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titled to damages for the breach of his con- doctrine, and have invented various theotract, payable pro rata out of the assets in ries, fictions, and arguments for avoiding the hands of the receiver.

this supposed doctrine of the common law. In treating of this subject, Cook on Cor- Finally, in 1899, an English court denied porations, $ 641, says: “It was formerly be that the common law ever countenanced lieved to be the common law that upon the such confiscation, and showed that in the dissolution of a corporation all its assets seventeenth and eighteenth centuries many belonged to the state, and all its debts were corporations were dissolved, and that in not canceled, and that the creditors were not a single case was any such doctrine applied. entitled to anything from the assets. This It again may be said that, although the remarkable theory has been stated and re- common law has its reproaches, this is not stated in text-books and decisions of the one of them. The American courts have alcourts for over one hundred years. It is ways refused to follow the supposed comfound in Blackstone's Commentaries and in mon-law rule on this subject.” The same the old works of Kyd on Corporations and work says, at g 042: “As already seen, the Grant on Corporations. The courts, however, old rule that upon dissolution all debts by while upholding the rule theoretically, have or to the corporation are rendered unenquite uniformly refused to apply such a forceable is no longer the law. It has been solved corporation constitutes a trust fund | prosecute the business for which it was creatpledged to the payment of creditors and stock- ed, its assets become a trust fund in the hands holders. Broughton v. Pensacola, 93 U. S. 266, of its directors, to be used by them in paying 23 L. ed. 896.

the corporate creditors. Stough v. Ponca Mill The property of an insolvent corporation con- Co. 54 Neb. 500, 74 N. W. 868. stitutes a trust fund pledged to the payment of The assets of a corporation are a trust fund all its debts equally and ratably. Butler v. for the payment of its debts, upon which credCockrill, 20 C. C. A. 122, 36 U. S. App. 702, itors have an equitable lien, as against both 73 Fed. 945.

stockholders and all transferees, except those It is a very plain proposition that the stock purchasing in good faith and for value. Cole v. and property of every corporation are to be re- Millerton Iron Co. 133 N. Y. 164, 28 Am. St. garded as a trust fund for the payment of its Rep. 615, 30 N. E. 847. debts, and its creditors have a lien and the Nothing is better settled than that the assets right to priority of payment over any stock- of an insolvent corporation are a fund for the holder. Bartlett v. Drew, 57 N. Y. 587, Fol- payment of its debts. The holders of such proplowed in Hastings v. Drew, 76 N. Y. 9.

erty take it charged with a trust in favor of In Nevitt v. Bank of Port Gibson, 6 Smedes such creditors, which a court of equity will en& M. 513, said Lumpkin, J., of the supreme

force. Shamokin Valley & P. R. Co. v. Malone, court of Georgia, "nearly all the learning on 85 Pa. 25. this subject was exhausted, it having been twice The settled law of Tennessee is declared to argued with singular diligence and ability. And be that the assets of an insolvent corporation there, as everywhere else where the question become, from the date of its assured Insolvency, has been raised, a majority of the court held a fixed trust fund for the equal pro rata distrithat the property and debts due to and belong. bution among its creditors, unless otherwise ing to the bank was a trust fund subject to the provided by law or fixed by a valid contract. cognizance and control of a court of equity for Tradesman Pub. Co. v. Knoxville Car Wheel the benefit of creditors. Hightower v. Thorn- Co. 95 Tenn. 634, 31 L. R. A. 593, 49 Am. St. ton, 8 Ga. 486, 52 Am. Dec. 412.

