1. CORPORATIONS 544(1) INSOLVENCY PREFERENCE-RECOVERY BY RECEIVER. Payments, made at a time when a corporation is insolvent and has suspended its business in the sense that it has ceased to meet its maturing pecuniary obligations as they accrue, to a creditor, with notice of the insolvency, whose debt arose by reason of an advance by him to the corporation at a time when it was insolvent to his knowledge, are voidable under section 64 of the Corporation Act, and may be recovered by a receiver.

2. CORPORATIONS 544(1)-LOAN TO CORPO BATION-KNOWLEDGE OF INSOLVENCY.

A creditor who has advanced money to a

corporation insolvent to his knowledge and has taken a pledge of all of its assets, the advances not being made in pursuance of any plan of rehabilitation, repayment being provided for in monthly installments in amounts which the creditor must have known the corporation could not pay except at the expense of new creditors, unless extraordinary circumstances intervened, is charged with knowledge of insolvency at the time of payments which in fact existed.

Bill by the Hoover Steel Ball Company against the Schafer Ball Bearings Company. Appeal of administrator of Daniel H. Tolman from determination of the receiver of defendant company on a claim. Receiver ordered to allow claim as a general claim with certain deductions.

See, also, 105 Atl. 500.

Bilder & Bilder and David H. Bilder, all of Newark, for receiver.

Benjamin F. Jones, of Newark, and Mr. Porter, for claimant.

LANE, V. C. The Tolman estate is the holder of notes aggregating $5,000, made by defendant corporation on or about October 27, 1917, and secured by a chattel mortgage. The total amount of the notes originally was $6,000. They were payable $500 each month. The first two notes were paid in due course. In prior conclusions in this case I found that the chattel mortgage was given at a time when the corporation was insolvent and had suspended its ordinary business in the sense of suspension of payment of its pecuniary obligations as they matured to the knowledge of Tolman, and I held void a pledge of steel made at the same time to secure another debt. The Tolman estate admitted the invalidity of the chattel mortgage for want of proper record. It filed its claim with the receiver for the balance of $5,000 due on the notes, which claim the re

ceiver rejected upon the ground that the pay-
ments of the two notes were in violation of
the sixty-fourth section of the Corporation

Act (2 C. S. p. 1638), for the reason that at the
time they were made the corporation was in-
solvent and had suspended business to the
knowledge of Tolman. I set forth the facts
with considerable detail in my prior conclu-
sions, which may be considered with these.
I found that the company at the time of the
original transaction was insolvent in the
sense that there was a general inability to
meet pecuniary obligations as they matured
by means of available assets or an honest
use of credit, and that it had suspended its
business in the sense that it had ceased pay,
ments of the pecuniary obligations as they
matured, and was not about to resume pay-
ments, and that no plan was proposed by
which the company was to be put upon its
feet, nor was it contemplated that the moneys
raised should be used for the purpose of put-
ting the corporation in the position of paying
its maturing obligations.
can be said is that the officers of the com-
pany hoped that the money advanced by Tol-
man might enable them to complete their
experiments so that they might have some-
thing which would put them in a position to
negotiate with creditors. Tolman was, in
fact, advancing capital at usurious rates,
secured by a pledge of all the company's
available assets.

The most that

The company was not in

need of funds to tide it over a temporary embarrassment. It was in need of working capital. In consideration of the advance of some $9,000 the corporation stripped itself of its available means of raising money. The notes and chattel mortgage were for short terms, and not given in pursuance of any plan of rehabilitation.

[1, 2] The law is settled that payments made to creditors, resulting in preferences, when a corporation is insolvent, to the knowledge of the creditor, may be recovered. Miller v. Audenried, 67 N. J. Eq. 252, 57 Atl. 1076, affirmed 68 N. J. Eq. 658, 60 Atl. 1134; Jessup, Receiver, v. Thomason, 68 N. J. Eq. 443, 59 Atl. 226. I do not mean to intimate that payments may not be made where the suspension of business has been so complete, or the payments are made so out of the ordinary course of business as that they may be recovered, even if creditors have not actual knowledge of insolvency. I conclude that at the time the payments were made Tolman had notice of the insolvency, and of the suspension of business in the sense that I have held that the company had suspended business. Both payments were made within sixty days after the giving of the chattel mortgage, which, with the pledge held by Tolman, covered all of the property of the corporation. As I have stated, the money was not advanced pursuant to any plan of rehabil

