174 N.W. 90 | N.D. | 1919
Lead Opinion
In this case there is no question concerning either the facts or the law. It is an appeal from an order of the district court denying a motion to remove the defendants as trustees of the Fargo Mercantile Company and to appoint a receiver for the company. Its corporate stock was 2,500 shares or $250,000. F. J. Langer owns 25 shares; William Langer, 100 shares. The affairs of the company had been so well managed for many years that its stock paid a dividend of
Order affirmed and case remanded forthwith.
Concurrence Opinion
(concurring). The main facts in this case have been briefly stated in the opinion prepared by Mr. Justice Robinson. The writer concurs in that opinion, but in order that the contentions of appellants’ counsel upon this appeal may be more fully stated and considered, a supplemental statement is thought necessary.
In the complaint, relief is prayed for as follows: (1) That defendants Quirk and Follett be adjudged trustees of the property of the old corporation; (2) that they be required to account, as trustees, for the property of the old corporation; (3) that the pretended sale of the property to the new corporation be adjudged null and void; (4) that the assets of the old corporation, including the good will of the business, be sold and the proceeds applied to the payment of debts and the residue distributed among the stockholders; (5) that a receiver be appointed to take possession of the property, effects, and assets of the old corporation for the purpose of preserving them for the benefit of those entitled to share in the distribution, and to the end that the same may be so handled as to yield the largest returns for the stockholders of the old corporation; and (6) for such further relief as may be found to be equitable.
While the record does not seem to disclose a demand on the part of the plaintiffs for the furnishing of security by the defendants Quirk and Follett to guarantee the performance of their duty as trustees, the order appealed from states that at the plaintiffs’ request the defendants Quirk and Follett are required to give bond to secure the performance of their duty as trustees, and to secure such judgment as the plaintiffs may obtain in the action. The order requires a bond in the sum of $35,000 to be given within ten days, which order was complied with.
It appears that after the order had been made denying the appointment of a receiver and requiring the defendants to furnish a bond as above, plaintiffs’ attorney requested the court to prepare findings of fact and conclusions of law, and that, in conformity with such request, findings and conclusions were made, the substance of which are: that the old corporation ceased to exist on April 1, 1915, and through a mistake of fact the business was conducted as formerly until about August 9, 1918, when three of the directors, Quirk, Follett, and Croil Hunter, together with an employee, organized the new.corporation; that thereafter the three directors named, without consulting plaintiffs, made a
The only question presented on the record upon this appeal involves the correctness of the order denying the appointment of a receiver before the trial of the action. The main arguments advanced by the appellant are: (1) That on account of the unlawful attempt to transfer the effects of the old corporation to the new, the defendants should not be continued as trustees; and (2) that the court should have availed itself of the statutory power which it is alleged it possessed to appoint a receiver pendente lite. The first argument largely involves considerations of expediency, and must be weighed in the light of the practical consequences which would follow the appointment of a receiver or a new trustee. It has been answered in the opinion of Mr. Justice Robinson, and, while nothing more need be said at this stage of the litigation, it might be added that, in view of the long period of successful management of the business by tho' directors of the old corporation who are continued in the new, there is only a very remote probability, especially in view of the bond, that the plaintiffs will ultimately sustain any loss by reason of continuing the directors of the old corporation as trustees. No necessity whatever appears to exist for disturbing the continuity of the management under which the business has been successful in the past, and upon which its future success so largely depends.
But the counsel for the appellants contends that a receiver should have been appointed under one of three subdivisions of § 7588, Compiled Laws of 1913. This section authorizes the appointment of a receiver on application of a plaintiff seeking to subject property or a fund to his claim when it is shown that the same is in danger of being lost, removed, or materially injured; also, in the eases provided in the Code of Civil Procedure, when a corporation has been dissolved or has forfeited its corporate rights, and in other cases where receivers have been appointed by the usages of courts of equity. It is quite apparent that the trial court has not abused any discretion it may have had to appoint a receiver under any of the subdivisions referred to. From the facts already stated, it is clear that the plaintiffs axe not attempting to charge any fund in which they are interested that is in danger of being lost, removed, or materially injured, and there is consequently no occasion for a receivership on this ground.
Section 4565 of the Civil Code states that a corporation may be dissolved in any one of three different ways, — (1) by the expiration of the time limited by its articles of incorporation; (2) by involuntary dissolution provided for in chapter 27 of the Code of Civil Procedure; and (3) upon voluntary application. The dissolution in the instant case was effected by the expiration of the time limited in the charter, and the trusteeship results by operation of law, as provided in § 4567 of the Civil Code. This, therefore, is not an instance in which the court is authorized to appoint a receiver under subdivision 5 of § 7588, Code of Civil Procedure. That subdivision clearly relates to cases in which a receivership may be necessary where an action is brought to dissolve a corporation or to secure a forfeiture of its franchise under chapter 27 of the Code of Civil Procedure. By the express language of the subdivision, it is so limited; for it states that a receiver may be appointed by the court “in the cases provided in this Code,” etc., clearly referring to the Code of which the section is a part; namely, the Code of Civil Procedure.
Nor is this a case for the appointment of a receiver under subdivi
Concurrence Opinion
I concur in the result.
Concurrence Opinion
(concurring). I concur in an affirmance of the order appealed from, for the reasons stated in the opinion prepared by Mr. Justice Birdzell.