Platt v. New York & Boston Railroad , 26 Conn. 544 ( 1857 )

Storrs, C. J.

In disposing of this case, we shall confine ourselves strictly to the questions which are presented on the record, without undertaking to decide several others which have been argued before us, but which we think are not now regularly presented. Pursuing this course, we shall not consider the questions made, as to the effect of the supposed consolidation or union of the three original corporations, chartered respectively by the states of Connecticut, Rhode Island, and Massachusetts; questions which the parties appear to be especially desirous that we shall determine, but which, as they are very important and attended with difficulty, and are not, in our opinion, presented on this record, we deem it proper to defer until it shall become necessary for us to decide them.

The case has been treated on both sides, in some parts of the argument, as if a consolidated corporation, formed out of those three corporations, is the one which was attempted to be put into insolvency before the probate court for the district of Middletown. We think, however, that the proceedings before that court were instituted, not against such a corporation, but against the original corporation called The New York and Boston Railroad Company, which was chartered by the legislature of Connecticut, in 1846,—that the latter is therefore the only corporation before that court, —and that it is in respect to that corporation only that those proceedings, or their regularity, are to be here considered and determined.

The original petition to the court of probate, instituted by Platt, alleges that he is a creditor of “ The New York and Boston Railroad Company, a corporation duly established and organized under the laws of the state of Connecticut, whereof ” the individuals therein named “are stockholders and members, having their office in Middletown; ” a description which corresponds exactly with the corporation of that name which was created in 1846 by the legislature of this state, but which is wholly inapplicable to one which has been consolidated with several other corporations created under the laws of other states, and merged and united with them into one substituted corporation by virtue of the laws of the several states by which they were originally incorporated. It proceeds to state that he has commenced a suit by attachment for the recovery of his debt against the corporation thus described; sets forth, at large, the proceedings on that attachment, which are those required by the insolvent act of 1853, in order to lay the foundation for an application to the court of probate for the relief therein provided for the creditors of insolvent debtors; and concludes by praying that court to appoint a trustee to take possession of the property of that corporation, and to proceed therewith pursuant to that act. And the petitioner’s attachment, which is set out in his petition, appears to be against the same corporation as that of which he alleges that he is a creditor, and which is described in that attachment in the same terms in which it is described in the petition. The subsequent applications to the court of probate, of Sage, and Hinchfield, and the executors of Jarvis, to be made parties to the proceedings of Platt, allege that they are creditors of the same corporation, which is called by the same name, and similarly described. And all the decrees and orders of that court are conversant with that corporation only. Indeed, the appellants in this case professedly and in terms take their appeal from the decrees and orders of that court in the settlement of the estate of the same corporation. It is of that corporation alone that they allege they are creditors, and their complaint is that the proceedings in that court will dissolve their attachment against it as such creditors; which obviously could not be the case if the corporation against which those proceedings were had were another than that of which they were creditors. In short, there is not, either in the petition to the court for the appointment of a trustee, or in any of the subsequent proceedings before that court, any mention of or allusion to any other corporation than that which was incorporated by the legislature of this state, by the name of the New York and Boston Railroad Company, and which is located at Middletown.

The first that we hear of any other corporation, is after the appeal was taken in this case, and when the appellants file their reasons for that appeal in the superior court. In the last of those reasons, after having in those which preceded it treated the proceedings of the court of probate as having been instituted against the original Connecticut corporation, and urged their invalidity on the ground that they were its creditors, and had secured their claim against it by a writ of foreign attachment, they allege that when, and long before, and ever since the attachment of Platt was sued out, which laid the foundation of those proceedings, and when the decrees and orders were made from which they had appealed,the said New York and Boston Railroad Company, referring to the corporation previously described and which was incorporated by this state, was united, amalgamated, merged, and consolidated, under that name, with two other certain corporations severally established under the respective laws of Rhode Island and Massachusetts, the capital stock of each corporation forming the capital stock of said united corporation, and the stockholders thereof being the stockholders of said united corporation, having all the powers, rights, privileges, and franchises which bad been granted to said corporations individually; that said union and merger being effected by the mutual agreement of said corporations in accordance with their respective charters, and ratified, validated, and confirmed by the legislatures of Connecticut, Rhode Island and Massachusetts, in 1854 and 1856, has never been repudiated by any of the parties thereto, nor annulled or vacated by either of the legislatures of said states, and that ever since said union and merger was so effected, the said New York and Boston Railroad Company have transacted all their business and elected their officers as one united company. In whateveraspeet ihe facts stated in this last reason be considered, we are unable to perceive their pertinency to this case. They are clearly of no importance unless they show, as the appellants claim, that the effect of the alleged union and merger was, not only to create a new corporation, but also to dissolve and put an end to the original Connecticut corporation. If the latter corporation was not thereby dissolved or extinguished, but a.new one only was created, (on neither of which questions do we deem it necessary to express any opinion,) it is obvious that the creation of such new corporation presents no impediment to the proceedings which have been instituted against the original Connecticut corporation, as the latter, in that case, still retains its existence, and is as liable to be proceeded against under our insolvent act, as if the new corporation, from which it is entirely distinct, had not been created. If the claim of the appellants is well founded, that the original Connecticut corporation became dissolved and extinguished to all intents and purposes by the effect of the union and merger, it results that that corporation was thereby ended from thenceforth and has now no existence. But the appellants admit, in their motion for this appeal, that that corporation is still undissolved and subsisting, and allege therein that they are creditors of if, and set up, as valid, an attachment by them for the recovery of their debt against it, which they seek to uphold against the proceedings against it in the probate court; and they appeal on the ground that those proceedings will dissolve that attachment. The ground, therefore, on which their appeal rests, is incompatible with and indeed contradictory to their claim of the utter extinction of that corporation. And by showing, as they claim to have done, that it is so extinguished, they destroy, of course, any claim or right of action against it which can be enforced by means of their attachment, and also the validity of that attachment, since they can not be creditors of or bring a suit against a nonentity. They would thereby place themselves in the condition of one who should appeal from a decree of a court of probate on the ground that he was a creditor of the estate in settlement, but in pursuing his appeal should show in his reasons that his claim against the estate is invalid. It is scarcely necessary to say that such an appeal would be ineffectual. If, however, that corporation, by its merger and union with the other corporations, is dissolved for certain purposes, but yet should be deemed to subsist so as tfc enable its creditors to proceed against it for the collection of their debts, as may perhaps be the case, and so, therefore, that the appellants, being creditors of it, may treat it as still in existence for that purpose, we are of opinion that it should be considered as also still subsisting for the purpose of enabling any of its creditors to avail themselves of the relief against it which is provided by our insolvent act. (See Ang. & Ames on Corp., ch. 22.)

