Patterson v. Lynde

Citations

• 112 Ill. 196

Syllabus

<p>1. Corporations—stockholders—in case of an insolvent corporation—remedy of creditors—unpaid subscriptions. Creditors, under proper circumstances, are not compelled to wait for the winding up of insolvent corporations, but may proceed to subject their unpaid subscriptions to the payment of their claims; but to do so they must first recover a judgment at law in the courts of this State, and have execution returned unsatisfied.</p> <p>2. In such case, the creditor is subrogated to the place of the debtor corporation, and the proceeding is in the nature of an equitable attachment, by which the debts due the company may be applied to the payment of its own debts.</p> <p>3. A foreign insolvent corporation owing debts, if still in existence, can be compelled, by mandamus or bill in equity, to collect its unpaid subscriptions wherever the stockholders may reside; and if it has ceased to exist, a receiver should be appointed, and the courts of other States, as a matter of comity, would recognize the right of the receiver, the same as they would the corporation itself if still in existence, to prosecute actions at law for the recovery of unpaid subscriptions.</p> <p>4. Unpaid subscriptions are a trust fund for the payment of the debts of the corporation, which is the trustee. When, therefore, the corporation has ceased to exist., then, upon the principle that a trust shall not fail, a court of equity will take jurisdiction and wind up its affairs.</p> <p>5. Saws—extent of stockholder’s liability after corporation has ceased to exist—adjustment as between the stockholders themselves. Where a corporation has ceased to exist, its assets in excess of what is necessary to pay its debts belong to the stockholders, and the duty of the stockholder in such case is only to pay his pro rata share of the amount needed to pay the debts. This duty is upon all stockholders owing for stock, and it is the duty of the court to adjust the equities between the different stockholders.</p> <p>6