44 W. Va. 133 | W. Va. | 1897
At March rules, 1895, of Mason County Circuit Court, Adam Weigand, C. T. Blessing, David Roush, S. J. Grimm, W. A. Carson, F. E. Gill, G. M. Nease, J. P. Hurlow, F. M. Gill, William Thomas, John Black, H. N. Rollins, W. R. Gill, J. B. Canter, J. E. Snyder, Alonzo Car-sey, W. H. Carpenter, Hugh Daugherty, and J. M. Grimm filed their bill in chancery against the Alliance Supply Company, a corporation, E. J. Summerville, trustee, C. E. F. Sayre, and others, alleging that said supply company was incorporated under the laws of this State, the 2d day of December, 1891, for the purpose of carrying on a general merchandise business at Letart, in Mason county; that, in addition to the number of shares subscribed for and held by the corporators (whose names are mentioned
“Whereas, it appears to the satisfaction oi the board of directors of this company that, owing to the embarrassed financial condition of this company, its business cannot be further carried on except at a constant loss; and whereas, in the opinion of this board, it is to the interest of this company and to the creditors thereof that all its propertjr and assets, real and personal, be conveyed to a trustee for the benefit of all its creditors,” — and directed the president and secretary of said company to make, execute, seal, and acknowledge, and deliver for record, a deed of trust to E. J. Summerville, trustee, upon all the real estate of the company, and all their goods, wares, and merchandise, and store furniture and fixtures, and all bonds, notes, accounts, claims, and demands then due and owing, or thereafter. to become due and owing to said company, for the purpose aforesaid, all of which, with many other provisions in said resolution contained, will more fully appear from the copy of the same, exhibited with the bill. The bill further alleged that, in compliance with said resolution, the*137 president and secretary, for and on behalf of the said company, on the 13th of December, 1893, made and executed the said trust deed; that all of said deeds were duly recorded in the clerk’s office of the county court of Mason county; that the said trustee, Summerville, took possession of the property conveyed by said trust deed, in accordance with the terms and provisions thereof, on the -day of December, 1893; that, for a long' time prior to the execution of said deed of trust to Summerville, the said corporation, through its officers and agents, had endeavored to increase the amount of its capital stock by sales of additional shares, and had endeavored in other ways to make some arrangements whereby the business of said corporation could be continued as contemplated by its oi'ganization, but were unable to make any arrangement that would warrant the further continuance of their said business; that a general meeting of the stockholders of said corporation was called on the 8th day of December, 1893, to meet on January 3, 1894, which meeting was for the purpose of devising some means whereby the business of said corporation might be continued; that, before said meeting was held, the action of some of the creditors of the corporation necessitated the said trust deed to lí. J. Summerville in order to prevent a sacrifice of its property; that the stockholders met in general meeting, pursuant to to the notice, at which meeting there was a large majority of the stock of said corporation present; and that the stockholders at the said meeting ratified, approved and confirmed the action of the board of directors in the several matters before recited, to wit, the assignment of cei--tain notes and accounts of the company to said S. J. Grimm, David Roush, and A. Weigand, and to said David Roush, as collateral security, in addition to the deed of trust aforesaid for the payment of said several notes in favor of said parties, and in the execution of the said deeds of trust to J. S. Spencer, trustee, and E. J. Summerville, trustee, respectively; that said stockholders’ meeting adjourned without making any arrangement or provision whatever for the further continuance of the business of said corporation, and that no arrangements or provisions have since, been made by the corporation or any one f or it*138 for the further operation of its business; that the said corporation had contracted debts in the prosecution of its said business which it was unable to pay; that said debts were largely in excess of its assets, and that said corporation was, as plaintiffs believed, wholly and totally insolvent; that said E. J. Summerville, trustee, had sold all the personal property of said corporation as directed by the deed of trust to him, and had in his hands the pi'oceeds of sale; that the real estate of said corporation had not been sold under any of the deeds of trust aforesaid, because, as plaintiffs believed, the amounts due upon the notes secured thereby had not been ascertained, 'and that said amounts could not be ascertained without an accounting-between the said corporation and the said Grimm, Roush, and Weigand, and Roush, as to the credits that should be properly applied to the payment of said notes by reason of the assignment of the said notes and accounts to the said parties as collateral security, as aforesaid, as some of said notes and accounts had been collected by the said parties, the amount whereof was not known, and that a considerable number of them were of no value; that pending the determination of the amount due upon the said notes, it was to the interest of the creditors and stockholders of said