Magee v. Geneseo Academy

Barker, P. J., (after stating the facts as above.) This corporation has-not been dissolved. Its legal existence continues, although it has ceased to-exist for all educational purposes, and no longer exercises the power conferred by its charter. A corporation may be dissolved by the surrender of its charter, and its acceptance by the state, but it cannot be held to be actually dissolved until so adjudged and determined, either by judicial sentence or sovereign power. Kincaid v. Dwinelle, 59 N. Y. 548; Stone v. Framingham, 109 Mass. 303; Denike v. Lime Co., 80 N. Y. 599. This defendant has never' been called upon, at anytime or place, to defend its corporate life. The prosecution of .this action against it as sole defendant by a private individual for the purpose of reaching money and assets in the hands of its officers, and seeking no other relief, is an admission of its continued lawful existence. • The finding of the trial court that the trustees do not contemplate the resumption of instruction under the provisions of the act of incorporation, and that there is no reasonable probability of the resumption of its educational functions, maybe sufficient reasons for dissolving the corporation by the judgment - of a court having jurisdiction, in the mode and manner provided by statute. It does not follow that a corporation is dissolved by a sale of its visible and-tangible property for the payment of its debts, and by the temporary.suspension of its business, so long as it has the moral and legal capacity to in creas e-its subscriptions, call in more capital, and resume its business. Philips v.. Wickham, 1 Paige, 590; Brinckerhoff v. Brown, 7 Johns. Ch. 217; Ang & A. Corp. (3d Ed.) 739. It is a general rule that a cause of forfeiture cannoS be taken advantage of, or enforced against a corporation collaterally or incidentally, or in any other mode, than by a direct proceeding for that purpose against the corporation, so that it may have an opportunity to answer and defend. In this state a court of equity has not, by virtue of its general inherent powers, the right to dissolve a corporation, but such power is entirely statutory, and can only be exercised in a manner sanctioned by the legislature. [711] The fact that the corporation has not been dissolved constitutes a perfect defense to this action. Heath v. Barmore, 50 N. Y. 302. The purpose of this action is to secure a distribution among the subscribers of so much of the endowment fund as now remains in the hands of the trustees of the corporation. The plaintiff’s contention is that the endowment fund was created and paid over to the academy for a specific use, to enable the corporation to carry out the purpose of its organization; that is, to give classical instruction, together with instruction in the useful arts and sciences, as provided by the charter; and when the fund ceased to be used by the corporation for that purpose, or whenever it became practically or actually dissolved, the fund reverted to the subscribers. The special term concurred in that view of the case, and adjudged and determined that the trustees hold the moneys and securities of the endowment fund now remaining in their hands in trust for the persons who subscribed and contributed to the same, and has directed the paying over and distribution of the fund among such subscribers, when ascertained, in the mode and manner indicated by the interlocutory decree. The defendant’s position is that the corporation is the absolute owner of all the property of the corporation, including the endowment fund, and it asked the trial court to order a distribution of the same among the stockholders after the payment of all the indebtedness. It is not appropriate, in our judgment, in this action to determine these questions, and all discussions of the same may be properly postponed until the matter is brought before some court which has jurisdiction to dissolve the corporation, and adjudicate the right of the creditors, the stockholders, and the subscribers, to the endowment fund. In proceedings conducted under the provisions of the statutes relative to this subject, all interested parties will have opportunity to be heard, and protect their rights and interests. If the decree is confirmed, then the creditors are cut off without a hearing, as well as the stockholders, who have not as yet had their day in court. If the decree should be modified so as to carry out the views of the defendant, then the fund would be distributed to and among the creditors and stockholders without any of the subscribers to the fund being heard, except the plaintiff. The interlocutory decree is reversed, and a new trial granted, costs to abide the final award of costs. All concur.