Case ID: ala_123/html/0376-01.html
Source: Caselaw Access Project
Author: {"author": "McCLELLAN, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Musgrove et al. v. Gray et al.
    
    
      Petition by Receivers to recover Possession of Property ■ of Corporation.'
    1. Writ of assistance; when receivers not entitled thereto. — The receivers of a corporation are not entitled to a summary writ of assistance to recover possession of property alleged to belong to the corporation from persons who were not parties to the pending cause in which the petitioners were appointed receivers and who, in good faith, deny the receivers’ right to the possession, claiming said property under a contract with the corporation; and the fact that the said corporation had been dissolved does not affect the principle here announced.
    2. ' Same; when immaterial that petition is not sworn to. — Where a petition filed by the receivers of a corporation asking for a writ of assistance, to recover the possession of the property of the corporation, and the answer of the respondent to the petition presents only a question of law as to the right of the petitioners to have issued the writ prayed, the fact that said petition and the answer thereto are not sworn to, is immaterial and will not prevent the determination of the issue presented; the petition and answer in such case being regarded as mere pleading.
    Appeal from the Chancery Court of Jefferson.
    Heard before the Hon. John C. Caemichael.
    On May 19, 1898, the stockholders of the Corona Coal & Coke Company filed their petition in the chancery court, asking the dissolution of said company as pro-Tided for under the statute; and on August 5, 1898, the chancellor rendered a decree dissolving said corporation. On September 12,1898, one J. H. Bartlett was appointed receiver of the property and assets of the Corona Coal & Coke Co. On October 28, 1898, J. H. Bartlett, as receiver, filed a petition in which he averred the facts as above set out, and further averred that in obedience to the direction of the court appointing him such receiver, he had taken possession of all of the property of the Corona Coal & Coke Co., except certain real and personal property which was in the possession of Musgrove Brothers, who refused, to deliver the same on demand.
    The petition prayed for the issuance of a writ of assistance, in order to put him in possession of said property so held by Musgrove Brothers. After the amendment of this petition, the respondents filed an answer thereto, in which they admitted that they were in possession of the certain designated properties, and had refused to deliver the same to J. H. Bartlett, and averred that-they held the same under and by virtue of a valid contract with the Corona Coal & Coke Co., which was made with said company prior to its dissolution, and that their right of possession'to said property had not expired.
    Upon the hearing of the cause, the chancellor rendered a decree ordering the issuance of the writ of assistance as prayed for. There ivas a petition for a re-liearing, and while this was pending, J. H. Bartlett was removed as receiver of the Corona Coal & Coke Company, and H. B. Cray and T. C. Culverhouse were appointed in his stead. Cray and Culverhouse, as receivers, filed their petition, praying that they be substituted for J. H. Bartlett, and that the writ of assistance theretofore prayed for might issue in their favor. On the hearing of this petition, the chancellor rendered a decree ordering' the issuance of the writ of assistance. From this decree the respondents appeal, and assign the rendition thereof as error.
    Alex T. London apt! John London, for appellants.
    It is a settled rule that if property is in the possession of a ¿third person, who claims title or right of possession of it, the receiver must bring a suit to recover the propcrty or the complainant must malve such third person a party to his suit, and have the receivership extended over this property. — Parker v. Browning, 8 Paige 388; High on Receivers, § 145; Gluck & Becker on Receivers, § (>0; 20 Amer. & Eng. Encyc. of Law, 134.
    It is alleged tliát by the dissolution of the corporation the contract under which these appellants claim possession, Avas abrogated, and the right of appellees is rested solely upon this proposition. In Nelson v. Hubbarcl,'9(5 Ala. 247, the Supreme Court, passing upon the effect of the voluntary dissolution of a corporation, says: “This statute does not purport to undo the valid acts of the corporation, while it Avas in existence, to disturb its previous disposition of property or to impair the obligation of contracts entered into by it.”
    James J. Garrett, contra.
    
   McCLELLAN, C. J.

This is a petition filed by receivers praying a AAT.it of assistance to recoArer possession of certain real and personal property alleged to belong to the corporation of Avhich petitioners are receivers against Musgrove Brothers, aaJio are not parties to the case, but are in possession of the property. The petitioners base their right to relief'upon the theory that when, as in this case, a corporation is voluntarily dissolved under the statute, contracts under Avhich third parties hold its property are annulled and avoided, and that therefore the contract of this corporation under Avhich Musgrove Brothers hold this property and under Avhich they allege they have the right to continue to hold it for a term yet to rim ceased to confer any such right upon them the instant the corporation aatis dissolved. This cannot be the laAV in respect to all contracts. Por instance, if MusgroA'e Brothers held this property under a lease for a term extending into the future, the dissolution Avould not affect their rights under it. Nor AATould such a state of facts present any obstacle to the winding up of the affairs of the corporation within the statutory period, as is suggested by counsel, for the property could, of course, be sold or even divided among stockholders subject to tlie leasehold interest. And for aught that appears to the contrary, Musgrove Brothers may have such a lease, or other contract entitling them to the possession notwithstanding the dissolution. Bo it is that the fact of dissolution is of no importance here, and the title to the relief prayed must he determined without regard to it, and upon the general principles which obtain in ordinary cases where the. receiver seeks to recover possession of property in the hands of one not a party to the suit. Those principles do not, in our opinion, authorize this summary remedy by petition and writ of assistance under the circumstances disclosed here. The party in possession aaíio asserts in good faith, color and claim of right is entitled, under the guaranty of due process of law, to his day in court and a trial according to the customary forms of laAv. We attach no importance to the fact that the petition is SAVorn to and the ansAver is not. The real issue being one of Iuav, the petition is to be regarded as mere pleading, as is also the ansAver. And Ave do not find that the ansAver justifies a conclusion that the respondents do not in good faith assert a right to the continued possession of the property. To the contrary, the case presents an effort, of the receivers to recover possession of property from persons aat1io are not parties to the cause and A\ho in good faith deny the receivers-’ right to the possession, by a summary Avrit. The writ should not haA'e been aAvarded. The receivers should be put to their action.—Beach on Receivers, §216; Parker v. Browning, 8 Paige 388; 20 Am. & Eng. Encyc. Law, 134.

The order aAvarding the writ of assistance is reversed and annulled, and an order Avill be here entered denying the Avrit and dismissing the petition.

lie versed and rendered.