ARTICLE SECOND. Judicial Supervision of a Corporation, and of the Officers and Members Thereof. SEC. 1781. Action against directors, etc., of a corporation for misconduct. 1782. By whom action to be brought. 1783. This article, how construed. § 1781. Action against directors, etc., of a corporation for misconduct. An action may be maintained against one or more trustees, directors, managers, or other officers of a corporation, to procure a judgment for the following purposes, or so much thereof as the case requires: 1. Compelling the defendants to account for their official conduct. in the management and disposition of the funds and property, committed to their charge. 2. Compelling them to pay to the corporation, which they represent, or to its creditors, any money, and the value of any property, which they have acquired to themselves. or transferred to others, or lost, or wasted, by a violation of their duties. 3. Suspending a defendant from exercising his office, where it appears that he has abused his trust. 4. Removing a defendant from his office, upon proof or conviction of misconduct, and directing a new election to be held by the body or board, duly authorized to hold the same, in order to supply the vacancy created by the removal; or, where there is no such body or board, or where all the members thereof are removed. directing the removal to be reported to the governor, who may, with the advice and consent of the senate, fill the vacancies. 5. Setting aside an alienation of property, made by one or more trustees, directors, managers, or other officers of a corporation, contrary to a provision of law, or for a purpose foreign to the lawful business and objects of the corporation, where the alienee knew the purpose of the alienation. 6. Restraining and preventing such an alienation, where it is threatened, or where there is good reason to apprehend that it will be made. From 2 R. S. 462, Part 3, ch. 8, tit. 4, § 33 (2 Edm. 482). § 1782. By whom action to be brought. An action may be brought, as prescribed in the last section, by the attorney-general in behalf of the people of the State; or, except where the action is brought for the purpose specified in subdivision third or fourth of that section, by a creditor of the corporation, or by a trustee, director, manager, or other officer of the corporation, having a general superintendence of its concerns. From Id., § 35, ch. 151 of 1870, § 2 (7 Edm. 662). 1783. This article, how construed. This article does not divest or impair any visitorial power over a corporation, which is vested by statute in a corporate body, or a public officer. From Id., 34. ARTICLE THIRD. Actions to Procure the Dissolution of a Corporation, and Actions to Enforce the Individual Liability of the Officers or Members of a Corporation, with or without a Dissolution Thereof. SEC. 1784. Action by judgment creditor for sequestration, etc. 1785. Action to dissolve a corporation. 1786. Id.; by whom to be brought. 1787. Temporary injunction. 1788. Receiver may be appointed. Permanent and temporary receiver. Powers, etc., of temporary receiver. 1789. Additional powers and duties may be conferred upon temporary receiver. 1790. Making stockholders, etc., parties. 1791. When separate action may be brought against them. 1792. Proceedings in either action. 1793. Judgment; property of corporation to be distributed. 1794. Id.; stock subscriptions to be recovered. 1795. Id.; as to liabilities of directors and stockholders. 1796. Effect of this article limited. § 1784. Action by judgment creditor for sequestration, etc. Where final judgment for a sum of money has been rendered against a corporation created by or under the laws of the State, and an execution, issued thereupon to the sheriff of the county, where the corporation transacts its general business, or where its principal office is located, has been returned wholly or partly unsatisñed, the judgment creditor may maintain an action to procure a judgment, sequestrating the property of the corporation, and providing for a distribution thereof, as prescribed in section 1793 of this act. From 2 R. S. 463, Part 3, ch. 8, tit. 4, § 36 (2 Edm. 483). § 1785. Action to dissolve a corporation. In either of the following cases, an action to procure a judgment. dissolving a corporation, created by or under the laws of the State, and forfeiting, its corporate rights, privileges, and franchises, may be maintained as prescribed in the next section: 1. Where the corporation has remained insolvent for at least one year. 2. Where it has neglected or refused, for at least one year, to pay and discharge its notes or other evidences of debt. 3. Where it has suspended its ordinary and lawful business for at least one year. 4. If it has banking powers, or power to make loans on pledges or deposits, or to make insurances, where it becomes insolvent or unable to pay its debts, or has violated any provision of the act, by or under which it was incorporated, or of any other act binding upon it. From Id., § 38 and part of § 39. See § 1787. § 1786. Id.; by whom to be brought. An action specified in the last section may be maintained by the attorney-general in the name and in behalf of the people; and whenever a creditor or stockholder of any corporation submits to the attorneygeneral a written statement of facts, verified by oath, showing grounds for an action under the provisions of the last section, and the attorneygeneral omits, for sixty days after this submission, to commence an action specified in the last section, then, and not otherwise, such creditor or stockholder may apply to the proper court for leave to commence such an action, and on obtaining leave may maintain the same accordingly. From Id., part of § 40, as amended by ch. 151 of 1870, §§ 2 and 5 (7 Edm. 662). Am'd by ch. 301 of 1880. 1787. Temporary injunction. In an action, brought as prescribed in this article, the court may, upon proof of the facts authorizing the action to be maintained, grant an injunction order, restraining the corporation, and its trustees, directors, managers, and other officers, from collecting or receiving any debt or demand, and from paying out or in any way transferring or delivering to any person, any money, property, or effects of the corporation, during the pendency of the action; except by express permission of the court. Where the action is brought to procure the dissolution of the corporation, the injunction may also restrain the corporation, and its trustees, directors, managers, and other officers from exercising any of its corporate rights, privileges or franchises, during the pendency of the action; except by express permission of the court. The provisions of title second of chapter seventh of this act, relating to the granting, vacating, or modifying of an injunction order, apply to an injunction order, granted as prescribed in this section; except that it can be granted only by the court. From Id., the remainder of §§ 39 and 40. 