Brown v. Pontiac Mining Co.

McGrath, C.. J: Bills were filed in the first two; cases [655] September 27, 1893, under chapter 124a, '3 How. ‘Stat, p. 3397, to wind up the affairs and distribute the assets of the defendant corporations. The bills were verified by-affidavits dated July 22, 1893. Defendants Watson and Ashley entered their appearance in February, 1894, and afterwards demurred in each case, setting forth: “1. That the said bill is not verified as required by law. “2. That the proceedings taken in said cause and the relief prayed for in said bill áre mot warranted or authorized by law. . “3. That the complainants have not, in and by their said bill, made or stated such a case as entitle® them, in a court of equity, to the relief therein prayed for. “4. That it appears by the said bill that there are divers other persons who are necessary parties to the said bill, but who are not made parties thereto.” The circuit judge held that, inasmuch as the affidavits were made long before the filing of the bills, it did not affirmatively appear that complainants were stockholders when the bills were filed; that the defect was jurisdictional; and dismissed tire bills. Complainants have appealed in both cases, and having some doubt as to whether an appeal lies, under Cady v. Manufacturing Co., 48 Mich. 133, have also obtained in each case an order to show cause why a mandamus should not issue compelling the circuit judge to vacate the order dismissing the bill and proceed with the cause. The chapter under which the proceedings are brought has been since amended, expressly providing for an appeal, hence it is unnecessary to discuss the" question as to the proper mode of bringing the cases here.1 If it be urged that an appeal did not lie, then the rule laid down in People v. Swift, 59 Mich. 529, viz., that where an inferior court has refused to entertain jurisdiction on a matter preliminary to a hearing on the merits mandamus is an appropriate remedy, is applicable. This is not an [656] application to review an order made .in the course of a proceeding, but rather for an order compelling the court to act. See Brown v. Circuit Judge, 75 Mich. 274. The statute (3 How. Stat. § 4161d9) provides that to such bill shall also be annexed an affidavit of the complainant that the facts stated in the bill are true. It is not claimed that the averments in the bill are not ample. We are cited in support of the judgment to the holdings in the attachment cases, and to Bryan v. Smith, 10 Mich. 229; Ayres v. Gartner, 90 Id. 380; and N. Y. Baptist Union v. Atwell, 95 Id. 239. Attachment proceedings and summary proceedings to recover possession of lands are special and purely statutory. In Bryan v. Smith the complaint did not contain the essential averment that at the time of the commencement of the proceedings complainant was entitled to the possession of the premises. In Ayres v. Gartner it is true that it was said that the statutory requirement was mandatory, but express reference was made to the fact that a motion to dismiss had been made, an opportunity had been given to apply for leave to amend, and no request therefor had been had. In Harrison v. Harrison, 94 Mich. 559, however, it was held that the affidavit might be amended, and the case was remanded for that purpose. See, also, Holcomb v. Holcomb, 100 Mich. 421. How. Stat. § 6824, provides that in all cases non-resident plaintiffs in justices’- courts shall give security for costs before process shall issue. Section 7296 provides that all original writs in which plaintiff is a non-resident shall, before service, be indorsed by a resident, who shall be liable for costs. As early as the case of Parks v. Goodwin, 1 Doug. 56, it was held that a writ of summons returnable before a justice would not be set asida, because of the omission of plaintiff, a non-resident, to give security for costs, provided that such security be given before a motion to set aside the writ is granted. The court in the present case is not one of special or limited jurisdiction. The bill of complaint averred that [657] complainants were stockholders. That averment did not conclude the court or defendants, but was open to inquiry in the course of the proceeding, and was a fact to be proven at the hearing. Nor do we think that the proceeding is a purely statutory one, in the sense that a suit in attachment or a summary proceeding to recover the possession of land is. The question of the power of a court of equity to dissolve a corporation is not involved. The bill is filed to distribute the. assets of a corporation chartered to exist during a limited period of time, which has expired. In such case the corporation is dissolved, with all the consequences of a dissolution by any other mode. Field, Corp. § 481; 2 Mor. Priv. Corp. § 1005; Ang. & A. Corp. § 778; People v. Walker, 17 N. Y. 502; Bank v. Wrenn, 3 Smedes & M. 791; Railroad Co. v. Rainey, 7 Cold. 432; Wilson v. Tesson, 12 Ind. 285; Bank v. Trimble, 6 B. Mon. 601; Asheville Division No. 15, Sons of Temperance, v. Aston, 92 N. C. 578. The franchise having expired, the lawful existence of the corporation ceased, and could not be continued. 2 Mor. Priv. Corp. § 1005. Upon the dissolution of the corporation the corporate property must first be applied to the payment of the debts of the corporation, and the remainder is to be distributed among the stockholders, and a stockholder may file a bill to effect such distribution. 1 Cook, Stock, Stockh. & Corp. Law, § 641. The court in.the present case had jurisdiction of the subject matter independently of the statute. The bill contained the necessary averments, and to support the decree proof at the hearing of complainants’ interest was requisite. In such case the defect is not jurisdictional, and an amendment should have been allowed. 1 Enc. PI. & Prac. 472, 511. It is, however, urged that the statute under which these proceedings are instituted is unconstitutional in that it does not make all stockholders necessary parties to the bill, and contains no sufficient provision for notice to them. The proceeding is, however, one in behalf of all [658] stockholders. The statute requires all other persons interested to he made defendants. Upon filing the bill an order is to be made reciting the filing of the bill, by and against whom filed, and its purpose. Notice of the contents of such order is to be published once in each week, and subpoenas are to be issued to all persons who are made defendants. The statute then expressly provides that proceedings subsequent to the filing of the bill, the publication of notice, and the issue of subpoenas shall be according to the usual course of procedure in Chancery cases. An order for the appearance of unknown defendants is provided for, and subsequent proceedings respecting them are to be in conformity with the statute-relating to non-resident defendants. Upon application for the appointment of a trustee an order to show cause is to be made, and published once in each week for three successive weeks. A hearing is provided for, and, upon Ms appointment, the trustee is required to give such security as the court may direct. The trustee is required to give notice of his appointment, and tMs notice is required to be published once in each week for three successive weeks. The trustee is empowered to take possession of the corporate property and to dispose of the same, but sales of real estate must be made in the manner prescribed by law for the sale of real estate in chancery foreclosures, and personal property is to be sold in such manner as the court shall direct. The power of distribution is not lodged with the trustee, but with the court, and the statute clearly contemplates that in the course of the proceedings the general powers of the court may be exercised when required to supplement the statutory procedure. The. statute is not open to the objections raised. . The writs must therefore issue as prayed, and the records will be remanded accordingly, with costs to complainants. Grant, Montgomery, and Hooker, JJ., concurred. Long, J., did not sit. Footnotes [1] The decrees were made December 6, 1894, and Act No. 39, Laws of 1895, which provides for an appeal, took effect March 26, 1895.