Kentucky Utilities Co. v. Steenman

• Decision Date: 28 May 1940
• Citation: 283 Ky. 317,141 S.W.2d 265
• Parties: KENTUCKY UTILITIES CO. et al. v. STEENMAN et al.
• Court: Kentucky Court of Appeals

141 S.W.2d 265

283 Ky. 317

KENTUCKY UTILITIES CO. et al. v. STEENMAN et al.

Court of Appeals of Kentucky

May 28, 1940

Appeal from Circuit Court, Jefferson County, Chancery Branch, First Division; Churchill Humphrey, Judge.

Action by Leonard D. Steenman and others against the Oscar C. Wright Company and others, wherein a receiver was appointed and sale of property was ordered. From a judgment confirming a master's report recommending acceptance of particular bid, the Kentucky Utilities Company and another prosecute joint appeals, and O. C. Wright prosecutes cross-appeal.

Affirmed.

Gordon Laurent, Ogden & Galphin and Frank A. Ropke, all of Louisville, for appellants.

Richard P. Dietzman, Henry M. Johnson, Lawrence S. Leopold, Carroll McElwain & Ballantine, Trabue, Doolan, Helm & Stites, and John Marshall, Jr., all of Louisville, for appellees.

STANLEY Commissioner.

At the instance of stockholders, a receiver was appointed by the Jefferson Circuit Court for six allied corporations, of which the Kentucky Electric Development Company was the chief one in order to prevent waste and conserve the property. This was on July 6, 1932. It had also been prayed in the petition that the court ascertain the assets and liabilities of the company to each other and to outsiders. But no other relief was asked. The judgment was affirmed. Oscar C. Wright Company v. Steenman, 254 Ky. 381, 71 S.W.2d 991.

The receiver continued the operation of the Kentucky Electric Development Company, it being the only one of the group owning any physical property. Though it is not in the record it appears by reference that the receiver filed a report of claims on July 12, 1934. No steps were taken in the case until December 13, 1939. Agreed orders signed by all the parties were then entered setting out the amounts of their respective claims against the Development Company, and dividing them into two classes, one of which should be paid in full and the other only on condition that the property "bring at a decretal sale" not less than $175,000, the right being reserved as to this second class of creditors to submit the claims to the court for adjudication. These agreed orders consented to a sale. On January 23, 1940, the court, "pursuant to the agreed order entered herein in December, 1939," ordered and adjudged that all the properties of the company be sold as a whole "at public sale to that bidder whose bid the court shall determine to be the highest and best bid." It was directed that the sale be by the commissioner of the court, after due advertisement, at the Jefferson County Court House. It was provided that no bids should be received or considered of less than $175,000; that the purchaser should make a "cash deposit of $500.00 and the balance of the purchase price shall be paid without interest on or before six months from the date of the confirmation of said sale"; that if the balance should not be so paid, then the sale should be null and void and the $500 deposit forfeited for the benefit of the company; and that conveyances should be made to the purchaser upon receipt by the court of the payment of the balance of the purchase price.

On February 8th, the commissioner reported an offer of the sale on February 5th, and that bids were received from J. McCauley Smith of $176,500, and from O. C. Wright, agent, $177,000, and that each bidder had made the stipulated cash deposit. It was further reported that Smith had filed a "declaration of agency and assignment of the bid" to the Kentucky Utilities Company. On its own motion the court referred to the Honorable Lafon Allen, as a special master, the question of which of the two bids was the highest and best bid. The special master heard much evidence on the issue which arose between Wright and the Kentucky Utilities Company, assignee and principal of Smith. He filed an analytical report and logical opinion in respect both of facts and law, with the finding that the Kentucky Utilities Company was the highest and best bidder and recommended its acceptance. The Kentucky Utilities Company filed exceptions to the report of sale, questioning the jurisdiction of the Jefferson Circuit Court to order the sale, and upon other grounds which have been conceded to be non-substantial. Wright filed exceptions to the report of the special master in which he set forth certain criticisms and objections. Fred C. Bruner, a creditor, also excepted to the master's report "because same is flagrantly against the evidence." Likewise, the receiver of the Utilities Development Company of Indiana as a creditor. It seems to be an allied corporation of the Development Company. The court heard evidence on these exceptions and overruled them, adopting and confirming Judge Allen's report and recommendations. The court adjudged the bid of the Kentucky Utilities Company to be the highest and best bid, and that the properties of the company "heretofore ordered to be sold are now hereby sold to the said Kentucky Utilities Company."

It should be stated that by order of court, Leonard D. Steenman (who instituted the litigation as a stockholder) was authorized as a creditor to prosecute and defend for all other creditors who should not expressly dissent from such representation, excluding those creditors who had filed exceptions to the special master's report.

The Kentucky Utilities Company and Bruner prosecute a joint appeal from the judgment against Steenman, Wright, the Kentucky Electric Development Company and its receiver, and two allied corporations, as appellees. Wright has been granted a cross-appeal.

The Kentucky Utilities Company, though it is here as an appellant, desires that the judgment be affirmed, its purpose in prosecuting the appeal being to have disposed of the doubt as to the jurisdiction of the Jefferson Circuit Court to order the sale and convey good title. Though the judgment is apparently favorable to the appellant and, therefore, within the logical rule that a party cannot appeal from a judgment in his favor, the company lost on its exceptions to the report of sale and is in position to prosecute the appeal. Its point is that though the Development Company had its principal office in Jefferson County and all parties interested in the litigation were before that court and have consented to the judgment of sale, yet none of the company's real estate nor any of its property, except some office furniture, is situated in Jefferson County. The real estate is located in four or five counties other than Jefferson. The appellant, Bruner, expressing satisfaction that he would be paid his claim regardless of the result of the appeal, makes the point that the judgment of sale only gave the bidder an option to purchase the properties by depositing $500, and that neither of the bidders could be compelled to complete the purchase within the six months provided. He also contends that Wright is entitled to be considered and accepted as the highest and best bidder. All of the appellees, except Wright, express a desire that the judgment be affirmed. Wright does not raise the question of jurisdiction, but insists that under the evidence as to what transpired in the offer of sale by the commissioner, he was the sole and only bidder and that in any event he was the highest and best bidder and it should be so adjudged.

The record is unusual. There is no pleading seeking a sale of the corporation's properties for the satisfaction of liens coupled with the allegations of insolvency and waste. The suit is strictly within the terms of Sections 298 and 302, Civil Code of Practice, neither of which, nor any other Code provision to which our attention has been called, authorizes a sale of the property and distribution of proceeds of an ordinary commercial corporation. Receivership is generally ancillary to an action seeking some other ultimate relief, such as the enforcement of a lien, but our special Code provision (Section 298 et seq.) makes a difference in our practice from general equity procedure in which the appointment of a receiver is but an aid or auxiliary. 53 C.J. 22; Fleming v. Virginia Mining Company, 196 Ky. 38, 244 S.W. 295. Under the peculiar facts, the absence of pleading, however, is not fatal to the judgment of sale. That judgment was agreed to by the parties to the suit. They constituted all of the necessary and proper parties and all were competent to agree. It is a general and sensible rule that a judgment by consent or agreement operates as a waiver of all defects or irregularities in the pleading or other proceedings, except such as...