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84-85 then in force may prescribe. It was held that employees acquired no vested right by virtue of the Acts of 1875 and 1887, such acts being superseded by the Act of 1892. The law recognizes no distinction between apprentices and other employees; the rule in Bedford v. Newark Machine Co. (16 N. J. Eq., 117) has been changed by statute. (Mingin v. Alva Glass Mfg. Co., 55 N. J. Eq., 463.)

This section being in derogation of the common right of creditors of the same class to be paid equally must be construed strictly. And the right conferred by it is held to be personal, inhering in the person alone who actually performs labor or services. (Lehigh Coal & Nav. Co. v. C. R. R. of N. J., 29 N. J. Eq., 252.)

84. Such lien shall be prior to all other liens that can or may be acquired upon or against such assets, except the lien and incumbrance of a chattel mortgage, recorded more than two months next preceding the date when proceedings in insolvency shall have been actually instituted against such insolvent corporation, and except the lien and incumbrance of a chattel mortgage recorded within two months next preceding the date when proceedings in insolvency shall have been actually instituted against such insolvent corporation, for money loaned or for goods purchased within said period of two months; and also except as against the lien of mortgages given upon the lands and real estate of such insolvent corporation.

P. L. 1849, p. 309; Act of 1875, § 63; P. L. 1887, p. 99; P. L. 1892, P. 426.

This section defines and limits the only liens which are allowed to take preference over the lien of laborers.

85. Compensation of receivers.

Before distribution of the assets of an insolvent corporation among the creditors or stockholders the court of chancery shall allow a reasonable compensation to the receiver for his services and the costs and expenses of the administration of his trust, and the costs of the proceedings in said court, to be first paid out of said assets.

Receiver's allowances and his expenses in winding up the company are entitled to preference over State franchise taxes. (Chesapeake & Ohio Ry. Co. v. Atlantic Transportation Co., 48 Atl. Rep., 997.)

86. Distribution; how made.

After payment of all allowances, expenses and costs, and the satisfaction of all special and general liens upon the funds of the corporation to the extent of their lawful priority, the creditors. shall be paid proportionally to the amount of their respective debts, excepting mortgage and judgment creditors when the judgment has not been by confession for the purpose of preferring creditors; and the creditors shall be entitled to distribution on debts not due, making in such case a rebate of interest, when interest is not accruing on the same; and the surplus funds, if any, after payment of the creditors and the costs, expenses and allowances aforesaid, and the preferred stockholders, shall be divided and paid to the general stockholders proportionally, according to their respective shares.

P. L. 1828, p. 63; Act of 1875, § 80; P. L. 1877, p. 74.

Both mortgage and judgment creditors are preferred only so far as they have acquired liens. Under the Act of 1875 and until 1895 there was a distinction between mortgages for the purpose of preferring creditors and judgments confessed for the same purpose. The former were not prohibited, the latter were. (Doane v. Millville Ins. Co., 45 N. J. Eq., 274, 282; Whittaker v. Amwell Natl. Bank, 52 N. J. Eq, 400, 414.)

Under the Revision of 1896 no preferences whatever can be made by an insolvent corporation. (See Section 64, ante.)

(Section

The franchise tax is a preferred debt in case of insolvency. 153, post.) With this exception New Jersey does not possess the crown's common law prerogative to have its debts paid in preference to the debts of other creditors. (Freeholders of Middlesex Co. v. State Bank, 29 N. J. Eq., 268; aff'd 30 N. J. Eq., 311; see also Evans v. Walsh, 41 N. J. Law, 281.)

The fact that a claim against an insolvent corporation was purchased for less than its par value does not authorize the receiver to refuse its allowance on the basis of par value. (Dimmick v. W. Fred Quimby Co., 21 N. J. L. J., 339.) But see Taylor v. Gray, 59 N. J. Eq., 621, where the claimants were also directors.

VIII.-Service of Process.

87. Process against corporations of this state.

In any personal action commenced against a corporation in any of the courts of law of this state, the first process to be made use of may be a summons, a copy whereof shall be served

§ 86-87

§ 87 on the president, or other head officer or agent in charge of its principal office in this state, or left at his dwelling-house or usual place of abode, at least six days before its return; and in case the president or other head officer or agent cannot be found to be served with process, and has no dwelling-house, or usual place of abode within this state, a copy of the summons shall be served on the clerk or secretary of the corporation, if any there be, and if no clerk or secretary, then on one of its directors, or left at his dwelling-house, or usual place of abode, six days before its return.

P. L. 1865, p. 467; Act of 1875, §§ 87-88.

Sections 87 and 88 relate to the service of process in personal actions, where the fruits of the litigation are secured by a common law judgment to be executed upon the property of the defendants. They do not apply to proceedings under prerogative writs (mandamus, etc.), which are enforceable only by attachment for contempt in disobeying the commands of the court (Freeholders of Mercer v. Penna. R. R. Co., 41 N. J. Law, 250). A writ of mandamus should be directed either to the corporation or to the select body within the corporation, whose province and duty is to perform the particular act, or to put the necessary machinery in motion to secure its performance, and the return must be made by those to whom the writ was directed (Id.).