Rep. 943, 32 S. W. 1097. The authorities are uniform that, in case a When an insolvent corporation ceases corporation is insolvent, its directors and off- carry on its business, and by a conveyance of cers are trustees for its creditors, and must all its property incapacitates itself from conmanage its property and assets with strict re- tinuing business, the law makes its assets a gard to their interests, and, if they themselves trust fund for the benefit of all its creditors are creditors, they cannot secure any prefer- without preference. Lyons-Thomas Hardware ence or advantage over other creditors while Co. v. Perry Stove Mfg. Co. 86 Tex. 143, 22 L. managing the insolvent corporation. Haywood R. A. S02, 24 S. W. 16, 88 Tex. 468, 27 S. V. Lincoln Lumber Co. 64 Wis. 639, 26 N. W. W. 100. 184.

In equity the capital stock of a corporation The assets of an insolvent corporation are a is regarded as a trust fund for the payment of trust fund for the benefit of creditors and stock- debts. The creditors have a lien upon it which holders. Sands v. Kimbark, 27 N. Y. 148. is prior in point of right to any claim which

While a corporation continues solvent, its the stockholders as such can have upon it; and officials are agents or trustees for its share. courts will be astute to detect and defeat any holders, but owe duty or obligation to none oth- scheme or device which is calculated to withers. But the moment a corporation becomes in. draw this fund, or in any way to place it beyond solvent its assets must be regarded as a trust the reach of creditors. Crandall v. Lincoln, 52 fund for the payment of all its creditors, and Conn. 73, 94, 52 Am. Rep. 560. the directors occupy the position of trustees,

This is the settled law. Buck v. Ross, 68 a fiduciary relation which forbids them to take Conn. 29, 57 Am. St. Rep. 60, 35 Atl. 763. the trust property and apply it to the payment The capital, unpaid subscriptions to the api. of corporate debts due to themselves. Beach v. tal stock, and the liability of holders of paidMiller, 130 III. 162, 17 Am. St. Rep. 291, 22 up stock to pay an additional amount equal to N. E. 464.

the par value of their stock, are all parts of a A corporation being insolvent and ceasing to trust estate sacredly pledged for the security of

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held that the liability of a corporation to , duration of the corporate charter. Where deliver goods according to an executory con a corporation is dissolved before a lease taktract ceases upon such corporation passing en by it runs out, the lessor may hold its into the hands of a receiver, where the re-assets liable for the breach of contract. ceivership was accompanied by the usual in Where a receiver is appointed, he generally junction against the further transaction of finds a number of executory contracts in business by the insolvent corporation. This force,-contracts of employment, or for conclusion is arrived at on the theory that rental of premises, or for purchases of mathe failure to perform was due to the opera terial, etc. He then must decide whether tion of law, and hence that no damages he wishes to adopt any of these contracts as could be recovered for breach of the con his own. If he does not adopt a particular tract. The better rule, however, is that, contract, then that contractor has no preeven at common law, the obligations of a ferred claim against the receiver, as a part corporation do not cease by reason of its of the receiver's expenses or disbursements, dissolution. The dissolution of a company but has merely a claim against the corporadoes not put an end to its executory contract tion and its general assets, and this claim to employ a person, nor obligations which may be for past sums due or for breach of were created for a period longer than the contract, or both. On the other hand, if the the creditors of a national banking association fund for the payment of its debts in the sense organized under the national banking acts. that, when the corporation is lawfully disStuart v. Hayden, 18 C. C. A. 618, 36 U. S. App. solved, and all its business wound up, or when 462, 72 Fed. 402.

it is insolvent, all its creditors are entitled, in The law is that, when a corporation is in equity, to have their debts paid out of the corsolvent, its capital is a trust fund for the pay- porate property before any distribution thereof ment of its debts. Hence, a director who is a among the stockholders. Wabash, St. L. & P. creditor upon a pre-existing debt cannot take R. Co. v. Ham, 114 U. S. 587, 29 L. ed. 235, 5 advantage of his superior information to secure Sup. Ct. Rep. 1081. his demand in preference to other creditors. That the property of an insolvent corporaHill y. Pioneer Lumber Co. 113 N. C. 173, 21 tion is a trust fund for the benefit of its credL. R. A. 560, 37 Am. St. Rep. 621, 18 S. E. itors is true only in the sense that, after a 107.

