Upon a bill in equity by creditors of an insolvent corporation,
whose claims amounted to more than $2,000, against the corporation
and stockholders therein, to compel sums, due from them to the
corporation for unpaid subscriptions to stock, to be paid in, and
administered as a trust fund and distributed among all creditors of
the corporation who should come in and contribute to the expense of
the suit, the circuit court referred the case to a master to
receive proofs of claims, and upon the return of his report
adjudged that claims severally less than $5,0000, but together
exceeding that sum, were just debts of the corporation, and that,
in order to pay them, the stockholders should pay the amount of
their subscriptions to a receiver. Stockholders so charged with
more than $5,000 each appealed to this Court.
Held that
the sums in dispute were sufficient to give the Circuit Court
jurisdiction of the case, and this Court jurisdiction of the
appeal.
This was a bill in equity, filed February 8, 1889, in the
Circuit Court of the United States for the Middle District of
Tennessee by citizens of Pennsylvania, of Indiana, and of Ohio,
judgment creditors of the Clifton Coal Company, in behalf of
themselves and all other creditors who should come in and
contribute to the expenses of the suit, against that corporation,
which was a Kentucky corporation whose chief officers resided in
Tennessee, and against sixteen individuals, alleging that they were
stockholders in the corporation and citizens of Tennessee, and had
paid nothing for their stock and were liable to the corporation for
the amounts thereof, and their liabilities were assets of the
corporation and a trust fund for the payment of all its debts, that
the corporation was insolvent, and had no other assets that the
plaintiffs could reach, and that its officers had declined to
collect or to attempt to collect any of the amounts so due to it,
and had neglected to administer the trust fund.
The bill prayed that the defendant stockholders might be
Page 137 U. S. 367
decreed to pay to the plaintiffs, and to such other creditors as
might become parties, such sums as might be found due them; that
such sums might be assessed upon the stockholders as law and equity
require, and that the moneys due from the stockholders to the
corporation might be decreed to be held in trust by them, and to be
a trust fund for its creditors, and be administered by the court as
a trust fund pledged for the payment of the debts of the
corporation, and for general relief.
The corporation, though served with process, did not appear, and
no further proceedings were taken against it. The plaintiffs
dismissed their bill against three of the individual defendants
because, as recited in the order of dismissal, they were not within
the jurisdiction of the court, being citizens of other states than
Tennessee. The other defendants appeared and answered, and upon a
hearing it was adjudged that the amount of their stock had never
been paid, and was still due from them to the corporation, and
constituted a trust fund for the payment of the debts of the
plaintiffs and of other creditors who might come in. A receiver was
appointed, and the case referred to a master to receive proofs of
claims. 41 F. 531. The master's report allowed sixty-three claims
of different creditors, amounting in all to $22,888; those of the
original plaintiffs for $4,032, $3,286, and $464, respectively; one
other claim for $3,527, and the rest varying from $1,060 down to
$3.25.
As to the claims for less than $2,000 each, the defendants
excepted to the master's report and moved the circuit court to
dismiss the bill for want of jurisdiction. On September 6, 1890,
the court overruled the exception and motion, confirmed the
master's report, and decreed that all the claims allowed by the
master were just debts of the corporation and entitled to be paid
out of the assets, and that in order to pay the amount of these
debts, the defendants should pay to the receiver, and he should be
authorized to collect, their unpaid subscriptions to stock,
amounting in all to $56,175, the sums so charged against five of
the defendants being more than X5000 each, and against each of the
other defendants less than $5,000. The defendants so charged with
more than $5,000 appealed to this Court.
Page 137 U. S. 368
The appellees now moved this Court as follows:
"First. To advance this cause for hearing, and now to hear the
same, so far as there may be appeals herein, under the provisions
of the Act of February 25, 1889, c. 236, questioning the
jurisdiction of the circuit court to render certain parts of the
relief granted by its judgment herein."
"Second. To dismiss all the other appeals herein for the reason
that this honorable court has not jurisdiction of the same."
By agreement of parties and leave of court, the case was
advanced for hearing as to the questions of the power of the
circuit court to grant the relief decreed, and those questions, as
well as the motion to dismiss, were submitted on printed
briefs.
MR. JUSTICE GRAY, after stating the case as above, delivered the
opinion of the Court.
This is a bill in equity by some, in behalf of all, of the
creditors of a corporation against the corporation and holders of
stock therein. The bill is not founded upon any direct liability of
the stockholders to the plaintiffs, but upon the theory that, the
corporation being insolvent and having no other assets, the sums
due to it from the stockholders on their unpaid subscriptions to
stock ought to be paid by them to the corporation as a trust fund
to be distributed among the plaintiffs and all other creditors of
the corporation so far as required to satisfy their just claims,
and that, the corporation having neglected to collect these sums or
to administer the trust, and the plaintiffs and defendants being
citizens of different states, the circuit court, sitting in equity,
should compel those sums to be paid in by the stockholders, to be
administered as a trust fund and to de distributed among all
creditors who should
Page 137 U. S. 369
come in. Such a bill can only be maintained by one or more
creditors in behalf half of all, and not by any one creditor to
secure payment of his own debt to the exclusion of others.
Sawyer v.
Hoag, 17 Wall. 610,
84 U. S. 622;
Patterson v. Lynde, 106 U. S. 519;
Johnson v. Waters, 111 U. S. 640,
111 U. S. 674.
In
Hatch v. Dana, 101 U. S. 205, the
bill of a single creditor, which was sustained by the court, was
brought in behalf of himself and all other creditors of the
corporation who should come in and contribute to the expenses of
the suit. No other creditors came in, and it did not appear that
there were any others.
Each of the appellants has been charged by the decree below with
a sum of more than $5,000, and it is undisputed that each of them,
if the others should prove insolvent, would be obliged to pay the
whole sum charged against him, and that each therefore has more
than $5,000 at stake. The contest is upon the sufficiency in amount
of the creditors' claims to support the jurisdiction of the circuit
court in the first instance, and of this Court on appeal, within
the meaning of the statutes limiting the jurisdiction of each court
to cases in which the sum in dispute exceeds $2,000 and $5,000,
respectively. Acts of August 13, 1888, c. 866, § 1, 25 Stat. 434;
February 16, 1875, c. 77, § 3, 18 Stat. 316. The sums alleged to be
due from the corporation to the original plaintiffs amounting to
more than $2,000, the circuit court had jurisdiction of the case,
and authority to administer and distribute the amounts due from the
individual defendants to the corporation for unpaid subscriptions
to stock, as a trust fund for the benefit of all the creditors of
the corporation, and for that purpose to permit creditors who had
not originally joined in the bill to come in and prove their claims
before a master.
Johnson v. Waters, above cited.
The trust fund so administered and ordered to be distributed by
the circuit court amounting to much more than $5,000, the appellate
jurisdiction of this Court is not affected by the fact that the
amounts decreed to some of the creditors are less than that sum. It
was immaterial to the appellants how the sums decreed to be paid by
them should be distributed, and (which is more decisive) such a
bill as this could not have
Page 137 U. S. 370
been filed by one creditor in his own behalf only, and the case
does not fall under that class in which creditors who might have
sued severally join in one bill for convenience and to save
expense. This Court therefore has jurisdiction of the whole appeal,
according to the rule affirmed in
Gibson v. Shufeldt,
122 U. S. 27, and
the cases there collected.
Motion to dismiss appeal overruled, and jurisdiction of the
circuit court sustained.