Parsons v. Rinard Grain Co.
| Decision Date | 07 July 1919 |
| Docket Number | No. 31519.,31519. |
| Citation | 173 N.W. 276,186 Iowa 1017 |
| Parties | PARSONS ET AL. v. RINARD GRAIN CO. ET AL. (WELLS ET AL., INTERVENERS.) |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Calhoun County; E. G. Albert, Judge.
The opinion states the case. All parties appeal, except the Rinard Grain Company, the Rinard Savings Bank, C. C. McPherson, and Fred W. Good. Reversed in part and affirmed in part.Gray & Gray, of Rockwell City, for plaintiffs appellants.
Frick & Frick, of Rockwell City, for appellant interveners.
E. C. Stevenson, of Rockwell City, for appellee intervening creditors.
A corporation, known as Rinard Grain Company, was organized September 28, 1912, to deal in grains, coal, and tile at Rinard. One Neyens was employed as manager at a salary of $85 per month. Business was begun in December, 1912. The capital stock consisted of 54 shares of $25 each, all of which were paid in cash, except 6 shares which were paid in lumber. The company had no elevator, but it erected corncribs and coal bins. Neither Neyens nor the officers of the company appear to have had any previous experience in the line of business undertaken. Having been appointed a committee to wind up the affairs of the corporation, the plaintiffs, the president, secretary, and one of the directors filed a petition, alleging the insolvency of the company and praying for the appointment of a receiver. One of the plaintiffs, John Parsons, was appointed receiver, and qualified as such. Upon his application, the court ordered the sale of all personal property, and also directed the collection of an assessment of $80 per share from the stockholders. Such indebtedness amounted to $3,000.49, not including the costs and attorney's fees incident to this litigation. Only the corporation was notified of this application. See State v. Union Stockyards State Bank, 103 Iowa, 549, 70 N. W. 752, 72 N. W. 1076.
Fifteen of the stockholders other than the officers filed a petition of intervention September 2, 1915, in which they alleged that the action of the court was without notice to them; that the plaintiffs and other officers of the corporation were responsible to the corporation and its stockholders for failure to perform the duties, the breach of which rendered the corporation liable; that they incurred an indebtedness in excess of that allowed by the articles of incorporation and permitted by the laws of the state, and are now attempting to escape liability for indebtedness in consequence of their wrongdoing; that the by-laws purporting to confer on the directors the power to levy assessments are contrary to the statutes of the state; and that in any event the facts were not such as to authorize the exercise of such power by the board of directors. They prayed that Parsons be removed as receiver; that a disinterested person be appointed in his stead, and that plaintiffs and other officers and directors be held as liable for the existing indebtedness of the corporation; and that they be repaid the amounts by them paid for their respective shares.
The Rinard Savings Bank filed a petition of intervention November 29, 1915, alleging that a note of $930 was executed to it by the Rinard Grain Company, by John Harm as president, and John Parsons as secretary; that it was unpaid; that the receiver had allowed it as a claim; that he had in his hands certain money and property belonging to that company which should be used in payment of the bank's claim; that plaintiffs herein were the officers of the corporation at the time the note was negotiated; and that it exceeded the indebtedness the Rinard Grain Company, under its articles and the statute, might lawfully incur, and said bank prayed that the receiver be ordered to turn over the money in his hands in satisfaction of said note, and that judgment for any balance be entered against plaintiffs. Each of two other interveners, C. C. McPherson and Fred W. Good, filed petitions of intervention, praying judgments for sums, due them for corn, against plaintiff on the same grounds. The answers of the plaintiffs and receiver put the allegations of these several petitions of intervention in issue. The receiver filed an amendment to his answer to the petition of intervention of the 15 shareholders and a cross-petition, naming all the 36 shareholders as parties, and, on the order of the court, caused all save the two nonresidents to be served with notice to appear and answer. The receiver moved to strike the petitions of intervention of the Rinard Savings Bank, McPherson, and Good on the grounds which will hereafter appear, and the court ordered this motion “to be submitted with the case.”
