Smith v. George T. Smith Manufacturing Co.
Smith v. George T. Smith Manufacturing Co.
Opinion of the Court
The bill of complaint in this cause was filed by George T. Smith, a stockholder, and also claiming to be a creditor, of the George T. Smith Manufacturing Company, a corporation organized under Act No. 232 of the Public Acts of 1885, and the acts amending the same. It is claimed by the bill that the capital stock of such company was $200,000, consisting of 20,000 shares, of the par value of $10 each, and that the articles of association were executed by Dwight S. Smith (who subscribed for 4,500 shares), Henry H. Smith (who subscribed for 3,000 shares), and the complainant (who subscribed for 4,000 shares), on the 17th day of February, 1897; that the complainant turned over to the company certain patents and designs and appliances in payment of his stock subscription; and that Henry H. and Dwight S. Smith were, by their agreement, to convey to the company real estate of the value of $75,000 in settlement for their respective subscriptions, but that such transfer of real estate was never made. The bill also sets forth that, at the date of the filing of the same, the debts of the corporation amounted to $9,826.57, which did not include the sum of about $1,500 remaining due to complainant for salary and expenses. Complainant charges that defendant Hiram H. Smith purchased of the company 1,000 shares of so-called “treasury stock,” at the par value of $10 per share, but that such stock was never paid for, and such defendant is still indebted to the corporation on that account in the sum of $10,000; that defendant Henry H. Smith caused to be entered in the books of the company false and fraudulent entries, amounting to about $10,000, in favor of himself and brother, Dwight S. Smith,
The George T. Smith Manufacturing Company filed its-answer to such bill, neither admitting nor denying the averments of the bill in regard to the sale of the patents mentioned, the land of the value of $75,000, and whether or not'Hiram H. Smith was president and a stockholder, as charged, but admits that Hiram H. Smith has never paid the sum of $10,000, to the knowledge of the corporation. Defendant company neither denies nor admits that omissions of entries from the books of the company have been made, or that Henry H. Smith made a fraudulent entry in such books, but avers that the company would not recognize any liability on account of such entry. Defendant alleges that the charge that its annual report was false and fraudulent was not known to the company. Defendant denies that it is necessary, in order to protect creditors and stockholders, that a receiver should be appointed, and also that complainant has any right to such relief. Defendant sets forth a release by the complainant of all claims against the other stockholders of the
• The defendants BarkwPrth, Henry H. Smith, Hiram H. Smith, and Zoe M. Smith, administratrix of the estate of Dwight S. Smith, also filed their answers to such bill. Defendant Barkworth denied that the report of the company was false or fraudulent, or that he had any knowledge that Hiram H. Smith was a stockholder, and averred that said Henry H. Smith had agreed with him that the indebtedness standing to the credit of Smith Bros. (110,000) should not be considered until all the indebtedness to creditors had been paid.
The answer of Henry H. Smith admits that complainant conveyed certain patents, etc., to the company, but denies that the same were received in full payment of his stock, and insists that the land in question had been conveyed by himself and Dwight S. Smith to the Jackson Vehicle Company at the time articles of association were executed; also denies that there was any agreement by which the land, should be conveyed to the corporation in consideration of the stock issued to him and his brother. He also denies making any fraudulent entries in the books of the concern, and that Hiram H. Smith was a stockholder therein.
Hiram H. Smith, by his answer, denies that he purchased any stock in the company, or that he is indebted to it, and claims that the land mentioned is the property of the Jackson Vehicle Company.
The defendant Zoe M. Smith neither admits nor denies the averments of the bill, and leaves complainant to his proofs.
On the 21st day of April, 1898, the George T. Smith Mill Building Company, of Cleveland, a corporation, by David Morison, its president, filed its petition in this cause, setting forth therein that it was a creditor of the George T. Smith Manufacturing Company, holding two notes of
To the petition defendants entered their general demurrer. The petitioner moved to strike such demurrer from the files for irregularity, but such motion was waived. Hiram H. Smith, one of the defendants, died on the 15th of May, 1898, and, on July 9th following, an order was made reviving the cause against his administrators; and, on the same date, a decree was entered sustaining the demurrer and dismissing the petition, from which decree the petitioner appeals.
It is claimed that the statute gives the petitioner the right to intervene. This is the only question involved. Chapter 281, 2 How. Stat., in addition to the general juris
In Riverside Iron Works v. Wayne Circuit Judge, 100 Mich. 124, the petitioner sought to intervene, and answer and file a cross-bill resisting a petition filed under this same chapter. The petition was denied in this court. It was said that petitioner could gain no advantage over the other creditors, and that any equities sought to be-reached would not be disturbed by the sequestration; that the petitioner was entitled to such relief as the parties filing the bill asked for. In the present case, if the petitioner is allowed to intervene, then any general creditor might be so permitted. "Whatever may result from the original proceedings will belong to the creditors. The petitioner has not shown that it has any other or greater rights than any other creditor, or any specific right in the thing which forms the subject of the controversy. General creditors are not permitted to intervene in such cases. Horn v. Volcano Water Co., 13 Cal. 62 (73 Am. Dec. 569); Welborn v. Eskey, 25 Neb. 193; Lewis v. Harwood, 28 Minn. 428. See, also, Heap v. Heap Manfg. Co., 97 Mich. 147. We think the statute cannot have the construction contended for. Such construction would permit all creditors to intervene, and might cause endless
The order below must be affirmed.
Reference
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- SMITH v. GEORGE T. SMITH MANUFACTURING CO.
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