Laird v. Pan-Amercian Lumber Co.

• Decision Date: 30 January 1922
• Docket Number: No. 14236.,No. 14239.,14236.,14239.
• Parties: LAIRD et al. v. PAN-AMERCIAN LUMBER CO. et al.
• Court: Missouri Court of Appeals

237 S.W. 1047

LAIRD et al. v. PAN-AMERCIAN LUMBER CO. et al.

Nos. 14236, 14239.

Kansas City Court of Appeals. Missouri.

January 30, 1922.

Rehearing Denied February 20, 1922.

Appeal from Circuit Court, Jackson County; Daniel E. Bird, Judge.

"Not to be officially published."

Action by Otho E. Laird and another against the Pan-American Lumber Company and C. D. Logan, H. D. Mersereau, L. Meyerhardt, Sam Heilburn, C. P. Fullington, and J. J. Cosner, in which Clarence I. Spellman was appointed a receiver for the defendant corporation. From an order allowing fees to the receiver, the plaintiffs and the defendants, other than the first-named defendant, appeal. Affirmed.

H. H. McCluer and Roland Hughes, both of Kansas City, for appellants.

A. N. Gossett, of Kansas City, for respondent Spellman.

BLAND, J.

This is an appeal from an order allowing fees to a receiver. The facts out of which the receivership arose, and those happening after the appointment of the receiver, are complicated, and to recite them in detail would require an opinion entirely too lengthy. We will attempt to state as briefly as possible what appear to be the leading facts in the case.

Defendant Pan-American Lumber Company is a Missouri corporation, originally incorporated under the name of Reyburn Lumber Company. It was incorporated in December, 1917, with a capital stock of $750,000, which was divided into 7,500 shares of the par value of $100 each. The property conveyed to the company in payment of the capital stock consisted of about 29.000 acres of land in Calhoun county, Fla., subject to a first mortgage for $110,000. The original stockholders of the company were Roscoe Reyburn, Louis Meyerhardt, C. D. Logan, D. H. Mersereau, and Sam Heilburn of Kansas City, Mo., and J. J. Cosner and C. P. Fullington of the state of Florida.

In January, 1918, the company authorized the issuance of bonds in the sum of $750,000, to be secured by a second deed of trust on said land. $200,000 of these bonds were to acquire additional property and equipment for milling lumber upon the land owned by the company. $137,500 of the latter mentioned bonds were issued, and found their way largely into the hands of the various stockholders of the company in payment of land transferred to the company and situated in Franklin county, Fla., upon which was located mill property and machinery to be used in connection with the lumber operations upon the company's Calhoun county land. $62,500 of this $200,000 bonds were not issued by the company. $110,000 of the $750,000 bond issue were deposited with the Commerce Trust Company, the trustee, in Kansas City, Mo., to take up the first mortgage upon the Calhoun county land. $450,000 of the bond issue were held by the trustee, Commerce Trust Company, for future extension, and it does not appear that this amount was ever used.

After the placing of the above-mentioned mortgages upon the property, in order to obtain money with which to improve the mill site and mill property, and to pay the expenses of the company, a mortgage was given to secure the payment of a note for $25,000. This mortgage covered the land and mill property in Franklin county, Fla., and the company's railway, barges and engines in Calhoun county, Fla. To secure the note, in addition to the last-named mortgage, a lien was given on all of the outstanding bonds of the company which were deposited with the Commerce Trust Company, the amount of these bonds being $137,500. The company also became largely indebted to various parties for money borrowed for various other things, and had no money in the treasury with which to continue its operations.

