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§ 50-51

50. Certain corporations may take stock and bonds in other corporations in payment for labor and materials.-Corporations having for their object the building, constructing or repairing of railroads, water, gas or electric works, tunnels, bridges, viaducts, canals, hotels, wharves, piers or any like works of internal improvement or public use or utility, may subscribe for, take, pay for, hold, use and dispose of stock or bonds in any corporations formed for the purpose of constructing, maintaining and operating any such public works; and the directors of any such corporation formed for the purpose of constructing, maintaining and operating any public work of the description aforesaid may accept in payment of any such subscription, or purchase, real or personal property, necessary for the purposes of such corporation, or work, labor and services performed or materials furnished to or for such corporation to the amount of the value thereof, and from time to time issue upon any such subscription or purchase, in such installments or proportions as such directors may agree upon, full-paid stock in full or partial performance of the whole or any part of such subscription or purchase, and the stock so issued shall be full-paid stock and not liable to any further call, neither shall the holder thereof be liable for any further payments, and in all statements and reports of the corporation to be published or filed this stock shall not be stated or reported as being issued for cash paid to the corporation, but shall be reported in this respect according to the fact.

P. L. 1891, p. 329.

Only to the corporations designated in this section is express power given by the statute to issue stock in payment of work, labor and services, and then only to construction companies, although it would seem from the case of Wetherbee v. Baker (35 N. J. Eq., 501, 512), that where the contract for the rendition of services has been made in good faith and stock issued thereon, such stock would be held to be legally issued.

Any corporation may hold stock and bonds of other corporations. Any corporation may purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by any other corporation or corporations of this or any other state, and while owner of said stock may exercise all the rights, powers and privileges of ownership, including the right to vote thereon.

P. L. 1888, p. 385; P. L. 1888, p. 445; P. L. 1891, p. 329; P. L. 1893, p. 301.

Before the statute was enacted the general rule was that a corpora- § 52 tion had no implied power to purchase shares of the capital stock of another corporation. (See Cook on Corporations, § 315; Elkins v. Camden & Atlantic R. R. Co., 36 N. J. Eq., 5.) In 1889, by an amendment to Section 55 of the Revision of 1875 (Section 49, ante) the directors of any company organized under that act were authorized to purchase "the stock "of any company or companies owning, mining, manufacturing or pro"ducing materials, or other property necessary for their business," and to issue stock in payment therefor. The present section came into the law in 1893, and since that time there has been no restriction upon the power of corporations to purchase, hold and dispose of stock, bonds and securities of other corporations, domestic and foreign.

A corporation may vote shares in another corporation in which it is a stockholder by a proxy duly authorized. (State v. Rohlffs, 19 Atl. Rep., 1099.)

52. False certificate. If any certificate made, or any public notice given by the officers of any corporation, in pursuance of the provisions of this act, shall be false in any material representation, all the officers who shall have signed the same, knowing it to be false, shall be jointly and severally liable for all the debts of the corporation contracted while they were stockholders or officers thereof, as a penalty enforceable in the courts of this state only.

P. L. 1846, p. 70; P. L. 1849, p. 307; Act of 1875, § 56.

The Revision of 1896 makes a knowledge of the falsity of the certificate or notice a prerequisite to a recovery under this section and provides that the liability created is a penalty enforceable in the courts of this State only. Such knowledge was not necessary under either the Act of 1846 or the Revision of 1875.

This personal liability may be enforced by any creditor, whose contract arose while such officers were stockholders or officers of the company, by an action at law, and it is not necessary to proceed by general creditors' bill, as under Section 36. (Wetherbee v. Baker, 35 N. J. Eq., 501.) Sections 93 and 94 apply, and no sale can be had under the execution against the officer or director, until after judgment has been obtained against the corporation and execution thereon returned unsatisfied. The case of Quimby v. Waters (27 N. J. Law, 296, 28 Id., 533) is a precedent for such an action.

This section relates to "officers," and does not include incorporators who signed the certificate of organization. (Thompson-Houston Elec.

Co. v. Murray, 60 N. J. L., 20.)

853-55

V.-Winding Up.

53. Corporate existence continues.-All corporations, whether they expire by their own limitation or be annulled by the legislature or otherwise dissolved, shall be continued bodies corporate for the purpose of prosecuting and defending suits by or against them, and of enabling them to settle and close their affairs, to dispose of and convey their property and to divide their capital, but not for the purpose of continuing the business for which they were established.

P. L. 1846, p. 72; P. L. 1849, p. 308; Act of 1875, § 59.

In a suit by stockholders of a dissolved corporation against the directors for mismanagement of its affairs, the corporation should be made a party, by virtue of this section. Creditors should likewise be made parties. (Camp v. Taylor, 19 Atl. Rep., 968.)

