George Altman, Inc. v. Vogue Intern., Inc.

• Decision Date: 15 August 1974
• Citation: 366 Mass. 176,314 N.E.2d 913
• Parties: GEORGE ALTMAN, INC., et al. v. VOGUE INTERNATIONALE, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 913

314 N.E.2d 913

366 Mass. 176

GEORGE ALTMAN, INC., et al. v. VOGUE INTERNATIONALE, INC.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 10, 1974.

Decided Aug. 15, 1974.

Thomas C. Cameron, Boston, for defendant.

Julius Thannhauser, Boston, for plaintiffs.

Before TAURO, C.J., and BRAUCHER, HENNESSEY, KAPLAN, and WILKINS, JJ.

WILKINS, Justice.

Vogue Internationale, Inc. (Vogue), challenges by appeal and exceptions various orders and decrees in connection with the appointment of a temporary receiver and a permanent receiver of its property.

On July 12, 1972, George Altman, Inc. (Altman), commenced this proceeding by the filing of a 'bill of complaint' seeking the appointment of a receiver of Vogue. Altman was apparently seeking to allege sufficient facts to justify the appointment of a receiver pursuant to G.L. c. 156B, § 105. ¹ Altman alleged that it had obtained a judgment and execution against Vogue in February, 1972, and that, despite numerous attempts by deputy sheriffs to make demand for payment, demand had not been completed. Altman further alleged that there was another judgment creditor holding an execution on which 'the sheriffs were unable to make demand.' During the week following the filing of the bill, eleven general creditors and one judgment creditor of Vogue filed petitions for leave to intervene. Vogue contends, and the appellees apparently concede, that Altman's execution was satisfied in full on July 20, 1972. ²

Vogue contends that because Altman's execution was satisfied, it was error for a judge on August 3, 1972, to appoint a temporary receiver, to allow other creditors to intervene, and to deny Vogue's motion to dismiss the petition. The record does not disclose the nature of any hearing held prior to the judge's action of August 3.

On August 30, 1972, Altman was allowed to amend its bill to allege that funds of Vogue had been transferred on or about August 16, 1972, to two officers of Vogue by means of a check drawn by them on a corporate bank account; that motor vehicles owned by Vogue had been transferred to those officers subsequent to the appointment of the receiver; and that the assets of Vogue were being wasted. Vogue argues that the motion to amend should not have been allowed because it alleged events subsequent to the filing of the original bill.

On September 7, 1972, a trial was held on the issue whether a permanent receiver should be appointed. The judge found that Vogue was insolvent. He found that during July, 1972, Vogue transferred three automobiles owned by the corporation to officers of Vogue, that there was no businesslike arrangement to pay for those transfers and that, even after the appointment of the temporary receiver, the corporate officers acquired new certificates of registration for those automobiles in their names. The judge further found that in August, 1972, officers of Vogue withdrew at least $15,600 from the corporation for their own purposes and withdrawal of the money indicated 'an intent on the part of . . . (Vogue's) officers to deplete corporate assets if afforded the opportunity.' The judge also found that Vogue's president removed fur skins from the corporate premises on August 3, 1972, and that he had those furs at his home. He concluded that there had been 'a wasting of assets, a depletion of assets and a removal of assets' and ruled that the creditors were entitled to a permanent receiver. Vogue argues that the evidence, which is reported, does not support the findings and rulings.

We turn first to Vogue's challenge to the appointment of the temporary receiver. The record contains no explanation of the evidence, if any, and the arguments of counsel which were presented to the judge who appointed the temporary receiver. The burden is on Vogue to show that the judge's decision was wrong. The existence of a second, unsatisfied judgment creditor was alleged in the original bill. That judgment creditor sought and was granted intervention by the judge on the same day he appointed the temporary receiver. We do not accept the argument that the judge had no choice but to dismiss the petition when Altman's execution was satisfied, if indeed it was then established (or agreed) that the execution had been satisfied. Section 105 of G.L. c. 156B does not require the dismissal of a bill seeking a receivership when the execution of the judgment creditor whose circumstances support the bill has been satisfied in full. Indeed § 105 does not by its terms require that the bill be filed by the unsatisfied judgment creditor. A receivership is not solely for the benefit of the petitioning creditor or creditors. See Wellman v. North, 256 Mass. 496, 501, 152 N.E. 886 (1926); New England Theatres, Inc. v. Olympia Theatres, Inc., 287 Mass. 485, 494, 192 N.E.2d 93 (1934) cert. den. sub nom. E. M. Loew's, Inc. v. New England Theatres, Inc., 294 U.S. 713, 55 S.Ct. 509, 79 L.Ed. 1247 (1935). It has been held that the appointment of a receiver is not barred where the judgment of the original petitioning creditor has been paid if other creditors have intervened. Parten v. Southern Colonization Co., 146 Minn. 287, 289, 178 N.W. 744 (1920). Accord, Eggleston v. Pantages, 103 Wash. 458, 462, 175 P. 34 (1918). On this record we cannot say that the appointment of a temporary receiver was wrong as matter of law.

Effective appellate review of an interlocutory decree appointing a receiver, particularly a temporary receiver, is not always feasible. Such a decree can often have irreversible and far-reaching consequences for the debtor and others. Therefore, particular care must be exercised by a judge in order to ascertain that facts exist which justify, and in the judge's discretion require, the appointment of a temporary or permanent receiver. See Hurley v. Boston R.R. Holding Co., 315 Mass. 591, 616--617 ³, 54 N.E.2d 183 (1944).

Turning then to Vogue's challenge to the appointment of the permanent receiver, we conclude that the facts found by the judge were supported on the evidence and in the judge's discretion warranted the appointment of a receiver on general equity principles. 'Generally, the appointment of a receiver rests in the sound discretion of the court. But in order to justify the appointment of one on the application of a creditor, it should at least appear that he has a valid claim against the corporation, that there are assets applicable to its payment, and that he has exhausted his legal remedies, or that the circumstances are such that to deny the application would lead to a wasting and loss of property which otherwise might be made available for the payment of the debts of the corporation, and which could not be availed of in any other manner so satisfactory as by the appointment of a receiver.' Falmouth Natl. Bank v. Cape Cod Ship Canal Co., 166 Mass. 550, 568--569, 44 N.E. 617, 619 (1896). See New England Theatres, Inc. v. Olympia Theatres, Inc., supra, at 287 Mass. 492, 192 N.E.2d 93; Albre v. Sinclair Constr. Co. Inc., 345 Mass. 712, 717--718, 189 N.E.2d 563 (1963). The findings...