Cohin v. F. S. Waters & Co.

Mr. Presiding Justice Sears

delivered the opinion of the court.

Of the several questions raised by the briefs of counsel, we need consider but one, viz., whether a simple contract creditor may file a bill of complaint against an insolvent corporation under the provisions of section 25 of the incorporation act, and, without obtaining any of the relief provided by that section, obtain in lieu thereof relief by having a fraudulent conveyance made by the debtor corporation set aside, and assets, which were thereby conveyed prior to the filing of the bill of complaint, subjected to the satisfaction of the simple contract claim.

It is settled that a simple contract creditor may avail of the provisions of section 25, and may file a bill of complaint to obtain the relief afforded under that statute. Buda F. & M. Co.v. The Columbia Celebration Co., 55 Ill. App. 381.

And such a bill has been referred to as being in the nature of a creditor’s bill and designed to aid creditors in the collection of their debts. Butler Paper Co. v. Robbins, 151 Ill. 588.

• And it has been held that as the enactment contemplates a distribution of all the assets which the insolvent corporation has at the time of the beginning of the suit, therefore a transfer of such assets made after bill of complaint filed and summons served will be set aside in order to effect such distribution of assets. Bailey v. Snyder, 61 Ill. App. 472.

But we are not aware of any adjudicated ease in which it has been held by the Supreme Court, or by this court, that assets not in possession of the insolvent corporation when the bill is filed, but which had been fraudulently transferred prior thereto, can be reached by a simple contract creditor who is proceeding under the provisions of section 25 in question. When the only scope of the proceeding, measured by the relief decreed, is to subject such equitable assets to the satisfaction of the legal claims of such creditors, as is the case here, we are of opinion that the bill can not be thus entertained for such purpose alone, and relief granted which the creditor could not obtain if his bill were appropriately framed for the obtaining of only that relief which is granted. In other words, section 25 of this act does not operate to enlarge the operation of section 49 of the chancery act. A mere contract creditor can not come into a court of equity for the simple purpose of enforcing a legal demand—one which involves the right to a trial at law. Shufeldt v. Boehm, 96 Ill. 560; Goembel v. Arnett, 100 Ill. 34; Dormueil v. Ward, 108 Ill. 216; Gore v. Kramer, 117 Ill. 176; The D. C. & B. R. Mills v. Ledwige, 162 Ill. 305; Ladd v. Judson, 174 Ill. 344.

It is argued that because the proceeding here involved the appointment of a receiver, as provided for by section 25, in question, therefore the court might reach and subject to the possession of the receiver all such equitable assets. But the receiver could not assert any right in equity in this behalf which could not be asserted by the general creditors or by the corporation itself. The corporation itself could not invoke the aid of a court of equity to that end, nor could an assignee of such corporation. Bouton v. Dement, 123 Ill. 142; Ide v. Sayer, 129 Ill. 230; The Republic Life Ins. Co. v. Swigert, 135 Ill. 150.

To reach such assets is a right inuring to creditors only, and under our practice to only such creditors as have exhausted their remedy at law.

It follows from the conclusion reached by the court upon this question that it is unnecessary to discuss the evidence or to consider other points which are presented by the briefs in relation thereto.

The decree is reversed and the cause remanded.