BIRD, V. C.
On bill for appointment of a receiver, and motion for injunction.
W. E. Potter, for complainants. W. S. Gummere and S. H. Grey, for defendant Wood.
BIRD, V. C. The bill charges that the defendant company is insolvent; and this charge not having been answered, and the proof being very clear in support of the bill, a receiver was appointed. Upon further consideration, I think it is the duty of the court to restrain the collection of the judgment confessed by the company to the defendant Wood, upon which executions have been issued, and all the assets of the corporation levied upon and advertised for sale. This will not settle the legal rights of the parties, but will enable the court to retain possession of the said assets, or their value, until the questions which have been presented by the bill and answer shall have been determined. This course, I think, is fully warranted by undisputed facts. Mr. Wood, the judgment creditor, from 1873 has been the owner of at least one-third of the capital stock, and from that date he has purchased of other stockholders until he has become the owner of all, except 400 shares, the par value of which is $20,000. It does not appear whether these last shares of stock have been issued and are owned by any one or not. Mr. Wood was president of the company until 1883. From that time until December 6, 1888, the company became indebted to him to the amount of $40,000, and to others, $120,000. At the last-named date Mr. Wood knew the situation. As I understand the admissions in the answer, he and two others composed the corporation on this 6th day of December, 1888, the day the judgment was confessed to him. It does not appear that he advanced any money to the corporation at that time. The judgment seems to have been taken for the sole purpose of securing the amount of the then existing indebtedness to him. The answer sets up that afterwards Mr. Wood advanced to the company $30,000, and that the former liabilities of $120,000 over and above his own have been reduced to $75,000, so that the total liabilities of the company, instead of being $160,000, are only $115,000.
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It seems to me that these statements most naturally awaken the inquiry, may not this judgment have been confessed for the purpose of preferring Mr. Wood? The single fact that the company was indebted to others $120,000 at the time it gave the bond and warrant goes very far towards justifying a reasonable prosecution of the inquiry. And when it is considered that when the judgment was entered, eight months later, the total assets of the company (as was admitted upon the argument) did not exceed $15,000 in value, and that if the sale, by virtue of said executions, be not restrained until final hearing, everything will be swept away from the general creditors, and all further investigation be to no purpose, such a case is made as not only to justify, but to require, the preservation of such assets as remain until the rights of the parties are fully determined. I will advise an order that an injunction do issue.