State Ex Rel. Calhoun v. Reynolds

233 S.W. 483, 289 Mo. 506, 1921 Mo. LEXIS 33

• Court: Supreme Court of Missouri
• Decided: July 22, 1921
• Status: Published

Opinion

ELDER, J.

Relators seek by writ of certiorari to quash a judgment entered by the St. Louis Court of Appeals in an original proceeding in prohibition brought at the relation 'of George T. Priest against John W. Calhoun, Judge, which judgment restrains and enjoins the respondent judge from proceeding further in the suit of J. H. Conrades et al. v. Blue Bird Appliance Company, pending in the Circuit' Court of the City of St. Louis, in which suit the said judge had theretofore appointed a receiver for the said Blue Bird Appliance Company. The death of respondent herein, the Honorable George, D. Reynolds, having been suggested, this cause has been revived against the Honorable Charles II. Dales, successor judge of the St. Louis Court of Appeals.

The facts in the proceeding in prohibtion, which are most relevant to this review, are thus stated in the opinion of the Court of Appeals:

“It appears .that on May 25, 1920, John H. Conrades, Thomas Mellow and Ben Gh Brinkman were by the Circuit Court of the City of St. Louis appointed receivers of a certain corporation known as the Blue Bird Manufacturing Company, and th^t said receivers took charg’e of all of the assets of the said company under their powers as receivers of said company, and that amongst said assets were fifty-one per cent of all of the capital stock of a corporation known as the Blue Bird Appliance Company,, a Missouri corporation.

“On June 19, 1920, said John H. Comrades, Thomas Mellow and Ben Gr. Brinkman, as receivers of the said Blue Bird Manufacturing Company, and as such owners of fifty-one per cent of the capital stock of the Blue Bird Appliance Company, filed a suit in the Circuit Court of the City of St. Louis, wherein said receivers asked for the appointment of a receiver for the said Blue Bird Appliance Company, and upon the same day a temporary receiver was duly appointed and qualified. Thereafter the court, on August 20, 1920, appointed a permanent receiver, upon the giving of a bond in the sum of $25,000, which bond was on the same day .filed, presented and approved by the court, since which time the judge of the circuit courl, respondent herein, has retained jurisdiction of the said case continuously, and the receiver, since the date of his appointment as permanent receiver, and up to the time of the filing of the application for a writ of prohibition herein, has continued in charge of and in control of the property of the said Blue Bird Appliance Company.

“The main allegations set out in the petition of the said Conrades et al., receivers of the Blue Bird Manufacturing Company, and as such holders of fifty-one per cent of the capital stock of the Blue Bird. Appliance Company, in which petition the appointment of a receiver for the said Blue Bird Appliance Company is sought (as appears from the respondent’s return herein) are:

“ ‘A. The plaintiffs in said cause were stockholders owning $5,100, par value, of the capital stock of the defendant corporation, whose total capital was $10,000, and were also creditors to the extent of approximately $450,000.

“ ‘B. That the assets of the defendant corporation located in various states were being subjected to attachments suits, levies and other forms of waste, and that all of. said assets were in danger of being utterly destroyed and dissipated.

“ ‘C. That all of the directors, officers, managers and executives of the defendant company had, on the 17th day of June, 1920, resigned and abandoned the property and assets of the defendant corporation, and defendant corporation was without any officers, directors, managers or executives.

“ ‘D. That unless a receiver were appointed by the court the value of plaintiffs’ stock in the defendant corporation would be utterly destroyed, and the value of plaintiffs’ claim would be utterly destroyed.

“ ‘E. The prayer was for the appointment of a temporary receiver, an inquiry by the court into all the facts alleged, the appointment of a permanent receiver and for all general and equitable relief that to the court under the circumstances might seem meet and proper.’

“On October 19, 1920, a petition in bankruptcy was filed in the United States District Court for the Eastern District of Missouri by certain creditors against the Blue Bird Appliance Company. One of the grounds of alleged bankruptcy of the said Appliance Company set forth in the bankruptcy petition is the appointment of a receiver for the said Blue Bird Appliance Company in the cause of Conrades et al. v. Blue Bird Appliance Company, above mentioned.”

The opinion further recites that the application for the writ of prohibition contains averments that the relator Priest is a creditor of the Blue Bird Appliance Company in the sum of $7500 and had attempted to per- feet a lien therefor by attachment proceedings, but that the aforesaid bankruptcy proceeding was designed to defeat the said lien; that although interested in defeating the proceedings in bankruptcy, he (the relator Priest) could not therein attack the appointment of the receiver for the said Blue Bird Appliance Company, as such attack would be collateral, but that the only course open to him was to raise the question of jurisdiction by a direct proceeding; that the circuit court was without jurisdiction to appoint a receiver in the suit of Conrades et al. v. Blue Bird Appliance Company, such lack of jurisdiction appearing upon the face of the petition filed in said cause.

