Krug v. Roberts , 1 Ohio Law. Abs. 750 ( 1923 )

ALLREAD, J.

Epitomized Opinion

Roberts recovered judgment against Krug Baking Co., a Delaware corporation, for personal injuries. After the injuries were received but before judgment, the Delaware corporation sold its assets and business to an Ohio corporation of a similar name and thereupon the Delaware corporation closed its business,-paid all its debts and liabilities other than to Roberts, and distributed its assets to its various stockholders. This action was ' brought against stockholders to sequester enough of the funds received by them to satisfy this judgment, and a jury trial was demanded. Krug et al contended that a liability for a tort is not a debt until reduced to judgment so as to affect a conveyance made before juudgment. The Court of Appeals held:

1. “We are of opinion that the case made hy the pleadings here is in chancery and not triable as a matter of right to a jury. It is unlike a case upon a contract of a subscription to capital stock.”

2. “Upon the dissolution of a corporation and the distribution of its funds to stockholders, such stockholders are not purchasers 'but receive the funds in trust for unpaid creditors, and such creditors would include not only ordinary debtors, but all those holding liabilities which may exist against the Company. Plaintiff’s action in tort was clearly a liability, capable of being enforced after judgment in an equitable action against the stockholders to the extent of receipts by them from the dissolved corporation.”