court of equily has duly acquired, by virtue of The capital stock and profits of a dissolved some independent general equitable principle, corporation should be regarded

trust jurisdiction to administer corporate assets, it fund for the payment of

its

debts and will administer them for the benefit of all cred. liabilitics, and the stockholders are only en itors equally. O'Bear Jewelry Co. v. Volfer, titled to such surplus as remains after their 106 Ala. 205, 28 L. R. A. 707, 54 Am. St. Rep. payment. Dudley v. Price, 10 B. Mon. 84. 31, 17 So. 525.

When a state becomes the sole stockholder in The cases of Gibson v. Trowbridge Furni. a corporation chartered by it for trading pur ture Co. 96 Ala. 357, 11 So. 365 ; Goodyear poses, and such corporation becomes insolvent, Rubber Co. v. George D. Scott Co. 96 Ala. 439, the state, upon taking the corporate property, 11 So. 370, and Corey v. Wadsworth, 99 Ala. does so as stockholder, and not as sovereign, 68, 23 L. R. A. 618, 42 Am. St. Rep. 29, 11 So. and takes such property charged with a trust 350, in so far as they decided anything beyond in favor of the corporate creditors. Curran v. the point that the transfer by the officers of Arkansas, 15 How. 304, 14 L. ed. 705.

a corporation of corporate assets to pay corpo. The obligations of its contracts survive the rate debts upon which such officers were seconddissolution of a corporation, and its creditors arily liable constituted, as respected other cormay enforce their claims against any property porate creditors, a fraudulent preference, and belonging to the corporation which has not was therefore, as to such creditors, void, were passed to bona fide purchasers, but is still held overruled by the decision in O'Bear Jewelry Co. in trust for the company or its stockholders at v. Volfer, 106 Ala. 205, 28 L. R. A. 707, 54 the time of its dissolution, in any mode per Am. St. Rep. 31, 17 So. 525 ; and the proposi. mitted by law. Mumma v. Potomac Co. 8 Pet. tion that the assets of a corporation become a 286, 8 L. ed. 945.

trust fund for the benefit of creditors, and are Its debts survive the dissolution of a corpo- beyond the power of disposition or control of ration, and creditors may enforce their claims the governing directors whenever and as soon against any property belonging to the corpora as the corporation becomes insolvent; and that tion which has not passed into the hands of a mere corporate insolvency gives a court of bona fide purchaser; for such property will be equity jurisdiction to administer the assets as held affected with a trust primarily for the trust property,- was there distinctly negatived. creditors of the company. Howe v. Robinson, The general doctrine that the property of a 20 Fla. 352.

corporation is a trust fund for the payment of By the old coinmon law a dissolution of a its debts only means that the property must be corporation extinguished its debts; but in such first appropriated to the payment of corporate cases courts of equity consider the property and debts before any portion of it can be distributed effects a trust fund for the payment of credit. to the stockholders. It does not mean that the ors, and shareholders into whosesoever hands property is so affected by the indebtness that they come subject to such a trust. Powell v. it cannot be sold, transferred, or mortgaged in North Missouri R. Co. 42 Mo. 63.

good faith and for value, except subject to the But such statements require great modifica | liability of being appropriated to pay that intion.

debtedness. Fogg v. Blair, 133 '. S. 534, 33 The property of a corporation is only a trust L. ed. 721, 10 Sup. Ct. Rep. 338.

receiver does adopt the contract, then, as is much broader than that of the New Jerto sums becoming due before such adoption, sey statute, which only directs the payment the contractor is a general creditor only, of the debts of the corporation out of its but, as to sums becoming due after such assets, and under which the courts of that adoption, they are a part of the receiver's state give damages on executory contracts expenses or disbursements, and must be rendered impossible of performance by reapaid as such. The law is clear that a re son of dissolution. As has been stated, the ceiver may refuse to carry out an executory contract is not invalid, everything done uncontract of the corporation. A receiver has der it is in part performance thereof, and no power, however, to cancel a lease, except the dissolution of the corporation cannot as to his own liability.”

