Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/683

 CHAP. XI.] CORPORATION AND CREDITORS. [§ 664. corporation to enjoin it from doing business and for the ap- pointment of receivers. 1 But a judgment creditor is entitled to a receiver on showing that there is danger that a corpora- tion, admittedly insolvent, will misappropriate its assets to his injury. 2 It follows, moreover, since it is only to protect their claims that creditors are ever entitled to interfere in the corporate affairs, that they can object to no action, authorized or unau- thorized, on the part of the corporate management, which does not injure their interests. Thus, a court of equity will not, on the petition of a general creditor, restrain a corporation from converting its assets into money by a sale to a share- holder, when no shareholder objects, and the sale is honestly made for an adequate price, with intent to apply the proceeds pro rata to the payment of the corporate indebtedness. 3 § 664. Accordingly, a creditor cannot prevent the dis- solution of a corporation. 4 For the obligation of contracts entered into by the corporation survives the dissolution ; and creditors may still enforce their claims against any corporate property which has not Creditors cannot pre- vent disso- lution ; 1 Pond v. Framingham, etc., R. R. Co., 130 Mass. 194. Compare Mer- chants', etc., Bank v. Trustees, 63 Ga. 549. Still at the suit of a judgment creditor a court of equity has power to take possession of the property (a bridge) of a corporation, and ap- point a receiver to collect the tolls and pay them into court, for the purpose of paying the judgment. Covington Drawbridge Co. u. Shep- herd, 21 How. 112. A creditor may enforce his claims, though he be also a shareholder. Brinham v. Wel- lersburg Coal Co., 47 Pa. St. 43. 2 Turnbull v. Prentiss Lumber Co., 55 Mich. 387. It has been held that in the case of a corporation which is insolvent and which has been aban- doned by its officers and directors, a simple contract creditor can main- tain an action for the appointment of a receiver and the administration of its assets. Nunnally v. Strauss, 94 Va. 255, following Finney v. Ben- nett, 27 Gratt. 305. 3 Barr v. Bartram M'f'g Co., 41 Conn. 506. Compare Swepson v. Bank, 9 Lea (Tenn. ), 713. A general creditor cannot secure the appoint- ment of a receiver in an action to prevent a corporation from fraudu- lently disposing of its property. Int. Trust Co. v. United Coal Co., 27 Colo. 246. 4 Mum ma v. Potomac Co., 8 Pet. 2S1 ; Smith v. Chesapeake, etc., Canal Co., 14 Pet. 45; Currant. State, 15 How. 310; Mobile R. R. Co. v. State, 29 Ala. 586. Neither will a court forfeit the corporate franchises at the suit of creditors, although acts constituting a ground of forfeiture have been done. Gaylord v. Ft. Wayne, etc., R. R. Co., 6 Biss. 286. See Cole v. Knickerbocker Life Ins. Co., 23 Hun, 255. 663