Fry v. Rush

• Decision Date: 06 July 1901
• Docket Number: 12,492
• Citation: 63 Kan. 429,65 P. 701
• Parties: WILLIAM H. FRY et al. v. J. W. Rush et al
• Court: Kansas Supreme Court

65 P. 701

63 Kan. 429

WILLIAM H. FRY et al. v. J. W. Rush et al

No. 12,492

Supreme Court of Kansas

July 6, 1901

Decided July, 1901.

Error from Pawnee district court; J. E. ANDREWS, judge.

STATEMENT.

ON April 9, 1895, J. W. Rush commenced an action in the district court of Pawnee county against the Western Kansas Loan and Mortgage Company, alleging that it had suspended business for more than three years and had held no election of officers that its president, secretary and general manager had each sold his stock and resigned, and said offices were vacant that there was not a quorum of directors existing for the transaction of business; that the assets consisted chiefly of bank stock and past-due paper about to be barred by the statutes of limitation; that there was imminent danger of insolvency; that the plaintiff was the owner and holder of a majority of the capital stock, and that there was no adequate remedy at law to protect his interest. The petition concluded with a prayer for dissolution and for a receiver. William Scott, who is a defendant in error in this case, was appointed receiver, but was afterward removed, and William Mansfield, one of the plaintiffs in error in this cause, was appointed in his stead. Much litigation ensued, and on February 1, 1897, it being shown that all the litigation had been disposed of and all the debts of the corporation paid including the expenses of the receivership and of that action, the receiver was discharged and the case dismissed.

On March 1, 1897, J. W. Rush and William Scott commenced this action in the same court against the following parties defendant: The Western Kansas Loan and Mortgage Company William H. Fry, William Mansfield as receiver of the Western Kansas Loan and Mortgage Company, William Mansfield, W. H. Vernon, Ella P. Vernon, E. A. Austin, Ada F. Charles, F. D. Smith, and S.W. Vandivert. With the exception of the first two, none of them was a party to the former suit. W. H. Vernon had been attorney for the receivers, Scott and Mansfield; E. A. Austin and F. D. Smith had been attorneys for Fry and Mansfield; Ella P. Vernon and Ada F. Charles had purchased certain assets from the receivers; and S.W. Vandivert was the judge who had made most of the orders. The petition, among other things, alleged:

"That in June, 1896, W. H. Vernon, Fred D. Smith, Edwin A. Austin Wm. Mansfield and S.W. Vandivert wilfully, fraudulently and corruptly combined, conspired and confederated together for the purpose of cheating, swindling and defrauding the W. K. L. & M. Co. of all its property, and of defrauding J. W. Rush of all his interest therein; that in pursuance of the same all of the defendants last mentioned assembled in the office of W. H. Vernon and there prepared all the orders hereinafter complained of; that the said judge did then and there render the judgments hereinafter complained of, and at different times signed all of said orders and rendered all of said judgments in said office, without trial or examination of any kind, and afterwards announced the same from the bench; that Scott had a good and valid defense to objections to his report as receiver, but was prevented from making use of the same by reason of being terrorized and held in contempt by the said S.W. Vandivert and the other defendants mentioned, and that Rush had a good and valid cause of action, as set forth in his original petition in the former action; that all of the assets sold and converted into cash by Mansfield, receiver, belonged to the W. K. L. & M. Co., and that none of said defendants had performed any legal services for the amounts allowed them; that the plaintiffs were prevented by the fraud, oppression and misconduct of the persons named from having a fair and impartial trial, and that the judge was an interested party in the suit and had no jurisdiction in said matters, and that the whole proceedings were fraudulent and void."

This petition concluded with the following prayer:

"Wherefore, plaintiffs demand that the pretended final judgments rendered on the 8th day of February, 1897, and all judgments and orders and rulings and proceedings made and allowed in said action, be set aside, held for naught, and that all the deeds and assignments as made by the said William Mansfield or any of the other defendants to any and all of the property in said action be set aside, canceled, and held for naught; that all orders made in said action for the allowance of attorney fees, costs and expenses in said action be set aside and held for naught; that all deeds and assignments made and executed by William Mansfield as receiver in said action be declared canceled, void, and of no effect; that the plaintiffs be restored to all rights and things that they have lost by reason of the proceedings, and that a new trial be granted."

