Snyder v. Nathan, 15069.
| Decision Date | 18 November 1965 |
| Docket Number | No. 15069.,15069. |
| Citation | 353 F.2d 3 |
| Parties | Clinton B. SNYDER, Plaintiff-Appellee, v. Irving NATHAN, Third-Party Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Sherwin J. Malkin, Chicago, Ill., for appellant.
Eli E. Fink, Chicago, Ill., for appellee.
Before SCHNACKENBERG, KILEY and SWYGERT, Circuit Judges.
Irving Nathan, third party defendant, has appealed from a judgment of the district court, insofar as it ordered a recovery against him by Clinton B. Snyder, plaintiff, in the sum of $9,012.50 and costs, in supplementary proceedings instituted by him in an effort to enforce a judgment for $152,8001 entered February 9, 1962 in his favor and against State-Wide Properties, Inc., a Delaware corporation (hereinafter called "State-Wide"), whose principal asset was an office building located in Chicago. Joined in said proceedings were numerous third party defendants, including a group of preferred stockholders of State-Wide, of which Nathan was one. All of them except Nathan were dismissed by the court, purportedly as the result of a compromise settlement.
In this court it is argued by Nathan's counsel that the district court erred in disregarding the solvency of State-Wide "during and subsequent to the payments to the preferred stockholders in determining whether or not the preferred stockholders were liable to plaintiff as an unpaid creditor of the corporation."
The record shows that resolutions adopted by the stockholders of State-Wide provided that the remaining assets were to be distributed "to the stockholders of the corporation in complete cancellation and redemption of all the outstanding shares of the corporation."
While the district court indicated that it was doubtful as to the solvency of the company, it did not decide that issue because it concluded that the company was in liquidation, with a consequent duty to pay creditors before retiring stock. We hold that the question of the solvency of State-Wide is not a relevant issue in this case.
Plaintiff Snyder explains that his cause of action is predicated on the fact that State-Wide had sufficient assets to pay him, but that certain of those assets were paid to the stockholders, including Nathan, instead of to him and that it is of legal significance that the corporation was then preparing for its dissolution.
We believe that the record supports Snyder's position. In Singer v. Hutchinson, 183 Ill. 606, 56 N.E. 388 (1900), the court said, at 619, 56 N.E. at 392.
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...a claim superior to that of the shareholders. Id.; see also Koch v. United States, 138 F.2d 850, 852 (10th Cir.1943); Snyder v. Nathan, 353 F.2d 3, 4 (7th Cir.1965). Several states have enacted statutes that continue the existence of corporations for a definite period of time following diss......
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