Max Ams, Inc., v. Barker
| Decision Date | 26 March 1943 |
| Citation | 293 Ky. 698 |
| Parties | Max Ams, Inc., v. Barker. |
| Court | United States State Supreme Court — District of Kentucky |
1. Appeal and Error; Judgment. — Rendition of judgment, not authorized under facts presented, by a court of competent jurisdiction over subject matter of and parties to action, is mere error, correctable by appeal, but judgment of court without jurisdiction of subject matter or parties is void.
2. Receivers. — Equity courts have jurisdiction to appoint receivers in order to prevent injury to thing in controversy and preserve it pendente lite for security of all parties in interest until finally disposed of as court directs.
3. Courts. — "Jurisdiction" consists in legal right by which judges exercise their authority or the power or authority conferred on court to hear and determine causes between parties and carry judgment into effect.
4. Courts. — The term "jurisdiction" imports authority to expound or apply laws and excludes idea of power to make laws.
5. Appeal and Error. — A judgment appointing corporation receiver with consent of corporation, which did not appeal therefrom, must be sustained on appeal from subsequent judgment making absolute a rule to show cause why successful bidder at receiver's sale of corporation's property should not comply with bid.
6. Corporations. — An action for appointment of receiver of insolvent corporation's property is in nature of equity action to settle corporation's affiairs, in which court may order receiver's sale of property, if necessary to preserve interests of all parties interested therein, including corporation's creditors.
7. Appeal and Error. — A successful bidder at sale of corporation's property by receiver, appointed by judgment agreed to and not appealed from by corporation, will obtain complete title to property covered by bid as against all parties to action for receiver's appointment, so as to require affirmance of judgment making absolute a rule to show cause why he should not comply with bid.
Appeal from Jefferson Circuit Court.
Woodward, Dawson & Hobson for appellant.
Dodd & Dodd for appellee.
Before Churchill Humphrey, Judge.
Affirming.
On April 25, 1933, A.M. Anderson, receiver of the National Bank of Kentucky, filed an action in equity in the Jefferson circuit court, chancery branch, first division, against the Goodwin Preserving Company, a Kentucky corporation, in which plaintiff sought the appointment of a receiver to take charge of and manage and operate, etc., the property of defendant, which consisted of real property upon which was located its manufacturing plant, and machinery therein; also other assets, all located in the city of Louisville. The petition alleged an indebtedness of more than $48,000 owing by defendant to the bank of which plaintiff was receiver, and that it was indebted to other creditors in large amounts aggregating more than or equal to its entire assets and was, therefore, insolvent. Four days prior to the filing of that petition — and in anticipation thereof, as well as in accordance with a mutual understanding — a resolution was passed by the directors of defendant consenting that such proceedings might be had, and agreeing to the relief asked in the later filed petition. After it was filed the corporation answered consenting thereto "and prays that this court issue such order as may be necessary, or orders, in the premises for the protection of the interest of creditors and stock holders of said corporation."
Upon submission, and with the consent of all parties, the court entered judgment reciting that both parties appeared by counsel and that "Thomas A. Barker be and he is hereby appointed receiver of all the property and assets, real and personal, of the defendant, Goodwin Preserving Company, including the real estate in the City of Louisville belonging to said defendant, and all brands and contracts, books and papers, accounts, records, cash on hand or in bank, and all rents, issues and profits arising from said assets, with authority to sell or lease, with the approval of the Court, any or all of said assets or property." (Our emphasis). The receiver took charge of the property after qualifying as such, and managed its operation thereafter for nearly ten years, making periodical reports to the court, which on January, 1943, showed that the defendant company did not have and the receiver could not provide for sufficient capital to operate the business which he had attempted to correct during his long service as receiver, but had been unable to do so. On that day he and the plaintiff in the action filed amended petitions in the cause setting out the situation as above described, and prayed for an order of sale of the property in receivership for the satisfaction, or pro tanto satisfaction, of its indebtedness, since it had been demonstrated that its operation by the receiver could not accomplish that result, and in the meantime the machinery — being the largest item — was decreasing in value. The business of the defendant was the preserving of fruits and pickling of vegetables, and it had built up a valuable good will on account of the quality of its product; but was nevertheless unable to acquire sufficient unincumbered capital to operate its business successfully.
Just prior to the application to the court the receiver had procured a number of bids or offers by prospective buyers of the property, which he disclosed to the court. Attorneys for the defendant, and of the movants for an order of sale, were present at the hearing and the court sustained the motion and directed the receiver to offer for sale the property, including, of course, the real estate whereon the plant of defendant was located, on Monday, the first day of February, 1943, at 11 o'clock A.M., in the Directors Room of the Louisville Trust Company, which presumably was also the office of the receiver. It directed that he first give notice in the newspapers published in Louisville of the directed sale, and to explain to those who submitted bids that they might alter them as to price and directed the receiver to then accept the highest and best one, and report his actions to the court. The...
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