Mr. Chief Justice Wilkin
delivered the opinion of the court:
One of the points made in the petition for rehearing is, that appellees Weigley, Bulkley & Gray, in their answer to the rule to show cause why they.should not be attached for contempt, did not question the general jurisdiction of the Superior Court to adjudicate upon the case presented to it, and therefore that question was not properly before us for decision. It is true, those parties; in that answer, placed their denial of such jurisdiction upon the ground that the corporation was not, at the time of filing the bill, doing business in Cook county and had no ‘property there. It is not denied that Ames, the other appellee, did in his answer specifically deny the “power or authority” of the court, “under the bill filed then, to appoint a receiver for the defendant, the Northwestern Shoe Company,” and as it has been stipulated that the two cases shall be considered as one, all parties are entitled to the benefit of that denial. We do not, however, understand that a party charged with contempt, in a case of this kind, is limited, upon his trial, to the defenses set up in his answer to the rule to show cause. The contempt proceeding, being for the benefit of the complainant in the chancery suit, partakes of that cause, and is according to the forms of practice in chancery. (People v. Diedrich, 141 Ill. 665. See, also, cases there cited.) The party accused is entitled to a trial. The charge in this case being the refusal of the defendants to respect and obey an order of court, the party bringing the accusation was, in the absence of an admission of that fact by the defendants, bound to prove the existence of such an order. Accordingly he offered in evidence the bill of complaint, summons and return, appearance and consent of the Northwestern Shoe Company to the appointment of the receiver, and the order appointing the receiver. If absolutely void, that decree was and is open to attack, directly or collaterally, whenever and wherever an attempt is made to set it up as the basis of a right of action. As was said in Buckmaster v. Carlin, 8 Scam. 108, speaking of the distinction between judgments and decrees which are void and those which are merely voidable : “The former are binding nowhere; the latter everywhere, until reversed by a superior authority.”
It is assigned for error upon this record that the court below erred in holding it had jurisdiction to appoint a receiver of the property of the Northwestern Shoe Company, and in holding that it had jurisdiction to entertain the bill of Jacob Graff for any purpose, and we entertain no doubt that under these assignments of error the defendants below had the right to insist, in the Appellate Court, that the decree which they were charged with disobeying was a nullity, and have the same right here.
Much time is spent, in the argument of the case, discussing the question as to whether this is to be treated as a direct or collateral attack upon that order. It is well settled that a party charged with contempt of a judgment or decree may acquit himself by showing that such judgment or decree is a nullity, but cannot be heard to question it on the ground of irregularity, however erroneous. (Tolman v. Jones, 114 Ill. 147; Leopold v. People, 140 id. 552.) In the latter case we said: “A party cannot be guilty of contempt of court for disobeying an order which the court had no authority of law to make. Want of power, as here used, is not, however, to be confused with mere irregularity in the exercise of power, for if the court has jurisdiction of the parties, and legal authority to render the order, then a party cannot stand in defiance of it, however improvidently or erroneously made.” Whether the attack is said to' be direct, or merely collateral, is. immaterial. If the Superior Court had jurisdiction of the parties and the subject matter of the action in which the receiver was appointed, he became the officer of the court, and his possession of the property of the corporation was the possession of the court itself, “and any unauthorized interference therewith, either by taking forcible possession of the property committed to his charge or by legal proceedings for that purpose, without the sanction of the court appointing him, is a direct and immediate contempt of court, and punishable by attachment.” (Richards v. People, 81 Ill. 551.) It makes no difference that the party charged with the contempt was • not a party to the proceeding in which the receiver was appointed.
