Page:The Green Bag (1889–1914), Volume 25.pdf/292

This page needs to be proofread.

Latest Important Cases by the law of the country to which the vessel belongs, applies in this case." Corporations. Liability for Debts of Prior Insolvent Corporation after Reorganization. U. S. In a decision of momentous importance, especially as to railroads, the United States Supreme Court laid down the general principle that a creditor of a corporation not a party to its organization may hold it£ successor for his debt. In this specific case the court, 5 to 4, in a decision which Mr. Justice Lurton, who dissented, declared "was alarming," held the Northern Pacific Railway Company responsible for a $125,000 judgment against the Northern Pacific Railroad Company, which it succeeded, despite the fact that the court expressly stated that no moral wrong-doing was to be found in the reorganization. Northern Pacific Ry. Co. v. Boyd, L. ed. adv. sheets no. 13, p. 554, decided April 28. Mr. Justice Lamar, who delivered the majority opinion, said: "Corporations insolvent or financially cmbarrased often find it necessary to scale their debts and re-adjust stock issues with an agree ment to conduct the same business with the same property under a reorganization. . . . But, of course, such a transfer by stockholders from themselves to themselves cannot defeat the claim of a non-assenting creditor. As against him, the sale is void in equity, regardless of the motive with which it was made. For, if such contract reorganization was consummated in good faith and ignorance of the existence of the creditor, yet, when he appeared and established his debts, the subordinate interest of the old stockholder would still be subject to his claim in the hands of the reorganized company. There is no difference in principle if the reorganization, instead of being effectuated by private sale, is consum mated by a master's deed under a consent decree." Mr. Justice Lurton said in his dissenting opinion: "It is not a case of the transfer by stock holders of one company to themselves as stock holders of another. The railroad company was hopelessly insolvent. Its annual deficit was about five million dollars. Its general creditors, represented by the general creditors' bill, and its mortgage creditors, represented in the mortgage foreclosure proceeding, were endeavor ing to prevent a disintegration, and to bring the property to sale. The stockholders, repre sented by the company, were resisting. The receivership had already lasted for several years


and the situation was growing steadily worse. The lien creditors, to save themselves, de vised a plan for the sale and purchase of the property by a new company which should assume their claims, so far as possible, and put the new company in shape to meet its obligations. A large sum of actual money was necessary, and also the consent of the stockholders, to bring about a speedy sale The very basis of the plan to receive any large sum upon stock sales was believed to depend upon making a market among the stockholders of the old com pany. . . . The price fixed turned out to be little below what the stock actually sold for on the open market for the year following the opera tion of the property by the purchasers. The subscription price to the shareholders, as the situation then appeared, was deemed fair, full, and just by the very court which had approved the plan and decreed the sale, as is shown by the opinion of Judge Jenkins in the Paton case, 85 Fed. 838." The Chief Justice, Mr. Justice Holmes, and Mr. Justice Van Devanter concurred in the dissent. Labor Unions. Closed Shop Conspiracy — Liability of Union for Non- Union Man's Loss of Employment. Conn. Closed shop agreements, which make it im possible for non-union men to obtain work in a given community, were held to be illegal con spiracies in a decision handed down April 18 by the Supreme Court of Errors of Connecticut. The decision holds that a non-union craftsman thus debarred from work has the right to main tain a suit for damages against the union which procures his discharge from a closed shop and prevents his employment in other closed shops. The decision ordered a new trial of a suit for damages brought by Dominick Connors of Yonkers against Patrick Connolly and other officers of the Danbury (Conn.) local of the United Hatters of North America. Conners sued for the difference between his wages as a common laborer at Yonkers and those as a skilled hat finisher at Danbury from Sept. 21, 1909. when he was discharged at the union's demand from a factory at Danbury. The Court (Prentice, C. J.) said in part: "It needs no argument to demonstrate that any combination between employers and employed which creates a condition in a community such as has been hereinbefore described, is a serious menace to the craftsman or workingman who, in the exercise of his free right of choice, does