The proceedings in insolvency in this case before the probate court, not being therefore against any new or consolidated corporation which may have been formed by the union and merger of other corporations, created by and united under the laws of different states, but only against the original corporation chartered solely by this state, it is unnecessary to consider the question which has been principally argued before us, whether our insolvent law is applicable to such a consolidated corporation, so as to give our courts of probate jurisdiction to dispose of its property or any part thereof, under and according to the provisions of that law.

The question then arises, whether the provisions of that act are applicable to such a corporation as the original New York and Boston Railroad Company chartered by this state,' and which is wholly a domestic corporation. The proceedings in this case were at the instance of creditors of that corporation, and not under an assignment made by it, and were therefore involuntary on its part. It is suggested that the act does not expressly authorize proceedings under it against any corporation in invitum, and that therefore no such body can be subjected to its operation, unless voluntarily on its part by having made an assignment of its property as provided in the first section. We by no means admit that corporations are not by the terms of the act, and the legal construction of its language, embraced in the other sections which provide for involuntary proceedings against insolvent debtors, and indeed have no doubt that, if it became necessary to decide that point, we should hold that they are embraced by its terms; but looking at the provisions of those other sections in connexion with the first, and especially at the second and fifth sections, there can not be a doubt that the act was intended to extend to corporations as well as to natural persons, and that involuntary proceedings were contemplated under it against the estate of all debtors who are competent to bring themselves voluntarily within its operation by making an assignment of their property. It is next claimed that if the act embraces any corporations, it does not embrace all, and that railroad corporations are among those which are excluded. Municipal corporations, so called, such towns, cities, boroughs, school districts, &c., are instanced among those which are claimed not to be within the purview the act. It may be admitted, and indeed, for reasons too obvious to be detailed, we think, that public bodies of that description were not intended to be subjected to its operation. But none of the reasons for excluding those bodies, growing out of their peculiar character, or the objects of their creation, apply to private corporations for banking, insurance, manufacturing, or trading purposes, or the building of canals, turnpikes or railroads, or the carrying on any other lawful pecuniary business, which “are chartered by the state, and reside by construction of law therein. Such corporations-created for the private advantage and emolument of the corporators, are, we have no doubt, those which are intended to be embraced by the provisions of our insolvent act. The reasons urged for distinguishing between railroad companies and other private business corporations, do not strike jus with any considerable force, while justice obviously requires that the creditors of that particular class of corporations should have the same protection for their debts as is provided for the creditors of other similar corporations. So far as the railroad company itself is concerned, it is entitled to no special immunity in this respect as to its creditors; and as to any inconvenience to the public by the temporary or permanent cessation of its business, consequent upon proceedings in insolvency against them, the necessity of which cessation however is not apparent to us, such inconvenience would be the same in kind, and would differ only in degree, from that which would attend similar proceedings against any of the other private corporations which have been mentioned; and would be the same only as if their business were conducted by natural persons who had become insolvent and therefore liahle to those proceedings. The appellants further insist that railroad companies were not intended to be embraced by the insolvent law on the ground that the trustee appointed under it would not be invested with the power of selling, leasing, or operating the railroad, and therefore that the most valuable portion of its property could not be made available for the payment of its debts. We do not deem it necessary to express any opinion on the legal principle affirmed in this objection ; for if it is correct it falls far short of sustaining the inference claimed from it. That some of the property of the company is of such a peculiar character that the trustee could not, by his own unassisted ‘power, dispose of or manage it for the benefit of creditors, would be an insufficient ground for concluding that the legislature did not intend that they, should have the benefit of such of its property as he could appropriate to their use. And we would add that in regard to other property, if there should be any in which the company would have a valuable interest, without undertaking to prescribe the particular course to be taken with it, which would now be premature, we can not but think that a method could be devised by which it could be made available to creditors.

