General S. S. Corp. v. Astoria Overseas Corp.

HUNT, Circuit Judge (after stating tbe facts as above). Appellant has dwelt upon the contention that the pledge of the unpaid subscriptions made by the board of directors of the Overseas Corporation in •July, 1921, was wholly void, upon the ground that, discretionary power being vested in the directors to make calls, and no authority appearing to have been given by the charter or Oregon statutes to do- so, the corporation had no power to pledge or assign the unpaid and uncalled for subscriptions, and that the stockholders by appearance in this litigation could not ratify the act of the directors, at least to th.e disadvantage of the appellant. But we do not find decision upon that point necessary to the case. In conformity with the prior decision of this court in Van Emon v. Veal, 158 Fed. 1022, 85 C. C. A. 547, which adopted the opinion of Judge Wolverton in Re Quartz Gold Mining Co. (D. C.) 157 Fed. 243, construing the Oregon statutes (section 5070, Mis. Laws Oregon, B. & C. Comp., as amended by Session Daws 1903, p. 41, § 3, section 6877, Olsen’s Oregon Daws), the directors of the Overseas Corporation were without power to make a valid general assignment for the benefit of creditors, “unless hy some authority of the stockholders, [863] through appropriate by-laws or specific resolutions empowering them so to act.” It must therefore follow that, as against creditors, the general assignment of June, 1922, was ineffectual, because made without the consent of holders of two-thirds of the issued capital stock. But while the Oregon statute cited contemplates that the necessary consent of the stockholders must be expressed at a regular or special meeting of the stockholders, called for that purpose, we clo not regard its provisions as excluding consent to an assignment made by directors, where, as here, the stockholders in good faith have recorded their assent by filing an answer pleading the general assignment as valid. Such is the view of this court in Bell v. Blessing, 225 Fed. 750, 141 C. C. A. 34, construing section 361 of the Civil Code of California. Thus all the stockholders, by appearing in the present litigation and pleading the assignment, have given their consent and this is sufficient to validate the assignment. However, the consent should not relate back to the date of the making of the assignment by the directors, so as to postpone rights of creditors whose rights attached before the date of the record of consent, which in the present case appears to be the t’inc of the appearance in this suit. Norton v. Alabama Bank, 102 Ala. 420, 14 South. 872; Wood v. McCain, 7 Ala. 800, 42 Am. Dec. 612. It is well established that a general assignment by a corporation passes the unpaid stock subscriptions, and gives to the assignee the right to enforce the payment of ,balances due to the company by shareholders. 10 Cyc. p. 1238; Chamberlain v. Bromberg, 83 Ala. 576, 3 South. 434; Eppright v. Nickerson, 78 Mo. 482; Terry v. Anderson, 95 U. S. 628, 24 L. Ed. 365; 2 R. C. L. 709. In Lionberger v. Broadway Savings Bank, 10 Mo. App. 499. the directors of a bank assigned all of its property for the benefit of its creditors, and at the time of the assignment there were amounts remaining unpaid by stockholders who had subscribed to the capital stock of the hank. The court held that, while in England it had been held that no assignment could he made of uncalled subscriptions by the corporation, for the benefit of particular transactions of the corporation with its creditors, the better-rule is that such unpaid subscriptions not called In are assignable in a general assignment, and that equity has jurisdiction to entertain a bill by the assignee, acting on behalf of all the creditors, to recover unpaid subscriptions. Germantown Passenger Ry. Co. v. Fitler, 60 Pa. 124, 100 Am. Dec. 546. It was said in Hatch v. Dana, 101 U. S. 205, 25 L. Ed. 885: “After all, a company call is but a stop in the process of collection, and a court of equity may pursue its own mode of collection, so that no injustice Is done to the debtor.” Appellant in its complaint entirely ignores the general assignment. The prayer asks decree directing defendant stockholders to pay into the treasury of the corporation the amount of unpaid balance on their stock subscriptions, and for application of enough to cover the judgment which appellant paid, for injunction, that a receiver he appointed to collect the unpaid subscriptions, and for general relief. We are of the opinion that the general assignment operated after the appearance [864] of the stockholders herein to vest the legal title in the assignee for the benefit of creditors, and was sufficient to take the assets of the company out of the custody and possession of the corporation, and that appellant has stated no ground for relief as prayed for against the defendants, or any of them. The duty of the assignee was to proceed to enforce the liabilities of the subscribing stockholders. It would appear that he failed to do his duty and endeavored to turn over the assets to the Astoria Bank, which was'already in possession of the unpaid subscription list. This may be sufficient reason for application for appointment of a receiver. The decree of dismissal of the complaint by the District Court was correct, hut it should have been made without prejudice to the right of the plaintiff to bring such suit as may enable it to share in the distribution of the assigned estate, and to test the question of any rights it may have acquired respecting the debts owing by the defendants previous to ratification. As so modified, the decree of dismissal is affirmed. So ordered.