The plaintiffs' answers to these petitions, sought to have stricken, were filed subsequent to the above order. On hearing the court overruled the motion to strike, entered judgment as prayed against the plaintiffs and the receiver on the petition of intervention of the Rinard Savings Bank, McPherson, and Good, and ordered assessments of $75 per share, and entered judgment thereon against the several shareholders accordingly. The receiver, plaintiffs, and the shareholders appeal.
I. The receiver complains of the ruling on the motion to strike the petitions of intervention of the bank, McPherson and Good. The grounds of this motion in substance were: (1) That the claims of the interveners were filed with and allowed by the receiver; (2) that the petitions of intervention are foreign to the issues joined; (3) that the original case did not involve any question of liability between stockholders and their creditors, or between officers and directors of the company and its creditors; (4) that if any creditor of the company has any claim against the plaintiffs, their action is cognizable in law and not in equity.
[1] The fact that the several claims had been filed with the receiver did not relieve plaintiffs of any liability thereon, nor prevent the maintainance of an action against any or all of them pending the receivership. For this reason the first ground of the motion was rightly overruled.
[2][3] The receiver filed his report November 29, 1915, saying that the claims of these interveners had been filed, and that he allowed each of them, and on the same day the court entered an order approving this report. On the same day the bank, McPherson, and Good filed their petitions of intervention. That of the bank sought no relief against the receiver save that of instructing him “to turn over and pay to this intervener money now in his hands, and that the same shall be applied to the payment of said note, and that said intervener have judgment against said plaintiffs for any balance, and, in the event that the court finds that the money in the hands of the receiver cannot be used, that it have judgment against the plaintiffs, and each of them, for the amount of said note.”
It will be noticed that no relief is sought against the receiver save the disposition of the funds themselves in his hands, and no grounds for the preference prayed were stated. The petitions of intervention of McPherson and Good asked that an order allowing said claims be entered, and judgment be rendered “against the receiver, John Parsons, as such,” and against the plaintiffs as individuals, and that the receiver be ordered to pay the claims out of any funds in his hands. As these claims had been allowed the day the petitions were filed, and all that was sought was an order of allowance and payment out of the funds in the receiver's hands without asserting any preference, no remedy was prayed as against the receiver other than had already been accorded these interveners by the order approving the report of the receiver, and therefore no issue was presented which concerned the receiver, and the only issue raised as against him, in the bank's petition of intervention, was whether its claim should be given preference by immediate payment from the funds then on hand. This much is said to show that the receiver was in no manner concerned in the issues raised as against the plaintiffs as officers and directors of the Rinard Grain Company. Moreover, the receiver upon his appointment and qualification became an officer of the court, and took possession of the property of the company as such, and was required to handle the same under the direction of the court, and was not a party to the suit save as he might make himself such in looking after the interest of creditors of the corporation or the protection of its property in the interest of the corporation as well as of the creditors. See McGowan v. Myers, 66 Iowa, 99, 23 N. W. 282. Surely he, as receiver, had no such interest in the litigation, between the interveners and the plaintiffs as under the pleadings would justify an objection on his part to the assertion of the interveners' claims against the officers and directors of the company. See section 3594 of the Code. This evidently was the subsequent understanding of the receiver, for he did not interpose answer to the petitions of intervention, and does not pretend that he omitted to do so because of the postponement of the ruling on the motion. The plaintiffs answered such petitions, and put in issue the allegations contained therein, without objection, by motion or otherwise, to litigating the issues as raised by the pleadings, and on the side of the calendar where filed. True, they asserted that the answer is filed subject to the ruling on the motion to strike; but, as they interposed no motion, this can be given no consideration.
Our conclusions are: First, that the receiver, who was in no manner prejudiced by the ruling on the motion, cannot complain; and, second, that he was not in a situation to raise any question as to the propriety of litigating the issues in the intervention proceedings, nor to challenge the propriety of the court's ruling had the motion been interposed by plaintiffs. See Reard v. Freiden, 169 N. W. 245;Kauffman v. Phillips, 154...
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