have the effect of rescission or rendering it Upon this question, the language of g 59 void ab initio, and undoing anything that of chapter 53 of the Code of 1899 has im- has been performed under it. Dissolution, portant bearing. It says the property and even upon the theory adopted by those assets of a dissolved corporation, whatever courts which adhere to the doctrine of Peothe cause or manner of its dissolution may ple v. Globe Mut. L. Ins. Co. 91 N. Y. 174, be, shall be subject to the payment of the is simply a contingency in view of which liabilities of the corporation. This language' the contract was made, and which it was

The general principle is well settled that the , are as much the absolute property of the corporproperty of a private corporation is not charged ation as any man's property is his. Graham v. by law with any direct trust or specific lien in La Crosse & M. R. Co. 102 U. S. 148, 26 L. ed. favor of general creditors, and such a corpora 106. tion, so long as it is in the active exercise of its That is to say that, when a court of equity functions, may exercise as full dominion and takes into its possession the assets of an incontrol over its property as an individual. Mc- solvent corporation, it will administer them on Claren v. Union Roller Mills & Elevator Co. 95 the theory that in equity they belong to the Tenn. 696, 35 S. W. 88.

creditors and stockholders, rather than to the It is not strictly accurate to refer to the as corporation itself. The idea underlies all the sets of an insolvent corporation as a trust fund, expressions in reference to “trust" in connection and to its officers as trustees; at most, under with corporate property, that the corporation some circumstances, the assets are a quasi trust is an entity distinct from its stockholders as fund, and the directors quasi trustees. Gott from its creditors. Solvent it holds its proplieb v. Miller, 154 Ill. 44, 39 N. E. 992.

erty as any individual holds his, free from the In the absence of countervailing legislation, touch of a creditor who has acquired no lien ; an insolvent corporation may prefer certain of free, also, from the touch of a stockholder, who, its creditors subject to the same restrictions | though equitably interested in, has no legal that apply to individual debtors, which it could right to the property. Becoming insolvent, the not do if its property and assets were held in equitable interest of the stockholders in the trust for all its creditors equally, as soon as in property, together with their conditional liabil. solvency supervened. Ibid.

ity to the creditors, places the property in a There is an extended examination of the condition of trust, first for the creditors, and trust-fund doctrine, commonly called the Ameri then for the stockholders. Whatever of trust can doctrine, in Hospes v. Northwestern Mfg. there is arises from the peculiar and diverse & Car Co. 48 Minn. 174, 15 L. R. A. 470, 31 | equitable rights of the stockholders as against Am. St. Rep. 637, 50 N. W. 1117, leading to the the corporation in its property, and their conconclusion that there is no distinction between ditional liability to its creditors. It is rather the absolute and unconditional control of his a trust in the administration of the assets after property and assets which belongs to an indi possession by a court of equity, then a trust atvidual and that belonging to a corporation. taching to the property as such for the direct The stockholders of a corporation cannot appro benetit of either creditor or stockholder. Hol. priate the corporate property without satisfy- | lins v. Brierfield Coal & I. Co. 150 U. S. 371, ing the creditors, not because it is held in trust 37 L. ed. 1113, 14 Sup. Ct. Rep. 127. for creditors, but because such appropriation is The question of trust when the legal right a fraud upon them. If equity is called upon to to the estate in lands of a dissolved corporation distribute corporate assets in the

of is claimed by the grantor in reversion under insolvency or dissolution, creditors will be the common-law rule cannot be considered to treated equally, and preferred to shareholders, prevent the legal results flowing from that rule who will get what is left pro rata to their in a court of law. A court of law is powerless shares.

