Dixie Music Co., Inc. v. Pike

• Decision Date: 28 December 1938
• Citation: 135 Fla. 671,185 So. 441
• Parties: DIXIE MUSIC CO., Inc. v. PIKE et al.
• Court: Florida Supreme Court

185 So. 441

135 Fla. 671

DIXIE MUSIC CO., Inc. v. PIKE et al.

Florida Supreme Court

December 28, 1938

Suit by H. H. Pike against William Shayne, individually, and trading and doing business as the Dixie Music Company, and the Dixie Music Company, Inc., a corporation, for the appointment of a receiver and for an injunction restraining defendants from removing, concealing, or tampering with the records of defendants, and from removing property from coin devices or from the state, and for an accounting. From an order appointing a receiver and entering a temporary restraining order without notice, the Dixie Music Company, Inc., a corporation, appeals.

Affirmed with direction that plaintiff be required to give a bond. Appeal from Circuit Court, Dade County; Arthur Gomez, Judge.

COUNSEL

Murrell & Malone, of Miami, H. H. Wells, of Tallahassee, and Albert S. Dubbin, of Miami, for appellant.

L. J Cushman, Richard H. Hunt, and Thomas W. McIlvain, all of Miami, for appellees.

OPINION

PER CURIAM.

This appeal is from an order appointing a receiver and entering a temporary restraining order, without notice to the opposite parties.

On July 1, 1937, H. H. Pike brought his bill of complaint against William Shayne, individually, and trading and doing business as Dixie Music Co., and Dixie Music Co., Inc., a Florida Corporation, praying that a receiver be appointed to take charge of all of the property of the defendants and to operate the business; that defendants and their servants, agents and employees be enjoined from removing, concealing or tampering with the records of defendants, and from removing money from the coin operated devices until further order of the court; that the keys to the coin operated devices and the records of defendants be ordered turned over to the receiver; that all property held by Dixie Music Co., Inc., be decreed to be subject to the lien of plaintiff's judgment, and that all transfers of property from Shayne to the corporation be decreed to be in fraud of creditors and the conveyances held void; and that an accounting be had.

The bill alleged in substance that William Shayne, doing business as Dixie Music Co., owned and operated a large number of phonographs and other musical devices, a large number of amusement devices commonly known as marble boards and games of skill, and slot machines, all of which devices were operated by means of inserting a coin in a slot, and were let out or placed by defendant in various locations throughout the State of Florida, under agreements with the owners of the locations, by which Shayne was paid a large part of the proceeds from the operation of said machines; that plaintiff on March 16, 1936, instituted suit and later recovered judgment for $4,999 and costs against William Shayne, trading and doing business as Dixie Music Co.; that on May 19, 1937, execution was issued on said judgment; and placed in the hands of the Sheriff of Dade County, and there is now due and owing plaintiff under said judgment and execution, which are in full force and effect $5,103.53, no part of which has been paid; that in May 1936, William Shayne, trading and doing business as Dixie Music Co., with intent to delay, hinder and defraud plaintiff and other creditors of their just and lawful actions, suits, debts, accounts, damages and demands, caused to be organized a corporation, known as the Dixie Music Co., Inc., authorized to have outstanding 50 shares of stock, 48 of which were subscribed for by Shayne, who became president and general manager thereof; that while plaintiff's action for damages was still pending William Shayne transferred to the corporation all of the coin operated devices and automobiles owned by him, and thereafter he operated said business under the name of Dixie Music Co., Inc.; that Shayne, as president and general manager of the corporation, is in actual control of all the property, and he is receiving all the profits from the operation of the business; that the corporation, as the alter ego of Shayne, holds all of the property and claims to receive all of the profits, although it paid Shayne nothing for the transfer of said property, except to issue to him 48 shares of capital stock; that the corporation, when organized, had no assets, property or capital, except that turned over to it by Shayne, it being a device created solely for the purpose of placing the property of Shayne beyond the apparent reach of plaintiff and other creditors; that the slot machines are being operated under a license issued to William Shayne, under the authority of Chapter 17257, Acts of 1935, and the corporation now claims to own and operate the machines although it holds no license to do so; that each of said coin operated devices contains from $25 to $150 in cash, and the location of each is, for the most part, unknown to plaintiff, and can only be ascertained from an examination of records in the possession of defendants; that the defendants, their servants, agents and employees are in possession of keys, by means of which these coin operated devices may be opened and money taken therefrom, and are in possession of the automobiles, the locations of which are unknown to plaintiff; that if plaintiff gives notice of this hearing, the servants, agents and employees of defendants would spirit away, conceal or destroy the records showing the location of said coin operated devices, would remove from said devices all money contained therein, would tamper with said devices so they would be worthless in the hands of a receiver, and could easily conceal or remove from the jurisdiction all of the automobiles.

