State that mandamus will not lie to compel payment of a declared dividends, nor will the writ be granted to compel a corporation to levy an assessment to pay a debt82.

$110. Bankruptcy.

Under the present national bankruptcy law, a corporation can not go into voluntary bankruptcy. But any corporation engaged principally in manufacturing, trading, printing, publishing, mining or mercantile pursuits, owing debts to the amount of one thousand dollars or over, may be adjudged an involuntary bankrupt, if guilty of an act of bankruptcy84.

$111. Remedies in Equity.

Irrespective of the adequacy of the relief at law, equity has jurisdiction in all fraud cases where the complainant is entitled to specifically equitable relief85. Where a corporation is conducted as a mere cloak for the perpetration of fraud, equity has power to grant relief by way of discovery and accounting-s6. Equity will even restrain acts done in furtherance of the purpose for which the corporation has been organized, when it appears that such acts are unlawful87.

Stockholders may go into equity for relief against gross misconduct or negligence on the part of managing officers. To give a stockholder this right, there must have been a clear breach of duty88. Usually demand upon the directors for observance of

tracts fraudulently acquired during control by one who was formerly the owner of a majority of the stock. See also Ruttle V. What Cheer Coal Mining Co., 153 Mich.

300.

87. Attorney General v. A. Booth & Co., 143 Mich. 89; People v. Mich. Sanitarium etc. Ass'n, 151 Mich. 452-464; Northern Securities Ass'n v. United States, 193 U. S. 197, 48 L. ed. 679; C. L. 1897, Sec. 9755, et seq. Thus the issuance of bonds at a usurious rate of interest, or the making of a usurious contract, may be enjoined by a stockholder where he is in danger of suffering injury through the illegal transaction.Fletcher & Sons v. Circuit Judge, 136 Mich. 511-513.

88. LaGrange v. State Treasurer, 24 Mich. 468-472.

the right involved is an essential prerequisite of the suit. But where the guilty parties are directors in control, and are necessarily parties defendant, a stockholder may bring suit without first demanding that the directors bring it. It is not to be presumed that the directors would sue themselves, nor that, if they did, they would prosecute with diligences. In an equitable proceeding brought by a stockholder for the benefit of a corporation, the corporation should be joined". Stockholders who have participated in the misconduct may also be made parties to the suit91. Unreasonable delay in commencement of suit operates to bar the right92. Where an action is barred by limitations as to the corporation, it is barred as to the individual stockholders93.

Independent of statute, equity has power to compel stockholders to pay their subscriptions into the treasury of the corporation, or into the hands of a trustee in bankruptcy, or into the hands of a receiver for the benefit of creditors96. In a bill to compel payment of subscriptions, all solvent stockholders whose subscriptions are unpaid are necessarily parties defendant97, but insolvent stockholders need not be joined's, nor need those be joined who are beyond the jurisdiction of the court99. Stockholders who have not paid their subscriptions may be

89. Kern v. Arbeiter Verein, 139 Mich. 233-241.

90. Cicotte v. Anciaux, 53 Mich. 227; Brockett v. Lewis, 144 Mich. 561; Coxe v. Hart, 53 Mich. 557.

91. Stone v. Pontiac O. & N. R. Co., 139 Mich. 265.

92. Keeney v. Converse, 99 Mich.

316.

93. Bates v. Boyce's Estate, 135 Mich. 540-541.

94. C. H. Little Co. v. Cemetery Ass'n, 135 Mich. 248.

95. Wood v. Sloman, 150 Mich. 177.

96. The remedy provided by C. L. 1897, Sec. 9755, et seq. is cumulative with the common law power of courts of equity to compel payment of subscriptions. C. H. Little v. Cemetery Ass'n, ante; Brown v. Mining Co., 105 Mich. 653. In Turnbull V. Prentiss Lumber Co., 55 Mich. 387-394, Justice Champlin said: "The stock of an insolvent corporation constitutes a trust fund

for the payment of its creditors. The same has sometimes been said with reference to the other property of an insolvent corporation. Among the creditors of such corporation equality is equity. The statute recognizes this maxim and declares that the court shall, upon final decree, cause a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among the fair and honest creditors of such corporation in proportion to their respective debts. Any creditor of the corporation is entitled to come in by bill or petition and establish his claim and share in the assets, and this he may do, although the bill is not filed in behalf of all creditors or of such as should come in and share the expense."

