Skirvin v. Coyle

• Decision Date: 16 May 1939
• Docket Number: Case Number: 28581
• Citation: 1939 OK 249,94 P.2d 234,185 Okla. 487
• Parties: SKIRVIN et al. v. COYLE et al.
• Court: Oklahoma Supreme Court

1939 OK 249

94 P.2d 234

185 Okla. 487

SKIRVIN et al. v. COYLE et al.

Case Number: 28581

Supreme Court of Oklahoma

Decided: May 16, 1939

Syllabus

¶0 1. CORPORATIONS--Rights of Minority Stockholders to Inspect Books Enforceable Without General Receivership.

A minority stockholder has the right to inspect and examine the books and records of his corporation at all reasonable times, and such rights should be fully enforced by the courts, without a general receivership of the corporation.

2. RECEIVERS--Power to Appoint Receivers to Be Exercised With Extreme Caution and Only Under Circumstances Requiring Summary Relief.

The exercise of the power to appoint a receiver is a delicate one, and should be exercised with extreme caution, and only tinder circumstances requiring summary relief, or where the court is satisfied that there is imminent danger of loss.

3. SAME--Burden of Proof on Applicant for Receivership.

Since the remedy of receivership is an extraordinary one, the applicant has the burden of presenting facts sufficient to disclose to the court a necessity for the remedy.

4. CORPORATIONS--Appointment of General Receiver of Corporation in Action by Minority Stockholders Against Last Officers and Directors of Same Held Abuse of Judicial Discretion for Lack of Sufficient Showing of Necessity for Receivership.

When, in a suit by minority stockholders against the last officers and directors of a corporation, suing them as individuals and as officers and directors of the corporation, and pending determination of the asserted claims against those defendants, a general receivership of the corporation is sought, and an order appointing such general receiver is made, without sufficient showing of necessity for general receivership of the corporation, the order appointing such receiver constitutes in law an abuse of judicial discretion and should be vacated.

Appeal from District Court, Oklahoma County; Lucius Babcock, Judge.

Action by B. W. Coyle et al., minority stockholders, against W. B. Skirvin et al., individually find as officers and directors of corporation. From order appointing general receiver of the corporation pending determination of action, the defendants appeal. Reversed.

Bliss Kelly, Ellsworth Jordan, and Fred P. Branson, for plaintiffs in error.

Harve L. Melton and Anderson & Ford, for defendants in error.

WELCH, V. C. J.

¶1 The order tested by this appeal appointed a general receiver, pending this litigation, of the properties, books and records, of the defendant American Oil & Refining Company, an Oklahoma corporation, and hereinafter referred to as the "Oklahoma Corporation." The defendants (plaintiffs in error here) raise two questions in the following language:

"The court committed error in appointing a receiver and refusing to vacate the order.

"First. For that the record shows that the federal court had appointed a receiver of the identical property and that Mr. Fletcher, the federal receiver, had the property and the books and records of the American Oil and Refining Company, the Oklahoma Corporation and the Nevada Corporation."

"Second: Abuse of discretion in appointing a receiver when no proof of need therefor, or property for the receiver to 'receive', was made."

¶2 It is necessary to notice essential facts and the general purpose of plaintiffs' action commenced in 1938. The Oklahoma Corporation was organized in 1916. In 1934 the American Oil and Refining Company, a Nevada corporation, was organized, hereinafter referred to as the "Nevada Corporation." The Oklahoma Corporation conveyed all its properties and assets to the Nevada Corporation some years before this suit was commenced and a large majority of the stockholders in the Oklahoma Corporation exchanged their stock therein for stock in the Nevada Corporation, which had the same or almost the same officers.

¶3 This suit was commenced in 1938 by Coyle and some 12 other stockholders. They own only a very small percentage of the aggregate stock, but bring this suit for the alleged benefit of themselves and all other stockholders. Some of the plaintiffs had not exchanged their stock for stock in the Nevada Corporation, while some of them had made such exchange.