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Benton & Pickard, of Keene, for plaintiff. John J. Landers and Joseph Madden, both of Keene, for defendant.

itation. It was an advance of capital rather than a loan of money to tide over a temporary embarrassment. Tolman's knowledge of the situation at the time the notes were given was such that he was bound to know PEASLEE, J. The accident resulting in that the company never could succeed and re-injury to the plaintiff occurred while he was sume its business unless something extraor-riding a bicycle on Court street in Keene. As dinary happened. The company was not he approached the intersection of Cross manufacturing, and was not in receipt of street, he saw the defendant coming down to There was an income. He knew, or was charged with Court street in an automobile. knowing, that within the short space of six- apparently plenty of time for the plaintiff ty days it could not commence manufactur- to cross ahead of the defendant and he did ing with profit. He must be assumed to so. He was on the right side of the street, know that the payments were at the expense going about 10 miles an hour. The defendant of new creditors of the company. The mon- turned the corner into Court street in the ey was used to prefer certain creditors. He direction the plaintiff was traveling, gave in turn was preferred at the expense of oth- no warning of his approach, and struck the Further recital of ers. Nothing was brought to his attention plaintiff from the rear. which would warrant him in assuming that the facts is unnecessary. From those already there had been the slightest change in the stated it is apparent that the case was situation. Under the circumstances, it was properly submitted to the jury. his duty to have ascertained the condition of the company at the time of the payments. I conclude that Tolman took the two payments of $500 charged with notice of insol-case. vency, and that the payments created voidable preferences.

Inasmuch as the dividend on the Tolman general claim will be in excess of $1,000 there is no necessity that any actual repayments be made.

The receiver may allow the claim of the notes secured by the chattel mortgage as a general claim for $6,000. He may figure the dividend for the general creditors as if

The argument to which exception was taken merely asked the jury to draw a legitimate inference from the evidence in the Exceptions overruled.

PLUMMER, J., was absent. The other Judges concurred.

CALLAHAN v. BOSTON & M. R. R. (No. 1568.)

he had $1,000 more than he has in his pos- (Supreme Court of New Hampshire. Merri

session, and may deduct that $1,000 from the
dividend payable to Tolman's estate.

No costs to either party.
Settle order on one day's notice.

WHITNEY v. CARR. (No. 1564.) (Supreme Court of New Hampshire. Cheshire. March 4, 1919.)

MUNICIPAL CORPORATIONS 706(6)-COLLISIONS-NEGLIGENCE-QUESTION FOR JURY. In action by bicyclist for injuries caused by defendant's automobile striking him from rear after turning into street from a cross street, whether defendant was negligent held for jury.

mack. March 4, 1919.)

1. COMMERCE 27(6)-EMPLOYERS' LIABILITY ACT "INTERSTATE COMMERCE"-TEST.

The test of whether or not a locomotive engineer was engaged in interstate commerce within federal Employers' Liability Act (U. S. Comp. St. §§ 8657-8665) when he was injured is that, if the accident was incident to interstate work or to a whole day's work, partly interstate and partly intrastate, he is engaged in "interstate commerce."

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Interstate Commerce.]

2. COMMERCE 27(6)—FEDERAL EMPLOYERS' LIABILITY ACT- APPLICABILITY — "INTERSTATE COMMERCE."

Where a locomotive engineer employed by a common carrier, acting under two orders, one to help an interstate freight train to a summit and the other to return with his engine, was Transferred from Superior Court, Cheshire in interstate commerce within federal Employinjured on his return trip, held, he was engaged County; Marble, Judge.

Action by Walter J. Whitney against Edward J. Carr. Transferred on defendant's exceptions to the denial of his motions for a nonsuit and a directed verdict, and to the argument of plaintiff's counsel to the jury. Exceptions overruled.

ers' Liability Act (U. S. Comp. St. §§ 86578665).

Exceptions from Superior Court, Merrimack County; Branch, Judge.