Proceeding, the opinion recites that respondent’s return to the preliminary rule issued shows that the relator Priest had been an officer and director of the Blue Bird Appliance Company -up to the 18th day of June, 1920, on which day he, with the other officers and directors of the company, had resigned as such officers and directors; that immediately after resigning as officers and directors of the Blue Bird Appliance Company all of the stockholders of that company, except relator Priest (who owned one share) and the aforesaid Conrades, Mellow and Brinkman, receivers of the Blue Bird Manufacturing Company, left the City of St. Louis.

Further matters pertinent to a determination of the contentions of relators herein, as to why the judgment of the Court of Appeals should be quashed, will be adverted to in the course of the opinion.

Review °f I. At the threshold of a consideration of the questions presented by relators, let us re-affirm the doctrine which we have firmly enunciated in our most recent pronouncements, to-wit, that in certiorari it is no^ 0Iir province to determine whether the Court of Appeals erred in its application of rules of law to the facts stated in its opinion, but only whether upon those facts it announced some conclusion of law contrary to the last previous ruling of this court upon the same or a similar state of facts. [State ex rel. American Packing Co. v. Reynolds, 287 Mo. 697 ; State ex rel. Peters v. Reynolds, 214 S. W. l. c. 122; State ex rel. Mechanics’ Amer. Natl. Bank v. Sturgis, 276 Mo. 559, 208 S. W. l. c. 462; Majestic Mfg. Co. v. Reynolds, 186 S. W. 1072.]

Eelators in their brief assign nine grounds of error, wherein it is alleged that the Court of Appeals failed to follow the last controlling decision of this court. All but two thereof are entirely foreign to the purview of certiorari, when measured by the rule above quoted. These two we shall discuss in order.

Different Facts. II. Eelators urge that the opinion of the Court of Appeals is in conflict with State ex rel. v. Shields, 237 Mo. 329, and State ex rel. v. Mills, 231 Mo. 493, 500, which hold, as relators say, “that where the jurisdiction of a court to hear and determine a case rests unon facts, the supervisory court will not, by prohibition, preclude such court from determmmg its jurisdiction from the facts, and after it has determined its jurisdiction from the facts will not interfere, for the reason that such matter then becomes mere error and can be reached by appeal.” Both of the foregoing cases were proceedings in prohibition, and while we fully agree with the rule of law there announced, that rule has no relevancy to the case before us for review, for the reasons following.

That portion of the opinion of the Court of Appeals which is apposite to the contention urged, is as follows:

“Having in mind the general rule that the appointment of a receiver is not the end and object of litigation, but merely a provisional remedy resorted to for the purpose of preserving property involved in litigation, so that the relief awarded by the court, if any, may be effectual (State ex rel. Merriam v. Ross, 122 Mo. 435, 25 S. W. 947; Miller Bros. v. Perkins, 154 Mo. 629, 55 S. W. 874), does the petition filed below by the receivers of the Blue Bird Manufacturing Company, as holders of fifty-one per cent of the stock of the Blue Bird Appliance Company, contain allegations of fact sufficient to confer jurisdiction upon' a court of equity solely for the appointment of a receiver, and not ancillary to other, relief sought therein, for a going corporation? In other words, do the facts alleged in the petition bring the case within the exception to the foregoing general rule, namely, that courts of equity have jurisdiction to appoint receivers for corporations, even in the absence of express statutory authority, in cases of extreme necessity for which there is no other adequate remedy? ..."

“Neither the elementary text-writers, when the full context on the subject is read, nor the adjudicated cases, sustain the view that a court of equity has jurisdiction to appoint a receiver for a going corporation upon allegations alone showing that the corporation is temporarily without officers and directors, unless it appears that the circumstances are such that the condition thus alleged to exist is one amounting to a condition of extreme necessity for which the complainants have no other adequate remedy. A fortiori would this be true where the petition, though averring that the corporation is without officers and directors, upon its face shows that the complainants are in control of a majority of the stock of the corporation and hence in a position to remedy the matter without invoking the extraordinary power of a court of equity. ...

“Do then the circumstances outlined in the petition below make out a case of such extreme necessity for which there is no other adequate relief that equity alone can grant adequate relief ? We think not. It affirmatively appears that the petitioners below, three in number, were the receivers of the Blue Bird Manufacturing Company, and as such receivers held fifty-one per cent of the total capital stock of the Blue Bird Appliance Company. The relator herein, George T. Priest, was the owner and holder of one share of the capital stock of the said Appliance Company on the day when the officers and directors of that company resigned, and also on the following’ day thereafter, when the receivers for the Manufacturing Company filed their receivership petition, and was present in St. Louis at that time. No action whatsoever was taken by the said receivers of the Blue Bird-Manufacturing Company, though they were the owners and holders of fifty-one per cent of the stock of the Blue Bird Appliance Company, toward calling a special meeting of the stockholders for the election of a new board of directors, though such action is specifically provided for by our statutes (Secs. 2964-5-6, R. S. 1909). The, petition thus clearly fails to exhibit a state of1 facts from which a court, of equity could conclude that the petitioners had exhausted all reasonable efforts to induce corporate action, but on the contrary, conclusively shows that no action whatsoever was taken on the part of those same receivers holding fifty-one per cent of stock toward calling a special stockholders ’ meeting, or otherwise, but contented themselves, on the very next day succeeding that on which the officers and directors of the company had resigned, with seeking the aid of a court of equity to appoint a receiver, though the statutes specifically provide a method of procedure under such circumstances. And it will be noticed that whatever proper amendments could'be made to the petition below, these salient and determinative facts in the case could not be affected thereby.”

