Singer v. Allied Factors

• Decision Date: 18 February 1944
• Docket Number: 33407.
• Citation: 13 N.W.2d 378,216 Minn. 443
• Parties: SINGER v. ALLIED FACTORS, Inc., et al.
• Court: Minnesota Supreme Court

13 N.W.2d 378

216 Minn. 443

SINGER
v.
ALLIED FACTORS, Inc., et al.

No. 33407.

Supreme Court of Minnesota

February 18, 1944

Rehearing Denied March 2, 1944. [13 N.W.2d 379]

Syllabus by the Court.

1. Where, for default of the receiver for a corporation to bring an action to recover for wrongs done to it by its officers and others, a stockholder brings such an action as the representative of the corporation and its stockholders, and at the commencement of the trial of the action he stipulates that the receiver for the corporation, appointed prior thereto, is the real party in interest and the owner of the cause of action sued upon, and thereupon the receiver takes over the prosecution of the action, the stockholder ceases to be a party in interest, is not a party aggrieved by a judgment therein against the receiver, and is not entitled to appeal after the receiver has been discharged.

2. Where in such a case this court finds that the receiver, after judgment has been rendered against him, abandoned, with the stockholder's consent and approval, the cause of action sued upon, the stockholder will be denied leave in this court to prosecute as plaintiff an appeal on behalf of the corporation.

Louis Sachs, of Minneapolis, for appellant.

Best, Flanagan, Rogers, Lewis & Simonet, Stanley V. Shanedling, Leonard, Street & Deinard, and Smith & Callahan, all of Minneapolis (Irving Juster, of Minneapolis, of counsel), for respondents.

Don A. Jenkins, of Minneapolis, Minn., pro se.

PETERSON, Justice.

E. H. Singer, the original plaintiff, brought this action as a stockholder of and in behalf of the Apex Dress Company, a corporation, to impress a trust upon certain of its assets transferred to the defendant Fairchild Dress Company or, in lieu thereof, to recover damages; for an accounting by the individuals named as defendants participating in the transfers or, in lieu thereof, such damages as Apex sustained by reason of their wrongful acts; and for such general relief as the facts might warrant. Plaintiff claims that he stands in the position of a stockholder of Apex in virtue of the fact that he is a stockholder of Allied Factors, Inc., which owns some preferred stock of Apex. He also claims to be a creditor of Apex.

Numerous defendants were joined. Of these, James M. Thompson and the Ambassador Garment Company are out of the case and will be passed without discussion. The other defendants include three corporations, viz., Allied, Apex, and Fairchild, certain named individuals who were officers and stockholders in control of these corporations, and Don A. Jenkins, who prior to the commencement of the action was appointed receiver for Apex by the district court of Hennepin county. In substance, the complaint alleges that the defendants, other than Jenkins, pursuant to a conspiracy, by wrongful, ultra vires, and illegal acts caused to be transferred to Fairchild certain assets, goodwill, and personnel of Apex.

The receiver, appearing pro se, by his separate answer in effect admitted the allegations of the complaint and joined in plaintiff's demand for relief. The answers of the other defendants controverted the complaint.

At the commencement of the trial, the parties stipulated that the cause of action sued upon belonged to Jenkins as receiver for Apex; that the receiver was the real party in interest; and that the action should be prosecuted by him. Prior to the trial, Singer's counsel had been appointed associate counsel for the receiver. During the trial, Singer's counsel resigned as such and thereafter appeared of record exclusively [13 N.W.2d 380] as counsel for the receiver. A cross-bill was then [216 Minn. 445] filed against Singer, who appeared pro se in opposition thereto. The record shows that it was stated in open court 'by said Singer and his former attorney that the expenses of this litigation had been and were being borne by said Singer.'

Upon conflicting evidence, the trial court made findings of fact and conclusions of law in favor of the defendants. Judgment was entered thereon on April 4, 1942. Subsequent thereto, on August 15, 1942, on the receiver's petition showing that he had abandoned any prospect of realizing anything further by reason of the receivership, the district court allowed his account, discharged him, and exonerated his sureties. In the judgment costs were awarded against Singer as nominal plaintiff.

Singer as plaintiff, without the receiver joining, appealed from the judgment. No assignment of error...