Suit by William E. Callahan against the Boston & Maine Railroad. From a verdict

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the defendant was

for plaintiff, defendant brings exceptions. [ returning to Plymouth, there is no evidence Exceptions overruled. to warrant a finding that he was engaged in on that return trip. Case under the federal Employers' Liabil- interstate commerce ity Act (Act April 22, 1908, c. 149, 35 Stat. Reliance is put upon the fact that he had 65 [U. S. Comp. St. §§ 8657-8665]) to recover two orders, one to help the freight to the for injuries received by the plaintiff on Janu- Summit, and the other to then return to ary 21, 1914. Trial by jury and verdict for Plymouth. But this is satisfactorily accountthe plaintiff. At the time of the accident ed for by the rule that all engaged in operating a train work under a common order. a common carrier by railroad engaged in commerce between Ver- So long as his engine was attached to train mont, New Hampshire, and Massachusetts, No. 604 he would operate under the orders also in commerce within New Hampshire, for moving that train. But, when his engine and the plaintiff was in its employ as a lo- was detached, further and separate orders to direct his movements were necessary. comotive engineer. On defendant's road, near Ashland, N. H., there is a point called For this reason his orders were in separate the Summit, which is the apex of the grades parts, one the order common to him and from north to south and from south to north. the men on train No. 604, and the other At the time of the accident it was necessary for his own direction after leaving No. 604. to assist heavy trains over the Summit from These orders were both given to him at the north to south and from south to north by same time, and, taken together, made up the attaching to them an extra engine called the directions under which he left Plymouth. helper. By them he was given a task to perform, and that task was not completed until he returned to Plymouth.

The plaintiff was employed by the defendant to operate the helper. On the day of the accident there was occasion to help interstate train No. 604 from Plymouth to the Summit, and the plaintiff was assigned to the task. He was given a copy of the orders for operating No. 604, and in addition thereto, on a separate sheet, an order to return to Plymouth with his locomotive as soon as he left No. 604 at the Summit. He had no further orders. The accident occurred on his return trip.

The argument that his return may have been to take up an intrastate task, if of value to the defendant upon the legal questions involved, is not supported by the evidence. There is no evidence to warrant a finding that he was ordered back to Plymouth for any particular work. He had no further orders. As the plaintiff put it in argument, his orders were to do the required work and come home. Upon this evidence

was an incident to the work done on the trip to the Summit, and that therefore the plaintiff was engaged in interstate commerce at the time of the accident.

At the close of the evidence the defend-it could well be found that the return trip ant's motion for a directed verdict upon the ground that the plaintiff was not shown to have been engaged in interstate commerce at the time of the accident was denied, subject to exception.

Martin & Howe, of Concord (De Witt C. Howe, of Concord, orally), for plaintiff. Streeter, Demond, Woodworth & Sulloway, of Concord (Jonathan Piper, of Concord, orally), for defendant.

PEASLEE, J. [1] The question presented is whether the evidence warranted a finding that the plaintiff, at the time of the accident, was engaged in interstate commerce within the meaning of the federal Employers' Liability Act, as construed by the Supreme Court of the United States. Counsel do not differ materially as to the test to be applied. If the act the servant was performing at the time of the accident was incident to interstate work, or if it was incident to a whole day's work which was partly interstate and partly intrastate, he is within the provi

sions of the act.

[2] The defendant claims that when the plaintiff left train No. 604 he had completed his interstate employment, and that, as it does not appear what he was to do after

Exception overruled.

PLUMMER, J., was absent. The others concurred.

OKLAHOMA PRODUCING & REFINING
CO. v. OKLAHOMA CONSOL. PRO-
DUCING & REFINING CO.

(Court of Chancery of Delaware. Dec. 30, 1918.)

1. CORPORATIONS 49(1)-CORPORATE NAME -RIGHT TO PRELIMINARY INJUNCTION.

The similarity of names of complainant, Oklahoma Producing & Refining Company, and defendant, Oklahoma Consolidated Producing & Refining Company, being such that the public would probably be deceived thereby, tending entitled to have its rights protected by prelimnaturally to harm complainant, complainant is inary injunction against defendant's use of its name until the case can be fully heard upon the proofs adduced in the regular way.

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2. TRADE-MARKS AND TRADE-NAMES 95(5) | by the defendant of its corporate name, as -INJUNCTION-LACHES.

