Isaac Silver & Bros. Co., Inc. v. Kalmon
| Decision Date | 15 July 1932 |
| Docket Number | 9070,9071. |
| Citation | 165 S.E. 434,175 Ga. 244 |
| Parties | ISAAC SILVER & BROS. CO., Inc., v. KALMON et al. IRVING TRUST CO. et al. v. SAME. |
| Court | Georgia Supreme Court |
Motion for Rehearing Denied August 12, 1932.
Syllabus by the Court.
Where federal court in New York appointed receivers for Delaware chain-store corporation doing business in several states including Georgia, who were also appointed in federal court in Georgia in ancillary proceeding, Georgia superior court's refusal to vacate its appointment of receiver held erroneous (Civ. Code 1910, §§ 5055, 5474, 5477-5479, 5495).
A federal court in the state of New York, on petition of creditors, appointed receivers for a Delaware mercantile corporation, the latter doing business in a large number of cities in several states, including Albany, Ga. The receivers accepted and entered upon the discharge of the duties imposed. Subsequently, and with notice, unsecured creditors without a lien of any kind petitioned the superior court of Dougherty county, Ga., to appoint other receivers to take charge of and conduct the Albany store of the Delaware corporation. No fraud was alleged; it was not alleged that the petitioners did not have an adequate remedy at law. The court appointed a receiver as prayed for in the petition. The corporation, and the receivers, having also been appointed in the federal court, Middle district of Georgia, in an ancillary proceeding, intervened and prayed that the court vacate its appointment of receiver and turn over the property to the receivers appointed by the federal court in New York and also in the ancillary proceeding in Georgia. The court denied the prayers of both petitions. Held, that the judgments are erroneous and must be reversed.
Error from Superior Court, Dougherty County; B. C. Gardner, Judge.
Proceeding by E. H. Kalmon and another against Isaac Silver & Brothers Incorporated in which the Irving Trust Company and others, receivers, intervened. To review the judgment, defendant and interveners bring error.
Reversed.
Where federal court in New York appointed receivers for Delaware chainstore corporation doing business in several states including Georgia, who were also appointed in federal court in Georgia in ancillary proceeding, Georgia superior court's refusal to vacate its appointment of receiver held erroneous (Civ.Code 1910, §§ 5055, 5474, 5477-5479, 5495).
On March 19, 1932, E. H. Kalmon and P.J. Brown, partners, composing Albany Produce Company, filed in Dougherty superior court an equitable petition against Isaac Silver & Bros. Company, Inc. They alleged that the defendant was operating, in various states of the Union, a large number of chain stores, including in the system or chain a 5--10--25 cent store at Albany; that the Albany store had become indebted to petitioners on open account for merchandise in the sum of $1,329.09, which was past-due and payment of which had been refused by the defendant; that petitioners were "informed and charge" that on March 19 receivers (Irving Trust Company and another) were appointed by the District Court of the United States for the Southern District of New York for all the stores of the defendant, including the one at Albany; that there was grave danger of loss to "petitioners and other domestic creditors" of the local store; that the receivers appointed in New York were nonresidents, and petitioners were apprehensive that the assets of the defendant located in Georgia and especially in Albany would be placed beyond the reach of the processes of the state courts and beyond the power of petitioners to subject them to the payment of their debt; that ever since the appointment of receivers in New York, or shortly before, the receipts of the Albany store had been telegraphed from day to day beyond the state of Georgia; that it was the duty of the court to take whatever steps should be necessary or appropriate to protect the interests of petitioners and other domestic creditors similarly situated; and that to that end the court should by a receiver take charge of the Albany store and hold the same subject to the further order and direction of the court. The prayers were for the appointment of a receiver, for judgment for the amount of the debt claimed, and for general relief. On this petition the court appointed a temporary receiver, and enjoined all persons from interference with his custody of the Albany store.
