Hurley v. Universal Clay Co.

• Decision Date: 03 June 1919
• Docket Number: No. 19837.,19837.
• Citation: 213 S.W. 28,278 Mo. 408
• Parties: HURLEY v. UNIVERSAL CLAY CO. et al.
• Court: Missouri Supreme Court

213 S.W. 28

278 Mo. 408

HURLEY v. UNIVERSAL CLAY CO. et al.

No. 19837.

Supreme Court of Missouri, Division No. 2.

June 3, 1919.

Appeal from Circuit Court, Jackson County; Battle McCardle, Judge.

Suit by Michael J. Hurley against the Universal Clay Company and others. From an order overruling plaintiff's motion to set aside an order approving a sale and directing the receiver to make a deed, plaintiff appeals. Appeal dismissed.

John H. Lucas and William C. Lucas, both of Kansas City, and John F. Garner, of Quincy, Ill., for appellant.

Gage, Ladd & Small, Morrison, Nugent & Wylder, H. L. Hassler, and L. C. Boyle, all of Kansas City, for respondents.

WALKER, J.

This is an appeal from the overruling by the circuit court of Jackson county of a motion to set aside an order with approving a receiver's report of sale.

A suit had been instituted in said circuit court by plaintiff as a shareholder, for the appointment of a receiver for the defendant the Universal Clay Company. The petition alleged that the individual defendants, who were in official and actual charge and control of the property of the company, had not paid for their capital stock therein, and had so wasted and mismanaged its affairs as to render the appointment of a receiver necessary to protect the remaining assets from being dissipated and lost. The prayer asked that said defendants be enjoined from any further participation, official or personal, in the conduct of the business or management of the property of the company, and that the receiver appointed be directed to take charge of its entire property, enforce the payment by defendants of the capital stock subscribed for by them, and for general equitable relief.

The individual defendants, answering, denied the allegation of waste and mismanagement, and declared that the stock held by them had been paid for in full; that at the time plaintiff became the owner of stock in the company, which was in 1915, two years after its organization, and at all times thereafter, he had full and complete knowledge of the organization of the company, the manner in which its stock was paid, and the condition of its business and affairs; that, after so acquiring said stock, plaintiff by his attorney inspected the stock book and minute books of the company and its articles of incorporation, and thereafter presented the certificates of stock so acquired for registry in his own name; that at the time plaintiff acquired said stock active operations at the plant of the company had ceased; that ever since said date no action has been taken by these defendants except that which was absolutely necessary to protect and preserve the property.

These defendants further stated that the company had no money with which to operate its property or to pay its debts; that the company cannot be operated with profit in its present condition; that it has an unsecured indebtedness of approximately $71,000 on account of moneys loaned and advanced to it, in addition to a deed of trust for the principal sum of $33,890.35 now a lien upon its property.

The defendants therefore prayed the court to be relieved of the demands of plaintiff, that a reference be had to determine and liquidate the indebtedness of the company, and that the receiver appointed be directed to sell the property, pay the debts, and for such other and further relief as to the court shall seem just and proper.

After a hearing on the application of the plaintiff for the appointment of a receiver, the consent of defendants, who were all present either in person or by counsel, the application was granted, and a receiver was appointed. After qualifying by giving bond as required, he was directed to take charge of the property of the company and report his proceedings to the court, and apply from time to time for such further orders and decrees as might be deemed necessary. Under this order the receiver took charge of the property, and thereafter reported, among other things necessary for the information of the court, that he had found the company's business at a standstill, and its plant inoperative; that it was burdened with debt, with no money on hand, and that the plant, consisting of kilns and other instrumentalities for the manufacture of fire brick, was in a dilapidated and worn out condition, and that the implements and machinery were obsolete; that he had found the company to be wholly insolvent and unable to discharge its indebtedness; that its attempted operation would but involve it more deeply in debt; and that a sale of the property, which consisted principally of a tract of land from which the clay products had been obtained, would be necessary to a realization of anything of value for the stockholders from the assets. The receiver therefore asked that an order be made for the sale of the property, the terms and conditions of same to be submitted to and approved by the court before the sale was consummated.

Thereafter, on the 19th day of October, 1915, all of the parties plaintiff and defendants being present by their respective counsel, the receiver's report was taken up and evidence heard thereon. After a consideration of same the court found, so far as pertains to the matter here at issue:

"That the property of said company is incumbered by a deed of trust now amounting to about $34,000; that in addition to said deed of trust said company is indebted in the sum of about $80,000; that there is no money on hand to pay said indebtedness; and it was ordered that the said report of the receiver be, and is, approved; that he be, and is hereby, authorized to borrow money for current expenses, and to give receiver's certificates therefor; that the property and plant of defendant Universal Clay Company [describing it] be sold at public or private sale to the highest and best bidder for cash or on such...