[1] The similarity of the names of the complainant and defendant are such as that it is probable that the public would be deceived thereby, and as this tends naturally and inevitably to harm the complainant, it is Where creditor proceeds in equity to secure clear that as the matter now stands, the the appointment of receivers on ground of incomplainant is entitled to have its rights solvency of the corporation, obtaining a judgprotected by a preliminary injunction until ment and unsatisfied execution is not a condithe case can be fully heard upon the proofs tion precedent to enforcement by the receivers adduced in the regular way. The opinion of stockholders' liability for unpaid subscrip

3. CORPORATIONS 259(7)-STOCKHOLDERS→ LIABILITY-REMEDY,

Creditor's remedy by "bill in chancery" against a stockholder of a corporate debtor, given by General Corporation Law (22 Del.

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Laws, c. 394) § 49, must be initiated by a cred- | 10. CORPORATIONS 243(10)—STOCKHOLDERS itor's bill. -LIABILITY-ESTOPPEL.

4. CORPORATIONS

563(2)—STOCKHOLDERS— LIABILITY-ENFORCEMENT BY RECEIVERS.

The ordinary liability of a stockholder for unpaid subscription is an asset of the corporation, enforceable by its receivers upon insolvency, while a statutory liability for a sum in addition to unpaid subscriptions, as under a "double liability" statute, is not such an asset, but a liability directly to the creditors, which a receiver, in the absence of statutory authority, has no power to enforce.

5. CORPORATIONS 235-DOUBLE LIABILITY OF STOCKHOLDERS.

Stockholder's liability in addition to unpaid subscriptions, as under a "double liability" statute, is not resorted to if the assets of the corporation, including unpaid subscriptions, are sufficient to pay creditors.

11. CORPORATIONS 240(1) - STOCKHOLDERS -LIABILITY-KNOWLEDGE OF CREDITORS.

The liability of stockholders for unpaid subscriptions is unaffected by creditors' knowledge or lack of knowledge of the facts and circumstances under which the stock was issued. 12. CORPORATIONS ~240(1) — STOCKHOLDERS -LIABILITY-CREDITORS ENTITLED TO ENFORCE-PARTICIPATION IN ILLEGAL ISSUE.

That a creditor actually participated in the issuance of unpaid stock as full-paid and nonassessable, or consented thereto, does not estop him from enforcing, as a statutory liability on 232(1)-STOCKHOLDERS- unpaid stock, his claim against other stockLIABILITY-FULL-PAID AND NON ASSESSA-holders, to whom such stock was issued with his

6. CORPORATIONS

BLE STOCK.

Stockholder's liability for unpaid stock is unaffected by fact that corporation issued stock as full-paid and agreed that it should be nonassessable; such agreement being ultra vires and void, and the acceptance of stock raising an implied promise to pay therefor.

7. CORPORATIONS 232(1)-STOCKHOLDERS LIABILITY DEFENSE OF ULTRA VIRES STOCK ISSUED WITHOUT CONSIDERATION.

It is no defense to liability for unpaid stock that, the stock having been issued without consideration, contrary to the constitutional provision, the issue was ultra vires and void; the ultra vires feature of the transaction being, not the issuance, but the failure to exact payment for the stock, and the agreement that it need not be paid for.

8. CORPORATIONS 246-STOCKHOLDERS-LIABILITY-CLASSES OF STOCK.

As to stockholders' liability for unpaid stock, there is no distinction or priority of liability between stock subscribed for and that which is issued and accepted without being paid for, or between preferred and common stock; the test, under the statute, being not the class or character of the stock, but whether it has been paid

for.

9. CORPORATIONS 262(2)-STOCKHOLDERSLIABILITY -VALIDITY OF ISSUE-"ACTUAL CAPITAL PAID IN CASH OR PROPERTY."

Although the General Corporation Law (22 Del. Laws, c. 394) provides that at no time shall the total amount of the preferred stock exceed two-thirds of the actual capital paid in cash or property, it is no defense to liability for unpaid preferred stock that the issue of preferred stock was void and not assessable for the debts of the company, because the common stock was not paid for in cash, since creditors may assume that the par value of common stock has been paid, so that the words of the statute, "actual capital paid in cash or property," mean, as to creditors, the par value of the common stock issued.

assistance or acquiescence, where there was no intention on his part to perpetrate a fraud upon the others, or gain an unfair advantage by the transaction.

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