But service of such writs may be made on foreign corporations by serving on an officer or agent as prescribed by Sections 102 and 103, post. Sections 87 and 88 refer to the mode of serving process in the higher courts, and not when issued by justices of the peace. Such process must be served in the manner prescribed by the Small Causes Act. (D. L. & W. R. R. Co. v. Ditton, 36 N. J. Law, 361; Wheeler & Wilson Mfg. Co. v. Carty, 53 N. J. Law, 336; Gen. Stat., p. 1867, § 18.)

Section 87 prescribes the manner in which a summons may be served, and has no application beyond the first process in the cause. As to subsequent process "everything must depend upon the circumstances of each particular case, having regard to the purposes for which the corporation was created, and the nature of the duties of the person on whom service is made, either in his official capacity or by the usages of the company. The principle is, that it must be made upon some person upon whom the duty devolves by virtue of his official position, or of his employment, to communicate the fact of service to the governing power in the corporation. A service on such a person is a service on the corporation." (Dock v. Elizabethtown Steam Mfg. Co., 34 N. J. Law, 312, 318; Facts Pub. Co. v. Felton, 52 N. J. Law, 161. But see Norton v. Berlin Iron Bridge Co., 51 N. J. Law, 442.)

There is nothing in this section to prohibit the voluntary appearance § 87a-88 of a corporation. (Beebe v. George H. Beebe Co., 64 N. J. Law, 497.)

87a.* Service of declaration on corporation.

Where the defendant is a corporation, service [of the declaration] may be made by delivering the same to the president or other head officer, or to the secretary or clerk thereof, personally, or by leaving the same at his dwelling-house or place of abode; and the plaintiff, if he shall be entitled to costs in the cause, shall be allowed for such service the sum of two dollars for each defendant so served, not exceeding three, and the same to be included in the taxed bill of costs.

"An act to regulate the practice of courts of law (Revision of 1874),” § 106. See Gen. Statutes, p. 2551.

88. Process against foreign corporations.

In all personal suits or actions hereafter brought in any court of this state, against any foreign corporation, process may be served upon any officer, director, agent, clerk or engineer of such corporation, either personally or by leaving a copy thereof at his dwelling-house or usual place of abode, or by leaving a copy at the office, depot or usual place of business of such foreign corporation.

Act of 1875, § 88.

In 1891 it was decided that a justice's court had no jurisdiction of a foreign corporation. (Wheeler & Wilson Mfg. Co. v. Carty, 53 N. J. Law, 336.) The next year, however, the Legislature amended the Small Causes act so as to confer jurisdiction upon the justice's court, providing "that any body politic or corporate of this State, or of any other State, may sue and be sued in any court for the trial of small causes, in any action or proceeding over which said court has jurisdiction."

P. L. 1892, p. 182; Gen. Stat., p. 1896.

Service of process on foreign corporation. The person to whom a foreign corporation commits the management and control of its business thereby becomes the agent of the corporation for the purpose of receiving service of process in all actions arising in this State out of the conduct of the business. (Moulin v. Insurance Co., 24 N. J. Law, 222, 234; s. c., 25 N. J: Law, 57, 65; National Condensed Milk Co. v. Brandenburgh, 40 N. J. Law, III; Norton v. Berlin Iron Bridge Co., 51 N. J. Law, 442.)

* Arbitrary number; section inserted here merely for convenience of reference.

$ 89-90

The line between those who represent and those who do not represent a foreign corporation for the purposes of this act is defined in Mulhearn v. Press Pub. Co., 53 N. J. Law, 150.

In Carroll v. N. Y., N. H. & H. R. R. Co., 65 N. J. Law, 124, it was held that service on the engineer in charge of defendant's boat for transferring cars from Jersey City to the Harlem River was not good.

The United States Circuit Court, however, in Devere v. D. L. & W. R. R. Co., 60 Fed. Rep., 886, held that service on a locomotive engineer was good.

An officer of a foreign corporation casually within the State on business of his own, where the corporation has never transacted any business within the State, is not a proper person to serve with process against the company. (Freeholders of Mercer v. Penna R. R. Co., 42 N. J. Law, 490; Moulin v. Ins. Co., 25 N. J. Law, 57, 61.)

An officer of a foreign corporation who comes into the State for the purpose of giving testimony is privileged from service of a summons in an action against the corporation while he is so in attendance as a witness, and a service made under such circumstances will be set aside. (Mulhearn v. Press Pub. Co., 53 N. J. Law, 153.)

Service of process on a person whose only connection with the company was a contingent one which had ceased before the commencement of the action, was held not good. (Security Insurance Co. v. Hass, 17 N. J. L. J., 374.)

See, also, as to service on foreign corporations, Camden Rolling Mill Co. v. Swede Iron Co., 32 N. J. Law, 15.

As to the service of prerogative writs against foreign corporations, see Sections 102 and 103, post.

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When the sheriff or other officer shall return such summons "served" or "summoned," the defendant shall be considered as appearing in court, and may be proceeded against accordingly. Act of 1875, § 89.

Where a sheriff in making his return added other words after the statutory indorsement "served," such words were held to be surplusage. (Norton v. Berlin Iron Bridge Co., 51 N. J. Law, 442.)

90. Proceedings when summons not served.

In case the sheriff or other officer shall return a summons, issued against any corporation of this state, "not served" or "not summoned,” and an affidavit shall be made to the satisfaction of the court that process cannot be served upon it, the court shall make an order directing the defendant to cause its

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