Morrow Shoe Mfg. Co. v. New England Shoe Co.

• Decision Date: 09 March 1894
• Docket Number: 71.
• Parties: MORROW SHOE MANUF'G CO. v. NEW ENGLAND SHOE CO. et al.
• Court: U.S. Court of Appeals — Seventh Circuit

60 F. 341

MORROW SHOE MANUF'G CO. v. NEW ENGLAND SHOE CO. et al.

No. 71.

United States Court of Appeals, Seventh Circuit.

March 9, 1894

Peckham & Brown and Miller & Starr, for appellant.

Flower Smith & Musgrave, for appellees.

A. B Jenks and W. A. Foster, for Peabody.

BAKER District Judge.

The appellees have filed petitions for a rehearing, which they have supported by elaborate briefs. We have given their petitions and briefs attentive consideration, and find no error pointed out which would justify the court in granting them a rehearing. The grounds upon which our decision is rested are fully stated in the opinion heretofore filed, to which we still adhere, and no good purpose will be subserved by adding anything to what is there stated. The petitions of the appellees are therefore overruled. The appellant has filed a petition for a rehearing and a modification of the opinion of the court by striking out of the same the following:

'The bill fails to allege that the plaintiff had prosecuted its claim to judgment, and had issued an execution thereon, and had the same returned nulla bona. For this reason the bill is insufficient within the doctrine of Scott v. Neely, 140 U.S. 106, 11 S.Ct. 712, and Cates v. Allen, 149 U.S. 451, 13 S.Ct. 883 977.'

The appellant further asks that the order of the court be modified to read as follows:

'That the decrees herein entered respectively on the 28th day of April, 1892, dismissing the bill of complaint as to the defendants Gore, Prouty, and Heimerdinger, and on the 9th day of May, 1892, dismissing the said bill as to Hiram B Peabody, be reversed at the costs of said appellees, and that said cause be remanded to the court below for further proceedings not inconsistent with this opinion, and with leave to complainant to amend its bill as it may be advised within thirty days after the judgment herein shall be certified to said court.'

Counsel for the appellant insist that the suit is brought under Rev. St. Ill. c. 32, § 25, and that under this section it is unnecessary to the maintenance of the suit that the claim should have been reduced into judgment and an execution issued thereon and returned nulla bona. This section provides that:

'If any corporation, or its authorized agents shall do, or refrain from doing any act which shall subject it to forfeiture of its charter or corporated powers, or shall allow any execution or decree of any court of record, for a payment of money after demand made by the officer to be returned no property found, or to remain unsatisfied for not less than ten days after such demand, or shall dissolve or cease doing business leaving debts unpaid, suits in equity may be brought against all persons who are stockholders at the time, or liable in any way for the debts of the corporation, by joining the corporation in such suits; * * * and courts of equity shall have full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor, etc.'

It is firmly settled that under this section it is not necessary to the maintenance of a suit in equity in the courts of the state that the claim of the creditor should have been reduced into judgment, and an execution issued thereon and returned nulla bona. A suit in equity may be maintained in a court of the state by a simple contract creditor, who holds neither a general nor a specific lien against a corporation which is insolvent and has ceased to do business, leaving debts unpaid, for the purpose of winding up its affairs. Mining Co. v. Edwards, 103 Ill. 472; St. Louis, etc., Min Co. v. Sandoval, etc., Min. Co., 111 Ill. 32; Id., 116 Ill. 170, 5 N.E. 370; Alling v. Wenzel, 133 Ill. 264, 24 N.E. 551; Hunt v. Rink Co., 143 Ill. 118, 32 N.E. 525; Mellen v. Iron Works, 131 U.S. 352, 9 S.Ct. 781. As a general rule, where a new right is created by the statute of a state, the federal courts will take cognizance of it, and will enforce it according to their methods of procedure. Whether it will be enforced at law or in equity depends upon its character. When it is remedial in its nature and essentially of an equitable character, it will be enforced on the equity side of the court. Gormley v. Clark, 134 U.S. 338, 10 S.Ct. 554; Davis v. Gray, 16 Wall. 221; Case of Broderick's Will, 21 Wall. 503; Holland v. Challen, 110 U.S. 15, 3 S.Ct. 495; Frost v. Spitley, 121 U.S. 552, 7 S.Ct. 1129. But every new right of an equitable nature created by the statute of the state is not necessarily enforceable in the federal courts upon the same facts and under the same circumstances as in the courts of the state. If the new right is one not within the recognized equitable jurisdiction of the federal courts, it cannot be enforced by such courts in equity, although the statute of ...