State v. New Orleans Water Supply Co.

Citations

• 111 La. 1049
• 36 So. 117
• 1904 La. LEXIS 596

Syllabus

<p>CORPORATIONS — DISSOLUTION—APPOINTMENT OP LIQUIDATOR — ACTION BY STATE — NEW COMPANY—RIGHTS OF STOCKHOLDERS.</p> <p>1. Where the charter of a waterworks company was forfeited by judgment of the state court, and thereupon a receiver was 'appointed by the United States Circuit Court, who, under its orders, took possession of and operated the plant, and where nearly one year subsequently a liquidator was appointed by the Governor under the statutes to administer the assets of the dissolved corporation, and said liquidator was made a party to the suit in the federal court, and by plea asserted his superior right to the custody and administration of said assets, the state has no standing to litigate the rights of the liquidator with the stockholders of the defunct company and a new corporation organized by them, having neither possession nor control of said assets.</p> <p>2. The object and purpose of a corporation must be determined from the provisions of its charter, and not from the declarations or acts of its officers or agents. The - defendant stockholders had the right to organize the new corporation for the purpose of supplying water to the city of New Orleans and its inhabitants, and, to that end, for the further purpose of purchasing the plant of the former company. They also had the legal right to sell to said corporation for its shares of stock all their right, title, and interest in the assets of the dissolved corporation, subject to the payment of debts and costs of administration.</p> <p>3. The burden of proof is on the state to show that defendant has issued fictitious stock. Where the evidence leaves the question of value in doubt, and, in the nature of things, the residuary interest of the stockholders cannot be ascertained until the plant is sold, and the affairs of the corporation liquidated, the demand of the state for the forfeiture of charter should be nonsuited.</p> <p>Nicholls, G. J., dissenting in part.</p> <p>(Syllabus by the Court.)</p>