Lost Creek Coal & Mineral Land Co. v. Scheuer

• Decision Date: 22 January 1931
• Docket Number: 3 Div. 940.
• Citation: 222 Ala. 400,132 So. 615
• Court: Alabama Supreme Court
• Parties: LOST CREEK COAL & MINERAL LAND CO. v. SCHEUER ET AL.

132 So. 615

222 Ala. 400

LOST CREEK COAL & MINERAL LAND CO. v. SCHEUER ET AL.

3 Div. 940.

Supreme Court of Alabama

January 22, 1931

Rehearing Denied March 12, 1931.

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Bill for appointment of a receiver, etc., by Lillie W. Scheuer and Helen W. Scheuer against the Lost Creek Coal & Mineral Land Company, a corporation, and directors and officers thereof.From a decree appointing a temporary receiver, the respondent corporation appeals.

Reversed and rendered.

C. H Roquemore and Wm. E. Thetford, Jr., both of Montgomery, for appellant.

S. H Dent, of Montgomery, for appellees.

GARDNER J.

The appeal is from an order appointing a temporary receiver.Complainants are minority stockholders of defendant corporation, owning a fraction over twenty shares of the five hundred shares of capital stock outstanding.The decree of the chancellor is rested upon the bill, answer, and affidavits submitted by the parties.From these it appears the corporation was organized in 1887 to buy and sell mineral lands for profit and lease the same, and that some profits have been thus realized in the past.From a sale many years ago there arose a breach of warranty suit resulting in a judgment against the corporation in May, 1925, in the sum of $1700.While there was a sale of the corporate property under execution in October, 1928, yet the bill indicates the invalidity of this sale for that it was had more than ninety days after the return day of the execution (section 7814 Code, 1923;Hawes v. Rucker,94 Ala. 166, 10 So. 85), and discloses another sale under like process on September 14, 1929.Time for redemption from this sale by the corporation expires therefor September 14, 1931.

The original bill, filed in April, 1930, contained some general averments looking to an accounting by the secretary and treasurer of the corporation, and the petition for receiver, filed September 5, 1930, contained additional allegations to show a lack of complete bookkeeping and charge that as to the account of the lessee Cedron Coal Company, there was a discrepancy of $925.83.These averments were denied in the answer and in affidavit of said secretary and treasurer with explanations, details of which are not necessary here to relate; this for the reason that under the authority of Alabama Coal & Coke Co. v. Shackelford,137 Ala. 224, 34 So. 833, 97 Am. St. Rep. 23, the order appointing the receiver could not be rested upon the averments seeking an accounting by the secretary and treasurer.The order must therefore stand or fall upon that feature of the bill charging mismanagement and neglect in the directors and officers of the corporation in failing or refusing to redeem the corporate property from the execution sale of September 14, 1929.

It is universally recognized that the power of appointment of a receiver is a delicate one, to be exercised with great caution and to be resorted to only in extreme cases, where it appears complainants will sustain irreparable loss.McDermott v. Halliburton,219 Ala. 659, 123 So. 207;Hayes v. Jasper Land Co.,147 Ala. 340, 41 So. 909, 910;Sullivan v. Central Land Co.,173 Ala. 426, 55 So. 612, 614;Dixie Lumber Co. v. Hellams,202 Ala. 488, 80 So. 872;Henry v. Ide,208 Ala. 33, 93 So. 860;Henry v. Ide,209 Ala. 367, 96 So. 698;Howze v. Harrison,165 Ala. 150, 51 So. 614.

Where, as here, the receivership is rested upon a preservation of the estate, there must be made to appear "imminent danger to the property, the subject of the suit."Hayes v. Jasper Land Co., supra.

The bill avers that the mineral rights of the corporation, sold under execution, were worth in excess of the sum due for redemption, and that complainants' offers to advance the necessary funds to that end were refused.The answer and the affidavit of the president of the corporation detail what occurred as to such offers, and, as so detailed, are not denied by any counter affidavits.We think the president's affidavit, therefore, is to be properly accepted as correctly stating the situation.

It appears therefrom that complainants themselves made no offer but an offer was made at one time by M. Scheuer, husband of one of the complainants, and at another time by Harry Scheuer, husband of the other complainant.M. Scheuer's offer was first only upon condition that a stockholders' meeting be called to approve the same, which was done, but on the day preceding that set for the meeting said Scheuer advised the president that some of the stockholders had employed counsel for appointment of a receiver and the loan would only be made upon condition that counsel fees be paid, and that the secretary and treasurer tender his resignation.The offer of Harry Scheuer was for a loan of one year only; the mortgage debt maturing six months earlier than the expiration period for redemption.But this offer was also conditioned upon the resignation of the...