On March 22, in the absence of appearance on behalf of Isaac Silver & Bros. Company, Inc., the court directed the receiver to continue under the order of March 19, "the court retaining jurisdiction over the cause and reserving the right to vacate, modify, or amend said order upon the application or motion by the defendants within ten days from" March 22. On April 5, the petition was amended to make it appear that it was brought on behalf of petitioner "and all other creditors of the defendant similarly situated, *** that is to say, all creditors residing in the jurisdiction of" Dougherty superior court, "who have claims against defendant similar to the claim of petitioner," and by attaching as an exhibit a copy of the petition for the appointment of receivers and the answer of the defendant filed in the District Court in New York. In the meantime the receivers appointed in the New York proceedings had, on ancillary petition filed March 22, been appointed receivers by the District Court of the United States for the Middle District of Georgia, the district in which the Albany store is located.
Interventions were filed in Dougherty superior court by four Georgia corporations, asserting that the defendant was indebted to them for merchandise sold to the Albany store in stated amounts. Isaac Silver & Bros. Company, Inc., moved to vacate the appointment of the receiver. The receivers appointed on the ancillary proceeding in the District Court for the Middle District of Georgia filed in Dougherty superior court a petition reciting the fact of their appointment by the District Court for the Southern District of New York to take charge of all properties of the defendant, operate the business, collect the rents, issues, and profits, to intervene in or become a party to any suit in equity necessary to the proper protection of the assets of the defendant and carrying out the terms of the decree appointing them; the fact of their appointment as ancillary receivers; that the petition by Kalmon et al. in Dougherty superior court was filed after the District Court for the Southern District of New York had through its receivers taken possession of all property of the defendant, and praying that the property be turned over to them as such receivers. This petition asserts that because the proceedings in New York were filed first and followed immediately by the ancillary proceeding in the Middle District of Georgia, they should not be interfered with in the handling of the property of the defendant; that it would be to the interest of all creditors for them to operate the store at Albany, as they were enabled to purchase goods for all the stores at considerable advantage over purchases for a single store; that under the comity existing between the courts the property should be turned over to them; and that the petition of Kalmon et al. should be dismissed, because it did not set forth any equity or any ground for the appointment of receiver by the superior court of Dougherty county.
The court denied the petition of the ancillary receivers, and provided that the receiver already appointed should continue to operate the Albany store, but that the receivers appointed in the federal court might apply for appointment as associate receivers, and that upon satisfaction of the claims of local creditors the assets in the hands of the local receiver would upon application be surrendered. Separate bills of exception were sued out by Isaac Silver & Bros. Company, Inc., and Irving Trust Company et al., the receivers appointed by the federal courts. In the case first stated the errors assigned are: (1) That the petition in Dougherty superior court did not state a cause of action for appointment of a receiver (2) the plaintiffs had adequate remedy at law by attachment against the goods of a foreign corporation; (3) it showed that plaintiffs had no lien upon the property and that there was no reason why the property should be continued in the hands of a receiver; (4) the proceedings under which the receiver was appointed were illegal, because the length of time elapsing between the rule nisi, March 19, and the date fixed for the hearing, March 22, was unreasonably short and contrary to law; (5) the court could not, as it undertook to do, extend the liability on the bond given by J. P. Champion, who had been appointed temporary receiver, by an order providing that he continue as such receiver and that the bond given by him as temporary receiver continue of force, in the absence of consent of the surety on the bond; (6) the amendment to the petition should not have been allowed over the objections urged at the time it was offered, that the original suit was not a creditor's bill and could not be converted into a creditor's bill on behalf of other creditors and plaintiffs, and that there was nothing to amend by, and that the right to file interventions by other creditors should for the same reasons have been denied; (7) the denial of the motion to vacate the receivership and the continuance of the same was wrong for the reasons stated in the four grounds first stated. The ancillary receivers assign as errors the allowance of the amendment to the petition and the intervention by other creditors, over objections made by them on the same grounds as stated above, and...
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