Deeds v. Gilmer

• Decision Date: 11 April 1934
• Parties: DEEDS et al. v. GILMER et al. BOGER . v. SAME.
• Court: Virginia Supreme Court

174 S.E. 37

DEEDS et al.

v.GILMER et al.

BOGER .

v.SAME.

Supreme Court of Appeals of Virginia.

April 11, 1934.

[COPYRIGHT MATERIAL OMITTED]

Appeal from Circuit Court, Pulaski County.

Suit by H. C. Gilmer, receiver of the Cheves Lumber Company, against the Fireproof Wood Products Corporation and others, wherein H. C. Gilmer was appointed receiver of the named defendant, and bill for injunction by H. C. Gilmer, receiver of the Fireproof Wood Products Corporation, and others, against A. E. Boger, B. C. Sales Company, Inc., and others, which were consolidated with attachment proceedings by W. F. White, by H. C. Gilmer, as receiver for the Fireproof Wood Products Corporation, by the Pulaski National Bank, and by D. A. Smith, receiver of the Rocky Gap Flooring Company, against A. E. Boger, the Pulaski Veneer Corporation, B. C. Sales Company, Inc., and T. C. Coleman. John W. B. Deeds, receiver of the B. C. Sales Company, Inc., and others, appeal, and A. E. Boger separately appeals from the decree.

Decree reversed, and causes remanded with directions.

Argued before CAMPBELL, C. J., and HOLT, EPES, HUDGINS, GREGORY, and BROWNING, JJ.

Deeds et al. v. Gilmer et al.:

Jno. S. Draper, of Pulaski, and S. B. Campbell, of Wytheville, for appellants.

Gilmer, Wysor & Gilmer, of Pulaski, for appellees.

Roger v.Gilmer et al.:

Dalton & Jordan, of Pulaski, and W. J. Henson, of Roanoke, for appellant

S. B. Campbell, of Wytheville, and Jno. S. Draper, of Pulaski, for appellees.

EPES, Justice.

The decree here appealed from was entered on July 18, 1932, in a consolidated cause composed of two chancery suits in which A. E. Boger was one of the defendants and several attachment proceedings against Boger, as principal defendant and Pulaski Veneer Corporation, B. C. Sales Company, Inc., and T. C. Coleman, as codefendants, which have been transferred from the law to the chancery side of the court During the pending of the proceedings, John W. Deeds was appointed receiver for B. C. Sales Company, Inc., and had himself made a party to the several proceedings in which B. O. Sales Company, Inc., was a party.

John W. Deeds, receiver of B. C. Sales Company, Inc., Pulaski Veneer Corporation,, and T. C. Coleman filed their petition for an appeal from this decree, and presented therewith a transcript of the voluminous record in the consolidated cause.

After this petition had been filed, but before it had been acted upon by the court or any of the justices, A, E. Boger filed his petition for an appeal from the same decree. He did not file with his petition a transcript of the record, but in it he made reference to the petition filed by John W. Deeds and others, and prayed that the transcript of the record filed with that petition might "be read in connection with this petition, " and that the court would "treat this petition as a cross-assignment of error to this decree."

An appeal was allowed to John W. Deeds, receiver, and his copetitioners, and a few days later an appeal was also allowed to Boger.

We are met at the outset with a motion made by the appellants in the original petition to dismiss Roger's appeal as having been improvidently awarded, because he did not present with his petition a transcript of the record, as required by section 6339, Code Va. 1919.

This motion presents purely a moot ques tion, a discussion of which is without point here. Boger was a party defendant to the original petition for an appeal, and Bogeys petition is certainly a good assignment of cross-error, regardless of whether the appeal allowed him was improvidently awarded or not.

All the suits and proceedings composing this consolidated cause grew out of the failure of Fireproof Wood Products Corporation, which had its principal place of business and plant at Pulaski, Va. For convenience and brevity we shall often hereafter speak of this corporation as the Fireproof Corporation.

This corporation was incorporated under the laws of Virginia on November 17, 1928. at the instance of the Safety Fireproofing Products Corporation of New York, and whatever capital was put into it was put in by the New York corporation. A. E. Boger represented the New York corporation in procuring the incorporation of Fireproof Corporation, was named in its certificate of incorporation as one of its officers, and after its incorporation was in charge of its management and operations.

