Bull v. International Power Co.

93 A. 86, 84 N.J. Eq. 209, 1915 N.J. Ch. LEXIS 103
CourtNew Jersey Court of Chancery
DecidedFebruary 11, 1915
StatusPublished
Cited by12 cases

This text of 93 A. 86 (Bull v. International Power Co.) is published on Counsel Stack Legal Research, covering New Jersey Court of Chancery primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bull v. International Power Co., 93 A. 86, 84 N.J. Eq. 209, 1915 N.J. Ch. LEXIS 103 (N.J. Ct. App. 1915).

Opinion

Walker, Chancellor.

On December 11th, 1914, a decree was entered in this case adjudging the defendant corporation to be insolvent, awarding the usual injunction and appointing a receiver, both under the statute. An appeal was taken to the court of errors and appeals by the defendant on December 14th, 1914. The decree appealed from recites that

“the business of said defendant corporation has been, and is being conducted at a great loss and greatly prejudicial to the interests of its creditors and stockholders, and that it is insolvent, and that a receiver for the defendant should be appointed,” &c.

The act concerning corporations (Rev. 1896; P. L. p. 277), in section 65, provides for the appointment of receivers or trustees for insolvent corporations. That act was amended on April 1st, 1912. P. L. 1912 p. 535. The section, as amended, with the newly-added or amendatory words in italics, reads as follows:

“Whenever any corporation shall become insolvent or shall suspend its ordinary business for want of funds to carry on the same, or if its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, any creditor or stockholder may by petition or bill of complaint setting forth the facts and circumstances of the case, apply to the court of chancery for a writ of injunction and the appointment of a receiver or receivers or trustee or trustees, and the court being satisfied by affidavit or otherwise of the sufficiency of said application, and of the truth of the allegations contained in the petition or bill, and upon such notice, if any, as the court by order may direct, may proceed in a summary way to hear the affidavits, proofs and allegations which may be offered .on behalf of the [212]*212parties, and if upon such inquiry it shall appear to the court that the corporation has become insolvent and is not about to resume its business in a short time thereafter, c.r that its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders, so that its business cannot be conducted with safety to the public and advantage to the stockholders, it may issue an injunction to restrain the corporation and its officers and agents from exercising any of its privileges or franchises and from collecting or receiving any debts, or paying out, selling, assigning or transferring any of its estate, moneys, funds, lands, tenements or effects, except to a receiver appointed by the court, until the court shall otherwise order.’"

The section, as it originally stood, is as above recited, save that there is not contained therein the italicized words.

It appears, therefore, that prior to the amendment of April 1st, 1912, a receiver could be appointed for a corporation which had become insolvent or had suspended its ordinary business for want of funds to carry on the same. Now, a receiver may be appointed, not only if the corporation be in the situation just described, but, also, if its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors and stockholders. This language is in that part of the section which permits application to be made for the appointment of a receiver, and, later, in that part of the section which speaks of what may be made to appear to the court on the summary hearing, it is provided that if the corporation has become insolvent and is not about to resume its business in a short time thereafter, or that its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors and stockholders, so that its business cannot be conducted with safety to the public and advantage to the stockholders, the court may issue an injunction, &c., and appoint a receiver, &c.

Now, in the recital part of the decree in this cause, is this statement:

“and it appealing to the court upon such summary inquiry that the business of said defendant corporation has been and is being conducted at a great loss and greatly prejudicial to the interest of the creditors and stockholders,”

and it proceeds, "and that it is insolvent, and that a receiver for the defendant company should be appointed by this court,” &c.

[213]*213It is, therefore, apparent that the provision in the latter part of the section which reads, “that its business cannot be conducted with safety to the public and advantage to the stockholders,” is omitted. The first part of the phrase, “so that its business cannot be conducted,” is part of the newly-added matter in the amendment of 1912. The words “with safety to the public and advantage to the stockholders” are in both the original and amended acts.

Counsel for complainant now moves “to amend, or for an order amending nunc pro tunc, the decree entered in the above-entitled cause on December 11th, 1914, by inserting therein, after the word ‘stockholder/ line 2, page 2, the following: ‘so that its business cannot be conducted with safety to the public and advantage to the stockholders / and further, by inserting in said decree, after the word ‘insolvent/ line 3, page 2, the following: ‘and is not about to resume its business in a short time thereafter/ and further, by inserting therein, after the word ‘insolvent/ line 11, page 2, the following: ‘and is not about to resume its business in a short time thereafter/ and further, by inserting therein, after the word ‘stockholders/ line 14, page 2, of said decree, the following: ‘so that its business cannot be conducted with safety to the public and advantage to the stockholders.’ ”

The first two amendments asked for relate to the recital part of the decree; the last two to the ordering part. On the argument counsel abandoned any request for amendments in the ordering part of the decree upon the theory that if the court recites the facts which it finds, its order need not contain them, but may proceed to decree the relief to which the party is entitled upon the facts found. This is sound. Surely, if a decree recites all of the jurisdictional facts upon which relief may be grounded, it need only proceed to award the appropriate relief. But, such recitals are unnecessary, as will hereafter appear.

It seems to me, however, that the complainants are entitled, ’ if they desire, to have the statutory words, “so that its business cannot be conducted with safety to the public and advantage to the stockholders/’ inserted.

[214]*214Examination of many decrees of insolvency, and appointment of receivers in important cases, I think, will disclose that the recitals do not follow closely and literally the 'statutory language.

Counsel for defendant company urged that Atlantic Trust Co. v. Consolidated Electric Storage Co., 49 N. J. Eq. 402, is an authority, to the effect that tire decree, to be valid upon its face, should show that all of the statutory requirements are found to exist. Upon examination it will be seen that that case dealt not with the form of a decree adjudging insolvency, but only with tire sufficiency of the facts which would warrant the making of the decree. Said Vice-Chancellor Van Fleet, in that case (at p. 404) :

“The power to dissolve an insolvent corporation and wind it up is statutory.

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Bluebook (online)
93 A. 86, 84 N.J. Eq. 209, 1915 N.J. Ch. LEXIS 103, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bull-v-international-power-co-njch-1915.