Court Opinion

ID: 9574565
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:05:58.735166+00
Date Added: 2024-06-11T12:43:44.528558
License: Public Domain

SHENK, J., Dissenting.
I dissent.
In the first place, the opinion has invaded the domain of the trial court.
Contrary to the rule, the evidence favorable to the defendants in the trial court has been given controlling effect as against the decision of the court based on substantial evidence favorable to the plaintiffs in the pending action.
The ex parte character of the order appointing the receiver became of no significance, in view of the later hearing on the motion to vacate the order, at which all parties interested in the corporation, either as shareholders or directors, were present and represented. The evidence on the motion to vacate consisted of the verified complaint, an affidavit of the president of the corporation in support thereof, and affidavits in opposition to the appointment and continuance of the receivership. It was disclosed by the allegations of the complaint that the two plaintiffs and the two individual defendants were and had been, since September 17, 1935, the four directors of the corporation; that, under the by-laws of the corporation, all corporate powers were to be exercised by or under the authority of the board of directors, and the “business and affairs” of the corporation were to be controlled by said board; that, when the board consisted of four, three should constitute a quorum and the favorable action of three should be necessary to the transaction of business; that the president should be “the chief executive officer of the corporation and shall, subject to the control of the Board of *398Directors, have general supervision, direction and control of the business and affairs of the corporation . . . and shall have the general powers and duties of management usually-vested in the office of president of a corporation”; that G. C. DeGarmo is and has been since September 17, 1935, president of the corporation, ready, able and willing to perform the duties of his office; that because of illfeeling and dissension existing between the two plaintiff directors and the two defendant directors “no business has been transacted by said corporation since on or about the first day of January, 1938”; and because thereof it is impossible for the board “to transact any business of the corporation or to elect any person to act as manager or to give any person authority or power to transact any business for said corporation, and because thereof the corporation is not transacting any business and said corporation and its business, assets and property have been injured and said corporation has been greatly damaged”; that the directors Goldman and Shenberg have taken possession and control of all the business, assets and property of the corporation and have usurped and “are now'usurping and exercising the direction and control of the business and affairs of said defendant, Golden State Glass Corporation, without any right whatever to do so”; that Goldman and Shenberg, since March 1, 1938, have refused to permit the plaintiff president to perform any of the duties of his office or any services on behalf of the corporation, and that on March 1, 1938, the defendant Goldman, without any authority whatsoever, instructed the auditor of the corporation to discontinue the salary of the plaintiff DeGarmo, as president of the corporation.
The foregoing facts appear by direct averment of the plaintiffs’ complaint. On information and belief, the plaintiffs have alleged acts of fraud and mismanagement on the part of defendants Goldman and Shenberg, as set forth in the prevailing opinion.
On the allegations of the complaint, the further affidavit of plaintiff DeGarmo in support thereof, and the affidavits of the defendants in opposition, the trial court concluded, as stated in his answer and return to the alternative writ herein, as follows:
*399“After having considered said verified complaint and said affidavits and after having heard argument by said attorneys and having considered said argument, said respondent believed that the allegations made in said verified complaint are true and, so believing, said respondent did then and there make an order confirming the appointment of a receiver pendente lite.”
The respondent judge further stated, “That upon conflicting evidence before said court at the time of said hearings last above mentioned, he determined that said defendants Shenberg and Goldman were not, prior to May 31, 1938, the day said ex parte order appointing said receiver was made, in possession of the assets of said defendant corporation as officers or otherwise of said corporation, but were personally in possession of the assets of said corporation without any rights whatsoever and were purporting to conduct the business of such corporation without any right so to do, and further on said conflicting evidence he determined that because of dissension existing between the members of the Board of Directors above mentioned said corporation was not transacting and could not transact any corporate business”.
