Laumeier v. Sun-Ray Products Co.

• Citation: 50 S.W.2d 640,330 Mo. 542
• Decision Date: 27 May 1932
• Docket Number: 30429
• Parties: H. H. Laumeier and Joseph F. Martinsen, for themselves and all others similarly situated, v. Sun-Ray Products Company, Appellant
• Court: Missouri Supreme Court

50 S.W.2d 640

330 Mo. 542

H. H. Laumeier and Joseph F. Martinsen, for themselves and all others similarly situated,

v.

Sun-Ray Products Company, Appellant

No. 30429

Supreme Court of Missouri

May 27, 1932

Appeal from Jackson Circuit Court; Hon. Brown Harris Judge.

Reversed and remanded (with directions).

Watson Gage, Ess, Groner & Barnett for appellant.

(1) There is no such thing as a suit solely for the appointment of a receiver. The appointment of a receiver is ancillary relief and can only be had when it is appropriate to some relief which it appears plaintiff is entitled to have against the defendant. State v. Ross, 122 Mo. 435; Price v. Bankers Trust Co., 178 S.W. 745; State ex rel Priest v. Calhoun, 207 Mo.App. 149; 34 Cyc. 29, and authorities cited. (2) Since the appointment of a receiver is merely ancillary relief, the court has no jurisdiction to appoint a receiver unless the petition states a cause of action against the defendant. The suit was against the corporation and the petition was brought by stockholders, not by creditors. The petition only alleged grounds for relief against directors, managers, trustees or officers of the corporation, but alleged no ground for any relief to stockholders in a suit against the corporation alone. Slattery v. St. Louis & New Orleans Trans. Co., 91 Mo. 217; Boulicault v. Oriel Glass Co., 283 Mo. 237; Reeve Harden v. Eastern State Pub. Serv. Co., 14 Del. Ch. 156; Myers v. Occidental Oil Corp., 288 F. 997; Edwards v. Bay State Gas Co., 91 F. 942; Fornaseri v. Cosmosart Realty Corp., 274 P. 597; Delaney Produce & Refining Co. v. Crystal Pet. Corp., 264 P. 521; Willis v. Laurison, 118 P. 53; Taylor v. S. P. Co., 122 F. 147; Baker v. Baker, 204 N.Y.S. 11. (3) The petition, according to its whole scope and meaning, alleged nothing but grounds for the exercise of the power of a circuit court with the aid of a receiver over unfaithful officers, managers, trustees and directors of a corporation. Secs. 4959, 4960, R. S. 1929. (4) The demurrer to the petition should have been sustained. The only possible relief that the court could grant to plaintiffs, stockholders, against the corporation alone would be to virtually wind up the affairs of the corporation. The court had no authority so to do. State ex rel. Navigation Co. v. Dew, 312 Mo. 300; Ashton v. Penfield, 233 Mo. 391; State ex rel. v. Foster, 225 Mo. 171. (5) The evidence did not disclose any relief to which the plaintiffs, stockholders, were entitled as against the defendant corporation alone. See statement of case, analysis of allegation of the petition under the heading "Argument" and the following authorities: (a) Stockholders are not entitled to a receiver because of failure to audit books or permit inspection of books. 14 C. J. 862; See also form of action in State ex rel. v. St. Louis, etc., Co., 29 Mo.App. 301; State ex rel. v. Laughlin, 53 Mo.App. 542; State ex rel. v. St. Louis Transit Co., 124 Mo.App. 111. (b) Insolvency is no ground for the appointment of a receiver upon the application of a stockholder. 14A C. J. 958. (c) The allegation that the property through mismanagement and neglect is lying idle, going to waste and deteriorating in value is equivalent to an allegation that the corporation is temporarily inactive. This is no ground for the appointment of a receiver and is no ground for winding up the affairs of the corporation. State ex rel. Navigation Co. v. Dew, 312 Mo. 300. (d) The allegation that the officers who retain control of the affairs of the corporation threatened to abandon it and its assets is no ground for any relief in a suit against the corporation alone. State ex rel. Navigation Co. v. Dew, 312 Mo. 300; Slattery v. St. Louis, etc., Trans. Co., 91 Mo. 217; Boulicault v. Oriel Glass Co., 283 Mo. 237. (e) The allegation that most of the skillful employees of the corporation had wrongfully and wantonly been discharged because of jealousy, willfulness and wrong headedness of its officers, is no ground for any relief to stockholders against the corporation alone. See authorities under sub-head (d). (f) The allegation that unless timely action is taken a large number of accounts receivable will be barred by the Statute of Limitations is no ground for any relief to stockholders in a suit against the corporation alone. See authorities under sub-head (d). (6) No relief can be granted under a prayer for general relief which is not consistent with the main theory and purpose of the petition and supported by its allegations. There was neither allegation nor proof that plaintiffs, stockholders, were entitled to any relief against the corporation alone. State ex rel. Navigation Co. v. Dew, 312 Mo. 300; Schneider v. Patton, 175 Mo. 684; Newham v. Kenton, 9 Mo. 382; McNair v. Biddle, 8 Mo. 257; McCray v. Lowry, 25 Mo.App. 247. (7) Defendant is not estopped to complain of the failure to vacate the appointment of the main receiver by reason of the fact that it thereafter consented to the appointment of an ancillary receiver by a Kansas court.