to divest a legal estate in order to enforce an The American or trust-fund doctrine is thus equity. In equity the rights of creditors and explained by the United States Supreme ourt: stockholders, if any there are, of a defunct corA corporation is a distinct entity. Its affairs poration, will be enforced, whenever properly necessarily are managed by officers and agents, brought before a court administering equity. but it is as distinct a being as an individual is, To enforce such rights equity will follow the and is entitled to hold property as absolutely as legal estate in the hands of the grantor after an individual can. Its estate, its interest, its he has recovered it at law. St. Philip's Church possession, are the same. When a corporation v. Zion Presby. Church, 23 S. C. 297. becomes insolvent it is so far civilly dead that its property may be administered as a trust

IX. The effects of corporate dissolution accord.

ing to modern views. fund for the benefit of its creditors and stockholders. A court of equity will then make those

a. Ciril death. funds trust funds which in other circumstances An act of the legislature declaring the char.

case

understood should, upon its happening, end, very essence of performance, an act of perthe contract on a date earlier than that formance, a thing without which there could specified. Under that doctrine, full com- be no performance. Can the dissolution of pensation is paid for so much of the con- the corporation have the effect of undoing tract as has been performed at the date of that which was binding at the time it was the dissolution, and profits which would done, and of releasing obligations fixed and have arisen from the performance of the unalterable by the parties themselves ? It part remaining unexecuted are denied and cannot be done upon any theory except that refused. It is difficult to conceive or ex- which was supposed once to have been a press any reason why, upon the same prin- principle of the common law, under which ciple, money expended in the performance of the dissolution of a corporation canceled all a contract which is not one of mere agency its obligations, released it of its debts, vestor service should not be recovered. It is ed the title to its personal assets in the laid out and expended upon the faith of the king, and returned its real estate to the contract, at a time when that contract is donors,-a doctrine which Cook well says recognized by the parties as valid and bind has been declared by the English court never ing. If necessarily expended, as it must to have been a part of the common law, and be if recoverable in any sense, it is of the I which has never been adopted, approved, ter of a domestic corporation vacated and an tial impedinient to the prosecution of a creditnulled, and its powers and rights elsewhere or's claim by legal remedies before ordinary trivested, effects such corporation's legal death. bunals, and warrants the interposition of a Mumma v. Potomac Co. 8 Pet. 286, 8 L. ed. court of equity. Shamokin Valley & P. R. Co. 947.

v. Malone, 85 Pa. 25. When the charter of a corporation is taken No legal judgment can be rendered against a away or annulled by an act of the legislature corporation which has been dissolved by an act the corporation is extinct. Sturges y. Vander of the legislature. Merrill v. Suffolk Bank, 31 bilt, 73 N. Y. 384.

Me. 57, 50 Am. Dec. 349. The dissolution of a corporation by act of A scire facias cannot be maintained, nor can the legislature deprives it of its corporate ex a judgment be had thereon, against a dead cor. istence. Merrill v. Suffolk Bank, 31 Me. 57, 50 poration, any more than against a dead man. Am. Dec. 649.

Mumma v. Potomac Co. 8 Pet. 286, 8 L. ed. 947.

It is neither to be denied, nor questioned, b. Upon litigation.

but that, by the common law, a corporation

which has been dissolved absolutely for all purActions, suits, and other legal proceedings poses whatsoever stands upon the same footpending against a corporation abate by its ing as a dead person with respect of any power dissolution.

in the courts to enter a valid judgment against Walters v. Western & A. R. Co. 69 Fed. 679.

it. In the absence of any statute upon the After the dissolution of a corporation, the subject, the manifest logic and reason of the power to proceed judicially against it in an ac

thing are the same in both cases. Life Asso. of tion is wholly divested, except as specially au

America v. Fassett, 102 nl. 315. thorized by statute. Combes v. Keyes (Combes

The dissolution of a corporation abates all v. Milwaukee & M. R. Co.) 89 Wis. 297, 27 L. suits pending against it at the time such disR. A. 369, 46 Am. St. Rep. 839, 62 N. W. 89.

