Armour Fertilizer Works v. First Nat. Bank

Decision Date07 May 1924
Citation100 So. 362,87 Fla. 436
PartiesARMOUR FERTILIZER WORKS v. FIRST NAT. BANK OF BROOKSVILLE et al.
CourtFlorida Supreme Court

Suit by the First National Bank of Brooksville and others against the Armour Fertilizer Works. From a decree for plaintiffs defendant appeals.

Reversed and remanded.

Syllabus by the Court

SYLLABUS

Nature purpose, and scope of creditors' bill stated. The nature purpose, and scope of a creditors' bill is to bring into exercise the equitable powers of the court to enforce the satisfaction of a judgment by means of an equitable execution, because execution at law cannot be had.

The prevailing rule seems to be that before a creditor can resort to his remedy by creditors' bill he must first secure judgment at law and exhaust all means afforded by the law to recover on such judgment.

Unless complainants have first instituted suit, creditors' bill cannot be entertained. The rule as above stated was effective here prior to the enactment of section 3229, Revised General Statutes of Fla. 1920, which relaxed the rule by providing that a creditors' bill may be filed before the claim or claims have been reduced to judgment, but, unless complainants have first instituted suit for that purpose, the creditors' bill cannot be entertained.

Court may appoint receiver to take charge of property involved until final determination. If the bill of complaint had been a legal basis for a creditors' bill, and in addition thereto sufficient showing had been made, it would have been proper for the court to appoint a receiver to take charge of and hold the property involved until final determination of the cause.

Power to appoint inherent in court of equity; appointment of receiver discretionary; receiver not usually appointed in action instituted alone for such purpose. The power to appoint a receiver is one inherent in a court of equity. It is a matter of discretion, and not one of right and, as a rule, is an ancillary remedy. Except in rare and unusual instances it cannot be maintained in an action instituted alone for that purpose.

Cannot be appointed by consent of parties, where pleadings do not state cause therefor. It is axiomatic that consent of the parties to the litigation cannot confer power or authority on a court to appoint a receiver in a case where the pleadings do not state a cause for such appointment.

Mere insolvency does not warrant appointment; receiver cannot be appointed at instance of creditors to wind up insolvent corporation. Mere insolvency of the defendant, unless made so by statute, or coupled with some other reason, will not warrant the appointment of a receiver. And there is no authority in this state as we find in many states, which authorizes solely the appointment of a receiver at the instance of creditors to take charge of and wind up the affairs of an insolvent corporation. Appeal from Circuit Court, Hernando County; W. S. Bullock, judge.

COUNSEL

D. Niel Ferguson, of Ocala, and Evans & Mershon, of Miami, for appellant.

F. B. Coogler, of Brooksville, for appellees.

OPINION

TERRELL J.

The First National Bank of Brooksville, Fla., filed its bill against Petteway Land Company, a corporation, and Petteway Land Company and G. C. Schuler, copartners doing business as Tooke Lake Naval Stores Company, praying for the appointment of a receiver to take charge of the assets of the said defendants and preserve them for the best interests of all concerned until the further order of the court. The only ground urged for appointment of a receiver is insolvency on the part of defendants and deterioration of their assets. The bill was filed May 12, 1922, and on the same day the defendants filed their answer, admitting the allegations of the bill, and expressing their consent to the appointment of a receiver.

On the date bill and answer were filed the court made his order, 'treating the same as a bill in the nature of a creditors' bill,' and appointed Charles M. Price of Brooksville to be receiver of and to take charge of all the property of defendants, and to manage and control said property under order of the court. January 30, 1923, on application of the receiver the court ordered a private sale of all the assets of defendants for a sum not less than $3,000 cash, the purchaser to assume and become responsible for all secured claims against defendants, said secured claims amounting to $13,400 with accrued interest. Pursuant to the terms of and on the same day sale was ordered the receiver reported a sale of said assets to E. J. Willis, which sale was promptly confirmed by the court, and deed ordered executed by the receiver in favor of said E. J. Willis.

February 3, 1923, Armour Fertilizer Works, one of the creditors of defendants, filed and served notice on complainant and defendants that it would on February 10, 1923, or as soon thereafter as could be heard, apply to the court for 'an order vacating and setting aside' the order confirming said sale. February 21, 1923, Armour Fertilizer Works presented to the court its petition for leave to intervene and become a party defendant and 'file such pleadings as it may be advised.' On the date presented the court made its order granting the petition to intervene 'for the purpose of contesting and moving to restrict order of February 21, 1923'; same being the order confirming sale.

