Ingram v. Clover Leaf Lumber Co.

• Decision Date: 16 December 1932
• Parties: J. W. Ingram v. Clover Leaf Lumber Company, a Corporation, and S. M. Masters, Appellants
• Court: Missouri Supreme Court

55 S.W.2d 295

331 Mo. 739

J. W. Ingram v. Clover Leaf Lumber Company, a Corporation, and S. M. Masters, Appellants

Supreme Court of Missouri

December 16, 1932

Appeal from Circuit Court of City of St. Louis; Hon. Albert D Nortoni, Judge.

Reversed and remanded.

Ely & Ely and P. S. Terry for appellants.

(1) The court erred in appointing a receiver for the Clover Leaf Piling Company, for the court did not soundly exercise its discretionary power in appointing a receiver; for the order it not supported by evidence sufficient to sustain a finding that the property would deteriorate, that defendants were insolvent or that plaintiff would prevail on the merits. (a) In order to authorize the appointment of a receiver proof must be clearly made that the concurrent conditions exist as follows: 1. The deterioration or waste of the property, 2. The insolvency of the defendant, and 3, a reasonable probability that the plaintiff will prevail on the merits and none of the three requirements were shown here. Bushman v. Bushman, 279 S.W. 125; 1 Clark on Receivers (2 Ed.) sec. 59; Price v. Bankers Trust Co. of St. Louis, 178 S.W. 745; Huigens v. Crilly, 179 N.W. 10; Hannervig v. Lougheed, 167 N.Y.S. 788. (2) The court has no power or jurisdiction to appoint a receiver to take charge of the assets of the defendant Clover Leaf Lumber Company, on the ground that a partnership existed between it and plaintiff, for the reason that Clover Leaf Lumber Company had no authority to enter into partnerships and was prohibited from entering into partnerships by law. Franz v. William Barr Dry Goods Co., 111 S.W. 638; Aurora State Bank v. Oliver, 62 Mo.App. 390; Denny v. Guyton, 40 S.W.2d 569; Jackson v Hooper, 27 L. R. A. (N. S.) 658; Luhrig Collieries Co. v. Interstate Coal Co., 281 F. 265. (a) Under any circumstances the conduct of the parties and the condition of the business does not warrant the appointment of a temporary receiver. Sedberry v. Gwyn, 222 S.W. 783; Columbus Packing Co. v. State ex rel., 140 N.E. 376; Duke v. Allen, 85 So. 286; Smith v. Smith, 160 N.W. 756.

J. Henry Caruthers for respondent.

(1) Under its chancery jurisdiction and by legislative enactment the circuit court has power to appoint receivers. Sec. 998, R. S. 1929; Abramsky v. Abramsky, 261 Mo. 126; State ex rel. Hampe v. Ittner, 304 Mo. 151; Commonwealth Finance Corp. v. Mo. Motor Bus Co., 233 S.W. 168; 1 Clark on Receivers, sec. 53, p. 63. (2) Partnership is the relation existing between persons, who have so contracted that the profits of some business enterprise conducted by any or all of them for them all, enure to all as co-owners, and are shared accordingly. It is merely one species of joint ownership. George on Partnership, p. 2. (3) The circuit court has original jurisdiction in all matters of equity, and has inherent power, independent of any statute authorizing it, to appoint a receiver in the settlement of partnership affairs. Sec. 998, R. S. 1929; Cox v. Volkart, 86 Mo. 511. (a) Ordinarily a receiver of the effects of a partnership will not be appointed unless the bill prays for a dissolution and shows a proper case for the same, for it will destroy the trade. The ordinary equitable actions allowed between partners are, viz., (1) an action for accounting, (2) an action for accounting, dissolution and injunction. 2 Clark on Receivers, sec. 911, p. 1334. (b) A decree appointing a receiver of a partnership in a preliminary hearing should not pass upon the rights of the parties more than is absolutely necessary for the purpose of determining the necessity of the appointment of a receiver. 2 Clark on Receivers, sec. 911, p. 1335. (4) The circuit court has both chancery and statutory power to appoint a receiver to keep and preserve all property and protect any business or business interest entrusted to it, pending any legal or equitable proceeding concerning the same. Sec. 998, R. S. 1929; General Excavator Co. v. Emory, 40 S.W.2d 492; Stark v. Grimes, 88 Mo.App. 413; Cantwell v. Lead Co., 197 Mo. 42.

OPINION

Frank, J.