The .appellants next object to the regularity of the proceedings on the writ of attachment sued out by Platt against the railroad company, on which his petition to put it into bankruptcy was 'founded, because Stokes, on whom as secretary of the company demand was made by the officer for property sufficient for the security of Platt’s claim, and with whom a copy of that writ was left in séVvice, was not then the secretary of the company, for that the directors of the company had previously removed him from said office and appointed one Rice to said office in his place; and that therefore said demand of Stokes, and the service of said ‘writ, were both invalid. These objections do not rest on the ground that Stokes was never the secretary of the company, for it is impliedly admitted by the appellants in their reasons, and the argument has proceeded on the concession, that he had been its secretary, but upon the claim that 'Rice had been appointed in his place ; for if he had not, Stokes obviously retained the office. On the facts found, we think it plainly appears that whatever action was taken in respect to Rice, was not taken by the railroad company against which the proceedings before the probate court were instituted, but by what is claimed to be the new consolidated corporation formed by the merger and union before-mentioned, and that it was of the latter company only, if any, that Rice was appointed the secretary. It is obvious that such an appointment by that corporation did not have the effect of removing Stokes from his office of secretary of another subsisting and distinct corporation, the one which was the party to the proceedings in the court of probate. To the objection that the writ was not legally served on the company, it is also a sufficient answer that the insolvent act requires no service of the writ sued out by the petitioner to the probate court to be made on a debtor, in order to lay the foundation for an application to that court for the appointment of a trustee on his estate. All that is required for that purpose, and in order to give that court jurisdiction, is, that the debtor shall refuse to show to the officer, and that the latter shall be unable to find, sufficient property of the debtor to secure the attachment against him, and that the officer shall make a return to that effect fo the court of probate. The very reason why the creditor may apply for a trustee, is, that the debt can not be realized by an ordinary suit. If property could be found to satisfy it on the attachment, the debt could be collected in that suit, and an application to the court of probate would become unnecessary. It is therefore immaterial to the validity of the proceedings before the court of probate, whether the attachment on which they are founded is served on the debtor or not, since such service could be-important only with reference to the further prosecution of the suit in the court to which the writ is returnable.

The appellants further claim that there was no legal notice to the railroad company of the petition to the court of probate for the appointment of a trustee. It appears that the company appeared before that court on that petition by its attorney, that no objection was ever made to the want of such notice or to the jurisdiction of the court on that or any other account, that a time was fixed by the court within which the company should file their pleadings and answer to the petition, and subsequently for the hearing of the case, and that the hearing was afterwards repeatedly adjourned, and that all of these proceedings took place on the motion of the company by its attorney. After these proceedings it is too late for the company to set up a want of notice on the petition. Such an appearance cured any defect in or want of notice if it were otherwise insufficient. And we also think that the company having thus appeared and waived any objection on that ground, it is not competent for the appellants to avail themselves of that objection. It was an objection in its nature personal to the company, and of which they only could complain, and they having waived it, the proceedings in the probate court in this respect are unexceptionable.

The appellants also claim that when the proceedings were commenced, the company had no office or place of business in the Middletown probate district, and that therefore the court of probate for that district had no jurisdiction of the case. Without considering the manner in which the company conducted its affairs after its supposed union with the two other railroad companies with which it became connected, and which united companies had an office in Middle-town for the transaction of their business, we think that the office of the original Connecticut corporation must be deemed, for the purposes of the present proceedings, to have remained in Middletown, which is within that probate district. It had its office there when it was organized, and for a considerable period afterwards, and indeed down to the time of its connexion with the other railroad companies, and it does not appear that it has ever been removed to any other place. We are of opinion, even if it had ceased doing business before the proceedings in insolvency, that for the purpose, at least, of rendering them amenable to the provisions of our insolvent act, that should be considered as having continued to be their place of business within the intent of that act. The idea that an insolvent corporation having an office where its business is transacted, can, by discontinuing its- business, defeat the relief which is provided for its creditors by our insolvent law, is not susceptible of a plausible vindication. Its office would, for the purpose of jurisdiction and the administering of justice, be deemed to remain where it was when it ceased doing business. (See Evarts v. Killingworth Manufacturing Co., 20 Conn., 447.)

The claim that the judge óf probate was disqualified to act in this case, because he had been retained or consulted as attorney or counsel in matters appertaining to the settlement of the estate in question, is plainly unfounded. By the first section of the twenty-fifth chapter of the acts of 1855, on which the appellants rely, it was optional with the judge to act, if he had been so retained or consulted, unless some person interested in the estate objected, and in the present case no objection was made.

We therefore advise that the orders and decrees of the probate court appealed from, be affirmed.

In this opinion the other judges concurred

Decrees of probate to be affirmed.