Zacher v. Fidelity Trust & Safety-Vault Co.

• Decision Date: 28 November 1900
• Citation: 109 Ky. 441,59 S.W. 493
• Parties: ZACHER et al. v. FIDELITY TRUST & SAFETY-VAULT CO. et al. [1]
• Court: Kentucky Court of Appeals

59 S.W. 493

109 Ky. 441

ZACHER et al. v. FIDELITY TRUST & SAFETY-VAULT CO. et al. ^[1]

Court of Appeals of Kentucky.

November 28, 1900

Appeal from circuit court, Jefferson county, common pleas division.

"To be officially reported."

Action by Edmund Zacher, assignee and receiver of the Newport News &amp Mississippi Valley Company, and others, against the Fidelity Trust & Safety-Vault Company, assignee of the McDonald Brick Company, and others, claiming an attached fund. Judgment for defendants, and plaintiffs appeal. Affirmed.

Alex. P. Humphrey, Wm. Marshall Bullitt, Thos. W. Bullitt, and Humphrey, Burnett & Humphrey, for appellants.

Harris & Marshall, Harris & Barr, and Wallace McDonald, for appellees.

BURNAM J.

This is a controversy over the sum of $4,075.47, which is claimed by appellant Edmund Zacher as assignee and receiver of the Newport News & Mississippi Valley Company, by appointment of the superior court of the county of New Haven, in the state of Connecticut, and also by the Fidelity Trust & Safety-Vault Company, as assignee of the McDonald Brick Company, by virtue of an attachment levied thereon subsequent in time to appellant's appointment as receiver by the Connecticut court. A brief statement of the facts out of which the controversy grew is essential to the understanding of the legal questions raised upon the appeal: The Newport News &amp Mississippi Valley Company was chartered by the legislature of Connecticut in March, 1884, and, by the fourth section of the articles of incorporation, was empowered to acquire equip, construct, and operate railroads, railroad bridges steamboat lines, and kindred enterprises in any state or territory in the United States, or in any foreign country, except within the state of Connecticut. By virtue of this charter, in January, 1886, it leased the Chesapeake, Ohio & Southwestern Railroad for a term of 50 years; and it operated the road under the lease until July 23d, when its lease was canceled by common consent, and the operation of the road resumed by the lessor company until December 22, 1893, when it was put into the hands of a receiver by a judgment of the United States circuit court for the state of Kentucky on a bill by C. P. Huntington. During the period of its lease of the railroad line, appellant became liable to the McDonald Brick Company by virtue of the breach of a contract made with it. The McDonald Brick Company made a general deed of assignment for the benefit of its creditors to the Fidelity Trust & Safety-Vault Company, both corporations existing under and by virtue of the laws of the state of Kentucky. After the assignment of the brick company, appellee instituted suit against the appellant company in the courts of this state, and recovered judgment thereon for $20,000. After the surrender by the Newport News & Mississippi Valley Company of its lease of the Chesapeake, Ohio & Southwestern Railroad, it, on the 27th day of November, 1893, united with C. P. Huntington, as joint grantor, in conveying to the Illinois Central Railroad a large amount of property, consisting of stocks, real estate, bonds, etc., realizing as its part of the sale $900,000, which was turned over to the treasurer of the company. The whole of this money, and something approximating a half a million more dollars, which was in the hands of appellant company, were thereafter turned over to Mr. Huntington in payment of divers items of alleged indebtedness due to him by appellant company, leaving the treasury of the company empty. After the payment of this money to Mr. Huntington all of the remaining assets of appellant company, consisting of side tracks, switches, etc., were conveyed to John Echols, third vice president of the company, Holmes Cummings, their general attorney, and others, to protect them against any loss which they might sustain by reason of certain bonds which they had signed as security for the company. On the same day (March 16, 1894) a meeting of the stockholders was held, at which only two were present in person; the balance of the stock being represented by written proxies. At this meeting it was unanimously "voted that the affairs of the N. N. & M. V. Co. be wound up." And four days afterwards, on the 20th day of March, 1894, C. P. Huntington instituted suit in th superior court for the county of New Haven and the state of Connecticut, in which he prayed, for reasons therein alleged, for a decree winding up the affairs of the Newport News & Mississippi Valley Company, and for the appointment of a receiver to take charge of the assets of the corporation, according to the provisions of the statute; and pursuant to this application appellant Zacher was on the same day appointed temporary receiver of the liquidating company, which appointment was made permanent on April 13th thereafter, and on the 14th of April, 1894, F. H. Davis, as president of the Newport News & Mississippi Valley Company, executed to Zacher, as receiver, what purports to be a general deed of assignment of all of the property belonging to the Newport News & Mississippi Valley Company. This deed was subsequently ratified by the directors of the company on the 14th of May, 1894, and delivered to Zacher as receiver. On the 15th day of May, 1894, the fund in controversy here was attached by the Fidelity Trust & Safety-Vault Company, assignee of the McDonald Brick Company, by serving an attachment upon the garnishee. And thereafter the appellant Edmund Zacher instituted this suit, and claimed the fund in controversy by virtue of his appointment as receiver by the Connecticut court, and under the deed ratifying his appointment by the directors of appellant company. The claim was resisted by appellee on the ground that the appointment of Zacher as receiver by the Connecticut court was not in the nature of a voluntary assignment, and did not vest him with title to the assets of the corporation; that it was in effect a proceeding in invitum, and that the independent deed of assignment executed to him by the president of the corporation pursuant to the resolution of the stockholders was not, and was not intended to be, an independent, voluntary assignment for the benefit of the creditors, but was merely executed in aid of the receivership; that it was never recorded in Connecticut, and that the assignee named therein never qualified or gave bond thereunder; and that he acquired no additional power by virtue thereof, independent of that which came from his appointment as receiver. The court below dismissed the petition of appellant, and adjudged the fund to the McDonald Brick Company's assignee, and from this judgment this appeal is taken.

The appeal raises the question whether the receiver of an insolvent Connecticut corporation can maintain an action in the courts of Kentucky to recover money which resident creditors of the incorporation have attached. The statute of Connecticut (Gen. St. 1888) under which appellant was appointed reads as follows: "Sec. 1942. The superior court in the county in which any corporation, organized under the laws of this state, has its principal place of business may, as a court of equity, on the application of any of its stock-holders, wind up its affairs and dissolve it, if said court shall find that said corporation has voted to wind up its affairs, or abandon the business for which it was organized, and has thereafter neglected within a reasonable time or in the proper manner to wind up its affairs and distribute its effects among the...