Killian v. Maiden Chair Co.

• Decision Date: 23 December 1931
• Docket Number: 522.
• Citation: 161 S.E. 546,202 N.C. 23
• Parties: KILLIAN v. MAIDEN CHAIR CO.
• Court: North Carolina Supreme Court

161 S.E. 546

202 N.C. 23

KILLIAN v. MAIDEN CHAIR CO.

No. 522.

Supreme Court of North Carolina

December 23, 1931

Appeal from Superior Court, Catawba County; Clement, Judge.

Action by R. B. Killian against the Maiden Chair Company, in which a receiver was appointed. From the judgment, plaintiff appeals.

Affirmed.

Party cannot withdraw when adversary has set up counterclaim or claim of equitable nature involving rights which he is entitled to have determined.

Rule that party cannot withdraw after adversary has set up counterclaim held inapplicable to facts.

On or about July 17, 1929, the plaintiff, a stockholder of defendant, instituted an action against the defendant alleging that it was in imminent danger of insolvency. The complaint alleged that the indebtedness amounted to approximately $385,500. It was further alleged that the defendant had notes receivable worth about $200,000, "on which the Merchants Transfer & Storage Company of Washington D. C., has a lien to the amount of about $186,000.00," etc. There was a prayer for the appointment of a receiver. On July 22, 1929, C. R. Brady was duly appointed receiver of defendant and directed in his discretion "to run and operate the factory plant owned by defendant company and to employ all such assistants, superintendents, clerks and laborers, as may be necessary to properly operate said furniture plant until further orders of this court." The record discloses that the order appointing a permanent receiver was consented to by attorneys for the plaintiff and the defendant. On November 14, 1929, the receiver filed a petition in the cause stating: "That on or about February 25, 1927, the Maiden Chair Company executed to the Merchants Transfer & Storage Company, a Delaware corporation of Washington, D. C., agreeing to assign to and did assign to the Merchants Transfer & Storage Company from time to time its accounts receivable for value, *** and that there was about $211,000.00 of these accounts held by the Merchants Transfer Storage Company as aforesaid. *** That by the terms of said contract between the Maiden Chair Company and the Merchants Transfer & Storage Company the Maiden Chair Company was to collect the accounts from its debtors from time to time and remit the full collection to the Merchants Transfer & Storage Company; *** that up to this time he has collected approximately $70,605.82, and your receiver has paid to the Merchants Transfer & Storage Company from said collections the sum of $28,298.04, and that your receiver still has on hand in a bank in New York and the Citizens Bank at Conover, N. C., the sum of $42,307.78, and he is still collecting on said accounts from time to time. That some question has arisen as to whether or not your receiver should have paid the amount aforesaid to the Merchants Transfer & Storage Company, as set out, and pay the amount now on hand to it, and pay the amounts as collected from time to time, until the said Merchants Transfer & Storage Company is paid in full, without an order of the court." On the same day, to wit November 14, 1929, Judge Harding considered the petition and entered an order approving the action of the receiver in paying to the Merchants' Transfer & Storage Company the said sum of $28,298.04, and further directed the receiver to pay the balance in his hands then due said Merchants' Transfer & Storage Company under and by virtue of the terms of the contract referred to in the petition of the receiver.

The receiver made reports from time to time, and these reports were approved by the court and certain allowances were made by orders duly entered. On December 1, 1930, the Merchants' Transfer & Storage Company filed a petition after notice setting out the contract existing between it and the defendant, and alleging that the receiver had in his hands the sum of $2,656.64, which had been demanded by the petitioner, but that the receiver had declined to pay the same, and requesting an order directing the receiver to pay said sum to the petitioner. The receiver filed an answer to the petition of the Merchants' Transfer & Storage Company, setting out that he had incurred certain expense in collecting accounts for the Merchants' Transfer & Storage Company and suggesting that these expenses should be paid out of said fund.

In the meantime a creditors' committee of defendant filed an answer to the petition of the Merchants' Transfer & Storage Company, alleging that as the receiver had spent most of his time and energy in collecting accounts for said petitioner that the result was that the creditors who had received nothing on their claims were bearing the financial burden of collections for the benefit of petitioner. The creditors' committee thereupon asked that the court appoint a referee to take and state an account between all the parties. The cause was heard by Judge Clement in January 1931, and after considering the merits of the question presented, appointed a referee. The creditors' committee thereafter filed an amendment to the petition of the Merchants' Transfer & Storage Company attacking the contract between the defendant company and the petitioner storage company, and alleging that the storage company was securing a preference which was unlawful, and praying that the court direct a receiver ""to proceed forthwith by whatever process he may be advised and recover from the petitioner, Merchants Transfer & Storage Company, said amount to be ascertained before the referee and constituting the entire amount paid by the receiver to said petitioner."

Thereupon on July 8, 1931, the plaintiff, Killian, filed a supplemental petition alleging that the receiver had no right to pay any funds to the storage company, and that the action of the receiver in paying money under order of court to the storage company was wrongful and unlawful. It was further alleged that the storage company had charged more than 6 per cent and that the transactions between the storage company and the defendant chair company were usurious. Whereupon, the plaintiff prayed an order directing the receiver to file an itemized statement of his accounts and of all sums disbursed to the storage company, and to set aside the orders made from time to time by the judge of the superior court directing and approving payments theretofore made to the storage company. On July 16, 1931, the attorney for the storage company served notice on the attorneys for the receiver and of the creditors' committee and of plain...