Hyman Mercantile Co. v. Kiersky

• Decision Date: 08 December 1941
• Docket Number: 34739
• Citation: 198 So. 574,192 Miss. 195
• Court: Mississippi Supreme Court
• Parties: HYMAN MERCANTILE CO. et al. v. KIERSKY et al

198 So. 574

192 Miss. 195

HYMAN MERCANTILE CO. et al. v. KIERSKY et al

No. 34739

Supreme Court of Mississippi

December 8, 1941

November 11, 1940

Suggestion Of Error Overruled January 12, 1942.

APPEAL from the chancery court of Pike county, HON. R. W. CUTRER Chancellor.

Suit by Bernard Kiersky and another against the Hyman Mercantile Company, a corporation, and others, to have the corporate defendant dissolved and liquidated and a receiver appointed to take charge for that purpose. From a decree for complainants, the corporation and all of its stockholders except complainants, appeal. On motion to allow supersedeas bond, motion granted, and appeal bond fixed at $ 23, 000. On the merits. Reversed with judgment for appellants.

Appeal sustained. Reversed and judgment here.

Hutchison & Hutchison, of Summit, and Lotterhos & Travis, of Jackson for appellant.

The seller's call cotton transactions are not illegal, but, to the contrary, are thoroughly legitimate, valid and proper transactions. An examination of the Mississippi statutes, the Mississippi authorities, and of the general texts dealing with this subject matter discloses that, provided there is an actual bona fide sale and delivery of cotton or other commodity, it is perfectly proper and legal for the final price to be contingent at the time of sale and delivery and subject to final fixation at a later date.

See Code of 1930, Sees. 959, 1828, 1830, 1835.

The following Mississippi cases show that the transaction condemned under the statutes of Mississippi is a sale for future delivery in which it is contemplated that a settlement will be made based on the market, without an actual bona fide sale and delivery of the commodity: Ascher & Baxter v. Moyse Co., 101 Miss. 36, 57 So. 299; Cohn v. Brinson, 112 Miss. 348, 73 So. 59; Alamaris v. Clark & Co., 166, Miss. 122, 145 So. 893; Knox v. Clark, 177 Miss. 195, 171 So. 340; Campbell v. New Orleans National Bank, 74 Miss. 526, 21 So. 400, 23 So. 25; Western Union Telegraph Co. v. Little John, 72 Miss. 1025, 18 So. 418; Burgson & Co. v. Williams & Co., 155 Miss. 351, 121 So. 817; Stroud v. Loper, 190 Miss. 168, 198 So. 46; 27 C. J. 1062, 1067; 24 Am. Jur., Sees. 27, 66, 68, 71, 72.

The chancery court has no jurisdiction to liquidate and place in receivership a solvent, going corporation.

See Brent v. B. E. Brister Sawmill Co., 103 Miss. 876, 60 So. 1018; Benjamin v. Staples, 93 Miss. 507, 47 So. 425; 13 Am. Jur., Sees. 1295, 1296, 1297.

It seems hardly necessary to enter upon an argument based on the facts in this case, because it is so clear that no ground for receivership or dissolution was developed. There is no allegation nor any attempt at proof of insolvency of the corporation, but, to the contrary, the audit shows clearly that the corporation is solvent and in a sound condition. Furthermore, there is no debate about the fact that the corporation is a going concern engaged in business actively and pursuing the course intended by its incorporators and subsequently followed by it throughout the years of its existence. Hence under the Mississippi statute there is no cause for a liquidation of the corporation through a receivership or otherwise.

A. A. Cohn, of Brookhaven, and Cassidy & McLain, of McComb, for appellees.

Formerly the courts almost universally held that in the absence of a statute courts of equity had no inherent power to dissolve a solvent corporation. The trend of modern decisions is to the effect that local corporations, and especially those corporations, although solvent, so limited as to partake of the nature of copartnerships, should be dissolved by courts of equity and placed into receivership, even at the instance of minority stockholders, where any one or more of the following elements exist: gross mismanagement, fraud, serious dissension among the stockholders, inevitable ruin, failure of corporate purpose and other equitable reasons.

