Seiler v. Union Mfg. Co

• Decision Date: 23 November 1901
• Citation: 40 S.E. 547,50 W.Va. 208
• Parties: SEILER et al. v. UNION MFG. CO. et al.
• Court: West Virginia Supreme Court

40 S.E. 547

50 W.Va. 208

SEILER et al.

v.UNION MFG. CO. et al.

Supreme Court of Appeals of West Virginia.

Nov. 23, 1901.

CONSENT DECREE — SETTING ASIDE — INSOLVENT CORPORATION—RECEIVER —TRUST LIEN.

1. Syl., points 2, 4, Manion v. Fahy, 11 W. Va. 482, and Syl., point 1, Morris' Adm'r v. Peyton's Adm'r, 11 S. E. 954, 29 W. Va. 201, reaffirmed.

2. The parties to a suit can adjust matters and their rights between themselves, and have a decree entered by consent of all parties, without regard to the state of the pleadings or evidence in the cause; and the court at a subsequent term has no power to set aside, alter, or modify it without the consent of the parties, except only to correct a clerical error.

3. The court in its decrees carrying into execution a consent decree may construe the same when necessary, but it cannot set aside such consent decree, and enter one totally different therefrom, under the guise of construing it.

4. The stockholders and creditors of an insolvent corporation, other than a creditor by trust lien covering all the real estate of said corporation, procured the appointment of a special receiver of the property of said corporation. Held, that the said trust lien will be protected against indebtedness created by said special receiver.

(Syllabus by the Court.)

Appeal from circuit court, Tucker county; Jno. Homer Holt, Judge.

Bill by John R. Seller and others against the Union Manufacturing Company and others. Decree for complainants, and defendants appeal. Reversed.

Wagoner & Heironlmus and C. Wood Dalley, for appellants.