The vital question in the case then is, as stated in our former opinion, “whether the Superior Court in which the receiver was appointed, and in which the order was entered to turn over the goods, had jurisdiction of the subject matter of the bill.” The relief sought by the bill in this case was the dissolution of the corporation and settlement of its business. The appointment of the receiver was a mere incident to that relief, to enable the court to take possession of the property and business of the company and finally wind up its affairs. It is clear, if the court was without jurisdiction to grant the ultimate relief prayed by the bill, it had no power to appoint the receiver and authorize him to assume possession and control of the corporation assets. It is well settled by the decisions of this court as well as the authorities generally, that courts of chancery are without jurisdiction to decree the dissolution of corporations, except in so far as that jurisdiction is conferred by statute; and we deem it too clear for argument, that if the Superior Court had jurisdiction to adjudicate upon the subject matter of the bill of Jacob Graff and grant the relief therein prayed, that jurisdiction must be attributed to section 25, chapter 32, of our statute, and not to its general equity powers, sitting as a court of chancery. That section of the statute provides : “If any corporation or its authorized agents shall do, or refrain from doing, any act which shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record for a payment of money, after demand made by the officer, to be returned ‘no property found,’ or to remain unsatisfied for not less than ten days after such demand, or shall dissolve or cease doing business leaving debts unpaid, suits in equity may be brought against all persons who are stockholders at the time, or liable in any way for the debts of the corporation, by joining the corporation in such suits, and each stockholder may be required to pay his pro rata share of such debts or liabilities to the extent of the unpaid portion of his stock, after exhausting the assets of such corporation. And if any stockholder shall not have property enough to satisfy his portion of such debts or liabilities, then the amount shall be divided equally among all the remaining solvent stockholders. And courts of equity shall have full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor, who shall have authority, by the name of the receiver of such corporation (giving the name), to sue in all courts and do all things necessary to closing up its affairs, as commanded by the decree of such court.” Does it confer general jurisdiction upon courts of equity in this State to dissolve corporations and settle their business affairs?
We held in Wheeler v. Pullman Iron and Steel Co. 143 Ill.
Free access — add to your briefcase to read the full text and ask questions with AI
Mr. Chief Justice Wilkin
delivered the opinion of the court:
One of the points made in the petition for rehearing is, that appellees Weigley, Bulkley & Gray, in their answer to the rule to show cause why they.should not be attached for contempt, did not question the general jurisdiction of the Superior Court to adjudicate upon the case presented to it, and therefore that question was not properly before us for decision. It is true, those parties; in that answer, placed their denial of such jurisdiction upon the ground that the corporation was not, at the time of filing the bill, doing business in Cook county and had no ‘property there. It is not denied that Ames, the other appellee, did in his answer specifically deny the “power or authority” of the court, “under the bill filed then, to appoint a receiver for the defendant, the Northwestern Shoe Company,” and as it has been stipulated that the two cases shall be considered as one, all parties are entitled to the benefit of that denial. We do not, however, understand that a party charged with contempt, in a case of this kind, is limited, upon his trial, to the defenses set up in his answer to the rule to show cause. The contempt proceeding, being for the benefit of the complainant in the chancery suit, partakes of that cause, and is according to the forms of practice in chancery. (People v. Diedrich, 141 Ill. 665. See, also, cases there cited.) The party accused is entitled to a trial. The charge in this case being the refusal of the defendants to respect and obey an order of court, the party bringing the accusation was, in the absence of an admission of that fact by the defendants, bound to prove the existence of such an order. Accordingly he offered in evidence the bill of complaint, summons and return, appearance and consent of the Northwestern Shoe Company to the appointment of the receiver, and the order appointing the receiver. If absolutely void, that decree was and is open to attack, directly or collaterally, whenever and wherever an attempt is made to set it up as the basis of a right of action. As was said in Buckmaster v. Carlin, 8 Scam. 108, speaking of the distinction between judgments and decrees which are void and those which are merely voidable : “The former are binding nowhere; the latter everywhere, until reversed by a superior authority.”