See Tower-Connellsville Coke Co. v. Piedmont Coal Co., 64: F.2d 817; Dill v. Johnston (Okla.), 179, P. 608; Enterprise Printing & Publishing Co. v. Craig et al. (Ind.), 135 N.E. 189; Henry et al. v. Ide et al. (Ala.), 96. So. 698; Goodwin et al. v. Milwaukee Lithographing Co. et al. (Wis.), 177 N.W. 618; Green v. National Advertising & Amusement Co. et al. (Minn.), 162 N.W. 1056-1058; Brent v. B. E. Brister Sawmill Co., 103 Miss. 876, 60 So. 1018; 43 A.L.R. 244-268; 61 A.L.R. 1214-1224; 91 A.L.R. 665-678.

We respectfully submit that in the light of the authorities hereinbefore set forth, and more especially the decisions of the Supreme Court of this state, the chancery court had full and ample authority and power to appoint a receiver in this case and to authorize the liquidation of the corporation.

Argued orally by F. J. Lotterhos, for appellant, and by W. G. McLain, for appellee.

Griffith, J., Anderson, J., delivered the opinion of the court on the merits.

OPINION

Griffith, J.

The Hyman Mercantile Company is a corporation with a capital stock of $ 45, 000 par value. The two complainants own $ 11, 500 of this stock, or approximately one-fourth. They filed their bill complaining that the owners of the other three-fourths of the stock were unfriendly to complainants, and that the others were participating in the mismanagement of the affairs of the company in such divers ways, specifying them, that the value of the stock would soon be destroyed. Complainants prayed that a receiver be appointed to take over all the assets of the corporation, to convert them into cash, and thereupon that complainants should have their distributive share of the proceeds in proportion to their stock ownership. There are no other complainants.

The defendants answered and denied every allegation as to mismanagement or which otherwise would justify the relief prayed. On the hearing the court decreed in favor of the complainants, appointed a receiver and directed the receiver to take charge and to proceed according to the prayer of the bill. Defendants demanded an appeal with supersedeas, and called upon the trial judge to fix the amount of the supersedeas bond; and the judge being of the opinion, as it appears, that such a supersedeas would be controlled by Section 29, Code 1930, fixed the amount of the bond at $ 90, 000, or double the amount of the entire capital stock.

A motion has been filed here by the defendants for an allowance of the appeal with supersedeas secured by a bond more reasonable in amount and more in harmony with the justice of the situation than the disproportionately large bond stipulated by the trial judge, and the defendants invoke the provisions of Section 35, Code 1930, as being those which should be applied in the case now presented.

Were complainants claiming the entire property and had recovered a decree therefor, an appeal with supersedeas would be controlled by Section 29, Code 1930. But the utmost that the two complainants could recover here would be the one-fourth, approximately, of the total of all the assets of the corporation, this total being shown to amount to $ 70, 503.88, whence the one fourth would be approximately $ 18, 000. It is true that a receiver would take charge of the entire property, but a receivership is not an end to be attained but is only a means to the end by which complainants' rights in the property shall be preserved, and this right, as already shown, extends only to an approximate one fourth thereof.

If, then, a supersedeas bond is given by the defendants which will secure the complainants up to the sum of $ 18, 000, plus the margin hereinafter provided, there will be amply preserved to them, in case the appeal should fail, everything which in any event and as a matter of substantial right they could obtain were no appeal prosecuted, and we think they have no just right to demand a bond which would cover the whole property in three fourths of which the complainants have no equitable ownership. We will resort, therefore, to the provisions of Section 35, Code 1930, and will allow the appeal with supersedeas when the defendants shall give a supersedeas bond in the sum of $ 23, 000, which is double the par value of the complainants' stock conditioned that the principal and surety or sureties thereon shall be bound to pay unto complainants, and to no others than complainants, any loss which may happen to them as a proximate consequence of the detention of the assets of the corporation from the hands of the receiver pending the appeal in case the appeal should be unsuccessful, with costs if any, but to be void in case the appeal should be sustained, the bond to be approved in the manner as other appeal bonds in chancery are generally approved.

So ordered.

Anderson J., delivered the opinion of the court on the merits.

Appellees filed their bill in the Chancery Court of Pike County against appellant, a mercantile corporation, and two of the stockholders and officers of the corporation, W. K. Ransom and his wife, Gladys...