Sheridan Brick Works v. Marion Trust Co.

• Decision Date: 23 October 1901
• Parties: SHERIDAN BRICK WORKS v. MARION TRUST CO.
• Court: Indiana Supreme Court

157 Ind. 292

61 N.E. 666

SHERIDAN BRICK WORKS

v.MARION TRUST CO.

Supreme Court of Indiana.

Oct. 23, 1901.

Appeal from superior court, Marion county; James M. Leathers, Judge.

Action by the Marion Trust Company, as administrator of the estate of Mason J. Osgood, deceased, against the Sheridan Brick Works. From an order appointing a receiver for the defendant pendente lite, it appeals. Affirmed.

Linn D. Hay, John W. Bowlus, and Cassius C. Hadley, for appellant. Ayres, Jones & Hollett, for appellee.

JORDAN, J.

Appellee, the Marion Trust Company, as the administrator of the estate of Mason J. Osgood, filed an amended complaint in the lower court, consisting of 21 paragraphs. In each of these except the last it sought to recover against appellant on certain promissory notes in favor of its decedent's estate. These notes in the aggregate amount to $45,000. By the last paragraph of the complaint appellee sought for the appointment of a receiver pendente lite. After hearing the evidence introduced by each of the parties, the court made an interlocutory order whereby a receiver was appointed for said corporation, and for a reversal of that order this appeal is prosecuted. The errors assigned relate to the insufficiency of the complaint and to the alleged error of the court in appointing a receiver under the evidence. The material facts, among others, set forth in the paragraph of complaint in question, may be summarized as follows:

Appellant is a corporation engaged in the manufacture of brick, and its principal office is located in the city of Indianapolis, Ind. It is engaged in operating two plants in the manufacture of brick, one of which is situated in the town of Sheridan, Hamilton county, and the other at Brazil, Clay county, Ind. The capital stock is $50,000, divided into 500 shares, of which 250 are owned and held by Oliver H. Root, and 249 shares are owned and held by the estate of Mason J. Osgood, and 1 share is owned by Aquilla Q. Jones. Mason J. Osgood died on December 10, 1900, and, previous to his death, he, together with said Oliver H. Root and Aquilla Q. Jones, constituted the directory of the corporation. Osgood, at the time of his death, was also the president and manager of the concern, and Root was the secretary and treasurer thereof. The company is indebted to the estate of Mason J. Osgood, of which the Marion Trust Company is the administrator, in the sum of $45,000, which indebtedness is past due and unpaid, and the company has no funds out of which to pay and discharge said indebtedness. The brick works of the company situated at Sheridan are idle, and the company has no money to operate them, and, because of their not being operated, they are rapidly deteriorating in value. Prior to and at the death of Osgood, the company's president, there existed a disagreement among its officers and stockholders in respect to the management of the concern, and this disagreement still continues to exist, and thereby the affairs of the company are in an unsettled condition. On the 3d day of January, 1901, a meeting was held by the stockholders for the purpose of filling the vacancies which had resulted in the directory and in the office of president by reason of the death of Osgood, but the stockholders were unable to agree upon persons to fill said vacancies, and by reason of the continuance of such disagreement these offices remain vacant, and the company has no president or manager, and but two directors, and will continue in this condition, for the reason that the stockholders cannot or will not agree upon some one to fill said offices. Root, the secretary and treasurer, and also one of the two directors, has refused to call any meeting of the company for the purpose of endeavoring to elect a third director and a president, and by reason of this condition of the company its business and property are in danger of and liable to be dissipated and irreparably injured, unless a receiver is appointed by the court to take charge of and manage the affairs of the corporation. Sections 2 and 4 of article 1 of the company's by-laws, as set out in the complaint, are as follows:

“Sec. 2. The president shall preside at all meetings of the company and shall be the manager and have active control of the business affairs of the company. He shall approve all bills and countersign all checks given for disbursements by the company.”

“Sec. 4. The treasurer shall receive and hold all funds of the company and shall place them on deposit to the credit of the company in such bank or banks as the board of directors may order or direct. He or she shall make no disbursements unless especially directed to do so by either the president of the company or board of directors. The president of the company shall countersign all checks with the treasurer.”

In compliance with these by-laws, the funds of the company, for a long time prior to the death of Osgood, had been deposited in the Fletcher National Bank of Indianapolis, to be checked out only as provided by the by-laws. At the time of the death of Mason J. Osgood, its president, the company had on deposit in said bank $1,305.42, and this money cannot now be drawn or used by the company, for the reason that there is no president to countersign the checks drawn upon said bank, as provided by the by-laws. Oliver H. Root, the secretary and treasurer, and one of the directors, as heretofore stated, in violation of the by-laws of the company, as alleged, is assuming to manage the business of the concern, and is neglecting to deposit the money in the bank as the by-laws direct. The company has no officer authorized to manage its affairs or to approve bills or countersign checks drawn upon banks. By reason of all which its affairs have become complicated, and there are numerous creditors who are likely to commence suits against said company to enforce the payment of their claims, and its assets and property are liable to become dissipated and destroyed, and the company is in danger, it is alleged, of becoming insolvent. Appellant contends that the complaint upon which the order appointing a receiver is based does not state facts sufficient to authorize the appointment. The contention is that appellee, the moving party, under the facts therein alleged, is shown to occupy only the position of a creditor, and as such, in order to secure the appointment of a receiver, it must further be shown that it has a lien on the property of appellant or an equitable claim thereto. Reviewing the facts as alleged in the amended complaint, we find that they disclose that appellee's decedent, at the time of his death, was a large stockholder in appellant corporation, and that this stock is now held by appellee as the representative of his estate. The entire stock, it appears, was held by three persons, Root, Jones, and Osgood, appellee's decedent, and these three constituted the directory of the corporation. Osgood at the time of his death was the president and manager of the concern. The by-laws set out and embodied in the complaint show that the president has the active control of the company's business affairs, and is required to approve all bills and countersign all checks, etc. Osgood, in addition to his being a stockholder, was also at the time of his death a creditor of the company, holding claims due...