Manard & Schwimmer and Walter H. Maloney for respondents.

(1) There is no such thing as a suit solely for the appointment of a receiver. However, where necessity therefor exists, such as mismanagement, neglect of duty, waste and irreparable loss, then a receiver should be appointed. Price v. Bankers Trust Co., 178 S.W. 745; State ex rel. Priest v. Calhoun, 207 Mo.App. 149; R. S. 1929, sec. 4961; Cantrell v. Columbia Lead Co., 97 S.W. 179; Ashton v. Penfield, 233 Mo. 391, 135 S.W. 938; Bates v. Wherries, 199 S.W. 758; Lamont v. Lamont Crystallized Egg Co., 81 S.W. 1269. (2) The appointment of a receiver in this case was not ancillary and the petition seeking the appointment sufficiently stated a cause of action against the corporation alone. 14A C. J. 964-965, secs. 3187, 3188; Treat v. Pennsylvania Life Ins. Co., 199 Pa. 326; Elwood v. First Natl. Bank of Greenleaf, 21 P. 673; Van Vleet v. Evangeline Oil Co., 54 So. 288; Howard v. Cassidy Co., 42 Colo.App. 44; Oil City Iron Works v. Pellican Oil Co., 115 La. 265; Ponca Mill Co. v. Mikesell, 75 N.W. 46. (3) The petition does not seek nor does the order appointing the temporary receiver grant any direct relief as against any officer or director, other than an injunction not to interfere with the receiver in his duties. State ex rel. Navigation Co. v. Dew, 312 Mo. 300. (4) The demurrer to the petition should not have been sustained in that the respondents are not seeking to wind up the affairs of the company or because the petition does state a cause of action for the appointment of a receiver. (5) Evidence is sufficient for respondents to have been granted relief as against the corporation alone. (6) Appellant is estopped to complain of the court's order appointing the temporary receiver and appellant also has waived its right to object to such appointment, but its acquiescence to said appointment and in its failure to make timely objections. Rumsey v. Peoples Ry. Co., 55 S.W. 625; Greeley v. Provident Savings Bank, 15 S.W. 431; Hortskotte v. Menier, 50 Mo. 160; Canada v. Daniel, 157 S.W. 1034; Johnson v. United Rys. Co. of St. Louis, 152 S.W. 369.

OPINION

Atwood, J.

This is an appeal from an order of the Circuit Court of Jackson County refusing to revoke its interlocutory order made July 11, 1928, appointing a receiver to take charge of the assets and affairs of appellant Sun-Ray Products Company.

On oral argument here respondents filed motion to dismiss the appeal on the ground that the parties had previously stipulated in this court "that the cause in chief is pending in the trial court and will soon be decided upon the merits, whereon another appeal may shortly arise in this cause involving the same issues; that it would promote the convenience of the parties and the court that in such event said appeals be consolidated for hearing and determination by this court and, therefore, the parties hereto agree to a continuance and re-setting of this cause at the pleasure of the court." It was requested in the stipulation that this appeal be not heard upon the date then set for hearing, but that it "be continued and re-set for a later date at the pleasure and discretion of the court." Attached to respondents' motion to dismiss is a certified copy of an order of the court, entered at its March term, 1931, continuing and making permanent its prior appointment of a temporary receiver. This is obviously not the contingency contemplated in the stipulation and respondents' motion to dismiss is overruled.

H. H. Laumeier, Joseph F. Martinsen and John F. Rugg, purporting to act for themselves and others similarly situated, were the plaintiffs below, but Rugg withdrew as plaintiff before this appeal was taken, and appellant was the only defendant. It appears from plaintiffs' petition, filed June 26, 1928, that they were minority stockholders in defendant company, a Missouri corporation. Appellant challenges the sufficiency of the petition to state a cause of action and for that reason we set forth herewith the wrongs complained of and relief sought as therein pleaded:

"For about two years last past the defendant has wrongfully permitted the Ismert family to monopolize all of its offices, business, books, papers, records, and affairs, and has permitted two members thereof, to-wit: John H. Ismert and Martin E. Ismert, to have sole management and disposition of its funds, property and business. It has permitted them to fail and refuse to account for their official conduct in the management and disposition of the funds, property and business committed to their charge. It has permitted them to appropriate to themselves, without right, and to transfer to others, divers and sundry large sums of money and other property of great value, which have...