Jones v. Schaff Bros. Co.
| Decision Date | 01 March 1915 |
| Citation | 174 S.W. 177,187 Mo.App. 597 |
| Parties | JOSEPH M. JONES, Trustee in Bankruptcy for the AUTOMATIC MUSIC COMPANY, Appellant, v. THE SCHAFF BROS. COMPANY a Corporation, Respondent |
| Court | Kansas Court of Appeals |
Appeal from Jackson Circuit Court.--Hon. A. C. Southern Judge.
REVERSED AND REMANDED.
Judgment reversed and cause remanded.
Ellis Cook & Barnett for appellant.
(1) The attempted and alleged receivership proceedings were illegal and void. Sec. 60-b, Federal Bankruptcy Act; State ex rel. v. Ross, 122 Mo. 435; Alderson on Receivers, p. 81 Sec. 52; see also pages 82, 83, 84, 85, 86; High on Receivers (4 Ed.), p. 55; also p. 429, sec. 344-a; Whitney v Hanever Nat'l Bank, 71 Miss. 1009, 15 So. 33, 23 L.R.A. 531; Jones v. Bank of Leadville, 10 Colo. 464, 17 P. 272; Smith v. Ely-Walker D. G. Co., 79 Miss. 266, 30 So. 653; State v. District Court, 21 Mont. 155, 53 P. 272; 69 Am. St. 645; Mann v. German American Invest. Co., 70 Neb. 454; Railroad v. Gay, 86 Tex. 571, 26 S.W. 599; See also Note 20 L.R.A. 210, 23 L.R.A. 534. (2) Receivership proceedings were legal and valid, they constituted no bar to plaintiff's action because the bankruptcy law authorizes the recovery of preferences, even though secured through legal proceedings. Sec. 60-b, Federal Bankruptcy Act; Moore v. John H. Smith & Son, 30 Am. Bankr. Rep. 413 (U.S.) 1913, 205 F. 431.
Lathrop, Morrow, Fox & Moore for respondent.
(1) The petition does not state facts constituting a cause of action for debt, on contract or in tort, legal or equitable. Conclusions, not facts are pleaded. Every presumption must be indulged in favor of the validity of the acts of the circuit court, it having general jurisdiction in equity cases and the parties being before it. Its judgment cannot be collaterally attacked, and no direct attack is well pleaded. That judgment awarded the property to respondent and the matter is res adjudicata. Mallinckrodt v. Nemnich, 169 Mo. 397; State ex rel. v. Barnett, 245 Mo. 99; State v. Hunter, 171 Mo. 438; Meddis v. Kenney, 176 Mo. 200; State ex rel. v. Bank, 120 Mo. 161; Buddecke v. Ziegenhein, 122 Mo. 239; Potter v. Whitten, 161 Mo.App. 118; State ex rel. v. Dearing, 180 Mo. 53; Crommer v. Dickman, 18 Mo. 148; Cox v. Boyce, 152 Mo. 576; Cox v. Hunter, 152 Mo. 584; Carter v. Carter, 237 Mo. 624; State ex rel. v. Tracy, 237 Mo. 109; In re Ingenbohs, 173 Mo.App. 261; Wehrs v. Sullivan, 217 Mo. 167. (2) No cause of action under the bankruptcy law is peladed. Plainly the circuit court had jurisdiction of an action "to administer and distribute the assets of an insolvent company" and to appoint a receiver for that purpose. Having done so the same court in another suit cannot "encroach upon or intermeddle" with that power and authority. Beekman Lumber Co. v. Acme Harvester Co., 215 Mo. 221; Wehrs v. Sullivan, 217 Mo. 167; State ex rel. v. Reynolds, 209 Mo. 161.
--Plaintiff, Trustee in Bankruptcy of the estate of the Automatic Music Company, a business corporation located in Kansas City, Missouri, brought this suit to recover the value of an alleged voidable preference made by the bankrupt within four months before the filing of the petition in bankruptcy. A demurrer to the petition was sustained and plaintiff, declining to plead further, stood on his petition and appealed.
The facts stated in the petition are as follows:
The petition in bankruptcy was filed December 11, 1912, the corporation was adjudged a bankrupt on August 9, 1913, plaintiff was appointed and qualified Trustee on September 8, 1913, and on December 26, 1913, was ordered to institute this action, which was done on the same day the last-mentioned order was made.