corporation that the real estate should be rented out, and the proceeds of the renting collected and applied to the payment of the debts of the said corporation, and that the real estate should be taken care of and preserved during the pendency of said determination; that plaintiffs were advised that there were some unliquidated and unad-judged claims and demands due and owing said corporation by reason of breaches and forfeitures in the conditions of several bonds taken by the said corporation from some of its officers and agents for the faithful perfformance of their duties by such officers and agents; that said corporation had entirely abandoned its corporate business, and that there was no one who was authorized to take charge of and preserve their said real estate from loss and destruction; that the said Summerville, trustee, was not able to make a proper distribution of the funds in his hands until the amount due upon the notes was ascertained and determined, and the amounts due the several*139 creditors of the corporation, were also ascertained and determined; that it would therefore be to the best interests of the creditors and stockholders of the corporation to have a receiver appointed in the cause to take charge of and administer all its assets, and that the said E. J. Sum-merville, trustee, should turn over to such receiver all funds, in his hands as such trustee, and the receiver should thereafter take charge of and administer the same, as well as all other assets that might come into his hands as such receiver in lieu and in place of the said E. J. Sum-merville, trustee; and alleging that it would be greatly to the interest of all pai'ties concerned or interested in the assets of the corporation that said Summerville should be appointed as such receiver, and that his compensation as such receiver should be determined by services rendered as such receiver, and should in no wise interfere with or conflict with the compensation to which he was already entitled as such trustee; that plaintiffs constituted more than one-third in interest of the stockholders of said corporation, and in view of the facts recited, they desired to wind up the affairs of the said corporation, and have the same dissolved. The bill prayed that Summerville should be appointed receiver, take charge of the assets of the corporation, the cause be referred to a commissioner of the court to convene the creditors, to take, state, and report an account showing the assets and indebtedness thereof, the liens, if any, and their priorities, on the real estate, and to whom due, and to ascertain and determine the amounts respectively due to each of the creditors of the said corporation, and to settle the accounts of Summer-ville, trustee; and that, upon the incoming of the report of said commissioner, the property shown by said report to be on hand and unsold should be sold, and the proceeds applied to the payment of the costs attending the suit, and including the compensation of said Summerville as trustee and receiver, and the debts ascertained by said commissioner, and the surplus, if any remaining, to be paid to the stockholders of the said corporation, according to their respective interests; and that said corporation be dissolved; and for general relief.
On the 2d of June, 1894, the cause came on to be heard upon the pleadings, and the court appointed E. J. Summer-
The cause was referred to John K. Bellar, commissioner, to take, state, and report an account showing the assets of the corporation, the value of the same, and the indebtedness, and the liens and priorities on the real estate, and in whose favor, the amounts due to each of the creditors alid their priorities, if any, and to settle the accounts of the trustee, E. J. Summerville, and to report when said Alliance Supply Company became insolvent, the amount paid out by said company after it became insolvent, to whom paid, and the amount thereof, and what accounts have been assigned, to whom assigmed, the amounts, and against whom they were and the date of such assignments, the accounts collected under such assignments, who holds the uncollected accounts, and to report who were the stockholders of said Alliance Company, who of them composed the board of directors of said company from the date of its insolvency to the date of the decree, and the term of office held by each of said directors, and such other pertinent and proper matters as any person in interest might in writing require, or the said commissioner deem pertinent. The commissioner filed his report under said decree of reference, ascertaining the total assets at the time of making the report at two thousand seven hundred and nineteen dollars and ninety-five cents, estimating the outstanding unpaid accounts and stock accounts at fifty cents on the dollar, and the total indebtedness of the company at four thousand five hundred and thirty-eight dollars and eighty-nine cents, and reporting the claim of Grimm,
To this report defendants L. S. Delaplain, Son & Co. and the W. H. Smith Hardware Company excepted: “First. Because the said commissioner does not find the said Alliance Supply Company, a corporation, insolvent on the 8th day of December, 1893, at the time said corporation executed a deed of trust to J. S. Spencer, trustee, to secure David Roush, S. J. Grinnn, and Adam Weigand the payment of the amounts therein named. Second. Because the said commissioner finds the said debts as described in said trust deed to said J. S. Spencer, trustee, are a first lien upon the real estate of said corporation, by virtue of said trust deed, bearing date December 8, 1893; whereas
