Dodwell v. Rieves

• Decision Date: 23 December 1916
• Docket Number: 17896
• Citation: 74 So. 770,114 Miss. 4
• Court: Mississippi Supreme Court
• Parties: DODWELL ET AL. v. REEVES

74 So. 770

114 Miss. 4

DODWELL ET AL. v. REEVES

No. 17896

Supreme Court of Mississippi

December 23, 1916

Division B

APPEAL from the chancery court of Carroll county, HON. JAMES F MCCOOL, Chancellor.

Suit by J. M. Dodwell and others against J. A. Reeves, receiver for the Merchants' & Farmers' Bank of Vaiden. The prayer of the petition that the court instructed defendant receiver to prosecute an appeal to the supreme court from a decree of the chancellor vacating an assignment for creditors made by the bank, was denied, but the court granted an appeal to petitioners.

On February 21, 1913, the Merchants' & Farmers' Bank of Vaiden, acting through its board of directors, made a general assignment, without preferences, for the benefit of all of its creditors, to one McDougal, as assignee. No schedule was filed with the assignment, nor was the seal of the bank affixed to the instrument.

The instrument provided that the assignee should take possession of all the property, and collect all the accounts, and out of the proceeds should pay all expenses of executing and carrying into effect the trust imposed, including a reasonable compensation to be allowed by the court for his services and for the services of attorneys in advising and preparing the assignment, and for such other services as they might render the assignee, and that the assignee should, out of the residue of the proceeds, pay the creditors ratably etc. On the following day the assignee filed a petition in the chancery court praying the approval of the deed of assignment, and that all creditors of the bank be made parties to the proceeding, as required by law. The court approved his bond, and later, on the 11th of March, he executed another deed of assignment, containing the same provisions as the former, except that it purported to correct certain errors and defects in the first instrument, and on the same date another petition was filed with the court with similar provisions as those contained in the former petition. The assignee filed his schedule on March 5th.

On March 11th a cross-petition was filed by certain creditors of the bank, attacking the validity of the assignment upon the following grounds, to wit: (1) That said assignment was executed without any authority from the stockholders, and at a meeting hurriedly called, and the minutes of which are not dated and signed. (2) That said assignment was filed by the clerk of the chancery court, and was accompanied by any inventory or schedule. (3) That the name of the bank was not signed to said assignment, nor was the seal of the bank attached thereto. (4) That said assignment was acknowledged before J. C. Allen, clerk of the circuit court, and that two of the claims assigned were on notes against said Allen for small amounts, about forty-three dollars each. (5) That said assignee never filed a petition required by section 120 of the Code of 1906, making the bank and all its creditors parties to the petition; that the socalled petition filed by said assignee does not name but one party as defendant thereto, and that is J. O. Ringgold. (6) That the assignment is a preferential one--that is, preferring a debt due to Hill & Coleman for attorneys' fees--and, further, that A. J Coleman, one of the members of said law firm, was one of the directors who made the assignment, and was thereby as a director making a contract with himself as a member of said law firm, "whose claim was preferred."

The cross-petitioners further alleged that McDougal was a former director of the bank, and was an improper person to serve as assignee, and prayed for the removal and the appointment of a receiver. The assignee and certain of the directors answered alleging that the assignment was general and without preferences, and intended to convey all the property of the assignor; and the assignee further alleged that he had employed other attorneys in the place of Messrs. Hill and Coleman to advise him in the administration of the affairs of the bank.

The chancellor, upon a hearing in vacation, removed McDougal as assignee, and appointed J. A. Reeves, one of the petitioning creditors, as receiver, and subsequently in term time confirmed the appointment, and vacated and set aside the assignment. Subsequently appellants and others who were depositors and creditors of said bank filed a notice to the receiver, requesting him to prosecute an appeal to the supreme court from the decree of the chancellor vacating the assignment, which the receiver declined to do, and thereupon appellants filed a petition in the chancery court praying that the court instruct the receiver to prosecute such an appeal. The court denied the prayer, but granted an appeal to the appellants.

The sole question before the court is whether or not the assignment made by the bank is valid or invalid, and whether or not the court below was correct in entering a decree vacating and setting aside said assignment.

Reversed and remanded.

McLean & Corruthers, for appellant.

The first objection urged by the cross petitioners--creditors and minority stockholders--is that said assignment was executed without any authority from the stockholders and at a meeting hurriedly called.

