Payne v. Stuebe

Per Curiam. Plaintiff in error has assigned for error, (1) that “The court erred in sustaining the special master’s findings, and in holding that complainant was entitled to the relief prayed”; (2) that “The court erred in overruling the defendant’s objections, and in sustaining the special master’s findings in his conclusions of law”; and (3) that “The court erred in overruling the defendant’s objections to the spedal"master not finding that the bill of complaint herein should be dismissed for want of equity.” Defendant in error contends that the errors assigned are not properly before this court for review because there is no certificate of evidence. When a cause is heard on the pleadings with a report of evidence made by a master without any evidence being heard in court, a certificate of evidence is not required. Ferris v. McClure, 40 Ill. 99; Barnes v. Earle, 275 Ill. 381. The record does not contain any order of reference of the cause either to a special master or to the regular master, although it does contain a report to the court purporting to be made by A. E. Hall, special master in chancery, of the evidence with his conclusions. The report of the evidence recites that the defendant in error offered in evidence, as an exhibit, the charter of the News Printing Company issued by the Secretary of State, and the minutes of stockholders’ meetings held on December 10, 1906, and January 22, 1908; it also recites the offering in evidence of various leases, certificates of stock, bills of sale, chattel mortgages, notes and other documentary evidence, some of which were introduced by the defendant in error and others by plaintiff in error, none of which, however, are incorporated in the master’s report. The record does not contain any exceptions to the report of the master nor any order that the objections shall be permitted to stand as exceptions. Counsel for plaintiff in error in Ms argument contends that a trustee in bankruptcy, the defendant in error, is the representative of the corporation and not of its creditors, and'hence insists that the trustee has no right to file this bill against the stockholders to make them respond on their liability under section 8 of the Corporation Act of Illinois (J. & A. ¶ 2425) on the amount remaining due and unpaid on capital stock of which they were the owners. “Unpaid stock subscriptions in a bankruptcy corporation pass to the trustee. * * * And its trustee in bankruptcy may maintain suit for the same in the State court.” (Remington on Bankruptcy, sec. 976.) “A bankrupt’s liability for Ms unpaid stock subscription also is a provable debt. ’ ’ (Remington on Bankruptcy, sec. 709.) “But where the corporation •has no right to enforce the liability, its trustee in bankruptcy has none.” While some textbooks lay down the rule that the bankruptcy court has jurisdiction in the bankruptcy proceedings themselves to make the assessment which is stated to be a prerequisite to the institution of suits to collect the unpaid stock subscriptions, an examination of the authorities cited for such rule will disclose the fact that such an assessment has been held to be a prerequisite only to suits at law against the several stockholders, and the rule is laid down in Sawyer v. Hoag, 17 Wall. (U. S.) 610, and Burke v. Smith, 16 Wall. (U. S.) 390, that in a suit in chancery “the trustee, is the proper one to make the call.” In Re Remington Automobile & Motor Co., 153 Fed. 345, it was said: “Had the corporation not become bankrupt, it could have laid an assessment upon such of its stockholders as were liable for further calls to make up full payment, and the right to make an assessment and call passed by the bankruptcy to the trustee”; and in Allen v. Grant, 14 Am. Bankr. 349, it is said: “The trustee in bankruptcy of an insolvent corporation may sue for the recovery of unpaid subscriptions,” and “a transferee, who takes such shares with knowledge that they have been improperly issued as fully paid up becomes liable for the unpaid subscription. * * * This liability can be enforced by the trustee in bankruptcy. For while he represents the corporation in a sense, he also represents the creditors.” Trustees are appointed by the creditors under the Bankruptcy Act of 1898, and it is their duty to collect and reduce to money the property of the estate of which they are trustees, and it was said in Sanger v. Upton, 91 U. S. 56: “As regards creditors, there is no distinction between such a demand [the personal liability on unpaid stock] and any other assets which may form a part of the property and effects of the corporation.” Counsel for plaintiff in error has cited some Illinois authorities, the holding of which is that an assignee for the benefit of creditors represents the insolvent and not the creditors, and he cannot set aside fraudulent conveyances because the insolvent could not avoid his own fraudulent acts. These authorities are not in point and not controlling in bankruptcy proceedings for the reason that the amendments of 1903 and 1910 to section 70 E of the Bankruptcy Act conferred on a trustee in bankruptcy the right to recover property which had been transferred in fraud of creditors. This suit is a suit in equity. The trial court found the amount of the deficiency of assets to pay claims allowed against the bankrupt to be $2,857. It also found that the stock of the corporation consisted of 600 shares, of which plaintiff in error was the owner of 598 shares of the par value of $100 each, and the equitable owner of the share of stock issued in the name of Minna Stuebe and the share in F. A. Baumgart, of which they were only the nominal owners, and that when the number of shares of stock were doubled and the value reduced to $50 per share, plaintiff in error had issued to himself 1,196 shares and 2 shares to each of the other holders, but of which he was the equitable owner, and that not to exceed 50 per cent of the par value of the stock had ever been paid thereon, and that none of the assignments and transfers of stock had been recorded in.Vermilion county, the location of the principal office of the corporation. The plaintiff in error being the owner of all the capital stock and liable for one-half the face value thereof, the court did not err in rendering a decree against him for $2,857, the amount of the deficiency and costs. The plaintiff in error being liable on his holding of stock, it is unnecessary to review the question of liability for the value of property taken on chattel mortgage which is alleged to have been void. The decree is affirmed. Affirmed.