CHAPTER XLI.

Proceedings Against Corporations in Chancery.

SECTION 1. Upon a bill being filed under the direction of the Attorney General, in any court having equity jurisdiction, the court shall have power to restrain by injunction, any corporation from assuming or exercising any franchise, liberty or privilege, or transacting any business not authorized by the charter of such corporation; and in the same manner to restrain any individuals from exercising any corporate rights, privileges or franchises, not granted to them by any law of this State.

SEC. 2. Such injunction may be issued before the coming in of the answer, upon satisfactory proof that the defendants complained of have usurped, exercised or claimed, any franchise, privilege, liberty or corporate right not granted to them, and after the coming in of the answer, such injunction may be continued until judgment at law shall have been had.

SEC. 3. The circuit court in chancery within the proper county shall have jurisdiction over directors, managers, trustees, and other officers of corporations, and over any persons who may have held such offices, in any corporation, provided that proceedings are commenced within one year after they have ceased to be such directors, managers, trustees, and other officers:

1. To compel them to account for their official conduct in the management and disposition of the funds and property committed to their charge;

2. To decree and compel payment by them to the corporation whom they represent, and to its creditors, of all sums of money and of the value of all property which they may have acquired to themselves or transferred to others, or may have lost or wasted by any violation of their duties as such directors, managers, trustees, or other officers;

3. To suspend any such trustee or officer from exercising his office whenever it shall appear that he has abused his trust;

4. To remove any such trustee or officer from his office upon proof or conviction of gross misconduct;

5. To direct new elections to be held by the body or board duly authorized for that purpose, to supply any vacancy created by such removal;

6. In case there be no such body or board, or all the members of such board be removed, then to report the same to the Governor, who shall be authorized, with the consent of the senate, to fill such vacancies;

7. To set aside all alienations of property made by the trustees or other officers of any corporation contrary to the provisions of law, or for purposes foreign to the lawful business and objects of such corporations, in cases where the

1

person receiving such alienation knew the purpose for which the sa was made; and

8. To restrain and prevent any such alienation in cases where it may be threatened or there may be good reason to apprehend that it is intended to be made.

of last

SEC. 4. When any of the visitatorial powers enumerated Construction in the preceding section, over any corporation, are or shall be section. vested, by statute, in any corporate body or public officer, the provisions of that section shall not be construed to divest or impair the powers so vested.

diction

SEC. 5. The jurisdiction conferred in the third section of How juristhis chapter shall be exercised as in ordinary cases on bill or exercised. petition, as the case may require, or as the court may direct, at the instance of the Attorney General, prosecuting in behalf of the people of this State, or at the instance of any creditor of such corporation, or at the instance of any director, trustee, or other officer of such corporation having a general superintendence of its concerns, or by any stockholder of such corporation.

SEC. 6. Whenever a judgment at law, or a decree in chanc- Sequestration ery, shall be obtained against any corporation, incorporated of property. under the laws of this State, and an execution issued thereon shall have been returned unsatisfied in part or in whole, upon the petition of the person obtaining such judgment or decree, or his representatives, the circuit court within the proper county may sequestrate the stock, property, things in action and effects of such corporation, and may appoint a receiver Receiver. of the same.

upon decree.

SEC. 7. Upon a final decree on any such petition, the court Distribution shall cause, a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among the creditors of such corporation, in proportion to their debts respectively, who shall be paid in the same order as provided in the case of a voluntary dissolution of a corporation.

SEC. 8. Whenever any incorporated company shall have Surrender of remained insolvent for one whole year, or for one year shall corporate rights. have neglected or refused to pay and discharge its notes, or other evidence of debt, it shall be deemed to have surrendered the rights, privileges, and franchises granted by any act of incorporation, or acquired under the laws of this State, and shall be adjudged to be dissolved.

against

SEC. 9. Whenever any corporation having banking powers, Proceedings or having the power to make loans, on pledges or deposits, certain or authorized by law to make insurances, shall become in- insolvent corporations. solvent or unable to pay its debts, or shall neglect or refuse to pay its notes or evidences of debt on demand, or shall have violated any of the provisions of its act or acts of incorporation, or of any other act binding on such corporation, any court having equity jurisdiction may, by injunction, restrain such corporation and its officers, from exercising any of its corporate rights, privileges or franchises, and from

Who may apply for injunction.

Appointment of receivers.

Powers and duties of receivers.

When

made parties.

collecting or receiving any debts or demands, and from paying out or in any way transferring or delivering to an person, any of the moneys, property or effects of such corporation, until such court shall otherwise order.

SEC. 10. Such injunction may be issued on the application of the Attorney General in behalf of the people of this State, or on the application of any creditor or stockholder of such corporation, upon bill or petition, filed for that purpose, and upon due proof of any of the facts in the last section required, to authorize the issuing of the same. Whenever such injunction shall issue against any bank, for any violation of its charter, on the application of any creditor, the court shall proceed to final decree in such case, and adjudge a forfeiture if the proof is sufficient, nothwithstanding such creditor may settle with such corporation, and relinquish his claim against said corporation, and in all such cases the Attorney General, under the direction of the Governor or any creditor, shall have the right to appear and prosecute such suit, and such suit shall not be discontinued if either of them so appear and prosecute such suit to final judgment.

SEC. 11. Upon such application being made, and in any stage of the proceedings thereupon, the court may appoint one or more receivers, to take charge of the property and effects of such corporation, and to collect, sue for and recover the debts and demands that may be due, and the property that may belong to such corporation, who shall, in all respects, be subject to the control of the court.

SEC. 12. Such receivers shall possess all the powers and authority conferred, and be subject to all the obligations and duties imposed upon receivers appointed in case of the voluntary dissolution of a corporation.