For a year or more prior to the filing of the petition in bankruptcy, the said Music Company had been purchasing pianos and piano appliances from the defendant and on said December 11, 1912, and for several weeks prior thereto, the said Music Company was largely indebted to defendant on that account.
On December 3, 1912, said Automatic Music Company made a voluntary and ex parte application to the circuit court of Jackson county, Missouri, for the appointment of a receiver of its affairs, and in that exparte hearing, unauthorized by law and not founded upon any cause of action against said corporation, and at the instance of the corporation itself, an alleged receiver was appointed for it on the ground of its own insolvency. At that time the corporation owed more than $ 10,000 and its assets did not exceed $ 7500.
On December 11, 1912, defendant made application to the circuit court, wherein the alleged receiver had been appointed, for an order on the receiver to turn over to defendant a large number of pianos, and the proceeds of certain other pianos, then in the possession and control of said receiver, which application was based on the alleged ground that the said pianos and proceeds belonged to defendant and not to the insolvent corporation by virtue of a consignment contract between defendant and said corporation. Said application was sustained, and the receiver was ordered to turn over, and did turn over, to defendant a large number of specified pianos of the aggregate value of $ 1735, and also a number of specified promissory notes given by customers of the Music Company for the purchase price of other pianos, aggregating $ 2925 in value.
Said petition further alleged that said pianos and notes did not belong to defendant but were the property of said insolvent corporation; that the transfer of said property occurred within four months of the filing of the petition in bankruptcy; that the effect of said transfer was to enable defendant to obtain a greater percentage of its debts than any other creditor of said corporation of the same class; that said corporation was insolvent at the time said property was turned over and said transfer operated as a preference, and defendant and its agents acting for it, knew, or had reasonable cause to believe, that fact.
The petition further alleged that the defendant, after receiving said pianos and notes, converted them to its own use and disposed of same, and that plaintiff elected to sue for the value thereof, which was alleged to be $ 4660 for which judgment was prayed.
In our opinion it was error to sustain a demurrer to plaintiff's petition. It is true the petition contains some statements which are doubtless conclusions of law, for instance, that the appointment of the receiver was void and that his transfer of the property was null, etc. But these allegations did not constitute the whole of the petition; they merely followed as conclusions from the facts alleged therein as constituting plaintiff's cause of action. Since every fact constitutive of that cause of action was stated, the petition was good, even though it contained some conclusions of law drawn from those facts. Said conclusions might possibly have been omitted, and yet, if retained, served to explain and clarify, rather than confuse or becloud, the theory on which plaintiff was attempting to proceed. The allegation in the petition, that the insolvent corporation was the owner of the pianos and notes and that the defendant did not own them was not a conclusion of law. In one sense it might be thought to be, because ownership depends upon the conclusion which the law pronounces as the result of certain facts. But ownership is in reality merely an ultimate fact resting upon many other facts. This, however, does not require a pleader to state all the minute circumstances and course of proceedings by which that ultimate fact will be established. It is not at all necessary to aver with particularity how, or from whom, or the precise method in which, the fact of that ownership arose. That would be matter of evidence. [ An ultimate fact which is a corollary from other facts is still a fact and the means by which its existence is to be established need not be proved. Especially should this be the rule where the various facts establishing the ultimate fact are, as here, more fully within the knowledge of defendant than of plaintiff.
The same may be said concerning the allegation of the petition as to the validity of the receivership. The constitutive facts were alleged, namely, that the receiver was appointed on the voluntary application of the insolvent corporation, in an ex parte proceeding, without notice to creditors or others interested, and not in an action then pending wherein the court would have power to appoint a receiver as a provisional remedy or auxiliary measure in aid of some other lawful end sought to be accomplished by that action. This is a sufficient statement of the facts to call in question the power or jurisdiction of the circuit court to appoint a receiver under such circumstances, and, in connection with the other facts alleged, to question the validity of the order directing the receiver to turn the property of the insolvent corporation over to defendant and the validity of his act thereunder. The appointment of a receiver is not the ultimate end and object of a suit. The court cannot appoint a receiver upon the ex parte application of the corporation itself. There must be a proceeding pending. [State ex rel. v. Ross, 122 Mo. 435, l. c. 456, 461; State ex rel. v. Reynolds, 209 Mo. 161, l. c. 185.] This is clearly recognized by every statute authorizing the appointment of a receiver of which we have any knowledge. They are sections 1081, 1171, 2018, 2196, 2197, 2323, 2533, 3012, 3153, 3365, 3429, 3444, 3492, ...
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