Pyles v. Furniture Co.

• Decision Date: 29 June 1887
• Citation: 30 W.Va. 123
• Court: West Virginia Supreme Court
• Parties: Pyles v. Furniture Co.

30 W.Va. 123

Pyles

v.Furniture Co.

Supreme Court of Appeals of West Virginia.

Submitted June 2, 1887.

Decided June 29, 1887.

1. Multifariousness.

A bill will not be held multifarious by reason of an improper charge, which charge does not set up an independent cause of action. (p. 132.)

2. Pleading.

A general charge of fraud in a bill will not be sufficient to put the defendant to his answer. The facts, which, it is alleged, constitute the fraud, must be set out; and they must, if true, make out the charge. (p. 133.)

3. Corporation.

An insolvent corporation having ceased to do business has the same power, as an insolvent individual, to prefer a creditor in a general assignment of all its property for the payment of its debts. (p. 134.)

4. Corporation.

Where there was a decision in Virginia seventeen years before the formation of this State holding, that an insolvent corporation having ceased to do business could prefer creditors, and at the time of such decision a statute was in existence in Virginia, not applicable to the case decided, which denied to a mining or manufacturing corporation the right to make any incumbrance preferring a creditor, and such statute continued until 1863, after the formation of this State, when it was repealed by implication, and there has been no statute in force in this State for twenty four years denying such right to a corporation, the law, as then settled in Virginia, is the law of this State, and it can not be changed except by the Legislature. The decision then rendered has become a ride governing property; and it is not in the power of the courts to change it. (p. 142.)

5. Corporation.

There is nothing in the policy of our statutes, which forbids an insolvent corporation to prefer creditors. (p. 142.)

6. Corporation.

Where the whole scheme of a bill is to set aside trust-deeds executed by a corporation on grounds not recognized in law, and to distribute the proceeds of the property among the creditors pro rata, and there is also a charge in the bill, that the trustees have unreasonably delayed the execution of the trust, and that the property is wasting, and no charge, that the plaintiff ever demanded a sale of the property, and the bill alleges, that the property will not pay the several creditors under the trust, this charge under the circumstances is not sufficient to justify the taking of the property out of the hands of the trustees and the putting of it into the hands of a receiver. (p. 145.)

Ewing Melvin & Riley for appellant.

W. P. Hubbard and A. J. Clarke for appellees.

Johnson, President:

On the 27th day of February, 1885, the plaintiff instituted his suit in chancery in the Circuit Court of Ohio county against the defendants to set aside several deeds of trust, which had been executed by the Riverside Furniture Company, one of the defendants, to secure certain of its creditors, the last of which was a general assignment of all its property for the benefit of all its creditors, but preferring certain creditors. The further object of the bill was to have a receiver appointed and the property of the corporation sold and the proceeds distributed among its creditors ratably. The bill was filed at March rules and is as follows:

"In the Circuit Court oe Ohio County.

"Jacob B. Pyles vs. Riverside Furniture Company, S. C. Eschstruth, August Gelhring, George Brack man, Henry Wohlert, George Shallhase, Henry Faupel, Albert Metzner, Henry Kilmer, A. C. Sauer, J. P. Heinlein, John Freiber, C. Weileman, William Detering, Louis Wheeler, Philip Veith, Adam Stahl, The Commercial Hank of Wheel* ing, Heinrich Schrader, Louise Gegner, Catherine} Zimmer, Catherine Wheeler, August Rockebrand, Henry Bade, J. F. Merschrod, Joseph Wilson, The German Bank of Wheeling, G. Thoenen, The Exchange Bank of Wheeling, George Brakman, The Bank of Wheeling, 0. P. Brown, administrator of the estate of Phillip Metzner, deceased, James Wheeler, trustee, and 8. P. Hildreth, trustee. Bill in chancery. "To the Hon. the Judges of the Circuit Court of Ohio County:

