Oxford Telephone Mfg. Co. v. Arkansas Nat. Bank

• Decision Date: 27 May 1918
• Docket Number: (Nos. 11, 94.)
• Citation: 204 S.W. 1140
• Parties: OXFORD TELEPHONE MFG. CO. v. ARKANSAS NAT. BANK.
• Court: Arkansas Supreme Court

204 S.W. 1140

OXFORD TELEPHONE MFG. CO. v. ARKANSAS NAT. BANK.

(Nos. 11, 94.)

Supreme Court of Arkansas.

May 27, 1918.

On Rehearing, July 1, 1918.

Appeal from Washington Chancery Court; Ben F. McMahn, Chancellor.

Suit by the Oxford Telephone Manufacturing Company against the Arkansas National Bank. Judgment for defendant, and plaintiff appeals. Appeal dismissed.

E. B. Wall, of Fayetteville, for appellant. R. J. Wilson and H. L. Pearson, both of Fayetteville, for appellee.

SMITH, J.

The Oxford Telephone Manufacturing Company, hereinafter referred to as the "company," was an Arkansas corporation, but in 1913 it concluded to establish a branch of its business at Houston, Tex., and secured the necessary permit to do business in that state for the balance of the year covered by the permit and ending May 1, 1914. This permit was not renewed, and it became the duty of the proper officer of that state to cancel the permit, and on July 25, 1914, a Texas stockholder filed an application for a receiver at Houston, alleging, among other things, that the company had failed to renew its permit to do business in the state of Texas for the then current year. A receiver was appointed, who took charge of all property belonging to the company in the state of Texas. An agreement was made on August 10, 1914, between the company and one Dr. C. S. Preston and H. A. Kinney, both Texas stockholders and directors in the company, to take the real estate of the company in Texas and pay the indebtedness due in that state, and to pay all costs in the receivership proceedings, and to return to the company, free and clear from all liens and indebtedness, all the personal property of the company in the state of Texas. Authority for this agreement was conferred in a resolution passed by the board of directors of the company. Preston was present at the meeting at which this resolution was passed. Necessary deeds to effectuate the resolution were prepared and placed in escrow.

On December 17, 1914, the Arkansas National Bank, hereinafter referred to as the "bank," filed a complaint in the Washington chancery court asking reformation and foreclosure of a chattel mortgage given it by the company to secure a certain promissory note executed by the company to its order together with a personal judgment against certain of the company's officers. This complaint contained a prayer also for the appointment of a receiver to take charge of the assets of the company, the allegation being made that it was insolvent. The Texas contract was not consummated because of a disagreement which arose over certain of its provisions.

Judgment was rendered in favor of the bank on February 23, 1915, for $4,477.76 against the company. No order was made, however, by the chancery court appointing a receiver; but it appears that by common consent one J. F. Moore acted as such or in that capacity and executed a number of orders made by the court in regard to the property of the company, and as a result of this action and of these orders the property of the company appears to have been disposed of on advantageous terms and the largest possible amount realized out of its assets.

Pending that proceeding in the Washington chancery court, leave was obtained from that court by the company on July 28, 1916, to sue the bank for participation in an alleged wrongful conversion and disposition of certain of its assets, and in its complaint filed in that behalf the company alleged: That Preston had wrongfully converted its Texas property, in which action the bank had connived, and that included in the property thus converted was a lot of telephone wire which was very valuable. That this wire was shipped to Fayetteville and consigned to the bank, and that action was taken in violation of the contract between the company and Preston and in contempt of the decree of the Texas court disposing of that property. That Preston sold and retained the proceeds of the sale of certain personal property, and that the wire was taken charge of by an officer of the bank, which caused the same to be levied upon in satisfaction of the debt due it from the company. There was a prayer for the value of the property alleged to have been thus wrongfully converted by the bank and Preston.

Among other orders made by the court pending the final disposition of the original suit was one in which it was recited that:

"By agreement of counsel it is ordered by the court that the officers and directors of the company be and they are hereby authorized and permitted to sell any and all personal property of said company by private sale and apply the proceeds thereof to the payment of the judgment as herein set forth."

The court also ordered that all the personal property in Texas be shipped to Fayetteville except certain machinery. This order was not complied with, and the court made another order that Moore cause the wire and electric appliances and all telephone equipment to be shipped to Fayetteville and to make such disposition of the machinery in Texas as to him should seem fit.

One of the orders made by the court directed the attorney for the bank to assist Moore in collecting and disposing of the assets of the company, and this suit was brought upon the theory that the attorney for the bank entered into a fraudulent arrangement with Preston for the disposition of the assets in Texas. The record is a voluminous one and contains much testimony in regard to the assets thus collected and the disposition made of them, and no useful purpose would be served in setting out this testimony. The attorney for the bank testified that he had no understanding or agreement...