Standley v. Hendrie & Bolthoff Mfg. Co.

• Decision Date: 21 May 1900
• Citation: 61 P. 600,27 Colo. 331
• Parties: STANDLEY et al. v. HENDRIE & BOLTHOFF MFG. CO. et al.
• Court: Colorado Supreme Court

61 P. 600

27 Colo. 331

STANDLEY et al. v. HENDRIE & BOLTHOFF MFG. CO. et al.

Supreme Court of Colorado

May 21, 1900

Appeal from district court, Arapahoe county.

Creditors' suit by the Hendrie & Bolthoff Manufacturing Company and another against Joseph Standley and others. From an order authorizing a receiver to issue certificates of indebtedness defendants appeal. Reversed.

On August 7, 1897, the Hendrie & Bolthoff Manufacturing Company and A. C. Schlesinger filed a complaint in the district court of Arapahoe county against the Crown Point & Virginia Gold-Mining Company, wherein it is alleged that they were judgment creditors of the company, and also that the appellants had theretofore recovered judgment against the company, transcripts of which respective judgments were duly recorded in the office of the recorder of Clear Creek county Colo.; that the company had made no defense to any of the actions in which said judgments were rendered; that some of the judgments are false and fraudulent as against the creditors of the company, and that the company had collusively and without consideration, permitted them to be rendered against it for the purpose of defrauding certain of its stockholders, who were in the minority, and the other creditors of the company; that the management and control of the stock and concerns of the company were in the hands of George A. Kessler and George Semel, both nonresidents of the state of Colorado, who were fraudulently and recklessly managing its affairs and business operations for the purpose of wrecking the company; that none of said judgments have been paid by the company, or any one for it, and that it is making no effort to pay the same, but is allowing its property to be seized and sold by some of said judgment creditors, and is making no effort to redeem its property from such sale; that the mining properties of the company were valuable, if properly managed and worked, and that sufficient money could be obtained through the extraction of ore therefrom to pay all of its just debts; tht an execution had been issued upon a certain judgment obtained by Benjamin F. Lowell and others; that a demand had been made by the sheriff of Gilpin county upon the company to pay the money due upon the execution issued upon said judgment; that the company has allowed said judgment to remain unsatisfied for 10 days after such demand, by reason of which the sheriff had levied said execution upon the mining property of the company, and a valuable part of said mining property was on February 15, 1897, sold at sheriff's sale to satisfy the judgment; and that the time for the redemption from such sale would expire on August 15, 1897. It is also alleged that the meetings of the directors of the company had all been held outside of the state of Colorado, and in the city of New York, without any notice to S. A. Josephi, the only resident director of said corporation; that said corporation as managed is, and will be, entirely insolvent. They prayed judgment in behalf of themselves and all others similarly situated; the appointment of a receiver, with the usual powers and duties, and with the usual directions to take into possession and sequestrate the property and effects of the company, and convert the same into money, for the use of the creditors, and that the corporation be dissolved, and its business closed up, according to the statute in such case made and provided. Neither the appellants, although alleged to be judgment creditors of the company, nor the directors charged with fraud and mismanagement of the company's affairs, were made defendants to the suit. S. A. Josephi, the resident director of the company, acknowledged service of summons in the case on August 2, 1897. On the day the complaint was filed a petition in intervention by Samuel Hyman and Jonas Hiller was also filed, containing similar allegations to those of the complaint. On the same day Josephi was appointed receiver. On August 13, 1897, a petition for his removal, setting forth several grounds therefor, was filed by the company. On August 19, 1897, the appellants, with the exception of Mayhew, filed a petition in intervention, asking to be permitted to become parties defendant for the purpose of resisting the application for receiver, and to protect their rights in the property involved, wherein they alleged, in substance, that they were mortgage creditors of the defendant company, who had foreclosed their mortgages and sold the property under decrees of foreclosure, and held certificates therefor; that the judgment mentioned in paragraph 8 of the complaint was obtained in an action to foreclose a first mortgage on the east 750 feet of the Crown Point and Virginia claims, which had been given to secure a portion of the purchase price thereof; that a decree of foreclosure in the district court of the First judicial district of Colorado, in and for the county of Clear Creek, had been duly entered on May 25, 1897 making the same a first lien upon said premises, under which decree the same had been sold on July 12, 1897, and purchased by appellant Standley, as trustee (one of the creditors therein), who held a certificate of purchase therefor, duly recorded in the office of the recorder of Clear Creek county that the judgment recovered by Thomas H. Potter and Edward W. Williams on May 25, 1897, was obtained by foreclosure of a first mortgage on the west 750 feet of the Crown Point claim, under which decree the property was sold on June 20, 1897, and purchased by Potter and Williams, who held a certificate of purchase, duly recorded; that the judgment in favor of Thomas H. Potter and the Hawley Merchandise Company was obtained on May 25, 1897, in an action for the foreclosure of a first mortgage upon the property of said defendant known as the 'Bantala Lode-Mining Claim,' and was also given to secure the purchase price of said property, under which decree the same had been sold ...