solution takes place, and thereafter no valid The dissolution of a corporation ends an ac

judgment in u pending action can be taken tion pending against it, and all subsequent pro against the corporation. Marion Phosphate Co. ceedings therein are void, unless some statute

v. Perry, 33 L. R. A. 252, 20 C. C. A. 490, 41 U. providing for a continuance exists and is fol S. App. 14, 74 Fed. 425. lowed. McCulloch v. Norwood, 58 N. Y. 562 ;

When, in an action by a foreign corporation Sturges v. Vanderbilt, 73 N. Y. 384.

upon a promissory note, besides proof of the When a corporate charter is expressly sub

note and incorporation, it is shown that, by ject to repeal by act of the legislature, and con

order in chancery in the home state, a receiver tains no provision for the prosecution of suits

of the corporate property has been appointed against the corporation in case of its dissolu- upon a petition alleging the insolvency of the tion, and no other statute provides for such

company, and that it had suspended business prosecution, an action at law against such cor

for want of funds; and a statute of the foreign poration abates upon the repeal of its charter. state providing for the appointment of a reRead v. Frankfort Bank, 23 Me. 318.

ceiver when any corporation shall be dissolved When the charter of a company expires by is the only law proved, the inference is that limitation, its power to hold property as a cor

the company no longer has a corporate exist

ence, and the action must poration, aud to prosecute and defend suits and

be dismissed. actions, is gone; and, whether its property re

Merchants' Loan & T. Co. v. Clair, 107 N. Y. verts to the donors, or the stockholders, or to

663, 14 N. E. +14. the commonwealth as derelict, there is no doubt But statutes providing for the prosecution to that it no longer remaius in the corporation as judgment of pending suits, and action against such ; hence suits pending against it abate at dissolved corporations, affect only the domestic the instant its existence terminates. Rider v. companies. Suits against foreign corporations Nelson & A. Union Factory, 7 Leigh, 154, 30 abate by their dissolution notwithstanding such Am. Dec. 495.

statutes. Marion Phosphate Co. v. Perry, 33 To the same effect is May v. State Bank, 2 L. R. A. 252, 20 C. C. A. 490, 41 U. 8. App. 14, Rob. (Va.) 56, 40 Am. Dec. 726.

74 Fed. 123. The extinction of a corporation is a substan And the dissolution of a corporation after a

&

V.

and recognized in America. There is cer- , thereof. The rule on this subject is stated tainly no room for any such principle under in 10 Cyc. Law & Proc. pp. 794, 795, as folthe statutes of this state creating, regu- lows: "Directors are not disabled from lating, and providing for the dissolution of entering into contracts with the corporation, corporations and of the distribution of their provided there be enough directors on the assets.

other side of the contract to make Nor do the principles of law, constituting quorum, and provided the contract is open, the other ground for discontinuing the per- fair, and honest. The rule under considformance of the contract, preclude recovery eration prohibits a director from acquiring for outlay and expenses in part performance secret profits through contracts made with thereof. In its opinion, the court exon- or for the corporation, but does not prohibit erates Thompson from any actual fraud in contracts with the corporation, where there the procurement of his contract, although has been a full and fair disclosure of his inholding that his being a director of the cor- terest in the contract. For example, it has poration gave the stockholders the right to been held that the shareholders and directavoid it, and held that he is entitled to be ors of a manufacturing corporation, who, compensated for labor and money necessa- with their own money and on their own rily expended by him in part performance credit and risk, erect new works, may make trial against it has been had in an action upon A law distributing the property of an insolcontract and the submission of the cause to vent trading or banking corporation among its the court for decision has been made does not stockholders, or seizing it to the use of the abate the action, but judgment may be entered state, would as clearly impair the obligation of nuno pro tunc. Shakman United States its contracts as a law giving to the heirs the Credit System Co. 92 Wis. 366, 32 L. R. A. 383, effects of a deceased natural person to the ex53 Am. St. Rep. 920, 66 N. W. 528.

