Hyde Park Gas Co. v. Kerber

• Decision Date: 31 October 1879
• Citation: 5 Ill.App. 132,5 Bradw. 132
• Parties: HYDE PARK GAS COMPANYv.HENRY KERBER ET AL.
• Court: United States Appellate Court of Illinois

5 Ill.App. 132

5 Bradw. 132

HYDE PARK GAS COMPANY

v.HENRY KERBER ET AL.

Appellate Court of Illinois, First District.

October Term, 1879.

OPINION TEXT STARTS HERE

APPEAL from the Superior Court of Cook county; the Hon. S. M. MOORE, Judge, presiding. Opinion filed February 4, 1880.

This is an appeal by the Hyde Park Gas Company, a corporation, from the decree of the Superior Court of Cook county, appointing a receiver of the property, effects and business of said company, while it was in operation and without any decree for its dissolution, or the winding up of its affairs. The bill was brought by John F. Temple, one of the directors and the President of said corporation, but in the character of a stockholder, with whom was united as co-plaintiff one Kerber, who claims to be equitable owner of certain shares derived from Temple. All the individual directors, among whom was John C. Woolley, also the Treasurer, together with the corporation itself, were parties defendant. One feature of the bill was to procure an equitable division between Temple and Woolley of 241 shares of the stock of said company, purchased by them jointly. The other aspect of it is, an alleged breach of trust on the part of a majority of the directors, in the wrongful issue of divers second mortgage bonds and the sanction thereof by said majority of the stockholders, the purchase by said Woolley of fourteen of said bonds, being one thousand dollars each, and alleging that they were purchased with moneys of the company in his hands as treasurer, and that he had fraudulently paid interest on them with the like funds. The bill prays that these bonds may decreed to belong to the corporation and surrendered up; that the defendants be enjoined from appropriating any more of said bonds; that Woolley may be decreed to pay to the company all the moneys misappropriated by him; that the corporation may be dissolved, a receiver appointed, and for general relief. On hearing on pleadings and proofs, the court did not decree a dissolution of the company. The decree finds that “the issuance of the second mortgage bonds of the Hyde Park Gas Company was wholly unauthorized; that twenty of said bonds were temporarily loaned to Partridge, and the said Hyde Park Gas Company received no consideration for the same; that the pledging of six of said bonds to Thomas Davies, and all the issues and transfers of the said second mortgage bonds were in fraud of the rights of said company and of its stockholders, and ultra vires, and in contravention of the purposes of the execution of said bonds and of the terms of the resolution adopted by said Hyde Park Gas Company providing therefor.” After finding several other matters, the remainder of the decree, and so far as is material to the question involved, is as follows:

“The court further finds that in connection with the purchase of the one hundred and forty shares of the capital stock of said company held by said Henry F. Woolley, the said John C. Wooley improperly and wrongfully allowed and paid over to said Henry F. Woolley, and on account of such purchase, the sum of one hundred and fourteen dollars and _____ cents, which amount the court adjudges and decrees shall be charged to said Henry F. Woolley in his accounts with said company. The court also adjudges and decrees that the said John C. Wooley and Henry F. Woolley are entitled to be credited with their services from the 18th day of March, 1878, when an order to that effect, limiting their salaries was entered in this cause, to an amount not exceeding in the aggregate the sum of one hundred dollars per month, and their accounts shall be corrected accordingly. Also that said company has not paid dividends for many years, and the said John C. Woolley is unable to pay said company the amount owing by him to it. And it appearing to the court that there is good cause shown in this case for the appointment of a receiver of said company, it is therefore further ordered and decreed that unless the said John C. Woolley shall, within thirty days, take up, return and cancel said fourteen second mortgage bonds so wrongfully procured and held, or re-issued by him, and pay to said company the amount of his indebtedness to said company, as herein above adjudged, which indebtedness, after allowing credit for the amount paid by said Woolley for said bonds, such allowance to be made only on the return and cancellation of said bonds, is found at the date of this decree to be the sum of twenty-eight hundred and seventy-three and 80-100 dollars; then, and in such case such bonds shall not be taken up, returned and canceled within said time, and satisfactory evidence to that effect be within said time produced to the court and said indebtedness paid, Charles E. Morrison be, and he hereby is appointed receiver of said company, with all the usual powers of receivers in equity,” etc.

The decree does not find that the Hyde Park Gas Co. was insolvent, had ceased to do business, or that there was any judgment, decree or execution against it. The corporation alone appealed to this court, and assigns for error: 1, The rendition of said decree appointing a receiver. 2, In decreeing that the bonds described in the bill were not in equity the property of John C. Woolley. 3, The court erred in not dismissing the bill.

Messrs. HITCHCOCK, DUPEE & JUDAH, for appellants; that no sufficient cause for winding up the affairs of the corporation was shown, cited Underwood's Stat. 1878, 332.

A court has no jurisdiction to manage a corporation for the purpose of carrying on its business, but only to close it up: Waters v. Taylor, 15 Ves. Jr. 10; Marten v. Van Schaick, 4 Paige Ch. 479; Wolbert v. Harris, 3 Halst. Ch. 605; Jackson v. De Forest, 14 How. Pr. 81; High on Receivers, § 480.

Messrs. DENT & BLACK, for appellees; that the court had power to appoint a receiver without determining at once the question whether the business of the corporation should be closed, cited Rev. Stat. 1877, Chap. 32, § 25; Ogilvie v. Knox Ins. Co. 22 How. 380.

The corporate property is in a large degree, as to creditors and stockholders, trust property: Adler v. Mil. Patent Brick Mfg. Co. 16 Wis. 63; Koehler v. Black River Falls Iron Co. 2 Black, 715.

In respect to matters of trust and to secure the rights of stockholders, the court had power, independently of the statute, to appoint a receiver: Blatchford v. Ross, 54 Barb. 42.

MCALLISTER, J.

By the decree in this case, if the defendant, John C. Woolley, did not within thirty days take up and return to the Hyde Park Gas Company, the defendant corporation, the fourteen second mortgage bonds in question, and pay to the corporation the sum of $2,873.80, which was adjudged to be due from him to said corporation, and did not produce to the court satisfactory evidence within that time that he had done so, then a receiver of the corporation was to be considered as appointed. If he complied, then there was to be no receiver under that decree. The non-performance, therefore, by a delinquent director of the corporation of that which in the view of a court of equity was due by such delinquent to the corporation, the injured party, was made the express ground of visiting upon the injured...