Dwinnell v. Badger

MITCHELL, J.

For the purpose of sustaining the order appealed from, we must assume that the court found as true the state of facts most favorable to the order which the evidence would justify.

The short facts may therefore be stated as follows: Sequestration proceedings were instituted against the Northern Trust Company, an insolvent moneyed corporation, and a receiver of its property appointed pursuant to the provisions of G. S. 1894, c. 76. A creditor of the corporation intervened in these proceedings, and upon his application all its resident stockholders were made parties for the purpose of enforcing their personal liability for corporate debts. This part of the proceedings was conducted by the intervening creditor, who employed the petitioner as his attorney in the matter.

While this proceeding was pending, certain of the half-paid stockholders, — that is, those whose stock was only half paid for,— formed a syndicate, and made up a fund to the extent of the amount of their unpaid stock subscriptions, with and out of which they bought up all the claims against the insolvent corporation at the rate of 40 cents on the dollar. In consequence of this, the proceedings to enforce the stockholders’ liability were dropped, and nothing was in fact ever realized out of them. While the receiver of the insolvent corporation approved of the course taken by the intervening creditor, he made no contract of employment with him or his attorney. The sole contract of employment of the petitioner was with the intervening creditor.

The application of the petitioner was that the court direct the receiver to pay his services as attorney out of the corporate assets in his hands.

The principle sought to be invoked is that where one of many parties having a common interest in the trust fund, at his own expense takes proper proceedings to save it from destruction, and to restore it to, or collect it for, the purposes of the trust, and for the benefit of all interested in it, he is entitled to reimbursement, either out of the fund itself, which was saved, restored or collected through his efforts, or by proportional contribution from those who accept the benefit of his efforts.

Had a fund been realized through the efforts of the intervening creditor and his attorney, which had already been paid over to the creditors, we are by no means prepared to say that a court ought not to order reimbursement out of the corporate assets in the hands of the receiver which belonged to the same parties, instead of compelling the party to resort to an enforcement of proportional contribution by those who had received the fund secured by his efforts.

But the difficulty with petitioner’s case is that his efforts, or those of his client, have not resulted in any pecuniary benefit to creditors. Nothing has been realized from them, even indirectly. The money which the stockholders used in buying up or compromising the corporate debts was not the proceeds of their stockholders’ liability, but of their unpaid stock subscriptions, which were corporate assets, and belonged to the receiver.

Order affirmed.