Spader v. Mural Decoration Manuf'g Co.

• Decision Date: 13 September 1890
• Parties: SPADER v. MURAL DECORATION MANUF'G Co.
• Court: New Jersey Court of Chancery

20 A. 378

47 N.J.E. 18

SPADER

v. MURAL DECORATION MANUF'G Co.

Court of Chancery of New Jersey.

Sept. 13, 1890.

(Syllabus by the Court.)

Appeal from receiver.

Henry K. Nevers, James E. Hadley, David Snediker, and Timothy Cleary were severally employed by the Mural Decoration Manufacturing Company, under contracts for service respectively as salesmen and foreman, for terms of years commencing in 1887, and unexpired when the company, in September, 1888, was adjudged to be insolvent. With the exception of small sums expended by them for traveling expenses, they were fully paid to September 1, 1888. They now claim that they should receive the amounts of their respective salaries to the termination of their respective contracts, and accordingly have made demand upon the receiver, who has refused to pay the amounts demanded. From this determination an appeal to the chancellor has been taken in virtue of section 82 of the corporation act, (Revision, 192.)

Asa W. Dickinson, for appellants. Willard P. Voorhees, receiver, pro se.

McGILL, Ch. The appellants' claims are substantially for damages caused by the breach of their several contracts for service. The breach was occasioned by the insolvency of the defendant corporation. Upon such insolvency being ascertained by adjudication, a receiver was appointed, whose duty, under the statute, is to collect the assets of the corporation, and distribute them as that law directs. His proceedings are regulated entirely by the statutory law. He is not at liberty to recognize any liability, or to make any payment which is not approved by the statute. Such is the view taken of proceedings under a national bankrupt act, (Heywood v. Shreve, 44 N. J. Law, 94,) and it can hardly be questioned that the proceedings now considered partake of the same character, (State Bank v. Receivers of Bank of New Brunswick, 3 N. J. Eq. 266, 270; Receivers of People's Bank v. Paterson Sav. Bank, 10 N. J. Eq. 13, 17.) Upon examination of the statute it is perceived that the assets, including rights of action, damages, and demands of every nature, existing in favor of the company at the time of insolvency or "accruing subsequent thereto, "are to be collected by the receiver, who is receiver of both creditors and stockholders. Revision, p. 191, § 77. After such collection the receiver is to dispose of the assets, and is then to distribute the moneys realized from them among the "creditors" of the corporation under the order of this court. Id. p. 189, § 72. The creditors are to be paid proportionately to the amount of their "debts," except mortgage and judgment creditors, and are to be entitled to distribution upon "debts not due" upon making rebate of interest. After the payment of the cost of the proceedings and expenses of the receivership the surplus of the moneys, if any, "may" be divided, first to the preferred, and then to the general stockholders, proportionately, according to their respective shares. Id. p. 191, § 80. The general scheme of the act contemplates the ascertainment and payment of all just liabilities. The terms "creditor" and "debt" are not used in a narrow, restrictive, or technical...