97. Wilson v. Calif. Wine Co., 95 Mich. 117; Dunston v. Hoptonic Co., 83 Mich. 372.

98. Wilson v. Calif. Wine Co., Id. 99. Brewer v. Mich. Salt Ass'n, 58 Mich. 351-356.

made defendants in a judgment creditor's bill100. Such a bill may be filed without leave of court101, the only necessary condition precedent being that the complainant shall possess a judgment against the corporation, upon which execution has been issued and return unsatisfied102

$112. Receivers.

A corporation can not apply in its corporate capacity to be put into the hands of a receiver103; nor can a receiver be appointed for a corporation in a proceeding to which the corporation is not a party104. Under its general equitable jurisdiction, a court may, without statutory authority, appoint a receiver "to prevent fraud, or to save the subject of litigation from material injury, or to rescue it from threatened destruction"105. The exercise of this power is purely discretionary. In general, the court has no power to appoint a receiver upon an ex parte application108.

Under its general equitable jurisdiction a court may, at the suit of a stockholder who is suffering a continued fraud which can not be adequately remedied otherwise, appoint a receiver

100. Schaub V. Welded Barrel Co., 130 Mich. 606; Young v. Erie Iron Co., 65 Mich. 111.

101. McBryan v. Universal Elevator Co., 130 Mich. 111-114; Young v. Erie Iron Co., Id.; Turnbull v. Prentiss Lumber Co., 55 Mich. 387. 102. Grennell v. Ferry, 110 Mich., 262; First National Bank v. Dwight, 83 Mich. 189; Brewer v. Mich. Salt Ass'n, 58 Mich. 351; Tawas & Bay Co. R. Co. v. Circuit Judge, 44 Mich. 479-482.

103. Kimball V. Goodburn, 32 Mich. 10.

104. Scripps V. Crawford, Mich. 173.

123

105. Miner v. Belle Isle Ice Co., 93 Mich. 97; Ralph v. Circuit Judge, 100 Mich. 164; Thomp. Corp., Sec. 6842. Where a bill alleged that directors had fraudulently mortgaged corporate property to a trustee for their own benefit, and that the trus tee, for the purpose of wrecking the corporation and as a part of the fraudulent scheme, had foreclosed the mortgage, and the property had been bid in by a confederate, it was

held competent for the court to place the property in the hands of a receiver, pending final determination of the suit. In disposing of the case Justice Cooley said: "The power of the court to take possession of property, the title to which is in dispute, and to hold it through its officer until the controversy is determined, is undoubted." Tregaskis v. Superior Court, 47 Mich. 509-511.

106. People v. St. Clair Circuit Judge, 31 Mich. 456. In Turnbull v. Prentiss Lumber Co., 55 Mich. 397. Justice Champlin said: "Courts of equity are always averse to appointing receivers upon an ex parte application without notice to defendants whose rights are to be affected. It must be an extraordinary case which would justify such appointment ex parte, and some special circumstances must be shown to exist which would render it necessary to put a receiver in possession of the debtor's property to prevent irreparable loss: the rule being that a receiver will not be appointed before answer, unless it appears that

and proceed to wind up the company107. Such a receiver was appointed at the suit of bond holders in a case where the corporation had defaulted in payment of interest, and was without proper executive officers, and was threatened with dissipation of its property through tax and execution levies108. But a receiver will not be appointed on account of mere dissatisfaction with the management109. By statute, a receiver may be appointed upon a creditor's bill110, or upon a bill for dissolution filed by a majority of the directors, trustees, or other officers having management of the corporation111.

General creditors whose claims are not in judgment have no right to intervene by answer or cross-bill in a suit brought to obtain a receiver for a corporation. The proceeding will inure equally to the benefit of all creditors in any event, hence there is no excuse for confusing the issues and enlarging the scope of the litigation by permitting general creditors to intervene1ia Where a receiver has been appointed under an order which does not divest the corporation of title to its assets, the corporation is not by implication deprived of the right to act by its officers and agents so far as such action does not conflict with the rights and powers of the receiver113.

there is danger to the property or fund by the insolvency of the party having possession of it, or from some other cause; but when justice requires it, and the merits appear to demand it, upon the hearing of which due notice is given, one will be appointed."

