Fudickar v. Louisiana Loan & Inv. Co., 234.

• Citation: 13 F.2d 920
• Decision Date: 12 May 1926
• Docket Number: No. 234.,234.
• Court: U.S. District Court — Western District of Louisiana
• Parties: FUDICKAR et al. v. LOUISIANA LOAN & INV. CO.

13 F.2d 920 (1926)

FUDICKAR et al. v. LOUISIANA LOAN & INV. CO.

No. 234.

District Court, W. D. Louisiana, Monroe Division.

May 12, 1926.

McHenry, Montgomery, Lamkin & Lamkin, of Monroe, La., for complainants.

Geo. Gunby, of Monroe, La., for respondent.

DAWKINS, District Judge.

Complainants, citizens of the state of Louisiana, brought this suit, on behalf of themselves and such other stockholders as may wish to join herein, for the appointment of a receiver to the defendant, alleging that it is a Delaware corporation, with its "principal office in the city of Wilmington, state of Delaware"; that they are the owners of stock of the par value of $10,750; that the officers of said corporation, particularly its president, secretary-treasurer, and manager, "are jeopardizing the rights of the stockholders and creditors, and particularly the rights of your complainants, by grossly mismanaging and misapplying the property and funds thereof, all of which said property, funds, and assets are located within the jurisdiction of this court, and by committing ultra vires acts, in that" (a) they are operating said business at a great loss; (b) that the corporation "is in sole charge" of the president and secretary-manager, who was drawing salaries of $100 and $250 per month, respectively, which are entirely out of proportion to the services rendered, and in addition thereto are incurring further monthly expenses of $160 per month, and that "the earnings of said corporation amount to practically nothing, and certainly do not amount to such sums as warrants the large expenditures just outlined.

Complainants further show that the said expenses are not paid out of the surplus earnings or net profits, but entirely out of the capital of said corporation, which is thereby being impaired, and is steadily being further impaired, to the great loss and injury of said corporation, its stockholders, and particularly to your complainants"; (c) "that said corporation was organized to engage in the business of lending money, and has ceased to function because of the neglect and mismanagement of those in charge of its affairs," and the sums due and accruing upon its notes, etc., are not being collected, and its funds and property are thereby being dissipated; (d) that those in charge of said corporation have permitted one L. L. Lieber to compromise and settle a large indebtedness to it by transferring to the corporation 200 shares of its own capital stock, which is ultra vires its powers under the laws of Delaware, the state of its creation; (c) and (f) that the business and affairs are so muddled and confused that it has been impossible for complainants and other stockholders to obtain any information in regard thereto, and that the officers in charge own no stock in said corporation, and hence are without financial interest, are hostile to complainants, and it is impossible to get them to "straighten the corporation affairs."

Complainants further show that they are informed and believe, and, so believing, aver, that a transaction has been agreed upon and a combine made between those in charge of said corporate affairs and one V. V. Lamkin, stockholder, who recently has acquired a large amount of the preferred stock of said corporation, at a price much below par, under the terms of which the said corporation is to be liquidated by consent and agreement, and the remaining assets purchased, either by the said V. V. Lamkin, or those in charge of said corporation and the said V. V. Lamkin, or by a corporation to be formed by them; that the consummation of said transaction will result in a sacrifice of said assets, waste and dissipation thereof, and a total loss to the holders of common stock, in that all funds realized from such liquidation sale will be consumed in payment and retirement of the preferred stock, the holders of which, under the corporate charter attached hereto and made a part hereof, as aforesaid, are entitled to be paid in full the par value of their shares before any amount shall be paid to holders of common stock; and that, "although the complainants have not sufficient information to justify them in charging `actual fraud' against the officers and directors," yet their conduct has been such as to "constitute a fraud in law" and warrant the court in appointing a receiver, "which complainants believe and aver will result in the salvage to the stockholders of said corporation, and particularly to your complainants, the establishment and revival of the said corporation, and the final resumption of a safe and profitable business."

Complainants further alleged as follows: "That the funds, assets, and property of the defendant corporation are all located...