Immediately after it was incorporated, in accordance with a preincorporation contract, Fireproof Corporation purchased from H. C. Gilmer, receiver of Cheves Lumber Company, Inc., a parcel of land in the town of Pulaski, Va., with a woodworking plant thereon-for $35,000. The whole purchase price was payable in deferred installments, to secure the payment of which the corporation conveyed the property to J. L. Wysor, trustee.

For several months it operated this plant on a somewhat extensive scale under the management of A. E. Boger; but early in January, 1929, it closed down and leased its plant to lessees with whom we are not here concerned.

In addition to the debt owed by it to H. C. Gilmer, receiver of Cheves Lumber Company, Inc., during its operations it became indebted to the following creditors: W. F. White; D. A. Smith, receiver of Rocky Gap Flooring Company; Pulaski National Bank; F. L. Quesenberry; Pulaski Engineering Works; Midland Valley Lumber Company; Virginia Hardwood Lumber Company; James McGraw, Inc.; and Standard Oil Company of New Jersey. There may be other creditors, but, if so, they do not appear from the record, and we are not here concerned with them.

In June, 1929, it had become evident that the Fireproof Corporation was hopelessly insolvent, and that its sponsor (Safety Fire-proofing Products Corporation) would not put any more capital into it. When this became evident, the suits and attachment proceedings which compose this consolidated cause were instituted.

On July 3, 1929, H. C. Gilmer, receiver of Cheves Lumber Company, Inc., filed his bill

In chancery against Fireproof Wood Products Corporation, A. E. Boger, J. L. Wysor, trustee, and certain other persons whom it is not necessary to mention here.

This bill alleges that the Fireproof Corporation is insolvent; that it is indebted to H._ C. Gilmer, receiver of Cheves Lumber Company, in the sum of $35,000, which is secured by a purchase money deed of trust from it to J. L. Wysor, trustee, conveying its real estate and plant in Pulaski, Va., and is also indebted to other creditors, who, however, are not named; that A. E. Boger is liable to the Fireproof Corporation for the mismanagement of its properties and for sums which were improperly withdrawn by him from the corporation. It also contains this allegation with reference to misrepresentations made by Boger to the complainant:

The complainant "further alleges that Fireproof Wood Products Corporation was formed through the direct activities of A. E. Boger, who was representing himself and Edward Schaffer, and * * * Wright, of New York City, and that it was upon the representations made by said Boger in his individual capacity and as representing these New York persons that the contract of October 11, 1928, was based, and these representations were a direct and controlling inducement to the entering into that contract on the part of your complainant; * * * and these representations were that these promoters of Fireproof Wood Products Corporation would put capital enough into the operating corporation to be formed pursuant to that contract to cover all the values of the properties to be transferred under that contract, and a large additional amount.

"These representations were carried by said A. E. Boger into a newspaper publication in the town of Pulaski and were made to the Mayor of Pulaski, who was interested in his capacity as mayor in the enlarged industry of the community. They were also made to the bankers of the town of Pulaski, and upon these representations, certain of the bankers extended credit to this corporation, and made representations in good faith to prospective creditors of the corporation. These representations have not been fulfilled.

"Your complianant avers that he relied upon them in reporting to your Honor's court and recommending as receiver of Cheves Lumber Company, Inc., the sale of the assets of Cheves Lumber Company, as set forth in that report, and as subsequently ratified by decree of your Honor's court. And for that reason, your complainant made the sale and on unusually liberal terms as the deed of December 3, 1928, will show."

While the bill states in the above quotation that Boger made these representations to other creditors of the corporation, it does not name the other creditors to whom such representations were made, or state a case for any of them upon which he could recover.

The prayer of the bill, in so far as it is here material, reads:

"The prayer of your complainant is

* * * that a receiver be forthwith appointed to take charge of the properties [of Fireproof Wood Products Corporation]

* * *; that said A. E. Boger be required to furnish an accounting of his transactions personally with Fireproof Wood Products Corporation and its affairs, business and assets, and that he be required to account personally to the creditors of said Fireproof Wood Products Corporation on the basis of all moneys which he may have received from it, and on all representations and promises he may have made to induce others to extend credit to said corporation; [and] that all creditors of said Fireproof Wood Products Corporation be permitted to join as complainants in this suit as a general creditors' suit."¹

On July 5, 1929, the judge entered a vacation order appointing H. C. Gilmer receiver of Fireproof Wood Products Corporation. The order contains this provision:

"The said receiver is hereby given complete authority and direction to institute andconduct all suits, actions and other litigation for the purpose of liquidating the affairs of Fireproof Wood Products...