On the 14th day of February, 1895, the cause came onto be further heard on the papers formerly read, orders made, and proceedings had, and upon the report of Commissioner John E. Bellar, and upon the evidence returned with said report, and the exceptions indorsed upon said report; and the court overruled each and every exception so indorsed, except that indorsed by J. S. Spencer, which was sustained, and modified the report in that respect, so as to make Spencer’s account of seventy dollars a lien upon the fund in the hands of the receiver, and approved and confirmed the said report as,so modified; and proceeding to ascertain and determine the indebtedness of- the said Alliance Supply Company, and to ascertain and determine the liens and their priorities, as shown by the said report of the commissioner, the court convened the creditors and their amount of claims, with interest on each claim from the 3d day of September, 1894, until paid, and further ascertained that the debts of Adam Weigand, S. J. Grimm, and David Roush, and the debt of the said David Roush, were liens, and the only liens, upon the real estate of the defendant company, and were entitled to be paidyb'o rata out of the proceeds of the sale of the real estate; and in case the proceeds arising from the sale of the real estate, after paying the costs of sale, were insufficient for the payment in full of the said debts of Adam Weigand, S. J. Grimm, and David Roush, and the debt of David Roush, then, as to the residue of their said debts so remaining unpaid, they
The first assignment of appellants is that the court erred in overruling the demurrer to plaintiffs’ bill. This suit was broug-ht under section 57, chapter 53, of the Code of 1891, which provides that, “If not less than one-third in interest of the stockholders of a corporation desire to wind up its affairs, they may apply by bill in chancery to the circuit court of the county in which the principal office or place of business of such corporation is situated, * * * setting forth in their bill the grounds of their application, and the court may thereupon proceed according to the principles and usages of equity to hear the matter, and if a sufficient cause therefor be shown, to decree a dissolution of the corporation, and make such orders and decrees, and award such injunctions in the case as justice and equity may require.” It is contended by the appellants that plaintiffs had no right to go into a court of equity to dissolve the corporation when a majority of the stockholders had the absolute right by vote to discontinue the business, which they had practically done, as shown by the bill itself; that it was virtually dissolved, being wholly and totally in
The second assignment is that the court erred in appointing the receiver, and transferring the funds in the hands of the trustee into the hands of the receiver, the same person named as trustee being appointed such receiver. The appointment of a receiver is largely a discretionary power possessed by courts of equity. Section 6823, 5 Thomp. Corp., says: “Unless there is a statute giving the right to a receiver in a given state of facts, no one can demand the appointment of a receiver ex debito jiostitice; but the question whether or not a receiver will be appointed in a given case is addressed to the sound discre
The third assignment is: “The court erred in overruling the exceptions of appellants to the report of the master commissioner.” The commissioner filed with his report depositions covering two hundred and twenty pages of the printed record, which included the depositions of quite all the members of the company who had anything to do with its management; and It is apparent from the testimony of all the witnesses who speak of the management that the business of the company was carried on in a very loose and -unbusinesslike manner. W. A. Carson, secretary, and a member of the board of directors of the company, in
J. T. Fisher testifies that he was elected one of the board of directors July 15, 1892, and was the same day made secretary, and served in that capacity until October, 1893, when Mr. Carson took his place; that the first order of the board made, directing mortgage to be given Grimm, Roush, and Weigand, was April 1, 1893; and the reason it was deferred so long was that they had no one to write up the mortgage, and the directors directed him to write it up or have it done, and it was deferred from time to time. He says the company got the money from these parties, and he was elected one of a board of commissioners to make an investigation of their condition, and that he thinks they had enough to pay their liabilities, but did not make a full report to the board of directors. From-the general tenor of his testimony, he seemed to know vei-y little about the condition of the corporation. G. M. Nease testified that
