Baker v. Abbott Manufacturing Co.

Mr. Justice Holdom delivered the opinion of the court. This is a bill by creditors brought under section 25 of the Corporation Act (J. & A. ¶ 2442), which provides that “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. ’ ’ The defendant Abbott Manufacturing Company was organized to manufacture and sell bank, store and office fixtures, etc. The defendant Litsinger was president, defendant George W. McGum vice president, and defendant Leonard C. Reid secretary and treasurer of .the company. The capital stock of the company was $20,000, divided into 200 shares of $100 each. Litsinger subscribed for all the stock but two shares, while McGum and Reid subscribed for one share each. These officers comprised the law firm of Litsinger, McGum & Reid, practicing their profession in Chicago. The company was organized in October, 1913, and carried on its business first at 713-15 South Fifth avenue, Chicago, and afterwards at 2401 Normal avenue, Chicago. In August or September, 1915, the company’s factory closed, its employees were discharged, the office furniture, etc., moved and stored by the defendant Litsinger, and it ceased doing business. It moved its offices to the law offices of Litsinger, McGum & Reid. . At the time of the filing of the bill, January 17, 1916, the Abbott Manufacturing Company had ceased doing business, leaving debts unpaid, among which were debts due to the original complainants. At this time the Abbott Company was indebted to complainant Edward J. Baker in the sum of $92.40, a judgment for which was obtained in the Municipal Court of Chicago against the company on November 12,1915, and on the 15th of November thereafter, execution was issued and delivered to the bailiff of the court. On January 26, 1916, the execution was returned satisfied in full. The Abbott Company was also indebted to the complainant Bestwall Manufacturing Company at the time of the filing of the bill in the sum of $125.64. This debt was paid by the company subsequent to the filing of the bill and prior to January 25, 1916, the date of the filing of the amended answer. At the time of the filing of the bill there was due from the Abbott Company to the complainant The Wallace Press, under a contract made between them, the sum of $459.20, the amount found due by the master to whom the cause was referred. The decree varied the finding of the master as to the amount due The Wallace Press, fixing it at $315.96, and on this part of the decree The Wallace Press assigns cross errors. When the Abbott Company ceased carrying on the business for which it was incorporated it canceled the contract with The Wallace Press, and now contends that the contract was made by one William D. Innes without authority. From the evidence of Innes found in the record the master might well find, as he did, that Innes was the only visible head of the Abbott Company at its office and factory; that he signed the name of the president to the checks of the company to a limited amount. His authority so to do was registered at the bank where the Abbott Company kept its account. He likewise had charge of the office and all of its employees. He received the mail and examined it and had general supervision of the company’s affairs; and we agree with the finding of the master that “the evidence shows that Mr. Innes had both actual and ostensible authority to enter into and carry out the contract on behalf of the Abbott Manufacturing Company.” ' It is likewise argued that the Abbott Company did not cease to do business so as to make it amenable to be proceeded against under section 25, ch. 32, Rev. St. (J. & A. ¶ 2442), and counsel have elaborately argued the meaning of the word “cease” and have made copious citations from various lexicographers in an attempt to show that the Abbott Company had not ceased to do business within well-defined definitions of the word “cease.” We think, however, that the master might well find, as he did, that the company had ceased to conduct the business for which it was incor-, porated. It is clear, even from defendant Litsinger’s testimony, that the company had disbanded. It was a manufacturing company, as its name implies. It had ceased to manufacture; it had closed its factory; it had put its machinery, etc., into storage; it had taken its account books over to the individual defendants’ law offices and had proceeded to wind up its affairs. We think that, under any rational interpretation of the words of the statute, the company had ceased to perform its charter functions and was in process of liquidation and that the surface 'indications did not show a temporary suspension but a permanent going out of business. As the individual defendants had not fully paid for their stock, it was proper to join them as parties defendant in the bill for a dissolution of the corporation under section 25, ch. 32 (J. & A. ¶ 2442), supra. While The Wallace Press had no judgment at the time of the filing of the bill—only a pending suit—the’ complainant Baker had a judgment for his claim and an execution in the hands of a proper officer unsatisfied after demand. This was sufficient to give the court jurisdiction of the bill to dissolve the company, and the subsequent payment by the company of the judgment, as well as the claim of the Bestwall Manufacturing Company, did not oust the court of such jurisdiction. Furthermore, it was not necessary for The Wallace Press to reduce its claim to judgment as a condition precedent to invoking relief under section 25, supra. This has been expressly decided in Standard Distilling & Distributing Co. v. Springfield Coal Mining & Tile Co., 239 Ill. 600. The contention that disputed claims cannot be liquidated in a proceeding instituted under section 25, ch. 32 (J. & A. ¶ 2442), supra, does not appeal to us as being well taken, as it has been expressly held that a claimant whose debt is due and not reduced to judgment may avail of the provisions of section 25, supra, and it logically follows that if such claim is disputed, the chancery court having jurisdiction of the subject-matter might proceed to settle such dispute. The claim of The Wallace Press is allowed against the defendant Abbott Manufacturing Company and not against any of the codefendants. However this might be, the fact that the defendant Litsinger gave bond to pay any claim, with costs, which might be allowed against the company, as a condition of the court’s not appointing a receiver until final decree, makes the objection on this point of no avail. We think The Wallace Press should prevail on its cross errors. The. cause was heard on exceptions to the master’s report, the chancellor hearing no testimony aside from that contained in the master’s report. An examination of the testimony sustains, in our judgment, the conclusion at which the master arrived. He saw the witnesses, which the chancellor did not, and was therefore the better able to judge of their credibility from their appearance and their manner of testifying than was the chancellor or this court. The finding of the master in this regard should not, therefore, have been disturbed by the chancellor. On the disputed point there were two witnesses, one. for each of the parties. Their testimony was divergent, and it was therefore peculiarly within the power of the master to determine as to which one of the two witnesses he would believe; and furthermore, this being in the nature of an affirmative defense, the law imposed upon the company the burden of proving such defense by a preponderance of the evidence; this it failed to do. On the theory that each of these two witnesses was equally credible, the company did not sustain that part of its defense by a preponderance of the proof. For the error of the chancellor in departing from the report of the master and varying the same, the decree of the Superior Court is reversed and the cause is remanded with directions to enter a decree confirming the master’s report in toto and decreeing $459.20 as the amount due The Wallace Press, costs here and below, mcluding that of the additional abstract, to bo taxed against defendants. Reversed and remanded with directions.