"Humbly complaining, Jacob B. Pyles brings this suit in his own behalf and in behalf of all others the creditors of the "Riverside Furniture Company" who may contribute to the costs of and aid in prosecuting the same against the de- fendants above set out and named, and complains and. says and charges in this his bill of complaint, that the "Riverside Furniture Company" is a corporation, created and existing under the laws of the State of West Virginia, having its principal place of business at the city of Wheeling, in Ohio county, in said State; that its certificate of incorporation is dated on the 12th day of December, 1881, and is printed pursuant to law in the Acts of the Legislature of 1881, on pages two hundred and sixty four and two hundred and sixty five; that the said corporation was formed for the purpose of manufacturing and dealing in furniture of all kinds and such articles as enter into its manufacture, and of dealing in such patents as were then, or might be thereafter, issued for any machinery for making such furniture; for the purpose of purchasing and selling (after such purchase) such timber as may be necessary for the purpose of carrying on the proposed business; that the said corporation organized and carried on business until about the beginning of the year 1884, since which time complainant is informed and believes and charges the fact to be that the said corporation has done no business or transacted any affairs contemplated by the objects set forth in their certificate of incorporation; that the last board of directors for said corporation elected by the stockholders were Philip Metzner (now deceased), S. C. Eschstruth, August Gehring, George Brackman and Henry Wohlert, the four last named being still directors; that in January, 1882, Philip Metzner, as president, and William Detering, as secretary, and S. P. Hildreth, as trustee, executed a deed purporting to have been authorized by the board of directors of said corporation, conveying to said Hildreth lots numbered 18, 19, 20 and 21, situated on the east side of Water street in the Fifth Ward of the city of heeling in the addition to said city laid off by John Eoff and William Chapline. Said deed purports on its face to be in trust to secure the holder or holders thereof the payment of sixty bonds of the amount and denomination of five hundred dollars each, issued by the said corporation, all bearing date the first day of February, 1882, and payable to S. P. Hildreth, trustee, or bearer, on the first day of February, 1897, with interest at the rate of six per cent, per annum until. maturity, payable semi-annually; an authenticated copy of said deed of trust is marked "A" herewith filed and prayed to be taken as a part of this bill and to be read therewith. Your orator here charges, that this is fraudulent and void as to his judgment and lien hereinafter stated and as to other creditors of said company; that said deed was not made; for any corporate purpose specified in the certificate creating said corporation; that the bonds thereby secured to be paid were not lawful debts incurred by the corporation or authorized by law or the certificate of incorporation of said company; that they were not issued for any lawful purpose authorized by law; that the powers of said corporation were and are limited by the second section of chapter fifty two of the Code of West Virginia to the purposes for which it was incorporated, and it had no right to engage in borrowing money and giving its bonds in the manner set out in said deed; that the issuing of the said bonds was a manifest evasion of the statute requiring the stock of the company to be sold at not less than par; that no adequate consideration was ever received by the company for these bonds; that its means have been misapplied in the payment of interest on and in negotiating them; that said corporation again, on the 11th day of August, 1882, made another deed of trust to S. P. Hildreth, trustee, to secure the payment of a note therein described as being a note for money loaned; this trust covered certain lumber therein described; an authentic copy of this last deed is marked "B" herewith filed and prayed to be taken as part of this bill of complaint. Your orator avers, that this last named deed is unauthorized and fraudulent and void as to the claim of your orator hereinafter named.

"Your orator further shows, that the Commercial Bank of the city of Wheeling is a corporation existing under the laws of this State, and has been in existence and carried on business ever since the incorporation of the Riverside Furniture Company; that during all this time the said S. P. Hildreth has been its agent and cashier, and has at all times known of the debts claimed and deeds of trust hereinbefore referred to, and lie and his bank knew well, that the indebtedness of the Riverside Furniture Company could not be paid out of the property included in these deeds of trust, and that they carried all the assets of value belonging to the company; that your orator was, for at least ten years past, a customer of this bank, doing business in it and implicitly relying on the statements of its cashier, the said Hildreth; that your orator was and is a country merchant and dealer in lumber; that on or near the day of, 1883, the Riverside Furniture Company applied to your orator and desired to buy lumber on credit; that thereupon your orator applied at said Commercial Bank for information concerning the financial standing, ability and credit of the said Riverside Furniture Company, and was informed by said S. P. Hildreth, its agent and cashier, that the said Riverside Furniture Company was in good credit, solvent and secure. Relying on this statement, several times afterwards repeated, your orator was induced thereby to sell on credit to said Riverside Furniture Company a large amount of lumber, amounting in value to the sum of your orator's judgments...