73 Neb. 711 | Neb. | 1905
This is an appeal from an interlocutory decree appointing a receiver in a stockholder’s suit. The plaintiff, Rome Miller, is a stockholder in the Kitchen Brothers Hotel Company, and brings the action against James B. Kitchen, as president, and the corporation itself, alleging fraud and mismanagement on the part of the officers of the corporation and praying for an accounting and a receiver, but not asking to wind up the corporate affairs. The findings of fact upon which the receiver was appointed are substantially, though much abridged, as follows: Kitchen Brothers Hotel Company is the owner of certain hotel property in the city of Omaha known as the Paxton Hotel, with a capital stock of 500 shares of a par value of $1,000 each. In June, 1890, all of the stock of said corporation was owned by the defendant, James B. Kitchen, and his brother, Richard Kitchen, each owning 250 shares. Richard Kitchen died on the 29th day of June, 1890. Part of his shares of stock were bequeathed to various relatives and legatees and the balance of the shares, being 157 in number, were sold under a decree of the probate court to one Perkins, who sold the same on the 3d day of June, 1901, to the plaintiff, Rome Miller. Elizabeth Whalen, who intervened in the action to participate in the relief granted plaintiff, is the owner of five shares of stock acquired under the will of Richard Kitchen. The defendant, James B. Kitchen, owns 2931 shares of stock and ten other per
The appellants have not pointed out specifically wherein
On the other hand, appellee’s contention is that since there has been a continuous course of fraud and mismanagement as respects the stockholders carried on by the defendant for a long period of years, and since he has concealed or destroyed the books of the corporation and covered up the assets, he will continue in this wrongful course of action if permitted to retain the management and control of the property, and that hence it should be taken from him and put into a receiver’s hands.
While the enormous growth and extension of corporate affairs within the last quarter of a century has largely augmented the volume of actions in which the appointment of a receiver is prayed as regarding corporate property and corporate affairs, and while some courts have in the past been inclined to go to an extreme length in asserting the power of a court of chancery over the direction and management, of the affairs of corporations, still the tendency of the more modern decisions is to return to the safe and settled principles established in the past, and to refuse to interfere by such appointment unless absolutely necessary to do complete justice. “A receiver will not readily be appointed in a suit by a stockholder to remedy the frauds or ultra vires acts of the directors or of the corporation itself. The court will not injure the whole enterprise in order to correct a wrong done to the enterprise. Other. remedies will be applied.” 3 Oook, Corporations (5th ed.), sec. 863. The officers of a corporation are trustees for the benefit of its stockholders. To them has been committed the direction of the corporate affairs. Where
It appears from the evidence that the Kitchen Brothers Hotel Company is the owner and is engaged in the management of the Paxton Hotel in the city of Omaha, which is a large and valuable property; that this business has been successfully and profitably conducted ever since the death of Richard Kitchen and that it is at this time a profitable and going concern. No complaint is made but that the highest skill and most profitable management have been exercised so far as the hotel business itself is concerned. The property has been kept in good repair, the business has been profitable, and there is no complaint that the good will is suffering or that property of the corporation used in the business itself is being lost or destroyed. No contention is made but that the defendant Kitchen is amply able to respond financially to any judgment or decree which may be rendered against him in this action, and no claim is made in the petition that either the corporation itself or the defendant Kitchen are insolvent. The question then presented for our consideration is whether, in order to afford the plaintiff complete relief from the wrongs Avliich he charges that he, in common with other stockholders, has suffered, it is necessary to take the management and control of the business away from the corporation itself and vest it in the hands of a receiver.
Assuming that the findings of the district court as to the actions of the defendant as an officer of the corporation show the actual condition of affairs, and taking into consideration likewise the fact that the business and property
“An application for a receiver is addressed to the sound discretion of the trial court, and while by the statutes and by force of adjudicated cases the exercise of that discretion is to a certain extent governed by general rules, still in each case the particular circumstances must be regarded, and if, considering all the circumstances, The case be such that a greater injury Avould ensue from the appointment of a receiArer than from leaving the property in the hands now holding it, or if any other considerations of propriety or conveniency render the appointment of a*718 receiver improper or inexpedient, none will be appointed.’ ” Vose v. Reed, 1 Woods (C. C.), 657.
We have heretofore in Ponca Mill Co. v. Mikesell, 55 Neb. 98, and in Vila v. Grand Island Electric Light, Ice & Cold Storage Co., 68 Neb. 222, and Smiley v. Sioux Beet Syrup Co., 71 Neb. 586, considered generally the duties of a court with reference to the appointment of receivers for corporate property, and have clearly indicated the propriety of noninterference with the management of corporate affairs unless absolutely necessary for the protection of the property interests of the stockholders. In the instant case, we are of the opinion that whatever wrongs have been suffered by the plaintiff and the other stockholders of the hotel company in the past by reason of the wrongful acts of the defendant Kitchen may be as fully remedied without the appointment of a receiver as they can be if one were, appointed; that on the other hand, to take the management and control of the hotel property out of the hands of the persons who have apparently managed it successfully for many years, and to try the experiment of placing it in the hands of an officer of the court, would in all probability be highly detrimental to the business. This is the more probable, since it is a matter of common knowledge that the success or failure of a hotel often depends largely upon the personal qualities and characteristics of the person or persons who may be in the control and management of the business. The personal equation often cuts a large and important figure in a business of such character.
If a receiver were appointed as the plaintiff prays, for how long should his appointment continue? The petition does not ask for a dissolution of the corporation or the winding up of its affairs, and the only purpose for which the appointment seems to be prayed is that the conduct of the business may be taken out of the hands of the officers of the corporation who may be elected by a majority of the stockholders and kept indefinitely in the hands of the court. Since the defendant holds a majority
We are of the opinion that the facts shown did not require the appointment- of a receiver, and that the judgment of the district court in that regard should be reversed.
By the Court: For the reasons stated .in the foregoing opinion, the judgment of the district court is
Reversed.