Court Opinion

ID: 3465856
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:30:53.557725+00
Date Added: 2024-06-11T14:04:31.688967
License: Public Domain

This is a suit to have a receiver appointed for the defendant corporation. It was filed on the heels of the suit of State ex rel. Dendinger et al. v. Kerr Gravel Co., decided this day;1
and was manifestly filed to anticipate the action of the court in that case. Both cases were tried and disposed of by the court below on the same day.
                               I.
The suit was brought first by three alleged creditors of the corporation, whose claims were confessed in the answer filed by the president of the corporation, also confessing judgment for the appointment of a receiver. But said claims were not acknowledged nor said judgment confessed by the board of directors, and were expressly denied by the intervenors, who appeared herein to oppose the appointment of a receiver. No proof was made, or even attempted, of their said claims; the judgment of the lower court does not recognize them as creditors, and they have not appealed from said judgment, nor answered this appeal, praying to have their said claim recognized. They have, so far as this record shows, no interest in the appointment of a receiver for the defendant corporation. But, in any event, their prayer for the appointment of a receiver is based on the same grounds as those set up by the other petitioner, a stockholder, and we now pass to those.
                               II.
The stockholder who applies for the appointment of a receiver is the wife of the president of the corporation. Her petition sets up in general terms practically every ground set forth in the receivership statute as a cause for the appointment of a receiver. But her allegations of fact are of the most meager, and amount only to this: That the corporation is solvent; that the *Page 335 
stockholders have neglected to elect officers to manage the affairs of said corporation; that the affairs of said corporation are being well managed by the president thereof (her husband); that his said management is being interfered with by the refusal of the intervenors to finance the corporation any further under his management; that the filing of the mandamus proceedings to compel him to call stockholders' and directors' meetings has interfered with his ability to secure financial assistance elsewhere; that the corporation has contracted obligations which it cannot perform under such circumstances unless a receiver be appointed to manage its affairs.
                              III.
We see nothing in law or in equity which authorizes the appointment of a receiver under such circumstances. The purpose of asking for such receiver is (in the light of the other case this day decided) manifestly neither in the interest of the stockholders nor of the creditors, but appears, on its face, to be solely for the purpose of taking the control of the corporation away from its stockholders, unless they consent to allow the president to continue to manage its affairs without regard to the wishes of its stockholders and directors. And this should not be permitted. In Dreifus v. Colonial Bank  Trust Co.,123 La. 61, 48 So. 649, this court held, in effect, that even the liquidation of the affairs of a solvent corporation belonged exclusively to its stockholders; much more so, therefore, does the management of its affairs as a going concern belong to such stockholders. And, accordingly, they cannot be penalized by the appointment of a receiver to displace and dispossess them, because forsooth they are seeking by lawful means only to obtain, or retain, the management of affairs, to which they are legally entitled. *Page 336
                               IV.
The trial judge, on the allegation that there were some contracts which required immediate attention, and "to insure the operation of the plant in making deliveries under bonded contracts," appointed the president of the corporation as "temporary receiver," and fixed his bond. Whereupon the receiver took charge.
Plaintiffs have moved to dismiss the appeal taken by the intervenors on the ground that they have acquiesced in the judgment of the lower court (1) by moving to have the receiver's bond increased; and (2) by seeking the removal of the receiver for engaging in new business for account of said corporation, such as entering into new contracts, purchasing expensive new machinery, and issuing large amounts of receivers' certificates — all notwithstanding the suspensive appeal taken by intervenors, and in violation of the receivership act (No. 159 of 1898, p. 312), which provides that such an appeal "shall have the effect of suspending the functions of such receiver, except to perform such administrative acts as may be necessary for the preservation of the property."
The motion is wholly without merit. It is no more an acquiescence in the appointment of a receiver to ask that his bond be increased than it would be an acquiescence in an injunction or attachment to ask that the bond given to secure such writ be increased because insufficient. Nor yet is it an acquiescence in the appointment of a receiver to ask for his removal on the ground that, being receiver in fact by reason of his appointment, he is acting illegally under his said appointment pending the appeal taken. No more so than it would be an acquiescence in a seizure to complain additionally that the sheriff was proceeding to execute said seizure in an unlawful manner. *Page 337                                V.
Intervenors have asked for attorneys' fees. We think they are entitled to them under the provisions of Act 117 of 1916, p. 253, which provides that:
  "If the minority stockholder or stockholders shall unsuccessfully prosecute their cause for the appointment of a receiver, he or they shall not only be condemned to pay the cost of the proceedings, but shall be further condemned to pay reasonable counsel fees, and other reasonable expenses to the corporation or the stockholders on whose action, joint or several, the complaining stockholder bases his claim for relief. * * *"
And a petitioner for the appointment of a receiver, whose demand, though successful below, is rejected on appeal, is unsuccessful within the meaning of said act. Uncle Sam Planting 
Mfg. Co. v. Reynaud (our No. 26837) 157 La. 955, 103 So. 276.
We fix the sum of $300 as a reasonable attorney's fee in this case, and assess it against the unsuccessful stockholder.
                             Decree.
It is therefore ordered that the motion to dismiss be denied; that the judgment appealed from be reversed, and plaintiffs' demand rejected at their cost in both courts, and that intervenors herein have judgment for $300, as attorneys' fees, against the plaintiff Mrs. Sara Storm, wife of J.D. Kerr.
1 Ante, p. 324, 104 So. 60.