The question has never been passed upon by the supreme court of this state as to whether the board of directors of a corporation has the power to make a general assignment for the benefit of creditors, without having first obtained the authority of the stockholders so to do, but the courts of other states have decided that the board of directors does possess such powers, and such is the modern rule, as will appear from the following authorities: Robbins v. Embry, Smedes and Marshall's Chancery Reports, page 207; 7 Corpus Juris., page 738, section 510; Balton v. Kentucky Distilleries & Warehouse Co., 120 F. 338, citing 3 Thomp. Corp., sec. 3986; 3 A. & E. Ency. Law (2 Ed.), page 24, note 2 and cases cited; 10 Cyc. 1240; also 10 Cyc. 766; 3 A. & E. Enc. Law (2 Ed.), page 23; Leonard v. Hartzler, 50 L. R. A. (N. S.) 383, 90 Kan. 386, 133 P. 570; Dana v. Bank of United States, 5 W. & S. 223; DeCamp v. Alward, 52 Ind. 468; Union Bank v. Elliott, 6 Gill & J. 363; Burrill Assignments, sec. 64; Ang. & Ames. Corp., sec. 191; Morawetz Priv. Corp., secs. 240, 578-9; Cescombes v. Wood, 91 Mo. 196, 60 Am. Rep. 239, et seq.; 2 Cook on Corp. (5 Ed.), secs. 683 and 684; Sargent v. Webster, 46 Am. Dec. 743; State National Bank of St. Louis v. Merchants Bank of Grenada et al., 83 Miss. 610, et seq.; Beecher v. Marquette, 45 Mich. 103, 7 N.W. 695; 10 Cyc. 784, note 54.

The second objection urged against the assignment is that the assignment was filed by the clerk and was unaccompanied by any inventory or schedule--the position of the cross-petitioners being that the deed failed because of an imperfect, or want of proper, description of the property attempted to be assigned. The assignment provides as follows: "The party of the first part hereby warrants, sells, conveys, assigns, transfers, and sets over to the party of the second part all of its property, real estate, also all the goods, chattels, bills receivable, bonds, notes, choses in action, books, accounts, claims, demands, books of account, and all property of every name, nature, and description whatever and wheresoever located, the same being fully and particularly enumerated and described in a schedule hereunto annexed marked schedule A."

It is true that the "Schedule A" mentioned was not in fact annexed to the deed of assignment, but what possible difference could this make? What could be more full and complete than the description of the property sought to be transferred, which was all the property owned by the assignor of every name, nature, and description, whatever and wheresoever located? Cribben v. Ellis, 69 Wis. 337, 34 N.W. 154, et seq.; Barksdale v. Barksdale, 92 Miss. 1734, et seq.; 13 Cyc., page 634, par. h.; Vickham & Pendleton v. S. & O. Green, 61 Miss. 463; 3 A. & E. Enc. Law (2 Ed.), page 45, note 1; Turner v. Jaycox, 40 N.Y. 470; Kaufman v. Simon, 80 Miss. 189.

The next objection urged against the assignment is that the name of the bank was not signed to said assignment, nor was the seal of the bank attached thereto.

As to the first part of the objection, we merely call the attention of the court to the wording of the deed of assignment, as follows: "This indenture made this the 21st day of February, 1913, by and between the Merchants' & Farmers' Bank of Vaiden, Mississippi, party of the first part, etc.;" and then to the wording of the signing clause:

"Now by authority vested in us by virtue of a resolution of the board of directors of the Merchants' & Farmers' Bank, we, as the officials and directors of the bank, hereunto set our hands and the seal of said bank, this the 21st day of February, 1913." Then follow the signatures of the various officials of the bank, with their official positions shown opposite their names. The wording of the signing clause shows clearly that the deed of assignment was being signed by the officials of the bank upon behalf of said bank, the assignor.

"To a corporation's assignment for benefit of creditors a notary's certificate that C. President, and M. Cashier, thereof acknowledged that they executed and delivered the same as their voluntary act and deed for the uses and purposes therein contained," held sufficient to certify the corporation's acknowledgment. Eppright v. Nicholson, 78 Mo. 482.

As to the latter part of the objection, we direct the attention of the court to two recent decisions of our supreme court. "An unsealed deed executed by a corporation, though insufficient to convey the legal title, passes the equitable title which equity will protect." Hines v. Imperial Naval Stores Co., ...