Dufour v. Lang

• Decision Date: 19 December 1892
• Docket Number: 64.
• Parties: DUFOUR et al. v. LANG.
• Court: U.S. Court of Appeals — Fifth Circuit

54 F. 913

DUFOUR et al. v. LANG.

No. 64.

United States Court of Appeals, Fifth Circuit.

December 19, 1892

J. R Beckwith, for appellants.

John D Rouse, Wm. Grant, and Frank E. Rainold, for appellee.

Before PARDEE and McCORMICK, Circuit Judges, and LOCKE, District judge.

McCORMICK Circuit Judge.

On the 30th of April, 1892, the appellee, Carl Lang, a citizen of Indiana, on behalf of himself and of all others similarly situated, exhibited his bill of complaint in this case in the circuit court for the eastern district of Louisiana against the Louisiana Tanning Company and 12 individual defendants alleged to then constitute the board of directors of said company, alleging that said company was incorporated for the declared purpose, as expressed in its charter, of purchasing unimproved real estate in the parish of Orleans, and such other vacant woodland as might be necessary for the purposes of the corporation, and of constructing, maintaining, and conducting a tannery for the tanning and manufacture of leather products, and such other articles of commerce as appertain thereto; that said company was duly organized extensive and valuable works erected for the purpose of manufacturing leather and leather goods in the city of New Orleans; and in the fall of 1889 said corporation was in a situation to prosecute its legitimate business with great profit to the shareholders; that the president and directors of said corporation, and other shareholders, whose names are unknown to complainant, are engaged in the butchering business in New Orleans, and have constantly on hand, as a product of said business, a large quantity of hides for sale; that they own a majority of the stock of the corporation, and since the adoption of an amendment of the charter, procured by the president and secretary of the company on the 21st of November, 1889, pursuant to a scheme to defraud the complainant, who is not in the butcher business in New Orleans, and others similarly situated, have confined the operations of said corporation to the selling of hides produced by and belonging to themselves, as a broker or commission merchant, charging for such services a mere nominal brokerage. The prayer of the original bill sought to restrain this course of trade, alleged to be unlawful as well as fraudulent, and to have the operations of the corporation restored to and confined to the purposes expressed in the original charter, and for all orders necessary to effect that object.

On the 11th of June, 1892, the complainant filed a supplemental bill against the original defendants, except Joseph Tujague, and against P. Cougot and Wentzel Zimmerman, who were not parties to the original bill, alleging that since the filing of the original bill the officers of said corporation had called a stockholders' meeting, and on the 1st day of June, by a vote of a sufficient number of shareholders, said corporation was dissolved, and put in liquidation, and that the defendants Pierre Cougot, J. M. M. Dufour, and Wentzel Zimmerman were elected liquidators, have qualified, and are now in possession of the books, records, and property of the company as such; that about the time of the filing of the original bill the officers and directors of said corporation made a note to Pierre Ader (at that time a director) in the sum of $3,000, payable on demand, and at the same time granted a mortgage to secure the same, bearing upon all the real property of said company; that Pierre Cougot acted as the agent of said Ader in said transaction, and has filed a suit to foreclose said mortgage, and procured the issuance of a writ of seizure and sale thereon under which the sheriff has seized said real estate, and has advertised the same to be sold on the 25th day of June, 1892, to satisfy said note; that all of said actions of the officers and directors of said company were parts of a scheme and combination between them to wreck and destroy said corporation, and appropriate its assets and property to their own use; that the officers and directors are liable to account for all the profits made by them, and all they ought to have made out of the business of the corporation while under their control. The prayer is that a receiver may be appointed; that an account be ordered taken of the amounts due by the several defendants on account of all the matters complained of in the original bill and in the supplemental bill; that the assets of said company may be brought in and distributed; that said liquidators be ordered to deliver to said receiver the books and assets of the company and enjoined from interfering with the receiver in the performance of his duties. After notice to the parties of a rule to show cause why the receiver should not be appointed, and an appearance for them by counsel presenting affidavits and argument, the circuit court, on the 24th June, 1892, ordered, adjudged, and decreed as follows:

'That the interests of the defendants J. M. M. Dufour and P. Cougot in the subject-matter of the litigation in this case, and their relation to the Louisiana Tanning Company, which is adverse to the interests of the shareholders thereof, renders them incompetent to act as liquidators of said dissolved corporation, and their election and appointment, as such, is hereby set aside; and the said Wentzel Zimmerman, the other liquidator, having expressed a wish to be relieved of his trust, is also set aside.

'(2) It is further ordered that Wentzel Zimmerman, selected by the court in the first instance, and Geo. W. Barbot, nominated by the complainants, and the defendants declining to nominate third receiver, Joseph H. DeGrange, also selected by the court, be, and they are hereby, appointed receivers of said Louisiana Tanning Company, to act as trustees thereof in place of said liquidators, with full power and authority to liquidate and settle the affairs of said dissolved corporation; to collect, get in, and receive the outstanding debts, claims, and moneys due to or on account of said corporation business; to receive and take possession of all the stock in trade, effects, and property of every nature and kind belonging

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