107. Miner v. Belle Isle Ice Co., 93 Mich. 97-117. In this case Justice McGrath said: "This corporation has utterly failed of its purpose, not because of matters beyond its control, but because of fraudulent mismanagement and misappropriation of its funds. Complainant has a right to insist that it shall not continue as a cloak for a fraud upon him, and shall not longer retain his capital to be used for the sole advantage of the owner of the majority of the stock, and a court of equity will not so far tolerate such a manifest violation of the rules of natural justice as to deny him the relief to which his situation entitles him."

108. Ralph v. Shiawasee Circuit Judge, 100 Mich. 164.

109. Rumney v. Detroit etc. Cattle Co., 116 Mich. 640.-The application of the holder of a small amount of stock will not be entertained with favor where all other stockholders appear to be satisfied and the receivership would obviously work them an injury disproportionate to any possible good which might flow from it.

110.

Chancery Rule No. 30. 111. C. L. 1897, Sec. 10852, et seq. Cady v. Manufacturing Co., 48 Mich. 133-136.

112. Heap v. Heap Mfg. Co., 97 Mich. 147: Riverside Iron Works v. Wayne Circuit Judge, 100 Mich. 124; Smith v. Smith Mfg. Co., 119 Mich. 11-16. In the case last cited, Justice Hooker strongly intimates that such an intervention might be permitted to prevent a collusive adjustment between the complainant and the corporation.

113. Detroit R. Co. v. Campbell, 140 Mich. 384-382.

After appointment of a receiver, the right to bring suit against the corporation (except by permission of court) ceases, and the creditors have, instead, the right to pro rata participation in the net distributive assets of the corporation, until their claims, as proved, with interest, have been paid in full114.

In this State a creditor; officer or stockholder, as well as a stranger, may be appointed as the receiver of a corporation115.

After a receiver has been appointed, the right to bring actions for the benefit of stockholders and creditors vests in him116. But where the receiver himself, in common with others, is a wrongdoer or a delinquent, it is held that share holders or creditors may bring suit117.

§113. Executions.

Execution against corporate property should be levied in the same manner as other executions are levied, except where there is some statutory provision to the contrary118. Among the cases in which there are special statutory provisions, we find the following:

(a) Execution may, upon order of court, after fieri facias against the corporation has been returned unsatisfied, be issued directly against the members of a partnership association, limited, to the extent of their unpaid subscriptions 119.

(b) Franchises of corporations authorized to receive tolls may be sold on execution 120.

114. In re E. Bement's Sons, 150 Mich. 530-536.-A creditor is entitled to dividends out of the general assets only upon his claim as proved, without interest beyond the date set for proving claims; but if he holds collateral, he may apply it in payment of both principal and interest of any unpaid balance. Id.

115. Moran V. Wayne Circuit Judge, 125 Mich. 6; Gypsum Plaster & Stucco Co. v. Kent Circuit Judge, 105 Mich. 498; Covert v. Rogers, 38 Mich. 368; Barker v. Wayne Circuit Judge, 117 Mich. 325; C. L. 1897, Sec. 10860.

116. Rouse, Hazard & Co. V. Cycle Co., 111 Mich. 251-260.

117. Flynn V. Third National Bank, 122 Mich. 642-644; See also Leslie v. Lorillard, 110 N. Y. 519; 1 L. R. A. 456.

118. C. L. 1897, Sec. 10349.-"Executions against corporations, when levied upon any corporate property, shall be levied in the same manner as other executions are levied, except in cases otherwise provided by law."

119. C. L. 1897, Sec. 6080; Rouse, Hazard & Co. v. Circuit Judge, 104 Mich. 234.

120. C. L. 1897, Sec. 8535.-The words "other corporations" used in this statute are not construed to include other corporations generally, as for example, a telephone company. -Ripley v. Evans, 87 Mich. 217-228. Nor are they restricted to such corporations as have "toll houses and toll gates." They include street railways authorized to collect toll or fare.-McKee v. Grand Rapids & R. L. Street Ry. Co., 41 Mich. 274-278.