Ponca Mill Co. v. Mikesell

• Decision Date: 04 May 1898
• Citation: 75 N.W. 46,55 Neb. 98
• Parties: PONCA MILL CO. ET AL. v. MIKESELL.
• Court: Nebraska Supreme Court

55 Neb. 98

75 N.W. 46

PONCA MILL CO. ET AL.

v.MIKESELL.

Supreme Court of Nebraska.

May 4, 1898.

Syllabus by the Court.

1. A receiver will not be appointed for a corporation, at the instance of a stockholder, merely because of a difference of opinion between him and the officers or the holders of a majority of the stock as to the proper policy of managing the corporate affairs; but one will be so appointed when it is shown that the officers and the holders of a majority of the stock are fraudulently mismanaging the corporate business, converting its property to their individual use, and abusing their powers, to the injury of other stockholders.

2. The wrongdoers being in control of the corporation, both through its stock, and by being the officers thereof, it is not essential for a complaining stockholder to show, as a condition of maintaining his suit, that he first made demand on the officers to proceed on behalf of the corporation itself to remedy the wrongs complained of.

3. A stockholder, seeking the appointment of a receiver because of mismanagement and fraud by the majority stockholders and officers, alleged, among other wrongful acts, that the officers had conveyed away corporate property in secret trust for one of their number, and for a grossly inadequate price; that plaintiff had been compelled to resort to a stockholder's suit to set aside the conveyance, and that the court had imposed as a condition that the corporation repay a certain sum of money, giving him the right to do so if the corporation refused, and a consequent lien upon the property to indemnify him; that he had been compelled to make the payment. He asked the establishment and foreclosure of the lien. Held, that the two transactions were connected with the same subject of action, within the meaning of Code Civ. Proc. § 87, and could be joined.

4. In such an action the corporation itself is the essential defendant. It is not necessary to join all the directors.

Error to district court, Dixon county; Robinson, Judge.

Petition by S. P. Mikesell against the Ponca Mill Company, a corporation, and others, for the appointment of a receiver. From an order appointing a receiver, defendants appeal. Affirmed.Gantt & Welty, for plaintiffs in error.

IRVINE, C.

This is an appeal from an order appointing a receiver for a corporationat the instance of a stockholder. The order also establishes and forecloses a lien to the plaintiff upon certain of the corporate property. The defendants demurred to the petition, and, the demurrer having been overruled, they refused to plead further, and the order complained of was then entered. The principal ground of demurrer was that the petition did not state facts sufficient to constitute a cause of action. The petition alleges: That the Ponca Mill Company is a corporation organized under the laws of this state for the purpose of conducting a milling business, with a capital stock of $40,000, divided into 80 shares. That the plaintiff owns 26 shares; the defendant S. K. Bittenbender, 41 shares; and the defendant John Stough, 2 shares. That Stough is president, and Bittenbender secretary and treasurer. There are averments that Stough was unlawfully made president for the purpose of carrying out schemes to defraud others, but such averments are not specific, and may be disregarded. It is then alleged that the officers named have for years failed to make a statement of the condition of the corporation, and to publish notices of indebtedness, and have refused to give information which would enable others so to do; that they have seized corporate property, and converted it to their own use; that they have surreptitiously let contracts to themselves, and appropriated to their own use profits realized therefrom; that Bittenbender has borrowed money for the corporation at 8 per cent. interest, and charged the corporation 10 per cent. therefor; that Bittenbender and Stough made a pretended conveyance of certain corporate property, of the value of $10,000, to one Jordan, for the sum of $2,110, under a secret trust in Bittenbender's favor; that plaintiff was compelled to resort to the courts to have such conveyance set aside; that a decree was rendered canceling the conveyance on plaintiff's or the corporation's paying to Jordan $1,138, the decree providing that, if the corporation should fail to make the payment, plaintiff might do so, and would then have a lien on the property for the advancement; that the corporation failed to make the payment, and that plaintiff, to protect the corporate interests, was compelled to do so; that all the assets, books, and accounts of the corporation are in the possession of Bittenbender, who refuses to permit plaintiff to inspect the same; that certain buildings, including the mill of the corporation, were destroyed by...