Court Opinion

ID: 1079035
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:29:28.485288+00
Date Added: 2024-06-11T12:04:05.723947
License: Public Domain

COURT OF APPEALS OF VIRGINIA

Present: Chief Judge Moon, Judge Coleman and Senior Judge Hodges
Argued at Richmond, Virginia

SA'AD EL-AMIN

v.        Record No. 0282-94-2            MEMORANDUM OPINION *
                                      BY JUDGE SAM W. COLEMAN III
CAROLYN ADAMS                                 MAY 16, 1995

           FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                    Robert L. Harris, Sr., Judge
         (Sa'ad El-Amin; Beverly D. Crawford; El-Amin &
         Crawford, P.C., on brief), for appellant.

         David D. Hopper (Mezzullo & McCandlish, on brief),
         for appellee.

     Sa'ad El-Amin appeals a circuit court order entered in a

debtor interrogatory proceeding, Code § 8.01-506, that directed

him to deposit with the court his stock certificates in a

professional law corporation.    The debtor interrogatory

proceeding was an ancillary procedure to enforce a judgment

against El-Amin for spousal and child support arrearages.

El-Amin contends the court erred, for a number of reasons, in

ordering him to deposit his stock with the court.   For the

reasons that follow, we affirm the trial court.

                                 I.

     The Court of Appeals has subject matter jurisdiction over

"[a]ny final judgment, order or decree of a circuit court

involving . . . divorce [and] . . . spousal or child support."
     *
       Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
Code §§ 17-116.05(3)(b) and (d).   Because the debtor

interrogatory proceeding is an ancillary measure to enforce

support provisions of a divorce decree, this Court has subject

matter jurisdiction.    See Code §§ 17-116.05(3)(b) and (d).

     Furthermore, the Court of Appeals has jurisdiction over

"[a]ny interlocutory decree or order entered in any [case

involving divorce, spousal or child support] adjudicating the

principles of a cause."   Code § 17-116.05(4).   To adjudicate the

principles of a cause, an order must "respond to the chief object

of the suit."    Pinkard v. Pinkard, 12 Va. App. 848, 852, 407
S.E.2d 339, 341-42 (1991) (quoting Beatty v. Beatty, 105 Va. 213,

215, 53 S.E. 2, 3 (1906)).   The trial court's order requiring El-

Amin to deliver his stock certificate to the court, presumably to

liquidate El-Amin's interest in the corporation to satisfy the

judgment, is a determination that would necessarily affect his

property rights and, therefore, "would of necessity affect the

final order in the case."    Pinkard, 12 Va. App. at 851, 407

S.E.2d at 341.   Accordingly, an appeal of the interlocutory order

is authorized.

                                 II.

     El-Amin contends that the trial court lacked authority to

require him to deliver his stock certificate and to require him

to cause the stock certificates to be re-issued in his name

individually, rather than in his and his wife's name as tenants

by the entireties. Code § 8.01-507 states:
          Conveyance or delivery of property disclosed

                                 -2-
            by interrogatories. . . . [A]ny money, bank
            notes, securities, evidences of debt, or
            other personal estate, tangible or
            intangible, which it may appear by such
            [interrogatory] answers are in possession of
            or under the control of the debtor or his
            debtor or bailee, shall be delivered by him
            or them, as far as practicable, to such
            officer, or to some other, or in such manner
            as may be ordered by the commissioner or
            court.

(emphasis added).   This section expressly empowered the circuit

court to require that El-Amin deliver his property, including

stock certificates, to the court.

     El-Amin cites Code §§ 13.1-549.3 and 13.1-550 as prohibiting

him from transferring his stock in a professional legal

corporation to the court. Former Code § 13.1-549.3 states:
          Special provisions for law corporations as to
          qualifications of shareholders.—A
          professional corporation engaged in the
          practice of law may issue shares of its
          capital stock to individuals duly licensed to
          practice law in Virginia or another state.

This section specifically deals with the issuance of capital

stock by the corporation.    The section says nothing about
prohibiting a court from effectuating a transfer or liquidation

of stock.

     Code § 13.1-550 states:
          Transfer of shares.—No shareholder of a
          corporation organized under this chapter may
          sell or transfer his shares in such
          corporation except to said corporation or
          another individual who is eligible to be a
          shareholder of such corporation.

(emphasis added).

                                 -3-
       Code § 13.1-549.3 restricts the authority of a professional

legal corporation to issue capital stock to anyone other than

licensed attorneys.   Code § 13.1-550 places a similar restriction

upon shareholders.    While the statutes may have a bearing upon

the disposition that a court may make of the stock, the statutes

do not preclude a court of proper jurisdiction from seizing or

taking control of the stock and liquidating it as authorized by

law.   The statutes do not prohibit the liquidation or alienation

of stock in a legal professional corporation; the statutes only

provide that the stock may only be transferred to the corporation

or to "another individual who is eligible to be a shareholder."
       The trial court's order did not direct that legal title or

ownership of the stock certificates be transferred to the court.

