivers might be ordered to become parties to the assignment, and thereby compound the liability of French to the corporation, and accept the dividends paid under the assignment in full discharge of that liability. The decree, in terms, allowed the receivers to become parties to the assignment, and thereby compound the liability of French to the...