54. Directors; trustees on dissolution.-Upon the dissolution in any manner of any corporation the directors shall be trustees thereof, with full power to settle the affairs, collect the outstanding debts, sell and convey the property and divide the moneys and other property among the stockholders, after paying its debts, as far as such moneys and property shall enable them; they shall have power to meet and act under the by-laws of the corporation, and, under regulations to be made by a majority of said trustees, to prescribe the terms and conditions of the sale of such property, and may sell all or any part for cash, or partly on credit, or take mortgages and bonds for part of the purchase price for all or any part of said property.

Act of 1875, § 57.

Powers and liabilities of such trustees.-The directors, constituted trustees as aforesaid, shall have authority to sue for and recover the aforesaid debts and property, by the name of the corporation, and shall be suable by the same name, or in their own names or individual capacities, for the debts owing by such corporation, and shall be jointly and severally responsible for such debts, to the amount of the moneys and property of the corporation which shall come to their hands or possession as such trustees.

609.

Act. of 1875, 58; P. L. 1892, p. 35; P. L. 1894, p. 136; P. L. 1895, p.

56. Court of chancery may continue directors as trustees or § 56-58 appoint receivers of dissolved corporation.-When any corporation shall be dissolved in any manner whatever, the court of chancery, on application of any creditor or stockholder at any time, may either continue the directors trustees as aforesaid, or appoint one or more persons to be receivers of such corporation, to take charge of the estate and effects thereof, and to collect the debts and property due and belonging to the corporation, with power to prosecute and defend, in the name of the corporation or otherwise, all suits necessary or proper for the purposes aforesaid, and to appoint an agent or agents under them, and to do all other acts which might be done by such corporation, if in being, that may be necessary for the final settlement of its unfinished business; and the powers of such trustees or receivers may be continued as long as the court shall think necessary for such purposes.

P. L. 1846, p. 73; P. L. 1849, p. 308; Act of 1875, § 60.

"The authority of the Chancellor to interpose and take from the "directors the power to close up the business of the corporation, and place "its affairs in charge of a receiver, is a discretionary power, to be exercised "only on good cause shown-upon circumstances disclosed by the proof "which show the need of the interference of the court for the protection "of creditors or stockholders from breaches of trust by the directors in 'the performance of their duties." (Newfoundland R. R. Construction Co. v. Schack, 40 N. J. Eq., 222, 229; Rawnsley v. Trenton Mut. Life Ins. Co., 9 N. J. Eq., 95, 347.)

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57. Jurisdiction of court of chancery. The court of chancery shall have jurisdiction of said application and of all questions arising in the proceedings thereon, and may make such orders and decrees therein as justice and equity shall require.

P. L. 1846, p. 73; P. L. 1849, p. 309; Act of 1875, § 61.

58. Disposition of proceeds by trustees or receivers. The said trustees or receivers shall pay ratably, as far as its moneys and property shall enable them, all the creditors of the corporation who prove their debts in the manner directed by the court; and if any balance remain after the payment of such debts and necessary expenses, the same shall be distributed among the stockholders.

P. L. 1846, p. 73; P. L. 1849, p. 309; Act of 1875, § 62.

§ 59-62

Actions not to abate on dissolution. Any action, now pending or to be hereafter begun, against any corporation which may become dissolved before final judgment, shall not abate by reason thereof, but no judgment shall be entered therein except upon notice to the trustees or receivers of the corporation.

P. L. 1852, p. 140; Act of 1875. $$ 65, 92.

60. Copy of decree of dissolution to be filed in office of secretary of state.-A copy of every decree or judgment dissolving a corporation or forfeiting its charter shall be forthwith filed by the clerk of the court in the office of the secretary of state, and a note thereof shall be made by the secretary of state on the charter or certificate of incorporation, and in the index thereof, and be published by him in the annual volume of laws.

VI.-Execution Against Corporation.

61. On execution schedule of property to be furnished to officer.- Every agent or person having charge or control of any property of a corporation, on request of any public officer, having for service a writ of execution against it, shall furnish to him. the names of the directors and officers thereof, and a schedule of all its property, including debts due or to become due to it, so far as he may have knowledge of the same.

P. L. 1846, p. 71; P. L. 1849, p. 307; Act of 1875, § 66.

62. Execution may be satisfied by debts due the corporation.If any officer, holding an execution, shall be unable to find other property belonging to the corporation liable to execution, he or the judgment creditor may elect to satisfy such execution, in whole or in part, by any debts due to the corporation; and it shall be the duty of any agent or person having custody of any evidence of such debt, to deliver the same to the officer, for the use of the creditor, and such delivery, with a transfer to the officer in writing, for the use of the creditor, and notice to the debtor shall be a valid assignment thereof; and such creditor may sue for and collect the same in the name of the corporation, subject to such equitable set-offs on the part of the debtor as in other assignments; and every agent or person who shall neglect or refuse to comply with the provisions of this and the last pre

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