Moffat v. Smith

• Decision Date: 30 April 1900
• Docket Number: 1,309.
• Citation: 101 F. 771
• Parties: MOFFAT v. SMITH, U.S. Marshal, et al.
• Court: U.S. Court of Appeals — Eighth Circuit

101 F. 771

MOFFAT v. SMITH, U.S. Marshal, et al.

No. 1,309.

United States Court of Appeals, Eighth Circuit.

April 30, 1900

On October 26, 1883, John Munson, the appellee, recovered a judgment in the circuit court of the United States for the district of Colorado against the Henriett Mining & Smelting Company, Limited, of London, England, on account of personal injuries sustained by him through the negligence of the company while working in its mines. On June 13, 1885, an execution was issued on this judgment and placed in the hands of the United States marshal, who levied the same upon the Henriett lode-mining claim, and advertised the same for sale under the levy. The appellant thereupon filed the bill in this cause, and obtained a temporary restraining order enjoining the appellees from selling the mining claims levied on under and by virtue of the execution in the hands of the marshal in favor of the appellee Munson. The bill alleges that on October 10, 1883, before the rendition of Munson's judgment against the mining company, the mining company had sold and conveyed by deed all of its property including the above mining claim, to appellant, for 250,000 pounds; that the deed was filed for record in the proper recorder's office in Lake county, Colorado, in which this mine is situated, on November 3, 1883; that for this reason the mining claim is not subject to seizure and sale under the execution; and that the sale thereof would cast a cloud on appellant's title. Upon this ground he prayed that the injunction be made perpetual. The answer admitted the recovery of the judgment, and the issue of the execution and levy on the mine, also that a deed for the same had been executed by the mining company to the appellant, but charges that the title was taken by him only as trustee, and subject to the appellee's judgment. It further charges that the mine had originally belonged to appellant and certain other parties, and that it was by them sold to the mining company a corporation created under the laws of Great Britain, for the purpose of selling it; that the stock was sold to certain parties, with certain guaranties; and that afterwards the parties became dissatisfied, and they reconveyed the property to the appellant. A replication was filed and testimony taken and upon final hearing the injunction was dissolved and the bill dismissed, from which decree this appeal was taken.

Branch H. Giles and Gerald Hughes (Charles J. Hughes, Jr., on the brief), for appellant.

A. S. Blake, for appellees.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

CALDWELL Circuit Judge, after stating the case as above, .

One who acquires all the stock of a corporation cannot extinguish the debts of the corporation, or exempt its property from liability for the payment of its debts, by taking a conveyance of its property to himself, and canceling the stock of the corporation, or procuring its dissolution. From the testimony of the appellant it appears that, while the corporation owned the mining claims, he purchased all the shares of the corporation, and thereupon, in his own language--

'After I had gotten all the stock, I could not see the propriety of a continuation of the company in England, so I asked for a liquidator. That was given me,-- a liquidator appointed, who deeded the property back.'

Further on he testifies:

'Q. To whom did you apply to have the company dissolved, and how? A. Francis Andrews acted for me,-- as my agent and broker. Q. Was he an officer in the company? A. Yes, sir; he was secretary. Q. And he acted as your broker? A. He got the broker to do it. Q. To buy the stock? A. Yes. Q. Through whom did you apply, and through whom was it brought about? A. Through an application to the board of directors to have it dissolved, and they had to go to some court and get a liquidator appointed. They could only do that on my having possession of all of the stock. Q. It was a voluntary dissolution of the company at your solicitation and request? A. Yes, sir. Q. What property did this company own, other than the Henriett and the interests in the Maid of Erin, if any, that you know of? A. Nothing besides its furniture in its office over there, and machinery and stuff on the mine. * * * Q. What, Mr. Moffat, was the consideration that you paid for the deeds that you got from the company, conveying the Henriett mine and the interest in the Maid of Erin; those being the deeds that you have introduced in evidence? A. The return and the cancellation of the stock, under the English laws, before a liquidator could be appointed or could give a deed. That had to be done. Q. Then, if I understand it correctly, you purchased the stock from the stockholders, paying them for the stock, and then you turned it into the company,-- the stock to be canceled? A. Yes, sir; and I paid all indebtedness against the company that there was in England. Q. What indebtedness was there, if you remember? A. My recollection is, one item was something like three or four hundred pounds, which I paid. They had rented an office for a term ahead. To sublet it, I lost three or four hundred pounds. I think there were some little clerk bills. I can't tell. My recollection is, it amounted to between two and three thousand dollars,--something like that.'

It thus appears from the testimony of the appellant himself that, at the time of the conveyance of the property in controversy to him by the corporation, he was the owner of all the stock of the corporation, and that, as he could not see the propriety of the continuation of the company under these circumstances he had the entire property of the corporation conveyed to himself. Under such circumstances, the appellant certainly has not established such a superior equity as entitles him to any relief in a court of equity against a bona fide creditor of the corporation. If a corporation whose stock has...