It is assigned for error upon this record that the court below erred in holding it had jurisdiction to appoint a receiver of the property of the Northwestern Shoe Company, and in holding that it had jurisdiction to entertain the bill of Jacob Graff for any purpose, and we entertain no doubt that under these assignments of error the defendants below had the right to insist, in the Appellate Court, that the decree which they were charged with disobeying was a nullity, and have the same right here.
Much time is spent, in the argument of the case, discussing the question as to whether this is to be treated as a direct or collateral attack upon that order. It is well settled that a party charged with contempt of a judgment or decree may acquit himself by showing that such judgment or decree is a nullity, but cannot be heard to question it on the ground of irregularity, however erroneous. (Tolman v. Jones, 114 Ill. 147; Leopold v. People, 140 id. 552.) In the latter case we said: “A party cannot be guilty of contempt of court for disobeying an order which the court had no authority of law to make. Want of power, as here used, is not, however, to be confused with mere irregularity in the exercise of power, for if the court has jurisdiction of the parties, and legal authority to render the order, then a party cannot stand in defiance of it, however improvidently or erroneously made.” Whether the attack is said to' be direct, or merely collateral, is. immaterial. If the Superior Court had jurisdiction of the parties and the subject matter of the action in which the receiver was appointed, he became the officer of the court, and his possession of the property of the corporation was the possession of the court itself, “and any unauthorized interference therewith, either by taking forcible possession of the property committed to his charge or by legal proceedings for that purpose, without the sanction of the court appointing him, is a direct and immediate contempt of court, and punishable by attachment.” (Richards v. People, 81 Ill. 551.) It makes no difference that the party charged with the contempt was • not a party to the proceeding in which the receiver was appointed.
The vital question in the case then is, as stated in our former opinion, “whether the Superior Court in which the receiver was appointed, and in which the order was entered to turn over the goods, had jurisdiction of the subject matter of the bill.” The relief sought by the bill in this case was the dissolution of the corporation and settlement of its business. The appointment of the receiver was a mere incident to that relief, to enable the court to take possession of the property and business of the company and finally wind up its affairs. It is clear, if the court was without jurisdiction to grant the ultimate relief prayed by the bill, it had no power to appoint the receiver and authorize him to assume possession and control of the corporation assets. It is well settled by the decisions of this court as well as the authorities generally, that courts of chancery are without jurisdiction to decree the dissolution of corporations, except in so far as that jurisdiction is conferred by statute; and we deem it too clear for argument, that if the Superior Court had jurisdiction to adjudicate upon the subject matter of the bill of Jacob Graff and grant the relief therein prayed, that jurisdiction must be attributed to section 25, chapter 32, of our statute, and not to its general equity powers, sitting as a court of chancery. That section of the statute provides : “If any corporation or its authorized agents shall do, or refrain from doing, any act which shall subject it to a forfeiture of its charter or corporate powers, or shall allow any execution or decree of any court of record for a payment of money, after demand made by the officer, to be returned ‘no property found,’ or to remain unsatisfied for not less than ten days after such demand, or shall dissolve or cease doing business leaving debts unpaid, suits in equity may be brought against all persons who are stockholders at the time, or liable in any way for the debts of the corporation, by joining the corporation in such suits, and each stockholder may be required to pay his pro rata share of such debts or liabilities to the extent of the unpaid portion of his stock, after exhausting the assets of such corporation. And if any stockholder shall not have property enough to satisfy his portion of such debts or liabilities, then the amount shall be divided equally among all the remaining solvent stockholders. And courts of equity shall have full power, on good cause shown, to dissolve or close up the business of any corporation, to appoint a receiver therefor, who shall have authority, by the name of the receiver of such corporation (giving the name), to sue in all courts and do all things necessary to closing up its affairs, as commanded by the decree of such court.” Does it confer general jurisdiction upon courts of equity in this State to dissolve corporations and settle their business affairs?
