DeLbridge v. Kaukauna Fibre Co.

• Decision Date: 24 April 1917
• Citation: 165 Wis. 435,162 N.W. 478
• Parties: DELBRIDGE ET AL. v. KAUKAUNA FIBRE CO. ET AL.
• Court: Wisconsin Supreme Court

165 Wis. 435

162 N.W. 478

DELBRIDGE ET AL.

v.KAUKAUNA FIBRE CO. ET AL.

Supreme Court of Wisconsin.

April 24, 1917.

Appeal from Circuit Court, Outagamie County; Edgar V. Werner, Judge.

Action by J. H. Delbridge and another against the Kaukauna Fibre Company, its receiver and creditors, to compel the receiver to make a sale of the property of the corporation, and to cancel a contract between the receiver and the Union Bag & Paper Company. From orders setting aside the contract and denying the motion of the Union Bag & Paper Company to be made a party to the action, and denying a subsequent petition of that company asking that the receiver be required to retain funds to satisfy its claim for damages and breach of contract, the Union Bag & Paper Company appeals. Orders modified and affirmed.

This is an action by the plaintiffs to compel the receiver of the Kaukauna Fibre Company to make a sale and transfer of the property of the Kaukauna Fibre Company to A. J. McKay, of Appleton, Wis., and to cancel the contract between the receiver and the Union Bag & Paper Company for the sale of products of the Kaukauna Fibre Company. The Union Bag & Paper Company (hereinafter designated Bag Company) filed an intervening petition, asking that it be made a party defendant to the cause, that an order be entered ratifying and confirming the contract between the receiver and the Bag Company, directing the receiver to carry out the terms of the contract, and that any sale of the property and assets in the possession of the receiver be made subject to the rights of the Bag Company under the contract, and that the purchaser at such a sale be required to assume the contract. J. H. Delbridge filed an answer to the intervening petition on behalf of all parties to the cause, including the receiver, and averred that the product had been sold to the Bag Company without authority from the court. It charged that the price of the product fixed by the contract was less than the market price, and that enforcement of the contract would result in injury to the creditors and stockholders of the Kaukauna Fibre Company. It also alleged that the Kaukauna Fibre Company had entered into a contract, subsequent to the contract between the receiver and the Bag Company, to sell the mill and certain property of the Kaukauna Fibre Company to A. J. McKay of Appleton, Wis., and alleged, further, that if the contract with the Bag Company were declared binding on the Fibre Company, the sale of the property to McKay could not be consummated.

The receiver filed an answer, alleging that he entered into the contract with the Bag Company for the best interests of the property of the Fibre Company, and that no other attorneys were authorized to appear for him in the proceeding than Albert H. Krugmeier and Francis S. Bradford. Later J. H. Delbridge filed a petition, alleging that at the time of the appointing of a receiver the Kaukauna Fibre Company was indebted to the amount of $70,170.25. This petition asked that the contract with the Bag Company and other contracts be annulled, and that the receiver be directed not to make further deliveries thereunder, that the receiver be directed to file his final account, and that he either be discharged and proceedings dismissed, or that the court authorize the receiver to make sale of property to McKay, and that the proceeds of the sale be used in payment of the claims against the company. The receiver answered the Delbridge petition, submitting his account, and denied that he had entered into any contracts without authority, and alleged that he had not contracted with nor sanctioned the contract of sale with McKay.

The court held the contract between the receiver and the Bag Company void. The order provided that if the Bag Company pay the receiver $3,475.32, the amount due for product already delivered, the contract should be affirmed as to all material theretofore delivered, but in default to pay this sum, the court directed the receiver to sue the Bag Company for the market price of the product already delivered. The order further denied the motion of the Bag Company to be made a party to the action.

The court entered an order declaring the contract made between J. H. Delbridge on behalf of the Kaukauna Fibre Company with A. J. McKay to be void, and canceled all contracts made by the receiver for future deliveries of the mill's products. The court also ordered that the property be sold to J. W. Kiekhoefer upon certain terms and conditions prescribed; the sale to be made free and clear of all liens and claims against the property. Upon the receiver's report of the sale, the court ratified and confirmed the sale of the property to J. W. Kiekhoefer, and vested in J. W. Kiekhoefer the right to sue the Bag Company for goods sold and delivered under the contract with the receiver.

Subsequent to the above orders the Bag Company filed a further petition and contingent claim, alleging that since the property had been sold by the court it had become impossible to carry out the terms of the original contract with the receiver, that the amount of damages it suffered as the result thereof could not be ascertained at the time of the filing of the contingent claim, that a distribution of the proceeds of the sale in the receiver's hands was...