Empire Distilling Co. v. McNulta

• Decision Date: 04 January 1897
• Docket Number: 310.
• Citation: 77 F. 700
• Parties: EMPIRE DISTILLING CO. v. McNULTA.
• Court: U.S. Court of Appeals — Seventh Circuit

77 F. 700

EMPIRE DISTILLING CO. v. McNULTA.

No. 310.

United States Court of Appeals, Seventh Circuit.

January 4, 1897

On the 28th of January, 1895, John F. Olmstead and others filed their bill in the court below against the Distilling &amp Cattle-Feeding Company, wherein as stockholders of the company, and by reason of certain matters charged in the bill and on account of the alleged inability of the company to proceed with its business, and of its insolvency, a receiver was sought to be appointed of the property of the company and the court was asked to administer its affairs, to wind up and dissolve the corporation, to convert its property into money, and to apply the same to the payment of its debts. On the same day the court below appointed receivers, of whom the appellee, John McNulta, is the successor, with the usual powers of receivers in like cases. Subsequently, on the 15th day of February, 1895, Chester H. Graves and others, judgment creditors of the Distilling & Cattle-Feeding Company, filed their bill against the company, of like character with the bill of Olmstead, and thereupon the two causes were consolidated, and the receivership extended to the consolidated cause. On the 29th of May, 1895, the receiver John McNulta, reported to the court with reference to certain leases held by the Distilling & Cattle-Feeding Company as lessees, and among them the one in controversy in this suit that it would not be profitable to pay rentals thereon, and recommended that he be authorized by the court to permit default to be made in the payment of rent under such leases and upon the same day the court directed the receiver not to make any payments of rent thereunder, but to permit default to be made therein. On the 6th day of June, 1895, the intervener, the Empire Distilling Company, filed its petition in the consolidated cause, representing that on the 19th of August, 1887, the petitioner made a lease of certain real estate then occupied by distilleries to the P. H. Rice Distilling Company for the period of 25 years, the buildings thereon being then the property of the lessee, and for an annual rental of 6 per centum per annum upon the actual cash value of the demised lands, then fixed at $100,000, that is, for the first 5 years of the lease the rental to be $6,000 per annum, payable quarterly. The lease further provided that at the expiration of 5 years from the date of the lease, and every 5 years thereafter during the continuance of the lease, the property should be revalued at the request of either the lessor or lessee, and the same rate per cent. should be paid upon every such valuation as rental. The petition further charged that after the date of the lease the Distilling & Cattle-Feeding Company succeeded to all the rights and privileges of the P. H. Rice Distilling Company, took possession of the real estate described in the lease, became bound by the terms of the lease, and duly paid the rent until the 1st day of April, 1895, when it defaulted, and has since paid no rent. That on the 19th of December, 1892, pursuant to the terms of the lease, the value of the premises on the 8th day of August, 1892, was fixed by appraisers at the sum of $80,000, whereby, according to the terms of the lease, the rental became and has since remained, at the annual sum of $4,800. That the Distilling & Cattle-Feeding Company had adopted the lease and appraisal and become duly bound by the terms thereof. It then alleged the proceeding in the suit referred to, alleged that it had no notice of any of the proceedings therein, was not a party thereto, and is not bound thereby. It also alleged that the Distilling & Cattle-Feeding Company was not insolvent, and that it had at all times been able in the usual and ordinary course of business to meet all its current liabilities without resorting to the proceedings which had been adopted, and set forth certain proceedings and statements by the receiver of the company and the so-called 'reorganization committee,' which it is claimed tended to prove the allegations of the petition in that behalf. The petition prays that the receiver may be ordered to answer its petition, and that he should be 'instructed to pay to your petitioner the amount of rental fixed and due as aforesaid, the $1,200 due April 1, 1895, and $1,200 on the first day of each succeeding quarter. ' To this petition on the 15th day of June, 1895, the receiver filed his general demurrer. On the 5th day of July, 1895, upon the report of the receiver recommending an early sale of such of the distillery properties belonging to the company of which the receiver had taken possession, a decree of sale was entered directing the receiver to sell such properties upon the terms therein mentioned, and to report his doings to the court. The record further shows that on the 24th of July, 1895, a decree was entered in the cause which ascertained the facts found in the several bills of complaint to be true, and among other things that the complainants, Chester H. Graves and others, recovered a certain judgment on the 12th day of February, 1895, upon which a writ of fieri facias has been issued and returned nulla bona on the 26th day of February, 1895. It further found that, at the time of the filing of the bill of complaint of John F. Olmstead and others, the business of the defendant was being conducted at a loss; that it was without means or credit wherewith to borrow money sufficient to enable it to pay its obligations as the same matured, or to longer carry on or continue its business, and that it was then solvent. The decree further found that on the 3d day of June, 1893, the attorney general of the state of Illinois, filed in the circuit court within and for the county of Cook, in the state of Illinois, an information in the nature of a quo warranto against the defendant, the Distilling & Cattle-Feeding Company, to forfeit its charter upon the ground that it had been guilty of an abuse thereof. That on the 22d day of September, 1894, a decree was therein rendered adjudging and determining that the Distilling & Cattle-Feeding Company be, and it was thereby, ousted of...