L. J. Cushman, attorney for plaintiff, appended to the bill his affidavit as to the necessity of proceeding without notice.

On the same day the bill of complaint was filed, the court entered its order, as follows:

'The above-styled cause coming on this day to be heard upon the plaintiff's sworn bill of Complaint:

It is thereupon considered, ordered, adjudged and decreed as follows:

'1st. That Henry H. Taylor, Jr. be and he is hereby appointed as Receiver pendente lite of all of the goods and chattels, money and effects of the Defendant, William Shayne, trading under the name of Dixie Music Co., and of all of the goods and chattels, moneys and effects of the Defendant Dixie Music Co., Inc., and the said Receiver is hereby directed and ordered to forthwith take possession of and take into his care, custody and control all of the books, records, papers and documents of either the said William Shayne, trading and doing business as Dixie Music Co., or individually, pertaining to the business known as the Dixie Music Co., Inc., and to take into his care, custody possession and control, all coin operated devices, including phonographs, marble games, games of skill, or slot machines, including all money contained in all such devices or machines, and all automobiles, trucks, or other vehicles and all other property used in the business of the said Dixie Music Co., Inc., and to operate the said business until the further order of this Court, and to hold all of said property and effects subject to the order of, this Court.

'2nd. That the Defendants, William Shayne, individually, and trading and doing business as Dixie Music Co., and the defendant, Dixie Music Co., Inc., and their servants, agents and employees, are hereby ordered and directed to forthwith deliver to the Receiver hereby appointed, all of the property and effects mentioned in the first paragraph of this order, and they and each of them are hereby restrained and enjoined, until the further order of this Court from in any way interfering with the said Receiver, or wich any of the property hereby ordered delivered to the said Receiver, or from in any way interfering with the business known as Dixie Music Co., Inc., in the hands and custody of the Receiver.

'3rd. That the defendants, and their servants, agents and employees are hereby ordered to turn over to, and deliver to the said Receiver, or to his representatives, all keys or combinations to locks, required to open or gain access to any of the said coin operated devices, and all money in any bank, deposited to the credit of William Shayne, or Dixie Music Co., Inc.

'4th. That the Receiver be and he is hereby ordered and granted leave and permission to appoint such agents as may be necessary in order to take charge of the property described herein, and to operate the said business, always subject to the approval of the Court.

'5th. That the said Receiver shall within 24 hours file a good and sufficient bond in the penal sum of $2500. conditioned as provided by law.

'6th. That this order shall be effective upon the delivery thereof to either of the defendants, or to any of their servants, agents or employees in charge of the said business known as Dixie Music Co., or by delivery to them of a true copy hereof.

'Done and ordered in Chambers in the City of Miami, Dade County, Florida, this 1st day of July, 1937.'

From this order an appeal was taken by Dixie Music Co., Inc.

Two amendments were made to the bill of complaint after the above order was entered. The substance of the first amendment is that at the time the bill was filed, William Shayne did not have in his possession or in his name any property which might or could be levied upon for satisfaction of plaintiff's demand. The substance of the second amendment is that Shayne indorsed in blank all outstanding stock in the Dixie Music Co., Inc., and delivered it to the Mercantile National Bank of Miami Beach to be held for the account of and subject to the order of Shayne, and also had executed in the name of the corporation a chattel mortgage, between five and ten thousand dollars, covering all of the...