Espuela Land & Cattle Co. v. Bindle

• Decision Date: 01 November 1893
• Citation: 23 S.W. 819
• Parties: ESPUELA LAND & CATTLE CO., Limited, v. BINDLE et al.
• Court: Texas Court of Appeals

23 S.W. 819

ESPUELA LAND & CATTLE CO., Limited, v. BINDLE et al.

Court of Civil Appeals of Texas.

November 1, 1893.

Appeal from district court, Wilbarger county; G. A. Brown, Judge.

Application by John Bindle and others for a receiver to take charge of the property of the Espuela Land & Cattle Company, Limited, and to convert the same into money for distribution. From an interlocutory order granting the application, defendant appeals. Reversed.

Coke, Tucker & Coke, for appellant. John W. Wray, for appellees.

STEPHENS, J.

This appeal is from an interlocutory order appointing a receiver to take charge of and convert into money, for distribution among the creditors and stockholders of appellant company, all its assets in the state of Texas, which included the entire assets except a little office furniture in the city of London. The complaining litigants in the court below were John Bindle, who filed the original petition in July last, as the owner of 10 shares of preference stock in said company; A. M. Britton, who intervened as the owner of certain other shares; and Walter Katte, who intervened as a lien creditor. Of these, Britton was the moving and controlling spirit, though Bindle, his German cook, to whom for a nominal consideration he had assigned the 10 shares of stock, preceded him one step in the litigation, while just behind him came his brother-in-law, Katte, of New York. At the hearing of the motion for the appointment of the receiver it was developed that nearly 10 years ago appellant company was formed, under the Companies Acts of Great Britain, to acquire by purchase and to operate the cattle ranch in the Pan Handle of Texas, then belonging to the Espuela Land & Cattle Company of Ft. Worth, a Texas corporation, which was accordingly done. The Texas company being burdened with a debt of about $1,000,000, through the efforts of Britton, who was largely interested therein, was enabled to transfer to the London company, free of incumbrance, its entire herd of cattle, consisting of about 35,000 head, besides horses and other personalty, and also its grazing lands, subject to the lien for purchase money thereon, consisting of about 400,000 acres. The authorized capital of the new company was 40,000 shares of preference stock, of which about 26,000 were actually issued, and 60,000 ordinary shares, of which 30,000 were actually issued; the face value of each of the shares being five pounds. There were afterwards issued, as a means of raising money for the concern, 26,000 prior-lien debentures, and nearly 100,000 income debentures. The annual interest on the latter was payable only out of the net income, and was cumulative; and the time and manner of enforcing the collection of both principal and interest were left largely to the discretion of a majority of the debentureholders. These securities, as well as preference shares, were mostly held by Englishmen, and were declared to be a lien, in the order named, on the entire assets, subject to the mortgage on the lands. Katte and wife owned three income debentures, of the face value of £1,000 each, and two prior-lien debentures of the aggregate face value of £60. It was further made to appear that the London company had substantially the same amount of assets, though of reduced value, as in the beginning, with the debt evidenced by the debentures superadded; that no dividend had ever been paid to stockholders; that the stock, whether preference or common, was of little or no value; that the debentures had several years to run; that all interest on the prior-lien debentures had been paid; that by their terms none was payable on the income debentures for want of a net income; that the foreign company had all the time been under the management of a board of directors at London; and, although in the beginning Britton was made managing director in America, that he did not long hold that position, but had for several years been unable to exert any potential influence in the management of the company. The order appointing the receiver rests on these conclusions of the trial court: "(1) I find as a matter of fact that the defendant corporation is, and was at the institution of this suit, insolvent. (2) Plaintiff John Bindle and interveners Britton and Katte are, and were at the institution of this suit, shareholders and owners in said company. (3) That the interveners, Britton and Katte, are and were lien creditors of defendant company. [This finding as to Britton is admitted to be a mistake.] I therefore decide the law to be in favor of plaintiff and interveners, and that they are entitled to have a receiver appointed of and for the defendant, and it is accordingly ordered."

While it is not very clear to us that the fact of insolvency was established, we are of opinion that we would not be warranted in disturbing the finding on that issue. The question then arises, can a stockholder or lien creditor of an...