The court ordered that El-Amin "transfer" the stock "to this

court."   We construe the order to mean that El-Amin was required

to deliver physical control and custody of the stock certificates

to the court.   While the record does not make clear what the

court intended to do with the stock certificates, delivery of the

certificates to the court was a necessary step to protect the

status quo.   The court's physical custody of the instruments of

ownership was required for the court to take the steps necessary

to liquidate the stock and transfer ownership or to pursue such

other remedies as are available to a judgment creditor.

       A circuit court has authority under debtor interrogatory

proceedings, Code § 8.01-506, when accompanied by a writ of fieri

                                 -4-
facias, to identify and levy upon the personal property of a

judgment debtor.   While the market for stock in a professional

legal corporation may be limited, the shares of stock are not

sheltered from the debts of the shareholder.   See Street v.

Sugarman, 202 So. 2d 749 (Fla. 1967); Gulf Mortgage and Realty

Investments v. Alten, 422 A.2d 1090 (Pa. Super. Ct. 1980);

McAllester v. Andrews, 14 B.R. 356 (Bankr. M.D. Tenn. 1981).      The

trial court had statutory authority to order El-Amin, a judgment

debtor, to deliver stock certificates in his possession or

control, including those in a professional legal corporation, so

that El-Amin's interest could be liquidated according to law.
                               III.

     El-Amin next contends that the trial court erred by finding

that he and his wife did not own the stock in the professional

corporation as tenants by the entirety.   At the time the debtor

interrogatory proceeding was filed, the corporation had not

issued the stock certificates to its shareholders.   At the

October 11, 1993, debtor interrogatory, El-Amin testified that he

owned fifty percent of the stock in the professional corporation

and that his wife, Beverly Crawford, owned the other fifty

percent.

     The evidence proved that during various discussions

concerning ownership and formation of the professional

corporation, El-Amin made no mention that the stock was owned as

tenants by the entirety.   Similarly, when he was ordered to

                                -5-
deliver or transfer the stock to Adams and then to the court, he

did not mention that the stock was owned as tenants by the

entirety.   Thus, credible evidence supports the trial judge's

finding that El-Amin and Beverly Crawford individually owned

fifty percent of the stock in the professional corporation and

had not intended to own the stock as tenants by the entirety with

the right of survivorship as at common law.   The evidence

supported the trial judge's finding that El-Amin had fifty

percent of the stock issued in this manner after the

interrogatories in an effort to defeat his judgment creditor.

Thus, we affirm the trial judge's order directing El-Amin to have

the stock certificate reissued by the corporation in his name

individually, and to deliver the certificate to the court.
                                IV.

     El-Amin finally contends that the trial court erred by

"ordering" him and El-Amin & Crawford, P.C., to make no

expenditures of more than $3,000 or any expenditures out of the

ordinary course of business. The court's order states:
          4. ORDERED that El-Amin shall prevent
          El-Amin and Crawford, P.C. from making any
          expenditures outside the ordinary course of
          business until a final determination as to
          the disposition of the stock; and it is
          further
          5. ORDERED that any payment of salary by
          El-Amin & Crawford, P.C. of more than $3,000
          per month to any employee shall be deemed by
          the Court a payment outside the ordinary
          course of business in violation of this
          order; . . . .

     The trial court had personal jurisdiction over El-Amin.     It

                                -6-
had no jurisdiction over the professional legal corporation,

El-Amin & Crawford, P.C., and did not attempt to exercise any

control over the corporation.   However, El-Amin is a principal

and shareholder in El-Amin & Crawford, P.C.   The court's order

directed him to use the means available to him as a principal of

El-Amin & Crawford, P.C. to prevent expenditure of the

corporation's assets outside the ordinary course of business.     As

a principal and major shareholder in the corporation, El-Amin is

entitled to share in the corporate profits and owns an interest

in the corporate assets.   The trial judge did not err in ordering

that El-Amin, as a principal in the corporation, take reasonable

measures to assure that the assets of the corporation would not

be depleted while still enabling the corporation to carry on its

regular course of business.
     Paragraph No. 5 of the court's order states that payments in

excess of $3,000 per employee per month for salary "shall be

deemed" to be an expenditure outside the ordinary course of

business.   The order in this respect is directory and does not on

its face restrict or require El-Amin & Crawford, P.C., over whom

no jurisdiction exists, to perform any act.   However, we find

that the trial court did not abuse its discretion by entry of the

order.   Only upon El-Amin's failure to make a good faith effort

to comply with the order may sanctions be imposed against him.

                                V.

     Because the appeal is of right, rather than a petition for

                                -7-
appeal, Code § 8.01-676.1(E), and because no increase in the

amount of the appeal bond had been ordered at an earlier stage in

the appeal process, we deny the request at this stage to require

El-Amin to post an appeal bond for the amount of the judgment.

     For the foregoing reasons, we affirm the trial court and

remand this case for such further proceedings as are necessary.

                                           Affirmed and remanded.

                               -8-