SEC. 13. If such application be made by a creditor of any directors, etc., corporation, whose directors or stockholders are made liable by law for the payment of such debt in any event or contingency, such directors or stockholders may be made parties to the bill or petition, either on the filing thereof, or in any subsequent stage of the proceedings, whenever it shall become necessary to enforce such liability.

Directors, etc., made parties after decree.

Bill against stockholders,

etc.

SEC. 14. If any creditor of a corporation desires to make such directors or stockholders parties to the suit, after a decree therein against the corporation, he may do so, on filing a supplemental bill against them, founded upon such decree, and if such decree was rendered in a proceeding instituted by the Attorney General, such creditor may, on his application, be made plaintiff therein, with or instead of the Attorney General, and may, in like manner, make the directors and stockholders sought to be charged, defendants in such suit.

SEC. 15. Whenever any creditor of a corporation shall seek to charge the directors, trustees or other superintending officers of such corporation, or the stockholders thereof, on account of any liability created by law, he may file his bill for

that purpose in any court having chancery jurisdiction, which shall possess jurisdiction to enforce such liability.

thereon.

SEC. 16. The court shall proceed thereon as in other cases, Proceedings and when necessary, shall cause an account to be taken of the property and debts due to and from such corporation, and shall appoint one or more receivers, who shall possess all the powers conferred, and be subject to all the obligations imposed on receivers in case of the voluntary dissolution of a corporation.

solvency.

SEC. 17. But if, on the coming in of the answer, or upon Proceedings the taking of any such account, it shall appear that such in case of in corporation is insolvent, and that it has no property or effects to satisfy such creditor, the court may proceed, without appointing any receiver, to ascertain the respective liabilities of such directors and stockholders, and enforce the same, by its decree, as in other cases.

of property.

SEC. 18. Upon a final decree being made upon any such Distribution application to restrain a corporation, or upon any such bill filed against directors or stockholders, the court shall cause a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among its creditors, in the order and in the proportions prescribed in the case of a voluntary dissolution of a corporation.

stockholders

to pay

SEC. 19. In all cases in which the directors or other officers Compelling of a corporation, or the stockholders thereof, shall have been sto made parties to a suit in which a decree shall be rendered, on stock. if the property of such corporation shall be insufficient to discharge its debts, the court shall proceed to compel each stockholder to pay in the amount due and remaining unpaid on the shares of stock held by him, or so much thereof as shall be necessary to satisfy the debts of the company.

payment by

SEC. 20. If the debts of the company shall remain un- Enforcing satisfied, the court shall proceed to ascertain the respective directors, etc. liabilities of the directors or other officers, and of the stockholders, and to decree the amount payable by each, and enforce such decree as in other cases.

corporation.

SEC. 21. Upon any application to the court having juris- Discovery by diction, in any of the cases provided in this chapter, such court may compel such corporation to discover any stock, property, things in action or effects alleged to belong, or to have belonged to it, the transfer and disposition thereof, and the consideration, and all the circumstances of such disposition.

SEC. 22. Every officer, agent or stockholder of any corpo- Discovery by ration, against which proceedings shall be instituted, accord- officers, etc. ing to the provisions of this chapter, and every person to whom it shall be alleged that any transfer of any property or effects of such corporation has been made, or in whose possession or control any such property or effects shall be alleged to be, may be compelled, in the discretion of the court, to answer a bill filed to obtain any discovery in the preceding section specified, notwithstanding such answer may expose the

Answers, how
Compelled.

Answer, etc.,

not to be used

corporation of which he is a member to a forfeiture of its corporate rights, or any of them.

SEC. 23. The answers of the officers and agents of any corporation, shall be evidence against the corporation, in the same manner, and to the same extent as if such answers had been given upon an examination of such officers or agents, as witnesses in the cause, and such officers or agents may subsequently be examined as witnesses by either party, under the order of the court, but no such answer shall be compelled, unless by special order of the court.

SEC. 24. Neither the answer of any such officer or agent. on indictment. nor his testimony upon any such subsequent examination. shall be used as evidence upon any indictment, or other criminal prosecution or proceeding against him.

Staying proceedings at law.

Notice to creditors.

Exception
of certain
corporations.

SEC. 25. Whenever any bill shall be filed, or any application made against any corporation, its directors or other superintending officers, or its stockholders, according to the provisions of this chapter, the court may, by injunction, on the application of either party, and at any stage of the proceedings, restrain all proceedings at law, by any creditor against the defendants in such suit; and whenever it shall appear necessary or proper, may order notice to be published in such manner as the court shall direct, requiring all the creditors of such corporation to exhibit their claims and become parties to the suit, within a reasonable time, not less than six months from the first publication of such order, and in default thereof, to be precluded from all benefit of the decree which shall be made in such suit, and from any distribution which shall be made under such decree.

SEC. 26. The provisions of this chapter shall not extend to any incorporated library or lyceum society; to any religious corporation, or any incorporated academy or select school; nor to the proprietors of any burying ground incorporated under the laws of this State.

When assignments to be void.

Bond.

CHAPTER XLII.

Assignments for the Benefit of Creditors.

SECTION 1. All assignments commonly called common law assignments for the benefit of creditors shall be void unless the same shall be without preferences as between such creditors and shall be of all the property of the assignor not exempt from execution, and the instrument of assignment or a duplicate thereof, an inventory of the assigned property, a list of creditors of the assignor, and a bond for the faithful performance of the trust by the assignee shall be filed in the office of the clerk of the circuit court where said assignor resides, or if he is not a resident of this State, then of the county where the assigned property is principally located, Proviso, when within ten days after the making thereof: Provided, That no such assignment shall be effectual to convey the title to the

effectual.