clusion of his creditors would impair the obOften a state statute preserves for a longer ligation of his contracts. Curran v. Arkansas, or shorter period after its dissolution the right 15 How. 304, 14 L. ed. 705. of a corporation to prosecute and defend suits. The legislature, if the power to do so has Tuskaloosa Scientific & Art Asso. v. Green, 48 been reserved, may repeal the charter of a corAla. 346 ; Bowe v. Minnesota Milk Co. 44 Minn. poration without thereby impairing the obliga460, 47 N. W. 151 ; Blake v. Portsmouth & C. tion of any contract into which the corporation R. Co. 39 N. H. 435.

has entered; but it cannot establish rules in

regard to the management and disposition of c. Upon property and assets.

the corporate assets so that the avails shall be

diverted from, or divided unfairly and unequalThe ancient doctrine that, upon the repeal of ly among, the corporate creditors, thus impaira private corporation, its debts were extin- | ing the obligations of contracts; nor so that guished, and its real property reverted to its that portion of the avails which belongs to the grantors, and its personal property vested in stockholders shall be sequestered and diverted the state, has been so far modified by modern from the owners, and thus injure vested rights. adjudications that a court of equity will now Lothrop v. Stedman, 13 Blatchf. 134, Fed. Cas. lay hold of the property of a dissolved corpora- No. 8,519. tion and administer it for the benefit of its cred- Upon the civil death of a manufacturing coritors and stockholders. Broughton v. Pensa- poration by the expiration of its charter, real cola, 93 U. S. 266, 23 L, ed. 896.

estate conveyed to it in fee for a money con The common-law doctrine respecting cor- sideration does not revert to the grantors, but porate property and assets upon dissolution the title thereto vests in a receiver of its prophas, .so far as the modern business and com- erty and effects for the benefit of creditors and mercial corporation is concerned, become prac- stockholders. Owen v. Smith, 31 Barb. 641. tically obsolete. Its unjust operation upon the The rule of the common law that real estate rights of creditors and stockholders has been held by a corporation at the time of its dissolugenerally prevented by statute. And in equity tion reverts to the grantor does not, with rethe assets of such a corporation, which repre- spect of stock corporations, prevail in New sent, not the donations of a prince or its pious York, a statute of which (1 Rev. Stat. 248; 1 founder, but contributions of stockholders, are Rev. Stat. 600, 88 9, 10) provides that, upon held, independent of statute, to constitute a the dissolution of a corporation, the directors trust fund, into whosesoever hands they may or managers at the time become trustees of its come, for the benefit of creditors and stock- property to pay its debts and divide its propholders. Wallamet Falls Canal & Lock Co. v. erty among its stockholders, and the provisions Kittridge, 5 Sawy. 44, Fed. Cas. No. 17,105. apply as well to the real as to the personal

The rights and interests of the creditors and property; consequently, where land is stockholders of a corporation are neither ex- veyed absolutely to a corporation having stocktinguished nor seriously impaired by its disso- holders no reversion, or possibility of reversion, lution. If the charters or statutes for winding remains to the grantor. Heath v. Barmore, 50 up the business of a trading or moneyed cor- N. Y. 302. poration do not secure the rights and interests The modern doctrine now held in North Caroof its creditors and stockholders, equity regards lina in spite of earlier decisions to the contrary its capital property and debts as rust funds is that, upon the dissolution of a corporation, pledged to pay the dues of creditors and stock- the title to real property does not revert to the holders, and has ample power to reach and ap- original grantors or their heirs, and the personal ply them to the purposes of such trust. Taylor estate does not escheat to the state ; nor are the v. Hoimes, 14 Fed. 498.

debts due to and from the corporation extin

con

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