A. Jay Valentine, for appellees.

McWHORTER, J. On the 30th day of January, 1897, J. R. Seiler and others, officers and stockholders of the Union Manufacturing Company, a corporation doing business at Parsons, Tucker county, presented their bill to the circuit court of said county, praying for the appointment of a special receiver of the property and business of the said defendant company, that such business might be carried on and its debts paid, and the rights and interests of the parties in interest protected; and on the presentation of the said bill an order was made appointing William G. Conley special receiver, and remanding the bill to rules for process. The most valuable part of the assets of said Union Manufacturing Company consisted of real estate, upon which a deed of trust had before that time been duly executed and recorded, to secure to the Monumental Savings & Loan Association the payment of $1,500 loaned upon said property, according to the terms and conditions of the loan. Said receiver was authorized to carry on the business and operate the mill plant, and to have all power that might be necessary or proper for him to exercise in the prudent and successful con tinuance of said business, including the right to employ such agents, assistants, and employés as he might find necessary in the discharge of said business, and from the collection to be made by him from time to time of money then due said company, or thereafter to become due in the course of the business, he should pay first the current expenses of operating the business as they become due, and, i'f any surplus remained in his hands after paying current expenses, he was to retain the same, and continue to do likewise each month until the March term of the court, 1897, when he should make a full report of all the business transacted by him, and the surplus so remaining in his hands, for further decree. He made reports from time to time, when it was ascertained that the receiver was contracting a large indebtedness, and not paying off the indebtedness which existed at the time of his appointment On the 14th of December, 1897, the Monumental Savings & Loan Association filed its answer and cross bill, denying that it joined in the request for a special receiver, yet acquiesced in the belief at the time it was done that a special receiver should be appointed, but with the express understanding that the monthly dues each month becoming due under its contract should be paid by the receiver, and alleging that the business of the company was being destroyed by the receiver, and praying for his discharge, which motion to discharge the receiver was overruled by the court. On the 13th of March, 1899, the cause was referred to W. H. Kelly, commissioner, to ascertain and report the real estate owned by the defendant the Union Manufacturing Company and the real and personal estate owned by it on the 30th of January, 1897, the date of the appointment of the receiver, what property passed into the hands of the said receiver, and what disposition he had made of it and to ascertain and report the liens and priorities on said real and personal property, distinguishing between those existing at the time of receiver's appointment and those contracted by receiver, and to settle the receiver's account. On the 23d of June, 1899, a consent decree was entered, directing the sale of the property of said manufacturing company, expressly providing that only the equity of redemption should be sold of that property upon which the said building and loan association had its lien, such sale to be made by the special receiver; and it provided further that by the written consent of the said loan association, filed with the clerk of the court or with the receiver at any time prior to the time he should advertise said property for sale under the decree, the said receiver should sell the entire title to all said property, including that covered by said deed of trust aforesaid. Under the decree the receiver sold the personal property, and also sold the equity of redemption in thatcovered by the said Hen, but which equity of redemption only brought $5, and was purchased by the said building and loan association. The report of said sales was made, when the court refused to confirm the sale of the equity of redemption, and at tbe November term, 1899, of said court, entered a decree modifying, and, in effect, setting aside, the consent decree, and providing for the sale of the property absolutely, free from the said lien of the loan association, and for the payment out of the proceeds first of the costs and debts contracted by the receiver, which, as ascertained by the commissioner's report, would probably be more than sufficient to consume all the assets of the said Union Manufacturing Company. There were various exceptions made to said report of Commissioner Kelly. J. R. Seiler excepted: "First. Because said commissioner reports that the debts contracted, by Special Receiver Conley should rank with open accounts against said company, 'and take last place, so far as personal property of said company is concerned, ' and that the Monumental Savings & Loan Association be first paid out of a sale of the real estate. Second. Because said commissioner fails to report as the first charge or lien on all the property of the Union Manufacturing Company the debts contracted by special receiver, Wm. G. Conley, since his appointment as such special receiver." William G. Conley, special receiver, filed his exceptions as follows: "First. To the commissioner's report in this cause, for the reason that the commissioner reports that the deed of trust lien to the Monumental Savings & Loan Association, defendant, is a first lien against all of the real estate of the Union Manufacturing Company, and should be first to be paid out of the proceeds of the sale thereof, and at the same time shows that the receiver is indebted the amount of $1,495.11 at the date of the report, which is the receiver's debt, and is the first lien against all the property of the Union Manufacturing Company, and should be first to be paid out of the proceeds of the sale thereof, and should have been so reported, not only because this is proper from a legal standpoint, but because the said building and loan association joined with the stockholders and other of the creditors of the Union Manufacturing Company to place it in the hands of a receiver, as shown by the order appointing the receiver, entered at a special term of this court on January 30, 1897. Second. Because the accounts due the receiver amount to $1,0G4.55, out of which the special receiver for his services has had nothing except $50, about two-thirds of which are claims due the receiver, and by insolvent parties, and which are uncollectible. And the other assets, as shown by the report of sale, which will be filed herewith, will not be near a sufficient amount to pay the receiver's indebtedness. Therefore the receiver's indebtedness should be decreed and held to be a lien against all of the property, assets, and claims due said company's receiver, to be a first lien there against, and to be first paid out of the proceeds of the sale of its property. Third. That the costs of this suit, as well, should also be paid before the deed of trust debt of the Monumental Savings & Loan Association; and in this behalf, as against the report of the commissioner, which states that the debt to the Monumental Savings & Loan Association should be first paid before any other claim, the receiver excepts." And the Monumental Savings & Loan Association also filed its exception: "First. For that the commissioner reports vaguely, in that he reports 'that the Monumental Savings & Loan Association, in case of any sale of the real estate of the Union Manufacturing Company, such not being made subject to the Monumental Savings & Loan Association's deed of trust, the building and loan should then be first paid out of the proceeds of said sale.' The reason foi said exception is that the supreme court has ruled in the case of Wise v. Taylor, 29 S. E. 1003, that said sale can only be made subject to the building and loan debt, or, in other words, that the equity of redemption only can be sold. In that decision the court said: 'And the court has no power to change the terms' and conditions of the deed of trust as to the maturity of the loan thereby secured.'...