February 21, 1923, Armour Fertilizer Works presented to the court and asked leave to file a motion to vacate the order appointing the receiver, but the court entered his order refusing to allow said petition to be filed. February 21, 1923, Armour Fertilizer Works presented to the court and asked leave to file a demurrer to the bill of complaint, but the court entered his order refusing to allow said demurrer to be filed. On the said last-named date Armour Fertilizer Works presented its petition to the court to set aside the sale by the receiver to E. J. Willis, which petition was considered by the court and denied; that order of denial appearing to have been made May 1, 1923, and entered as to February 24, 1923.

From the foregoing decrees denying the petition to intervene, except for the purpose of moving to vacate the sale of the receiver, and for no other purpose, refusing to consider the motion to vacate the appointment of the receiver and hear argument thereon, refusing to consider the demurrer to the bill of complaint and allow argument thereon, and denying the petition to set aside the sale by the receiver to E. J. Willis, Armour Fertilizer Works prosecutes this appeal in its behalf against the complainant and defendants in the original bill.

Six errors are assigned; the first, second, and third of which are predicated on the order of the chancellor granting the petition of appellant to intervene solely for the purpose of moving to vacate the sale by the receiver, refusing to consider the motion of appellant to vacate the appointment of the receiver, and refusing to consider the demurrer of appellant to the original bill of complaint.

The bill of complaint alleges that defendants are insolvent; that they have assets amounting to $39,100 and liabilities amounting to $31,921.03, said assets being in land, stock, and farming implements, and liabilities being in debts due to some sixty or more persons, most of which are unsecured and past due; that complainant is one of the unsecured creditors; that it is not advisable to dispose of the assets of complainant at this time; that there is no dispute as to the sum of the liabilities; and that they are deteriorating in value very fast. It appears from the bill that no suits have been brought against defendants by any of the creditors, and the appointment of a receiver to take charge of and manage the assets under direction of the court is the only relief prayed for.

Under this statement of facts was the court warranted in treating the bill and answer as a bill in the nature of a creditors' bill and appointing the receiver, and should the appointment have been vacated on the motion of appellant here?

Bills brought by creditors of estates of deceased persons for the purpose of administering the estate are denominated in the English Chancery and in some of the courts of this country as creditors' bills. Such bills have also been used for the purpose of distributing a trust fund or the proceeds thereof to set aside fraudulent conveyances, or remove incumbrances interfering with an exception at law, and have been resorted to by creditors of insolvent corporations. In its more general application, however, a creditors' bill is one brought by a creditor who has secured judgment at law, and has in vain attempted at law to obtain satisfaction, and who sues in equity for the purpose of reaching property which cannot be reached by execution at law. The nature, purpose, and scope of such a bill is to bring into exercise the equitable powers of the court to enforce the satisfaction of a judgment by means of an equitable execution because execution at law cannot be had. Pettibone v. Toledo, C. & St. L. R. Co., 148 Mass. 411, 19 N.E. 337, 1 L. R. A. 787; Venable v. Rickenberg, 152 Mass. 64, 24 N.E. 1083, 8 L. R. A. 623; Raymond v. Blancgrass, 36...

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21 cases
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    ...County v. Dickenson, 125 Fla. 181, 185, 169 So. 734, 736 (1935) (emphasis supplied); see also Armour Fertilizer Works v. First Nat'l Bank, 87 Fla. 436, 440-41, 100 So. 362, 364 (1924). Our supreme court has consistently characterized a creditors' suit as an equitable remedy because it is pr......
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2 books & journal articles
  • Florida's New Commercial Real Estate Receivership Act: A Roadmap for Judges and Practitioners.
    • United States
    • Florida Bar Journal Vol. 96 No. 1, January 2022
    • January 1, 2022
    ...& Head, 171 So. 533 (Fla. 1936). (16) Jones v. Harvey, 82 So. 2d 371 (Fla. 1955). (17) Armour Fertilizer Works v. First National Bank, 100 So. 362 (Fla. 1924), the judiciary has discretion to apply the remedy as an ancillary proceeding in connection with some other action brought to obt......
  • Using receiverships to maximize the value of distressed assets.
    • United States
    • Florida Bar Journal Vol. 83 No. 11, December 2009
    • December 1, 2009
    ...128 So. at 247. (16) Id. (17) Id. (18) Compare Alter, 756 So. 2d at 153, with Armour Fertilizer Works v. First Nat. Bank of Brooksville, 100 So. 362 (Fla. (19) For example, presume that a bankrupt developer abandons real estate assets to the lender, which is subject to a motion for reconsid......

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