This is an action in equity seeking the dissolution of an alleged partnership, an accounting between the alleged partners, an injunction restraining defendants from collecting or disbursing partnership funds, and the appointment of a receiver to take immediate charge of the assets of said alleged partnership, and for such other and further relief as to the court might seem just and proper. The court appointed a receiver as prayed in the petition. A motion was filed to vacate and set aside the order appointing the receiver which was overruled, and defendants have appealed.

Plaintiff's verified petition reads as follows:

"Comes now the plaintiff J. W. Ingram, and for his cause of action states that he is a resident of Cape Girardeau, Missouri, and that the defendant Clover Leaf Lumber Company is a corporation organized and existing under the laws of Missouri, with its principal place of business in St. Louis that S. M. Masters is a resident of the City of St. Louis, and that the defendant Citizens Bank of Festus is organized and exists under the laws of Missouri, and is and was at all times mentioned herein, engaged in the banking business at Festus, Missouri.

"Plaintiff states that on or about the . . . day of June, 1931, plaintiff entered into a partnership with defendants, Clover Leaf Lumber Company and S. M. Masters, under the name and style of Clover Leaf Piling Company with offices in the City of St. Louis, for the purpose of engaging in and carrying on the general business of buying and selling piling, and have ever since been engaged in said business pursuant to said partnership agreement.

"Plaintiff states that his contribution to the partnership consisted of approximately twenty-three hundred (2300) pieces of piling, leases on various concentration yards, operating equipment, orders for piling and good will, all of the approximate value of nine thousand and no/100 ($ 9,000.00) dollars; that defendants, Clover Leaf Lumber Company and S. M. Masters contributed to the partnership the sum of nine thousand and no/100 ($ 9,000.00) dollars in cash; that it was agreed that plaintiff should bear half of any losses suffered in the operation of the business and should receive half of any profits made in the business; that defendants Clover Leaf Lumber Company and S. M. Masters should bear half of any losses suffered in the operation of the business and receive half of the profits.

"Plaintiff states that since the beginning of said partnership and while plaintiff and defendants were conducting their business, the defendants have at divers times appropriated to their own use from the receipts of said business certain sums of money belonging to the business of said firm, said sums being greatly in excess of the amount to which the defendants were entitled; that by reason of said action of defendants in appropriating said funds to their own use, the defendants have become greatly indebted to the partnership, which indebtedness the plaintiff has requested the defendants to pay, but said defendants have refused to comply with said request and continued to appropriate partnership moneys received by them to their own use and that by reason of the misappropriation of the partnership moneys defendants have greatly increased their indebtedness to the partnership and have thereby diminished its assets and the value of its property.

"Plaintiff states that by reason of said misappropriation and threatened dissipation of the funds as aforesaid the defendants have received and will receive the approximate sum of five thousand and no/100 ($ 5,000.00) dollars in excess of their proportionate share of the assets of the partnership and that they still continue to collect the moneys belonging to the partnership and threatened to appropriate the same to their own use.

"Plaintiff states that the Citizens Bank of Festus is the depository of the Clover Leaf Piling Company.

"Plaintiff further states that he has during the months of April and May, 1932, sold to the Clover Leaf Piling Company quantities of piling, after all set-offs and credits were allowed, at and for the price of five hundred thirty-seven and 05/100 ($ 537.05) dollars, which defendants Clover Leaf Lumber Company and S. M. Masters refused and still refuse to pay, although repeated demands have been made for payment.

"Plaintiff further states that he has paid out during the life and on behalf of the partnership, various and divers sums of money for the purchase of piling, labor, traveling and hotel expenses any other necessary expenses in and the sum of approximately twelve hundred and no/100 ($ 1200.00) dollars, for which plaintiff has not been reimbursed and which defendants Clover Leaf Lumber Company and S. M. Masters refused and still refuse to pay though repeatedly requested so to do.

"Plaintiff further states that said defendants are threatening to further dissipate the partnership funds now on deposit in the Citizens Bank of Festus, Missouri, by checking it out and appropriating it to their own use.

"Plaintiff further states that the defendant Clover Leaf Lumber Company has wrongfully held itself out as having authority to transact business for the Clover Leaf Piling Company by using its printed stationery for correspondence and contracts in relation to the partnership business, all in violation and contrary to the partnership agreement.

"Plaintiff further states that he negotiated and contracted with E. L McCain, a contractor, for a large quantity of piling for river work at Glasgow, Missouri, for and on behalf of Clover Leaf Piling Company, the terms of which plaintiff reported to defendant S. M. Masters who was then and still is the vice-president and general manager of defendant...