Empire Hotel Co v. Main

• Decision Date: 16 March 1896
• Parties: EMPIRE HOTEL CO. et al. v. MAIN.
• Court: Georgia Supreme Court

98 Ga. 176

25 S.E. 413

EMPIRE HOTEL CO. et al.

v.MAIN.

Supreme Court of Georgia.

March 16, 1896.

Insolvent Corporation — Appointment op Receiver.

1. Even if the directors of an insolvent corporation, after advancing money to it, and accepting for the same preferred stock of the company, subsequently unlawfully canceled this stock, and issued to themselves promissory notes of the company for the amounts severally advanced by each, and sought to collect the same by suit, these facts are insufficient to authorize a court of equity, upon the petition of a stockholder, to appoint a receiver to take charge of the assets and franchises of the corporation. In such case the plaintiff can be fully protected as to all of his rights in the premises by a proper injunction, such as was granted in the present case, and to which there was no exception.

2. Where a receiver of the property of a corporation was improperly appointed, an order directing him to sell such property was necessarily erroneous.

(Syllabus by the Court.)

Error from superior court, Whitfield county; T. W. Milner, Judge.

Action by H. K. Main against Empire Hotel Company and others. Judgment for plaintiffs and defendants bring error. Reversed.

R. J. & J. McCamy and Jones & Martin, for plaintiffs in error.

C. B. Reynolds, Maddox & Starr, and King & Spalding, for defendant in error.

LUMPKIN, J. The facts of this case are numerous and somewhat complicated, and, in the argument before this court, quite a number of legal questions were presented. However, as the case, in our judgmentshould have been made to turn upon the controlling propositions announced in the first headnote, we shall limit our remarks accordingly.

It was charged that the directors, after advancing money to the hotel company, and accepting for the same preferred stock of the corporation, subsequently unlawfully canceled this stock, issued to themselves promissory notes of the company in lieu thereof, and were seeking to collect the same by suit. It is fair to say in this connection that these directors introduced evidence strongly tending to show that their conduct in the premises was neither unlawful nor fraudulent, but was fully warranted by the existing facts. Upon the assumption, nevertheless, that it was not, we do not think, in view of the prayers of the petition, that a receiver should have been appointed. In our opinion, the injunction granted by the judge, and to which there was no exception, gave to the plaintiff all the relief to which he was entitled under the prayers of his petition. Whatever may be the rights of stockholders...