Opinion
10-11-1898
BLAKE v. DOMESTIC MFG. CO.
William V. Seufert and W. B. Williams, for petitioner. J. E. Howell and R. V. Lindabury, for respondent.
Suit by David Blake against the Domestic Manufacturing Company. Petition of Hugh W. Adams to extend the time to present claimsto the receiver of the defendant corporation. Denied.
William V. Seufert and W. B. Williams, for petitioner.
J. E. Howell and R. V. Lindabury, for respondent.
EMERY, V. C. This is an application for leave to present to the receiver of an insolvent corporation a claim against the corporation, after the expiration of the time fixed by the order of the court, and to extend the time so limited in order that the claim may be presented. The corporation, the Domestic Manufacturing Company, was declared insolvent on June 2, 1893, and on June 9, 1893. an order was made directing the creditors of the company to present their claims to the receiver within four months from the date of the order, "or that they be excluded from the benefit of such dividends as may thereafter be made and declared by the court upon the proceeds of the effects of the said corporation," and the receiver was directed to mail notices of the order within 20 days from date to each of the creditors of the corporation whose address he could ascertain in that time. Such notice (as appears by the proof of mailing filed July 7, 1893) was mailed to all of the creditors of the company whose names appeared on the books of account of the company. The Domestic Sewing-Machine Company, another corporation, connected in business with the Domestic Manufacturing Company, was adjudged insolvent at the same time, and a like order to limit creditors was taken in those proceedings. The notices to the creditors of both companies were printed together upon a single sheet. (See proof of mailing filed July 7, 1893.) The petitioner, in April and May, 1893, had sold materials to the Domestic Sewing-Machine Company, and duly proved the debt against the sewing-machine company upon this claim within the limited time. The goods, although sold to the sewing-machine company, were, as petitioner now says, delivered to the manufacturing company. No claim or proof of debt was presented by petitioner against the manufacturing company for the debt, and application was made by petition in April, 1898 (amended May 11, 1898), to extend the time limited by the order of June 9, 1893, and to allow petitioner to prove his claim for these goods sold to the sewing-machine company and delivered to the manufacturing company, as a debt against the manufacturing company. Two grounds or bases of claim against the manufacturing company are presented by the petition: First (paragraphs 12 and 20), that the sale to the sewing-machine company of goods to be delivered to the manufacturing company was induced by representations of the officers and agents of both companies that the two companies were one and the same concern, and were carrying on business as such; and that petitioner did not know, until after filing his claim against the vewing machine company, that there were two distinct corporations. The second general basis of the claim is that by reason of the situation and relation of the two companies, and their method of conducting business, the manufacturing company is liable for the claim; and that the exact facts as to the relation of the companies, which would result as petitioner is advised, in this liability, have been only recently determined in a suit brought in this court by Eliza Blake and others against the Domestic Manufacturing Company and others. 38 Atl. 241. The opinion in this case is referred to as summarizing the facts found upon the evidence there presented.
Upon consideration of the case as presented by the petition and the arguments and briefs of counsel, I reach the conclusion that the present application must be denied on account of laches. So far as the petitioner's claim is based upon the representations alleged in his petition to have been made by the officers of the sewing-machine company and of the manufacturing company that the two companies were one and the same concern, no sufficient reason appears why the claim against the manufacturing company should not have been presented to the receiver at the time of the presentation of the petitioner's claim against the sewing-machine company, or within the time limited by the order. And, so far as relates to the petitioner's claim, as based upon the facts disclosed by the litigation in the case referred to in the petition, no sufficient reason appears why the petitioner should not, pending that litigation, have applied to be made a party to the proceedings in insolvency, as a claimant against the Domestic Manufacturing Company, or to prove its present claim against that company. That suit was brought by persons claiming to be entitled, as pledgees or mortgagees, to the beneficial interest in the entire capital stock of the manufacturing company (except 20 shares out of 2,000), and all of the creditors of the manufacturing company, whose claims had been allowed by the receiver, and were contested by the complainants, were made parties to that suit, which involved the disposition of the assets of the manufacturing company as between the stockholders on the one side and the creditors in insolvency on the other. The petitioner's claim, as presented in his petition, is one which, on the face of it, is a claim against the sewing-machine company only, and is one which, as a claim against the manufacturing company, would manifestly have been contested by the complainants, by the creditors whose claims had been allowed, and by the receiver, had it been presented pending the suit. The dispute in that case was practically a contest for the entire assets of the manufacturing company between the stockholders and the creditors in insolvency. The litigation was pending for about three years, and petitioner, if he made any inquiries at all about his claim, must have known of the litigation, and that it involved the relations of the companies, and their method ofconducting business. The bills and answers in that cause, which were on file as early as 1895, would have informed petitioner, or put him upon inquiry, as to the facts upon which he now rests his claim against the manufacturing company. The claim now presented will apparently result in a protracted litigation and a long delay in the settlement of the estate, and the interests of the creditors whose claims upon the assets have been allowed and established, and who are entitled to a settlement of the estate, would be prejudiced by the delay. The assets in the receiver's hands have not yet been disposed of, nor has any disposition thereof been made, but the delay has been due to the pendency of the litigation between the stockholders (or claimants under them) and the creditors in insolvency, and, this litigation being ended, the receiver is now preparing to close up his trust. Under these circumstances this court should not, by any affirmative action, delay the settlement of the estate, or relieve the petitioner from the consequences of his own delay in presenting his claim. The cases where the court has, by its affirmative order, extended the time and allowed the claim, are cases where the delay has been satisfactorily explained, the debt undisputed, and the allowance did not occasion any delay in the settlement of the estate, or prejudice to the creditors who had duly proved their claims. Orinnell v. Insurance Co., 16 N. J. Eq. 283. The application to extend in petitioner's favor the time limited by the order of June 9, 1893, is therefore denied. The petitioner's further special prayer for relief, that the claims as presented in the petition be now allowed, cannot be granted, because, in the first place, the statute (section 76, Corporation Act 1896) expressly requires that every claim against an insolvent corporation must be presented to the receiver, in writing, under oath, in order that the receiver may pass upon and allow or disallow the claims; and, second, because the petitioner's claim against the manufacturing company is fairly contested, both by the receiver and creditors, and is evidently one of such a character as to require a formal presentation and trial by regular proceedings at law or in equity. The application is therefore denied.