Clayton v. Ore Knob Co.

MerriMON, C. J.

after stating the case: Although this action was not at first formally a creditor’s action, it after-wards was made and treated as such, and the appellant, a judgment creditor, was properly made a party plaintiff to the end he might share in the assets of the defendant accordingly as he might be entitled. That he may have shared in assets in the hands of the receivers did not prevent him or other creditors from insisting that there were, or ought to he, other and additional assets out of which his and other unpaid debts might and should be paid. There was no final decree or judgment at the time the order of reference was made, and there is, hence, no reason why the appellant should be concluded by former orders and judgments entered in the course of the action. The action is equitable in its nature, and it was the duty of the Court to see that the receivers had collected all the assets of the defendant and distributed the same to parties entitled to have the same according to their respective rights.

Very certainly, the capital stock, paid or unpaid, of the defendant, constitutes a trust fund for the benefit of its creditors, and whatever may be the rights of the stockholders as among themselves, the creditors have the right to have such fund collected and applied to the discharge of their debts. If the capital stock has not been paid for, it is the plain duty of the Court to require it to be collected, or so much thereof as may be necessary to pay its unpaid debts. Marshall Foundry Co. v. Killian, 99 N. C., 501, and cases there cited; Heggie v. B. & L. Association, 107 N. C., 581; Sawyer v. Hay, 17 Wall., 620; Wood v. Drummer,, 3 Mason, 308; Ang. and Ames Corp., § 600, et seq.

The defendant was incorporated for mining and smelting purposes, and it may be that its capital stock might in good faith have been paid for bj’' its stockholders with property other than money, appropriate for its purposes, as a tract of land containing a copper mine, and when the stock has been paid in good faith such payment would be legitimate, unless in some proper way and connection it should be alleged and proven that such payment was simulated, grossly inadequate and fraudulent, and intended to serve fraudulent purposes. In such case, such fraud appearing, the Court would compel payment of the stock, .certainly less a fair price for the property so applied and used. And in an action like this, the creditor might allege the fraud and have the questions arising in that respect determined according to the course and practice of the Court. There is no valid reason why he might not. The. Court has ample jurisdiction for the purpose as to parties and the subject matter embraced by the litigation.

In the present state of the pleadings in this case, no question of fraud is raised as to the payment of the capital stock of the defendant; the referee, however, finds that, in fact, it never was paid in cash, but proper certificates of stock were “issued to the corporators in proportion to their several interests in certain real estate then owned by them in Ashe County, and known as the Ore Knob property, consisting of a tract of land’ upon which was a mine of copper.” He does not find, as he should have done, if such was the fact, that the property was received and conveyed to the company with the understanding and intent that it should be and stand as payment for the stock, or for some part of it, if so intended. It is stated by the referee that no evidence was offered to show the value of the property — whether it was treated as a payment of the stock, or some part of it, seems to have been wholly ignored. Such finding was important, and the case could not be properly disposed of without it. It is scarcely probable that the property was so intended. The capital stock was $1,500,000, divided into shares of $10 each. That is a great sum, and it is scarcely probable that the land was accepted and treated as of that value, It is more probable that the property-was taken at a fair value, and the stock, except to that extent, was never paid for. The referee should have found how the facts were. Hence, the referee’s first finding of law, that the receivers “neither have, nor ought to have, any assets in their hands applicable to the ” appellant’s judgment, was unwarranted.

The inquiry does not involve any question of fraud. As we have said, such question does not arise in the present state of the pleadings.

The charter of the defendant provides that “said (thecap-ital) stock shall be issued as full paid stock, shall be personal property and transferrable.” This does not imply that the stock shall be issued to the stockholders without paying anything for it. Though the charter does not, in terms, imply that it may be paid for otherwise than with money, it would seem that it might be paid for with property,-but surely not at a nominal, simulated price! But we advert to this provision of the charter — rather a peculiar one — only to say that it does not imply that the corporators are to receive the certificates of stock without paying for the same.

There is error. The judgment must be set aside, and the referee must be directed to find the facts as indicated in this opinion, and if it shall turn out that the capital stock of the defendant has not been so paid in property, then the receivers must be required to collect so much thereof as may be adequate to pay the appellant’s debt.