New Foundland Ry. Const. Co. v. Schack
| Decision Date | 30 June 1885 |
| Parties | NEW FOUNDLAND RY. CONST. CO. v. SCHACK. |
| Court | New Jersey Supreme Court |
On appeal from an order of the court of chancery.
J. B. Vredenburgh, for appellant, New Foundland Ry. Const. Co.
T. N. McCarter, for respondent, Rudolph W. Schack.
This bill was filed by the respondent, a stockholder of the construction company, in behalf of himself, and all the stockholders and creditors of the company who should contribute to the expenses of the suit. The charge in the bill is that the company is insolvent, and has suspended business for the want of funds; that the directors have misappropriated the property of the company, and have taken steps for the dissolution of the corporation; and that the property of the company will be entirely squandered unless the court should interfere. The bill prays for discovery and an account, and also an injunction restraining the company from receiving any debts due to it, from paying and transferring any of its moneys or effects, and from continuing its business, and that it may be decreed to be insolvent, and that a receiver be appointed. A rule to show cause why an injunction should not issue pursuant to the prayer of the bill, and a receiver be appointed to take charge of all the property and estate, books and papers, of the corporation was allowed; and it was further ordered that, until the order should be made absolute or be discharged, the corporation and its stockholders should absolutely desist and refrain from dissolving or winding up the corporation, or from doing any act tending to such dissolution, and that its officers, agents, servants, and employes absolutely desist and refrain from contracting any debt or debts, and also from collecting or receiving any money owing to the corporation, and also from paying out any money, or selling, assigning, incumbering, or transferring any of its property or effects. On a hearing upon the bill, answer, and depositions, the vice-chancellor refused to appoint a receiver, and discharged the rule to show cause, but ordered that the restraining order should be continued until further order should be made. From the order continuing the injunction the company appealed.
The jurisdiction of the court of chancery to take charge of and control the business and affairs of a corporation is provided for by statute.
Section 70 of the corporation act provides that whenever any incorporated company shall have become insolvent, or shall suspend its ordinary business for want of funds to carry on the same, the chancellor may, on the petition or bill of any creditor or stockholder, setting forth the facts and circumstances of the case, make summary investigation, and if it shall be made to appear that the company has become insolvent, and shall not be about to resume is business in a short time thereafter, with safety to the public and advantage to the stockholders, the chancellor may issue an injunction to restrain the company, and its officers and agents, from exercising any of the privileges or franchises granted by its certificate, or by the act incorporating the company, and from collecting or receiving any debts, or from paying out, selling, assigning, or transferring any of the estate, moneys, funds, lands, tenements, or effects of the company, until the court shall otherwise order. By section 72 the chancellor may, either at the time of ordering such injunction, or at any time afterwards during the continuance of the injunction, appoint a receiver, if the circumstances of the case and the ends of justice require the intervention of a receivership. Revision, 189.
With respect to the insolvency of the corporation, the only allegations in the bill are that the company is indebted to divers persons in a large sum of money for goods furnished, and work and labor done, and money advanced to and for the said company, at their request and upon their order, as the complainant has been informed and believes; that the company is insolvent; and that...
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