Hopper v. Fesler Sales Company

• Decision Date: 22 November 1916
• Citation: 99 A. 82,11 Del.Ch. 209
• Court: Court of Chancery of Delaware
• Parties: GERALD R. HOPPER, v. FESLER SALES COMPANY

99 A. 82

11 Del.Ch. 209

GERALD R. HOPPER, v. FESLER SALES COMPANY

Court of Chancery of Delaware, New Castle

November 22, 1916

BILL IN EQUITY. The complainant seeks the appointment of a receiver on grounds of insolvency, and among other things alleges mismanagement by certain officers of the affairs of the company. A demurrer on behalf of the defendant was filed in which it was claimed that the bill was multifarious, and the cause was heard on bill and demurrer. The facts are sufficiently stated in the opinion of the Chancellor.

Demurrer overruled, and defendant required to plead to or answer the bill within a time to be fixed in the order.

Robert Pennington, for the compainant.

James I. Boyce, for the defendant.

OPINION

THE CHANCELLOR.

The bill is filed by a stockholder against the corporation which was organized, among other things, to manufacture and sell a certain kind of shaving brush, and charges that it has not at any time since its incorporation engaged in the business for which it was incorporated, except in a very small way, but that the officers of the company have devoted practically all their time to selling shares of stock of the company instead of carrying into effect the legitimate objects of the corporation. It is also charged that the officers of the company have been and now are grossly mismanaging its affairs by using its funds in their own interests, without stating the particulars of the charges by naming the officers or the acts done by them. It is also charged that the company is insolvent, in that it is unable to pay its debts as they become due in the ordinary course of business, and is for that reason unable to continue its business. A financial statement as of October 1, 1915, issued by the company is set out with the allegation that the values of the assets are grossly misstated and overvalued. A further allegation is that a receiver is necessary in order to preserve and liquidate the assets and pay the creditors of the company. The bill prays that the company be adjudged to be insolvent; that the person who is president and the person who is secretary and the treasurer answer the bill and interrogatories appended thereto; that a receiver be appointed; and that a subpoena issue to the company and to the president and the secretary and treasurer requiring it and them to answer the bill and interrogatories.

Of the interrogatories appended to the bill, few relate to the question of solvency, and the most of them relate to other charges in the bill as to mismanagement, and the company and the named officers are required to answer all of the interrogatories. The subpoena has been served on the company and only the company has appeared in the cause.

A demurrer to the bill has been filed by the company based on its being multifarious in that it joins complaints against the corporation with complaints which could be made on behalf of the corporation against its officers. There is no prayer in the bill that the officers who have mismanaged the affairs of the company, or used its moneys for their own benefit should make restitution for their unlawful acts. The misuse of the property of the company and the mismanagement of its affairs are stated rather as reasons why the corporation is insolvent than as affording a...