The respondent court had power to resolve the conflict presented by the complaint and the conflicting affidavits. (Doak v. Bruson, 152 Cal. 17 [91 Pac. 1001]; Brush v. Apartment & Hotel Finance Corp., 82 Cal. App. 723 [256 Pac. 285].) The ease of Boyle v. Superior Court, 176 Cal. 671 [170 Pac. 1140, L. R. A. 1918D, 226], is direct authority for the appointment of a receiver in ease of a deadlock of the board of directors on account of which the corporate business cannot be exercised. Such a deadlock was present on the showing made by plaintiffs in the pending action. That fact, together with other facts appearing in support of the plaintiffs’ showing, was sufficient to support the order appointing the receiver. As the court had jurisdiction of the parties and the subject matter, the authority of the trial court to act was full and complete and on this collateral attack on the decision of the trial court the peremptory writ of prohibition should be denied.
Secondly, the defendants Goldman and Shenberg had an appeal from the order appointing the receiver. (Subd. 2, sec. 963, Code Civ. Proc.) Under section 943, Code of Civil *400Procedure, they as appellants could have filed an undertaking staying all proceedings under said order pending determination of the appeal on its merits. This procedure constitutes a plain, speedy and adequate remedy in the ordinary course of law, within the meaning of section 1103, Code of Civil Procedure. (Jacobs v. Superior Court, 133 Cal. 364 [65 Pac. 826, 85 Am. St. Rep. 204] ; Sunset Farms, Inc., v. Superior Court, 9 Cal. App. (2d) 389, 393 [50 Pac. (2d) 106] ; Pacific Broadcasting Co. v. Superior Court, 100 Cal. App. 649 [280 Pac. 991]; Santa Ynez Mercury Corp., Ltd., v. Superior Court, 26 Cal. App. (2d) 279 . [79 Pac. (2d) 185].)
The ruling in the Jacobs case has never been questioned. It was there said at pages 365 and 366:
“Formerly—and when Havemeyer v. Superior Court, 84 Cal. 327 [24 Pac. 121, 18 Am. St. Rep. 192, 10 L. R. A. 627], was decided—there was no appeal from an order appointing a receiver, but in 1897 (Stats. 1897, p. 55) section 939 of the Code of Civil Procedure was amended so as to allow such appeal, and at the same time section 943 was amended so as to provide for the staying of an order appointing a receiver by an undertaking on appeal. These amendments were apparently intended to afford a remedy for prodigal, unwise, and unwarranted appointments of receivers, which seems to be a growing evil; and we think that they do afford an adequate remedy, as contemplated by said section 1103, and the decisions of this court on the subject. The fact that a question of jurisdiction arises does not change the rule as to the adequacy of the remedy by appeal. (See Agassiz v. Superior Court, 90 Cal. 101 [27 Pac. 49].)”
This rule has been consistently followed in the later eases above cited and was relied on by the District Court of Appeal in denying the writ of prohibition in this matter. (Cal. App.) [82 Pac. (2d) 492]. The case of A. G. Col Co. v. Superior Court, 196 Cal. 604 [238 Pac. 926], so greatly relied on by the petitioner, did not overrule the Jacobs case, but annulled the order as if the proceeding were one in certiorari.
I see no abuse of discretion on the part of the trial court in denying to the defendant directors, who are thus prima facie usurping the functions of the corporation and wrong*401fully in possession of its assets, the right to appoint an attorney to represent the corporation. All the shareholders and all the directors of the corporation were parties to the action. All interested parties were, therefore, represented in the action. The points in controversy affecting the corporation and its assets can be adjudicated in this action between the parties thus appearing. Especially was this true since the trial court ordered that no default be entered against the corporation and that the court would, on the suggestion of the defendant directors, appoint an attorney to represent the corporation, but the offer was denied. Under these circumstances, the action of the trial court in refusing to permit the attorney for the defendant directors to represent the corporation was not arbitrary, did not amount to an abuse of discretion, and should not be controlled by mandamus. The peremptory writ of mandamus should also be denied.
Curtis, J., concurred.
Rehearing denied. Shenk, J., and Curtis, J., voted for a rehearing. Langdon, J., did not participate.