¶4 It is difficult to briefly state the purpose of the suit. The petition is shown on pages 2 to 83, inclusive, of the record with numerous numbered paragraphs and subdivisions of paragraphs. It names as defendants W. B. Skirvin, individually, and as president; O. W. Skirvin, individually, and as vice president; M. A. Luty, individually, and as secretary-treasurer; and Ellsworth Jordan and F. C. Wallower, individually, and as members of the board of directors, respectively, of American Oil and Refining Company, an Oklahoma Corporation; Mrs. Pearl R. Mesta, and Mrs. George Tyson, formerly Mrs. M. S. Adams; and four corporations, to wit: Texahoma Realty Company; Skirvin Operating Company; Skirvin Hotel Incorporated, and Broadway Development Company. Neither the "Oklahoma Corporation" nor the "Nevada Corporation," in which the plaintiffs are stockholders, is named as party defendant. The suit is principally based on numerous alleged wrongful acts of the individual defendants, occurring since 1916, by which it is asserted the individual defendants took advantage of their controlling position, and operated and managed the affairs of the Oklahoma Corporation to and for their personal benefit, and for the benefit of other corporations and other properties in which the Skirvin family was interested. Various prior acts of mismanagement are alleged; such as. that various properties were sold to the Oklahoma Corporation at exorbitant prices by the individual defendants; that items of property were fraudulently conveyed to the individual defendants; that funds of the corporation were wrongfully expended for the benefit of properties individually held and owned; that various sums were diverted from the treasury of the corporation to the other corporation defendants, and that corporate funds were wrongfully expended for the personal benefit of Mr. Skirvin, and in payment of excessive salaries. There are numerous allegations of similar mismanagement resulting in loss to the Oklahoma Corporation, and wrongful gain to the individual defendants. It is alleged that such mismanagement and misconduct continued for most of the 20 years from 1916 to 1936, and culminated in the plan to organize the Nevada Corporation and to wrongfully convey the properties from the Oklahoma Corporation to the Nevada Corporation. Plaintiffs also allege that the sale and transfer of the assets to the Nevada Corporation was invalid and void. The ultimate relief sought by the petition is a judgment for the aggregate sums of money alleged to have been wrongfully taken from the Oklahoma Corporation by the individual defendants; for a lien to be impressed on the properties of the individual defendants and corporate defendants for the money wrongfully diverted from the Oklahoma Corporation to those properties. So that in final analysis the suit is to recover for the stockholders various money judgments against the defendants. The petition also seeks, pending litigation, the appointment of a general receiver.

¶5 Prior to the commencement of this action a creditors' suit against the Nevada Corporation had been commenced in the federal district court and that court had appointed a receiver of the assets of that corporation, which were the assets theretofore owned by the Oklahoma Corporation, and in 1934 conveyed and delivered to the Nevada Corporation, together with such additions or increases in assets as had been accumulated by the Nevada Corporation from 1934, when it was organized, and up to 1938, when the creditors' suit was filed and receiver was appointed.

¶6 So that when this suit was filed and when the trial court herein made its order appointing a receiver for the assets of the Oklahoma Corporation, that corporation was not in possession of any assets. The parties are not in full accord as to the present status in law of the Oklahoma Corporation. The original 20-year charter of 19,16 expired in 1936. There was a renewal of the charter or a revivor of the corporation under section 9713, O. S. 1931, 18 Okla. St. Ann. sec. 1, and section 9732, O. S. 1931, 18 Okla. St. Ann. sec. 17. It is a disputed question whether such renewal of charter or revivor of the corporation is valid. If that revivor is valid, then certain of the individual defendants are in charge of the Oklahoma Corporation as its officers, while if the revivor of the corporation is void, then those individual defendants, being the last officers of the expired corporation, continued in charge as statutory trustees, to wind up the affairs of the Oklahoma Corporation. We do not decide this controverted question, as we deem it unnecessary to do so.

¶7 At the hearing in this action, for appointment of receiver, the plaintiffs introduced their petition and rested, thereupon, without further evidence on the part of plaintiffs, the trial court made the order here presented on appeal, appointing a general receiver for the Oklahoma Corporation pending this litigation.

¶8 There was testimony offered by the defendants in opposition to the appointment of a receiver. That testimony was offered to explain the transfer of the assets from the Oklahoma Corporation to the Nevada Corporation, and covered the stockholders' meeting at which such transfer of assets was authorized; and explained the surrender of stock in the Oklahoma Corporation and exchange for stock in the Nevada Corporation by various of the plaintiffs in this action and numerous other stockholders. We do not further detail that evidence because we shall consider this matter upon the sufficiency of the plaintiffs' evidence to justify the appointment of the receiver.

¶9 Upon these facts the defendants urge that the trial court abused its discretion In appointment of a receiver "when there was no proof of need therefor or...