Thomson-houston Electric Light Co v. Henderson Electric & Gas Light Co

• Decision Date: 16 May 1895
• Citation: 116 N.C. 112,21 S.E. 951
• Parties: THOMSON-HOUSTON ELECTRIC LIGHT CO. v. HENDERSON ELECTRIC & GAS LIGHT CO.
• Court: North Carolina Supreme Court

21 S.E. 951

116 N.C. 112

THOMSON-HOUSTON ELECTRIC LIGHT CO.

v.HENDERSON ELECTRIC & GAS LIGHT CO.

Supreme Court of North Carolina.

May 16, 1895.

Corporate Assets—Fund for Creditors—Coun terclaim—Filing of Exceptions-Findings of Fact.

1. The relation between a corporate creditor and the corporation, whether solvent or insolvent, being simply that of creditor and debtor, he has no equitable title to the corporate assets in the hands of its treasurer.

2. A counterclaim against persons other than plaintiffs for a tort not connected with the subject of the action will not be allowed.

3. Exceptions to findings of fact by the court must be filed before the court adjourns for the term.

Appeal from superior court, Vance county; Battle, Judge.

Action by the Thomson-Houston Electric Light Company against the Henderson Electric & Gas Light Company and others for the purchase price of goods. From a judgment for plaintiff, defendant gas light company appeals. Modified.

J. W. Hinsdale, for appellant.

T. T. Hicks and T. M. Pittman, for appellee.

MONTGOMERY, J. The theory upon which the plaintiffs, in their complaint, seek equitable relief, rests upon the idea that the directors of the defendant corporation are trustees in the most comprehensive sense for them; that the assets of the corporation are a trust fund in the hands of the directors for their benefit; and that, there fore, in this action, they can have an order against the defendant Burgwyn for a payment into court of funds in his hands, as treasurer, to be applied to such judgment as the plaintiffs may recover against the defendant corporation. The argument of Mr. Hicks for the plaintiffs was able and ingenious, but it failed to satisfy us of the correctness of the plaintiffs' position. The relation between a creditor and a corporation, solvent or insolvent, is simply that of creditor and debtor; and where the law writers and the courts have used the words "trust fund" in connection with the assets of an insolvent corporation, it has not been intended to mean that there is a direct and express trust attached to the property. The assets are not, in any true and complete sense, trusts. 1 Pom. Eq. Jur. § 1046. In Hill v. Lumber Co., 113 N. C. 173, 18 S. E. 107, this court decided that a director of the insolvent defendant corporation, who was also a creditor, could not take advantage of the information which he had of the affairs of the corporation, to protect himself by a judgment confessed by the corporation in his favor, to the injury of other creditors, who did not have the same means of information; and that the assets of the corporation were a trust fund, and that general creditors were entitled to come in on equal terms withdirectors who were bona fide creditors. It is true, too, that in that case the court used the word "lien" in reference to the claims of creditors upon the assets of the company, but the word was afterwards explained in Merchants' Nat. Bank of Richmond v. Newton Cotton Mills, 115 N. C. 614, 20 S. E. 765, to mean simply a right of priority of payment over stockholders of the corporation. It did not undertake to decide that these priorities were such a trust as attached to the property, and placed the right thereto in the creditors. In Hollins v. Iron Co., 150 U. S. 371, 14 Sup. Ct. 127, these words are used: "A party may deal with a corporation in respect to its property in the same manner as with an individual owner, and with no greater danger of being held to have received into his possession property burdened with a trust or lien. The officers of a corporation act in a fiduciary capacity in respect to...