The above were the conditions at the time of the institution of this suit, which was commenced at the March term, 1919, of the circuit court of Jackson county, Mo. The suit was originally brought by Otho E. Laird, who held ten shares of the stock, and shortly thereafter Roscoe Reyburn was also made a party plaintiff. The petition for the receivership alleges misrepresentations upon the part of the Florida stockholders, Cosner and Fullington, as to the amount they contributed for the acquisition of the Florida land; that the company owed various sums of money, was largely in debt, and was without funds to operate the plant; "that the business has been transacted in a reckless and wasteful manner; * * * that the credit of the company has become impaired by the issuance of checks upon banks" where the company had no funds; that large amount of accounts were unpaid; that policies of insurance had lapsed for nonpayment of premiums ; that a great amount of taxes were unpaid; that the holders of the $110,000 mortgage on the Calhoun county land were threatening foreclosure; "that the property * * * is being permitted by a majority of the present directors to go to rack and ruin, and that, unless some steps are taken to prevent it, the property of the company will become wholly worthless and the stockholders will lose the whole amount they have invested therein;" that the officers were wholly incompetent to manage and look after the affairs of the company, and were not familiar with the lumber business, some of them living 3,000 miles distant from the scene where the business was being transacted; and that they were not devoting their time to the business of the company. The petition prayed that Meyerhardt, Cosner, Fullington, and Heilburn be removed as directors of the company, and that a receiver be appointed to take charge of the company, to institute suit against Cosner and Fullington, and to require an accounting from Meyerhardt as president of the company and for other relief.

No answer was ever filed to this petition, but, default being made, the court appointed Clarence I. Spellman, of the Jackson County bar, as receiver of the company. The receiver immediately executed a surety company's bond in the sum of $10,000 for the faithful performance of his duties. Upon his appointment the receiver was requested by Messrs. Reyburn, Mersereau, and McCluer, the latter being attorney for Reyburn, to proceed to Florida, and they advanced him $125 expense money. The receiver left for Florida, and at St. Louis conferred with attorneys and discussed plans to unify the two ancillary receiverships in Florida; he arrived at Pensacola, and consulted attorneys there, and obtained the name of the judge in Florida before whom the application for receiver there would be heard. He then went to Apalachicola and there saw Fullington and Cosner, spending two days with them looking over the company's property and examining into the affairs of the company. He visited and talked with other persons who he thought might throw some light upon the muddled affairs of the company. He then went to Tallahassee, where he examined the records of the United States court, and found that a foreclosure suit had been filed upon the $110,000 first mortgage on the Calhoun county land, and that a decree pro confesso had been entered. He examined into the proceedings of this foreclosure suit, and spent several hours conferring with attorneys for the complainants in the foreclosure proceedings, urging leniency, and obtaining an agreement for time in which to plead. He had conferences with the attorney for the holder of the $25,000 mortgage, and explained the predicament of the stockholders of the company, and made a plea for time. He engaged an attorney in Tallahassee to assist him in the preparation and filing of ancillary bills in the Florida state court looking toward the unifying of the receiverships, and took the application therefor to the circuit judge at his home in Quincy, Fla., and laid the matter before him.

He returned to Pensacola and called upon the United States judge in whose court the foreclosure proceedings were pending and discussed the case with him, and sought his advice, explaining that the Missouri investors were in danger of losing their entire investment, and solicited the judge's advice, asking him to suggest an attorney to help. The judge suggested that an application to set aside the pro confesso decree be filed, which was done; the petition was drawn by the receiver after he arrived in Kansas City, and sent to his attorney in Pensacola, where it was filed. The receiver was gone 9 days. Upon his return to Kansas City he conferred extensively with the judge of the circuit court there and the stockholders and their attorneys. No action was taken upon the motion to set aside the decree in the foreclosure suit, but the proceedings remained in the same state from that time forward, nothing further being done.

At all of these times the receiver's relations with the stockholders in Kansas City were cordial. They were encouraging him to find a purchaser for the company's property. He corresponded with wholesale lumber dealers and timber associations, and called upon several leading lumber companies of Kansas City to get suggestions with reference to the marketing of the property. Meanwhile the land and mill in Franklin county had been sold under foreclosure, and the only remaining property the company had was the 29,000 acres in Calhoun county, Fla. Finally the information came that some lumber brokers in the south had found a purchaser for the property. The stockholders had fallen out among themselves; the Kansas City stockholders were divided into two groups; Reyburn, Logan, Laird, and Mersereau were on one side, and Meyerhardt and Heilburn were inclined to be with Fullington and Cosner on the other.

After the purchaser was found there were long drawn out negotiations in consummating the sale of the property. The receiver was engaged in many conferences and communications with parties attempting to arrange a satisfactory closing of the transaction. After the offer to buy the stockholders proceeded as though the receiver's services were dispensed with, and took up the matter of selling the property themselves, and held stockholders'...