Kelley v. Gill - 245 U.S. 116 (1917)
U.S. Supreme Court
Kelley v. Gill, 245 U.S. 116 (1917)
Kelley v. Gill
Submitted October 2, 1917
Decided November 5, 1917
245 U.S. 116
A court of bankruptcy has no jurisdiction over a suit in equity brought by the trustee of a bankrupt corporation in the the corporation's domicile, against a number of its shareholders there residing, for the purpose of collecting from each an ascertained sum of money which, by the terms of such shareholder's individual subscription contract, had become unconditionally due and payable to the corporation at times specified, and without regard to the obligations of other shareholders.
Where the liabilities of the shareholders of a corporation to pay stock subscriptions are several, independent, and unconditional, and no issue with the corporation touching such liabilities is common to the shareholders, the remedy of the corporation, or its trustee in bankruptcy, is by action at law against each shareholder separately; the equitable jurisdiction to avoid multiplicity of actions does not arise merely because the claims are very numerous, and a single
suit by the corporation, or by its trustee in bankruptcy, against many of the shareholders to collect their subscriptions cannot be maintained on that ground.
An order of the court of bankruptcy calling for the payment of shareholders' subscriptions to a bankrupt corporation which, before and independently of the order, were ascertained and payable adds nothing to the liabilities of the shareholders or to the rights of the trustee in bankruptcy, and cannot justify a single suit by the trustee against many of the shareholders to collect their subscriptions which, in the absence of the order, would not have been cognizable in equity, and neither can an order of the bankruptcy court directing the trustee "to institute a suit in equity" to make such collections confer such equitable jurisdiction.
The amendment to § 47, clause (2), of subdivision a of the Bankruptcy Act, made by the Act of June 25, 1910, 36 Stat. 840, § 8, did not confer new means of collecting ordinary claims due the bankrupt.
Where causes of action and citizenship of parties are such that a bankrupt, before bankruptcy, could have sued only in a state court, the bankruptcy court is without jurisdiction to enforce them at the suit of the trustee, even if, as a matter of equity jurisdiction, the trustee might join all causes in one bill to prevent a multiplicity of suits, while the bankrupt would have been obliged to sue upon each of them independently at law.
Contested claims of a bankrupt corporation against persons alleged to be shareholders, for moneys alleged to be due and payable on subscriptions to the corporate stock, are not to be regarded as property in the possession of the trustee in bankruptcy for the purpose of determining whether the bankruptcy court has jurisdiction to enforce them; nor does the fact that such alleged debtors are shareholders of the corporation enable the trustee to sue them in that forum to collect their subscriptions.
238 F. 996 affirmed.
The case is stated in the opinion.