People ex rel. Butler v. District Court of Sixth Judicial Dist.

• Decision Date: 07 April 1913
• Citation: 131 P. 424,54 Colo. 576
• Parties: PEOPLE ex rel. BUTLER et al. v. DISTRICT COURT OF SIXTH JUDICIAL DIST. et al.
• Court: Colorado Supreme Court

131 P. 424

54 Colo. 576

PEOPLE ex rel. BUTLER et al. v. DISTRICT COURT OF SIXTH JUDICIAL DIST. et al.

Supreme Court of Colorado, En Banc.

April 7, 1913

Application for prohibition by the People on the relation of Joseph G Butler, Jr., and others against the District Court of the Sixth Judicial District of the State of Colorado and others. Application denied.

A. M. Stevenson and L. M. Goddard, both of Denver for petitioners.

Charles W. Waterman and Caldwell Martin, both of Denver, for respondents.

HILL J.

This is an original application for a writ of prohibition to restrain the district court of San Juan county and the Honorable Charles A. Pike judge thereof, from proceeding further in a certain cause pending in said court, and to compel the court to quash, set aside, and annul certain orders appointing receivers therein and authorizing receivers' certificates of indebtedness. The order and rule to show cause were issued and return made thereto, wherein the respondents challenge the sufficiency of the petition, etc.; it also raises the question of acquiescence and laches upon behalf of the petitioners.

Upon February 7, 1911, E. E. Dick, as plaintiff, filed in the district court of La Plata county his complaint against the Green Mountain Mining & Milling Company as defendant. Among other things this complaint states that the defendant is the owner and in possession of sundry mining properties, etc., in San Juan county of a value in excess of $1,000,000; that it has heretofore been engaged in operating these properties, etc.; that it has issued $600,000 of interestbearing bonds secured by mortgage upon its property, of these $160,000 is an outstanding indebtedness; that $440,000 of the bonds are held as collateral security for the payment of $290,000 of other indebtedness of the defendant; that it has a floating indebtedness of $460,000 now due and payable; that six months' interest on the $160,000 bonds aforesaid is past due and unpaid; that the plaintiff is the owner of 120 shares of the capital stock of the defendant; that the defendant is indebted to him in the sum of $560 for salary as secretary and treasurer; that, in addition thereto, he holds two notes of the defendant for $2,000, which are long past due; that defendant is wholly unable to pay the principal or interest on its bonds or any of its indebtedness as the same matures or has matured; that its property is subject to judgments, executions, and attachments at the hands of its numerous creditors; that suits have been brought against it by its creditors in Pennsylvania and Colorado; that, if receivers are not appointed, the defendant will be subject to a multiplicity of suits and litigation of various sorts in Pennsylvania, Colorado, and elsewhere; that its assets will be dissipated and sacrificed; that certain creditors will secure a preference over others; that its property will be taken upon execution and sold piecemeal; that is property will be greatly dissipated, diminished, impaired, and wasted; that, if the interest on its bonds be not paid, the holders will declare default and proceed to foreclose their mortgage; as a result, the bondholders will secure a preference over the unsecured creditors and all the property will be consumed in the satisfaction of the indebtedness secured by the bonds; that, if the assets of defendant are not sacrificed by forced sales in the threatened litigation, they are far in excess of the liabilities of the defendant, and, if properly administered, will pay all its debts and leave a substantial residue for its stockholders; that the procuring of a comparatively small amount of money will permit the operation of the mines and plant of the defendant; that, if defendant is enabled to again resume operation of its property, it can eventually discharge and pay its indebtedness without sacrifice of its property. This is followed with detailed statements how this can be accomplished. It is alleged that the taxes for 1910 are unpaid and the result which will follow if not arranged for. It states that the plaintiff is informed and believes that the defendant will be able to procure funds sufficient to accomplish the results above indicated, if given a reasonable period to do so before there is foreclosure and forced sales of its property. This is followed with detailed information as to how this is to be done, with the further allegations that, unless the court assumes jurisdiction and appoints receivers, the claims of all unsecured creditors will be ultimately lost, as well as great damage to the secured creditors and stockholders. It is also alleged that, in a United States court in Pennsylvania, receivers have been appointed and have proceeded to take charge of the assets of the company in that state; that in that action the company by answer admitted the allegations of the bill which were, to a certain extent, the same as those contained in this complaint. The prayer is for judgment against the defendant for $2,512 and interest, for the appointment of receivers with detailed authority, and that the officers and agents of the company be compelled to turn the property over to them, and that all creditors be enjoined from instituting suits or attempting to enforce collections other than through the receivership, etc., and for general relief.

Upon the same day the defendant company purported to file its answer in which it admits the truth of the allegations contained in the complaint and consents to the appointment of receivers. Three receivers were appointed upon the day the complaint and answer were filed; they thereafter qualified and took possession of the property, and, it appears, have thus continued under the orders of the court.

Upon February 8, 1911, the court, upon its own motion, transferred the cause to San Juan county; it appearing that it was one affecting both real and personal property situate in that county.

On March 1, 1911, these petitioners, Joseph G Butler, Jr., and C. A. Ferguson tendered for filing in the action above referred to their verified petition for intervention wherein they allege, among other things, that they were not served with notice and had no knowledge of the appointment of the receivers until February, 1911; that the Pennsylvania court was without jurisdiction in the premises, and that the appointment of receivers there, as well as here, was without notice, except to one De Armit, who claimed to be the president of the defendant company, and one Ralph Hartzell, attorney, who assumed to file an answer for the defendant; that the company is indebted to Butler in the sum of $23,625.65, with interest upon certain notes, describing them, also an additional $5,000 furnished as a loan which is long past due; that he is a large stockholder owning 204,000 shares; that Ferguson is a creditor, and upon January 21, 1911, obtained a judgment for $3,500, with interest, against the defendant in the courts of Pennsylvania; that Ferguson is a stockholder owning 135,420 shares; that a large majority of the stockholders and creditors are opposed to the appointment of receivers either in Pennsylvania or Colorado; that it appears on the face of the bill in this suit that this court was without jurisdiction to appoint receivers; that there is no equity in the bill (this is followed with detailed reasons attempting to thus show); that Ralph Hartzell, purporting to answer for the defendant, had no authority to represent it; that there was no proper notice given to the company, nor any notice given to the stockholders, creditors, or bondholders; that the complaint fails to state a cause of action; that the appointment of receivers is not in the interest of the stockholders, etc. The prayer is for permission to intervene and become defendants, to include such other stockholders and creditors as desire to join them, that they may be...