Simmons v. Taylor

• Decision Date: 20 April 1901
• Citation: 63 S.W. 1123,106 Tenn. 729
• Parties: SIMMONS v. TAYLOR et al.
• Court: Tennessee Supreme Court

63 S.W. 1123

106 Tenn. 729

SIMMONS v. TAYLOR et al.

Supreme Court of Tennessee.

April 20, 1901

Appeal from chancery court, Shelby county; F. H. Heiskell Chancellor.

Bill by W. W. Simmons, as receiver of the Memphis Barrel & Heading Company, against W. F. Taylor and others. From an order overruling a demurrer to part of the complaint, and sustaining it as to part, both parties appeal. Bill dismissed.

Perkins & Watson, for complainant. Smith & Trezevant, and T. K Riddick, for defendants.

WILKES J.

This is a bill by the receiver of an insolvent domestic manufacturing corporation to enforce certain stock subscription liabilities, and to recover from the officers and directors for negligence, malfeasance, and mismanagement of the corporate affairs, and for allowing debts to be incurred by the corporation beyond the amount of capital stock paid in. The original bill was filed March 12, 1896, against Taylor Wellford, and Ward, and alleged generally the chartering and inception of the corporation in 1887, and the election of officers under the corporate name of the Wellford Manufacturing Company; that in 1890 a new charter was obtained under the corporate name of the Memphis Barrel & Heading Company, and that it organized on January 22, 1891 by the election of officers. The capital stock was fixed at $100,000, and of this $25,000 was issued to the Wellford Manufacturing Company in payment of its plant, and $12,500 to John F. Wheless and Matt F. Allen for a patent right to be used in the business. No other amounts were paid in, and no other stock appears to have been issued. It is charged that the patent right did not exceed $500 in value; that the plant and property of the Wellford Manufacturing Company did not exceed $4,000 in value; that Allen and Wheless transferred their stock to Taylor, Ward, Williamson, and Wellford; and it is charged that they are in equity liable to pay the amount of this subscription of stock, inasmuch as the alleged payment was inadequate, and the parties all knew the fact, and were liable for the difference between the stock subscribed and the actual value received by the company. The bill further averred that complainant was receiver of the Memphis Barrel & Heading Company by appointment of the same court in a cause filed in that court against A. K. Ward to wind up the corporation, and a copy of the decree of appointment and authority vested in him as receiver is made Exhibit A to the bill, and prayed to be made part thereof, but not to be copied. The bill further alleges that subsequently an order was entered in that cause empowering, authorizing, and directing complainant, as receiver, to institute all necessary or proper steps in equity or at law in assertion of the rights vested in him as receiver, and this order is referred to as "Exhibit B," and prayed to be made part of the bill. There are papers which in the main answer the description of these exhibits attached to the record after the final decree and prayer and granting of appeal, but they are not made part of the record, nor identified as Exhibits A and B by any marks or references. A copy of a petition, and an order thereon, filed in the case of the Memphis Barrel & Heading Company against Ward (the same case in which complainant was appointed receiver, and in which the order above mentioned was entered) is also attached at the close of the present transcript, from which it appears that the property of the corporation had been levied upon under execution against Ward, and authority was given to replevy the same, and to institute actions at law and suits in equity on all such necessary and proper occasions and under such circumstances as aforesaid; also another copy of a different petition and order thereon is likewise attached to the transcript in the same manner, reciting that the supreme court of the state had held that the previous order of the court did not confer upon the receiver the right to institute suits or actions for the collection of unpaid subscriptions or the collection of equitable assets. And upon this petition the court authorized, directed, and empowered the receiver to collect all debts due the company; to assert his right to all of its property; to collect unpaid subscriptions to the capital stock; to avoid all fraudulent transfers by the company, its officers or directors; and to impeach or avoid all issues of stock actually or constructively fraudulent; and to institute all actions or suits at law or in equity for the collection of all assets of the corporation, whether legal or equitable. Neither of the latter two orders is in any way made part of the record, or referred to in it in any way, and they are only part of the transcript by being attached to it as heretofore stated. A demurrer was filed to the original bill April 14, 1896. The grounds stated, among others, were that there was no allegation of any creditors of the company, or any claims allowed against it; that it was not alleged that the tangible assets had been exhausted; and that no proper order authorizing the suit is shown. This demurrer was not acted upon, but October 30, 1899, leave was granted to file an amended bill, which was actually filed December 9, 1899. The amended bill charged that Wellford had died insolvent, Williamson had also died, and their representatives were not made parties. The same charges are made as in the original bill, but more in detail; and liability is sought to be imposed on the same grounds as in the original bill, to wit, subscriptions unpaid, negligence, nonfeasance, and misfeasance in performance of duties, assenting to debts in excess of the capital stock paid in, etc. The bill alleges that debts to a large amount--some $239,000--had been established in the original suit, but no particular debt or creditor is named. No creditor is made a party, and the bill does not allege that it is brought in behalf of creditors, or show that fact, except so far as may be inferred from the statement that it is brought in discharge of the duties of complainant as receiver. On February 5, 1900, defendant Taylor, who seems to be now the sole litigant, the other parties having died or become insolvent, and the suit being against Taylor alone, moved to strike the amended bill from the files because no cost bond had been given, and the demurrer to the original bill was pending and undisposed of when the amended bill was filed. The chancellor required a cost bond, which was given, and he overruled the motion to strike from the files. Defendant Taylor then filed a demurrer to the amended bill embracing 18 grounds. The first is that there was no order of the court...