602, 634. § 1788. Receiver may be appointed; permanent and temporary receiver; powers, etc., of temporary receiver. In such an action, the court may also, at any stage thereof, appoint one or more receivers of the property of the corporation. A receiver, so appointed, before final judgment, is a temporary receiver, until final judgment is entered. A temporary receiver has power to collect and receive the debts, demands and other property of the corporation; to preserve the property, and proceeds of the debts and demands collected; to sell or otherwise dispose of the property as directed by the court; to collect, receive and preserve the proceeds thereof; and to maintain any action or special proceeding, for either of those purposes. He must qualify as prescribed by law for the qualification of a permanent receiver. Unless additional powers are specially conferred upon him, as prescribed in the next section, a temporary receiver has only the powers specified in this section, and those which are incidental to the exercise thereof, a receiver appointed by or pursuant to a final judgment in the action, or a temporary receiver who is continued by the final judgment, is a permanent receiver, and has all the powers and authority conferred, and is subject to all the duties and liabilities imposed upon a receiver appointed the voluntary dissolution of a corporation. From Id., parts of §§ 36 and 41. Am'd by ch. 399 of 1882. • So in original. § 1789. Additional powers and duties may be conferred upon temporary receiver. A temporary receiver, appointed as prescribed in the last section, is, in all respects, subject to the control of the court. In addition to the powers conferred upon him, by the provisions of the last section, the court may, by the order or interlocutory judgment appointing him, or by an order subsequently made in the action, or by the final judgment, confer upon him, the powers and authority, and subject him to the duties and liabilities, of a permanent receiver, or so much thereof as it thinks proper; except that he shall not make any distribution among the creditors or stockholders, before final judgment, unless he is specially directed so to do by the court. From Id., parts of §§ 41 and 42 of the R. S., and ch. 71 of 1852, § 1 (3 Edm. 682). § 1790. Making stockholders, etc., parties. Where the action is brought by a creditor of a corporation, and the stockholders, directors, trustees, or other officers, or any of them, are made liable by law, in any event or contingency, for the payment of his debt, the persons so made liable, may be made parties defendant, by the original or by a supplemental complaint; and their liability may be declared and enforced by the judgment in the action. From Id., § 43. § 1791. When separate action may be brought against them. Where the stockholders, directors, trustees, or other officers of a corporation, who are made liable, in any event or contingency, for the payment of a debt, are not made parties defendant, as prescribed in the last section, the plaintiff in the action may maintain a separate action against them, to procure a judgment, declaring, apportioning, and enforcing their liability. From Id., §§ 44 and 45. § 1792. Proceedings in either action. In an action, brought as prescribed in either of the last two sections, the court must, when it is necessary, cause an account to be taken of the property and of the debts of the corporation, and thereupon the defendant's liability must be apportioned accordingly; but, if it affirmatively appears, that the corporation is insolvent, and has no property to satisfy its creditors the court may, without taking such an account, ascertain and determine the amount of each defendant's liability, and enforce the same accordingly. From Id., §§ 46 and 47. § 1793. Judgment; property of corporation to be distributed. A final judgment in an action, brought against a corporation, as prescribed in this article, either separately or in conjunction with its stockholders, directors, trustees, or other officers, must provide for a just and fair distribution of the property of the corporation, and of the proceeds thereof, among its fair and honest creditors, in the order and in the proportions prescribed by law, in case of the voluntary dissolution of a corporation. From Id., §§ 37 and 48. § 1794. Id.; stock subscriptions to be recovered. Where the stockholders of the corporation are parties to the action, if the property of the corporation is not sufficient to discharge its debts, the interlocutory or final judgment, as the case requires, must adjudge that each stockholder pay into court the amount due and remaining unpaid, on the shares of stock held by him, or so much thereof as is necessary to satisfy the debts of the corporation. From Id., § 49. § 1795. Id.; as to liabilities of directors and stockholders. If it appears, that the property of the corporation, and the sums collected or collectible from the stockholders, upon their stock subscriptions, are or will be insufficient to pay the debts of the corporation, the court must ascertain the several sums, for which the directors, trustees, or other officers, or the stockholders of the corporation, being parties to the action, are liable; and must adjudge that the same be paid into court, to be applied, in such proportions and in such order as justice requires, to the payment of the debts of the corporation. From Id., § 50. § 1796. Effect of this article limited. This article does not repeal or affect any special provision of law, prescribing that a particular kind of corporation shall cease to exist, or shall be dissolved, in a case or in a manner, not prescribed in this article; or any special provision of law, prescribing the mode of enforcing the liability of the stockholders of a particular kind of corporation. |