If the Court of Appeals has erred in holding that the petition did not show jurisdictional facts sufficient to warrant the appointment of a receiver, it erred as a matter of opinion, and on certiorari we have no authority to quash its judgment on that ground. [State ex rel. American Packing Co. v. Reynolds, supra; State ex rel. Wahl v. Reynolds, 272 Mo. 588.] Moreover, even though the Court of Appeals may have misapplied the rule announced in the Shields and Mills cases, supra, to the facts before it, such misapplication does not constitute error cognizable in this proceeding, as the facts here are in no way analogous to the facts in the Shields and Mills cases, and no conflict can therefore be engendered. [State ex rel. Commonwealth Trust Co. v. Reynolds, 278 Mo. 695, 213 S. W. 804.] Furthermore, although the Court of Appeals, by its judgment, may have interfered with the action of the circuit court, after that court had determined and assumed jurisdiction upon the facts before it, nevertheless, by reason of the dissimilarity of facts in the cases cited, it cannot be said that there is a contrariety of opinion as insisted.

The point made must accordingly he ruled against relators.

else III. Relators also contend that the opinion of the Court of Appeals is in conflict with Price v. Trust Co., 178 S. W. 745, 749, which case relators claim holds “that a court of equity has jurisdiction to appoint a receiver for a corporation which has no officers or directors and whose property is threatened with sale, waste or dissipation.”

To sustain this claim relators cite the following passage from the Price Case, opinion by Faris, J., l. c. 749:

“If there were an allegation that the Arcadia Country Club had no officers or directors to conserve its interests and protect its property, we can see readily why a court of equity would interpose in the event of a threatened sale of the property of the club by .a mortgagee under an invalid or doubtful incumbrance. But there is a full complement of officers and directors of the Arcadia Country Club existing, and acting for aught, that is said or appears. Nor does it appear that the Bankers’ Trust Company is in possession of the property or any of it, which it is threatening to sell under its deeds of trust which are alleged to be without consideration, or void for that they are based on notes the making of which were acts ultra vires. Oh the contrary, the club, or the vendees of the 118 lots not reserved, but included in the deed of trust, seem to be, and for aught which appears to the contrary are, in possession thereof.”

From a perusal of the entire case above mentioned, it will be apparent that the paragraph cited is obiter dictum; and- a reading of the paragraph itself shows that the opening statement is made arguendo. Moreover, a’ further examination of the opinion will reveal this language:

“It is fundamental that there is neither in law nor in equity any such thing as a plain receivership action, i. e., an action in which a receiver is the only desideratum. In short, the appointment of a receiver by a court of equity, except in rare cases arising out of lunacy or infancy, is ancillary wholly to some other action having some definite relief in view7. [State ex rel. v. Ross, 122 Mo. 435, 25 S. W. 947, 23 L. R. A. 534.] The receiver is ‘the hand of the court’ used to protect the property and to prevent waste, or to hold the property in statu quo pending the decreeing of the relief which is the crux of the ease brought; so it necessarily follows that, absent a cause of action stated in the main case, there is no ground for the appointment of a receiver. [Cantwell v. Lead Co., 199 Mo. 1, 97 S. W. 167; Pullis v. Pullis, 157 Mo. 565, 57 S.W. 1095.]”

• And a reference to the petition in the instant case, which is epitomized in the opinion of the Court of Appeals, discloses that a receiver was the only desideratum contemplated thereby. Hence the judgment of the Court of Appeals, instead of being contrary to the Price Case, is consonant therewith.. Furthermore, the Court of Appeals in its opinion, quotes at length, as authority for its .ruling, passages from the Price Case which are declaratory of the doctrine that where there is any other adequate and complete remedy a receivership is precluded. And finally, even though the opinion of the Court of Ap peals may be inconsistent with anything said in the Price Case (which is contrary to our belief), there is no conflict therewith for the reason that the facts involved therein are not similar to the facts here.

Rreasons. IY. As said hereinbefore, other reasons are assigned by relators in behalf of the relief sought. "Were the case here on appeal or writ of error they might have some relevancy, but in an application for certiorari they have none. In a proceeding of this character the scope of our inquiry has been well determined, and unless the judgment of the Court of Appeals contravenes some prior ruling of this court, we will not interfere.

After a careful review, we find no merit in the errors urged by relators. It follows, therefore, that the writ herein was improvidently granted and should be quashed.

It is so ordered.

All concur.