Edenfield v. Crisp
| Decision Date | 18 May 1966 |
| Court | Florida District Court of Appeals |
Duane A. Reynolds, of Henderson, Franklin, Starnes & Holt, Fort Myers, for Appellants Edentfield.
William L. Stewart, of Stewart & Stewart, Fort Myers, for Appellant Fred's Barn, Inc.
James W. Moore, Naples, for Appellees.
This is an interlocutory appeal from an order entered sua sponte by the Chancellor below, appointing a receiver for Fred's Barn, Inc., a corporation, in a stockholder's derivative suit filed in the Collier County Circuit Court.
James W. Crisp, Jr., and Raymond Cail, minority stockholders of Fred's Barn, Inc., a Florida corporation, owning between them 5400 shares of stock out of a total issue of 15,053 shares, filed complaint against Fred H. Edenfield, Mae W. Edenfield and Fred H. Edenfield, Jr., owners of a total of 8700 shares in the corporation, and aggregating a majority. Mae W. Edenfield was the wife of Fred H. Edenfield, and Fred H. Edenfield, Jr., is their son. It was alleged that the Edenfields constituted the Board of Directors exclusively, and were also the only officers of the corporation, Fred H. Edenfield being the President, his son Vice President, and his wife Secretary-treasurer. It was alleged that the Edenfields had always voted their stock in a block at stockholders' meetings, thereby exercising "absolute control" of the corporation, which situation had existed for ten years immediately prior to filing of the complaint.
Many and numerous detailed charges of fraud, mismanagement, conversion, collusion, and conspiracy were alleged on the part of the Edenfields in their dominant management of the corporation's affairs, in disregard of the rights of minority stockholders, including the two plaintiffs. It was alleged that at one time the corporation owned and operated one of the largest, if not the largest, grocery businesses in Immokalee, Florida, and did a large volume of business in that area of the State, but that over the years, because of the machinations and manipulations of the defendants in burdening the corporation with unnecessary costs, expenses, salaries, and outside financial ventures, the net worth of the corporation, and the consequent value of the outstanding stock thereof, had deteriorated greatly. It was also alleged that plaintiffs had consistently endeavored to get an accounting of the acts and doings of the corporate officers, and/or access to the books and records of the corporation, but without avail; that on one occasion the Edenfields agreed to permit inspection of said books and records, but later refused such access after plaintiffs had procured a qualified C.P.A. to travel at plaintiffs' expense from Miami to Immokalee "for said useless trip." It was alleged that Fred H. Edenfield finally "announced" that the grocery business was "not showing a profit" and that there was no alternative "but to close down the business," especially in view of the fact that the State Road Department was in process of condemning "so much of the grocery store property that there would not be room to profitably operate the business," but that he failed to advise that he had already individually acquired and then owned the property immediately adjacent to the grocery store property of Fred's Barn, Inc.; on which adjacent property the Edenfields have since constructed a new building and are in process of operating a grocery store "almost identical to that which had been operated by Fred's Barn, Inc., and that they even used the name 'Fred's' for said business." It was alleged that the defendants had moved the equipment, stock in trade, books, records, market equipment, compressors, freezing units and other machinery and equipment of Fred's Barn, Inc., of a balance sheet valuation in excess of $86,000.00, into the newly constructed adjoining building. It was alleged that the Edenfields are now operating the grocery store business known as "Fred's" and that the business of "Fred's Barn, Inc." has been closed down. Many and numerous other allegations in like vein were contained in the 17-page complaint.
It further appeared from the complaint that the sum of $20,000.00 was being held by the Clerk of the Circuit Court for Collier County, Florida, in the registry of that Court, for the benefit of Fred's Barn, Inc., and/or the Edenfields, derived from a condemnation suit filed by the State Road Department of Florida, but that the Edenfields were endeavoring to effect transfer thereof to them personally. Said sum had been awarded in a Court condemnation trial as reimbursement for the acquisition of certain real property of Fred's Barn, Inc., by the Road Department.
The complaint prayed for an order appointing a receiver for Fred's Barn, Inc. to take charge of the property and assets of the corporation; that if such receiver was not appointed, plaintiffs or their representatives would be decreed the right of access to and examination of the files, books and records of the corporation; that an accounting be rendered by the Edenfields of their acts and doings as majority stockholders; that the corporation be reimbursed for the moneys and other property and assets alleged to have been wrongfully dissipated and converted therefrom; that the $20,000.00 held by the Court Clerk be turned over to the receiver as the property of Fred's Barn, Inc.; and that after the property and assets of the corporation had been recovered and its creditors paid, the corporation be dissolved and its remaining assets made liquid and distributed to the stockholders of the corporation according to their respective interests therein.
Thereafter, on November 8, 1965, the Chancellor issued order calling for the holding of a pre-trial conference in the case on January 19, 1966, and sent copies to all parties to the suit. The pre-trial conference was held on that date but was not completed, and was continued until March 18, 1966 by order of Court, and the parties were directed in the order to complete their discovery depositions, interrogatories, motions for production, requests for admissions, etc., prior to the continued date. On said January 19, 1966, the chancellor by separate order appointed ex mero motu Alfred J. Hackney as Receiver for Fred's Barn, Inc., with directions to file a receiver's bond in the amount of $1,000.00, to be approved by the Clerk of the Court. The receiver was empowered in the order to wind up the affairs of the corporation, marshal all assets, determine all creditors, procure each creditor to file...
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