In response to the inquiry of the decree of reference, “when said Alliance Supply Company became insolvent, the amount paid out by said company after it became insolvent, to whom paid, and the amount thereof,” etc., the commissioner reports it as his opinion, from all the evidence taken before him, that the Alliance Supply Company never was insolvent, unless it was soon the 13th of December, 1893, the date of the trust deed to E. J. Summerville (the assignment): “and at this time it is not clear from the testimony that said company was insolvent, but believes it insolvent. Your commissioner therefore reports that said company did not pay out anything after it became insolvent.” Then proceeds to give a list of the notes and accounts assigned to S. J. Grimm, David Roush, and A. Weigand, as collateral security for their notes of one thous- and three hundred dollars and three hundred and fifty dollars. On the 6th of December, 1893, at a meeting of the board of directors, the qitestion of a final settlement and assignment was discussed; and the condition of affairs was not materially changed between that time and the 13th of December, when the assignment was made. It is shown by the testimony of G. M. Nease that, between those dates, the concern took in thirty one dollars and seventy nine cents in cash, which was turned over to the assignee; and between those dates eleven dollars and thirty-nine cents was sold out of the store, and thirty one dollars and thirty-seven cents Mr. Roush took in the way of produce that was charged to him. According to report of a committee to ascertain the condition of the company on the 7th of November, 1893, the liabilities amounted to over four thousand five hundred dollars, while the assets turned over to the trustee on December 13th at full invoice price , only amounted to four thousand two hundred and ninety-seven dollars and thirty-three cents including outstanding accounts of some one thousand five hundred dollars at their face value, which are shown
There is no doubt in my mind, from the testimony in the cause, as to the insolvency of the company for the last three or four months of the year 1893; and while the directors claim that its assets were sufficient to pay its debts, and so stated, they had no careful estimates and inventories on which to base such statements, and their conclusions were rough estimates, if not mere guesses; and from the time they began to make something of an investigation, about August, 1893, they were evidently greatly concerned as to the safety of their claims, and doubted the solvency of the concern. “A person is insolvent, within the meaning of section 2, chapter 74, Code 1891, when all his property is not snfficient to pay all his debts.” Wolf v. McGugin, 37 W. Va., 552, Syl., point 1, (16 S. E. 797.) In the
The exception to the report of the commissioner in not finding the assignment of claims to Grimm, Roush and
It is assigned as error that the court erred in overruling the exception to commissioner’s report, in allowing the trustee and receiver exorbitant charges, fees, and commissions, and in the amount allowed for taking depositions before the commissioner, as exorbitant. From the additional record brought up in certiorari in the cause, it appears there is charged one item of one hundred and seventy-nine dollars, as follows: “Statement of costs of E. J. Summer-ville, in taking depositions in the case of Adam Weigand and and Others v. The Alliance Supply Company and Others:
To reporting- six days before John E. Bellar, commissioner, at $10 per day . $ 60 00
To transcribing- 237 pages, at the rate of 20 cents per hundred words, as allowed by sec. 4, pages 1062-3 (App.,) of Code [1891] 118 SO
To certificate. SO
$179.00
“Approved: F. A. Guthrie, Judge Circuit Court, Mason County, W. Va.”
The statute under which this charge is attempted to be made is found on pages 1062, 1063 (Append.), Code 1891. The first section is as follows: “The judges of the circuit courts may, at their discretion, employ shorthand reporters to report, under such regulations as the judges may prescribe, the proceeding's had, and the testimony given, during the trial of any cause in said circuit courts, and may allow them a reasonable compensation for their services and expenses.” The second section prescribes how such compensation shall be paid in felony and misdemeanor cases, as well as in civil cases. The fourth section provides that “it shall be the duty of said shorthand reporter to furnish a copy of the notes of testimony, written out in longhand, upon the request of the judge, without extra charge, and in case either party to the cause shall request or require a transcript of the said notes, the stenographer shall furnish the same in longhand, and
Fourth assignment: “The court erred in sustaining the exception to commissioner’s report by J. S. Spencer, and allowing- him a lien upon the funds in the hands of the receiver for his account of $70, for services rendered the company.” The exception as to the last three items, of ten dollars each, — in all, thirty dollars, — for services rendered in the preparation of the general assignment, was properly sustained; and the same should be paid out of the funds in the hands of the receiver, the services having been rendered for the benefit of all the creditors, and his charges being reasonable. “Where a fund is broug-ht into a court of equity through the services of an attorney, who looks to that alone for his compensation, although his interest cannot technically be called a ‘lien,’ he is regarded as the equitable owner of the fund to the extent of the reasonable value of his services; and the court administering the fund will intervene for his protection, and award him a reasonable compensation, to be paid out of it.” 3 Am. & Eng. Enc. Law, 458, and cases there cited. As to the residue of said claim of Spencer (forty dollars), the exception
For the reasons herein contained, there is error in the decree complained of, of February 14, 1895; and the same is reversed and annulled, and the cause is remanded for further proceedings to be had therein, according to the principles herein stated.
Reversed.