Tiger v. Rogers Cotton Cleaner & Gin Company

Decision Date11 July 1910
Citation130 S.W. 585,96 Ark. 1
PartiesTIGER v. ROGERS COTTON CLEANER & GIN COMPANY
CourtArkansas Supreme Court

Appeal from Mississippi Circuit Court, Osceola District; Frank Smith, Judge; affirmed.

STATEMENT BY THE COURT.

The appellee on the 14th day of May, 1908, obtained judgment against the Luxora Gin & Manufacturing Company in the sum of $ 476.60. Execution was issued upon the judgment against the judgment-debtor, and a return of nulla bona was made thereon. On the 21st day of November, 1908, a writ of garnishment was issued against appellants and others, summoning them as follows:

"To answer what goods, property, chattels and effects they, or either of them, had in their possession at the time this writ was served upon them, or that may have come into their possession since the service of this writ, belonging to the said Luxora Gin & Manufacturing Company. And they will further answer what sum or sums of money they or either of them owe the defendant, Luxora Gin & Manufacturing Company."

Appellants answered "that said firm of Tiger Brothers had no goods property, chattels or effects in its possession, either at the time of the service of this writ or any other time within the past three years, belonging to the Luxora Gin & Manufacturing Company, and further states that it does not owe the said Luxora Gin & Manufacturing Company any sum whatever."

This answer was filed December 2, 1908.

After hearing the evidence, the court found the facts as follows:

"First that the Luxora Gin & Manufacturing Company is a corporation.

"Second. That the garnishees, E. Tiger and N. Tiger, subscribed and agreed to pay par value for $ 500 worth of the capital stock of said corporation.

"Third. That said E. Tiger and N. Tiger did pay the sum of $ 100 on their subscription to the capital stock of said corporation leaving a balance due of $ 400 on said capital stock, with interest thereon at the rate of 6 per cent. per annum, and amounting to the sum of $ 120 at this date, making a total principal and interest, due from them to the said Luxora Gin & Manufacturing Company of $ 520.

"Fourth. That on the 1st day of July, 1905, said Luxora Gin & Manufacturing Company offered for sale the other $ 400 worth of stock owned by the said E. Tiger and N. Tiger to satisfy the balance of the unpaid subscription for the same, and there being no other bidders, John B. Driver, the then president of said corporation, bid for said corporation the amount of said unpaid subscription, and reported the same to the board of directors.

"Fifth. That when the purchase of said stock by said John B. Driver for the said Luxora Gin & Manufacturing Company was reported to said board of directors, the said board of directors expressly repudiated said transaction and refused to ratify the same.

"Sixth. That on the 14th day of May, 1908, a judgment was rendered herein in favor of the Rogers Cotton Cleaner & Gin Company, and against the Luxora Gin & Manufacturing Company, on a promissory note for the sum of $ 474.60, upon which there is due a credit for the sum of $ 100, the amount realized from a sale of the property mentioned in said judgment.

"Seventh. The court further finds that at the time the stock of said E. Tiger and N. Tiger in said Luxora Gin & Manufacturing Company was sold, or attempted to be sold, to satisfy the unpaid subscription thereon, said corporation was hopelessly insolvent, and continued so down to the present time.

"Eighth. That at the time of the sale of said stock, or the attempt to sell said stock, the plaintiff was a creditor of said corporation, evidenced by the obligation upon which the judgment of May 14, 1908, was based."

Upon these findings of fact the court declared the law to be that an insolvent corporation has no right, as against its creditors, to purchase its own stock, and that the purchase or attempt to purchase the stock of appellant on behalf of the Luxora Gin & Manufacturing Company was null and void against the appellee, who was then and still is a creditor of the Luxora Gin & Manufacturing Company. The court entered judgment in favor of appellee against appellants, Tiger Brothers, for the sum of $ 410 and costs.

From this judgment appellants duly prosecute this appeal.

Affirmed.

W. J. Lamb, for appellant.

The corporation had the right to purchase its stock. Kirby's Dig. § 847. The suit should have been dismissed, because the insolvency of the debtor was not proved. 71 Ark. 1. No judgment can be rendered upon the answer of the garnishee. 45 Ark. 271; 52 Ark. 130; 48 Ark. 349; 42 Ark. 219.

J. T. Coston, for appellee.

The failure to file additional interrogatories was a mere error, which may be waived. 53 S.W. 44; 87 S.W. 50. Judgment against the garnishee was proper. Kirby's Dig. § 3701; 70 Ark. 128. The statute of limitations was not raised below, and cannot be considered here. 95 S.W. 1005; 91 S.W. 555. The garnishee may plead the statute of limitations. Rood on Garnishment, § 376; 20 La.Ann. 116; 10 Mo. 557; 32 N.H. 141; 21 Tenn. (2 Hump.) 137; 11 Wash. 527. The five years statute applies. 62 Ark. 406. A question not raised in the motion for a new trial cannot be considered here. 23 Ark. 23; 70 Ark. 429. Insolvency of the corporation was proved. 51 N.E. 605; 72 N.W. 425. Appellants' abstract is not in compliance with rule nine. 122 S.W. 495.

OPINION

WOOD, J., (after stating the facts).

It could serve no useful purpose to discuss in detail the evidence upon which the court based its findings of fact. It suffices to say that these findings are sustained by the evidence.

Appellants contend that, at the time they filed their answer as garnishees herein, they were not, and had not been for more than three years, indebted in any sum whatever to the gin company. Appellants say this is so for the reason that their stock in the gin company was sold in July, 1905, and that thereafter appellants had no further interest in or connection with the gin company. But appellants' contention can not be sustained.

The court found, and the evidence tended to support that finding, "that at the time the stock of appellants in the gin company was sold or attempted to be sold to satisfy the unpaid subscription thereon said corporation was hopelessly insolvent." This being true, conceding for the present that there was a sale and purchase of the stock, the transaction was nevertheless void as to creditors of the corporation.

Mr Cook, in his excellent work on Corporations, says: "If the corporation is insolvent at the time of the purchase, it is clearly an invalid transaction, and will be set aside. The rule goes still further, and declares that if a corporation, by a purchase of shares of its own capital stock, thereby reduces its actual assets below its capital stock and debts, such purchase may be set aside, and the guilty corporate officers, as well as the vendor of stock, may be rendered liable thereon at the instance of a corporate creditor." Cook on Corporations, § 311, pp. 849-850, and cases cited in notes 3 and 1 of above pages. The corporation in which appellants owned shares of capital stock for which they had not paid being insolvent, the sale and purchase by it of these...

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