Demurrers were filed by the defendants, William Mansfield as receiver, William Mansfield, W. H. Vernon, Ella P. Vernon, E. A. Austin, Ada F. Charles, F. D. Smith, and S.W. Vandivert, for the following reasons: (1) Incapacity of plaintiffs to sue; (2) defect of parties; (3) misjoinder of causes of action; (4) insufficient facts to constitute a cause of action. The defendant S.W. Vandivert was afterward dismissed from the case. These demurrers and all other motions by the defendants were overruled by the court. The cause was tried without a jury, and on September 23, 1898, the court found for the plaintiffs, the substance of its judgment and decree, as stated by counsel for plaintiffs in error, being as follows:

"1. It sets aside the order finding the facts concerning and removing William Scott and appointing William Mansfield as receiver, of August 17, 1896.

"2. It sets aside the order finding the facts concerning and against J. W. Rush and Wm. Scott, of September 7, 1896.

"3. It sets aside the order permitting Wm. H. Fry to intervene as an additional party plaintiff, of August 17, 1896, and strikes his intervening petition from the files.

"4. It sets aside the order dismissing Rush as a party plaintiff, on November 26, 1896.

"5. It sets aside the order directing Wm. Mansfield, as receiver, to sell real estate and other assets, of October 19, 1896, the order confirming such sale, and all proceedings touching or concerning such sale.

"6. It annuls the deeds made by the receiver to Ella P. Vernon, Ada F. Charles, and Edwin A. Austin, and decrees the full legal and equitable title to still remain in the Western Kansas Loan and Mortgage Company, orders them to surrender their deeds for cancellation, and enjoins them from selling, attempting to sell and from exercising any control or dominion over said real estate.

"7. It gives Ada F. Charles a lien on the land described in the deed to her for the amount of her purchase-money, directs a sale for the payment of the lien, with interest after six months.

"8. It sets aside the various orders allowing W. H. Vernon, E. A. Austin and F. D. Smith attorneys' fees, and allowing William Mansfield fees as receiver, and finds the amount each received to be, to wit: E. A. Austin, $ 726; F. D. Smith, $ 650; William Mansfield, $ 342.97.

"9. It in recapitulation sets aside all the proceedings on, from and after August 11, 1896, reinstates Rush as plaintiff, reinstates Scott as receiver, reinstates the case of Rush v. The Western Kansas Loan and Mortgage Company for such proceedings as the exigencies of the case may require.

"10. It orders E. A. Austin to pay Scott, as receiver, $ 726; and F. D. Smith to pay Scott, as receiver, $ 650; and Wm. Mansfield to pay Scott, as receiver, $ 342.97 (within twenty days).

"11. As a finality, it orders Wm. Mansfield to surrender to Wm. Scott, receiver, all things of the Western Kansas Loan and Mortgage Company in his possession or under his control."

The object of reinstating the original case, as set forth in subdivision 9 of the quotation from the statement of the contents of the judgment by counsel for plaintiffs in error, was stated by the court, in its eleventh conclusion of law, as follows:

"The receiver will hold all of said trust property subject to the ultimate distribution among the stockholders and parties entitled thereto. A suitable order will be made and notice given requiring all creditors of said corporation to appear and file their claims in said cause, to the end that they may be terminated and either allowed or disallowed; and also an inquiry will be instituted for the purpose of locating all stockholders of said corporation, to the end that the surplus of said estate may be properly apportioned and distributed among them."

To reverse the judgment of the district court this proceeding in error was begun.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. JUDGMENT--Final Order--Review. Although some parts of a judgment may be interlocutory in their nature, yet, where others are definitive and by their terms exclude the possibility of further action by the trial court as to the issues and as to all the parties to the cause, the adjudication is such a final order as will entitle the parties whose rights are definitely determined to a review.

2. CORPORATIONS--Office and Officers--Pleading. The laws of this state provide for annual elections of directors of corporations and for filling vacancies in the directorate and other offices, and an allegation in a petition that certain vacancies existed at one time, or that the directors in office at a particular time were inefficient or derelict in duty, does not raise a presumption that such state of facts will continue from year to year.

3. CORPORATIONS--Action by Stockholder--Conditions Precedent. In an action by a stockholder for the benefit of a corporation, he must allege and prove not only that he...