We held in Wheeler v. Pullman Iron and Steel Co. 143 Ill. 197, that the two clauses of the above section must be construed together, and that the “good cause” which must be shown by the second clause to authorize courts of equity “to dissolve or close up the business of any corporation, to appoint a receiver therefor, with authority to wind up its affairs,” means some one, or more of the causes mentioned in the first clause,—that is to say, courts of equity only have jurisdiction to so decree when certain causes exist, which are the doing or refraining from doing some act which shall subject the corporation to a forfeiture of its charter or corporate power, or allowing an execution or decree of any court of record for the payment of money, after demand made by the officers, to remain unpaid, or that the corporation has dissolved or ceased doing business, leaving, debts unpaid. It cannot be seriously contended that this bill shows the existence of any of these causes for dissolving the Northwestern Shoe Company at the time it was filed. The only reason shown for filing it is, that creditors of the corporation had commenced suits against the company to collect debts which it owed them, and had seized certain of its property by proper writs of attachment. All the other averments of the bill are to the effect that if creditors are permitted to so collect their debts great injury will result to the complainant as a stockholder. It is not even shown that the corporation could not have paid the debts for which it was sued, if it had desired to do so. The allegation “that said company has not, since September 2, 1892, performed the functions for which it was incorporated ; that it ceased doing business on said date and is not now doing any business whatever,” is but a repetition of the averment “that by reason of the levy of said attachments upon the said property of said company the company has ceased doing business, and is thereby deprived of the benefit of its good will and the use of its property, to the-injury of complainant, as such stockholder.” The writs of attachment were levied on the second day of September, 1892. The company ceased to do business on that day because the writs were levied, viz., because its creditors were proceeding, in a lawful manner, to enforce payment of their debts, and thereupon a stockholder seeks to make that ceasing to do business the ground of jurisdiction in a court of equity to postpone the creditors, place the corporation in the hands of a receiver and wind up its affairs. To hold that ceasing to do business under such circumstances is within the meaning of the statute, would be to defeat the very purpose for which the law was enacted.
We said in Hunt v. LeGrand Roller Skating Rink Co. 143 Ill. 118, speaking of this section 25: “It is manifest, however, that the statute provides a remedy in the nature of a creditor’s bill, and is designed to aid creditors in the collection of their debts, and it is also plain, from the statute, that, as part of the relief afforded in such suit in equity, the chancery court has full power, for good cause shown, to close up the business of any corporation, or dissolve it.” And again: “We think it clear that it was the intention of the legislature, by the enactment of said section 25, to afford remedies to creditors of corporations for the enforcement of their private and personal rights,—and this even to the extent of permitting courts of equity, for good cause shown, to decree the dissolution of the corporation sued.” To the same effect is Wheeler v. Pullman Iron and Steel Co. supra.
To hold that, under this statute, whenever creditors of a corporation attempt to collect their just claims against it by action at law, stockholders may invoke the jurisdiction of a court of equity to take charge of all the company assets, and thus defeat the creditors, because the enforcement of their rights by authorized processes of law would result in embarrassment or loss to the company, would be to not only violate its plain provisions, but to allow it to be used to defeat the very purpose for which it was enacted. Here is a bill by a single stockholder, other stockholders not being made parties. Only a part of the creditors are made parties, others being given no opportunity to question the jurisdiction of the court or the sufficiency of the bill. Hone of the causes for which, by the statute, courts of equity are authorized to take charge of corporations and close them up, are alleged. That the ultimate relief prayed for cannot be lawfully granted by the court upon this bill, it seems to us, must be conceded. Can it be said, nevertheless, the court, in making the interlocutory order appointing the receiver, only proceeded irregularly, and therefore the validity of that order cannot be questioned in this proceeding ? We think not. Having no general equity powers in the case, and the bill wholly failing to bring it within the provisions of section 25, the Superior Court exceeded its jurisdiction in making the order which appellees are charged with violating, and that order must therefore be held void.
The judgment of the Appellate Court will be affirmed.
Judgment affirmed.