Sullivan Timber Co. v. Black

• Decision Date: 11 February 1909
• Citation: 48 So. 870,159 Ala. 570
• Parties: SULLIVAN TIMBER CO. ET AL. v. BLACK.
• Court: Alabama Supreme Court

48 So. 870

159 Ala. 570

SULLIVAN TIMBER CO. ET AL. v. BLACK.

Supreme Court of Alabama

February 11, 1909

Appeal from Chancery Court, Mobile County; Thomas H. Smith Chancellor,

Bill by John W. Black against the Sullivan Timber Company and others. Decree of dismissal, and both parties appeal; defendants being termed appellants. Affirmed on both appeals.

Blount & Blount, and Stephens & Lyon, for appellants.

L. H. &amp E. W. Faith, for appellee.

MAYFIELD J.

The original bill in this case was filed by the appellee and cross-appellant, John W. Black, against the Sullivan Timber Company and other individuals, who were trustees of the Sullivan Timber Company, at that time a dissolved corporation under the laws of Florida. The bill was subsequently amended by adding as respondents certain stockholders of the Sullivan Timber Company. The Sullivan Timber Company, a corporation was dissolved by a decree rendered by the circuit court of Escambia county, Fla., at the suit of the stockholders. one of whom was the complainant, Black. The original respondents to the bill, in connection with the complainant, Black, were directors of the corporation prior to its dissolution, and by virtue of the statutes of Florida and the decree of the circuit court dissolving the corporation the directors became the trustees of the corporation, charged with the duty of winding up the affairs, and were proceeding so to do at the time the bill was filed by the complainant, Black, who was appointed a receiver of the corporation by the register of the chancery court of Mobile, in which the bill was filed without notice. From this appointment an appeal was taken under the statute to the chancellor, who vacated and annulled the appointment, and from this decree of the chancellor an appeal was prosecuted by the complainant to this court, which decree was affirmed. See Black v. Sullivan Timber Co., 147 Ala. 327, 40 So. 667.

At the time of taking the first appeal to this court the chancellor made an order continuing the receiver in the possession of the property of the corporation pending the appeal, which provided that he should merely hold and protect the property. It was nearly a year from the time the appeal was taken until decided by this court. During this time the receiver continued to administer the affairs of the corporation. Soon after the affirmance by this court on the former appeal, the receiver filed his accounting, and a reference was duly ordered to be held. Soon thereafter the complainant, who was the receiver, with leave of the court amended his bill, by filing what is called by the counsel for appellants a "substituted bill," which not only detailed the facts stated in the original bill, but also contained additional matter occurring since the bill was filed. This substituted bill sought, among other things, to have the chancery court to take jurisdiction of the affairs of the corporation and administer the same through the five statutory trustees, who were made such by the statutes and the decrees of the courts of Florida at the time of the dissolution of the corporation. The receiver had filed an account showing the receipts and disbursements of nearly $80,000. A reference was ordered, and held, to pass upon this account, and numerous exceptions were filed by the receiver to the register's report, many of which were sustained by the chancellor. The chancellor, however, restated the account, which constituted a part of the register's report. After this report a reference was ordered for the purpose of ascertaining the compensation to be allowed the receiver. The register reported an amount aggregating nearly $3,000. To this report exceptions were filed, which were overruled by the chancellor. Subsequent to this time the respondents filed a motion to dismiss the bill as amended for want of equity; and among other grounds was one that the bill was a departure from the original bill, and a demurrer was also interposed upon this ground. Upon the hearing of this motion the chancellor granted the motion and dismissed the bill, but taxed the entire costs of the case against the trust or fund in the hands of the receiver, and directed that the receiver pay over to the trustees of the corporation the funds remaining in his hands after the allowance of his own compensation and the costs of the case. This order was complied with by the receiver's paying over the money to himself as one of the trustees, and executing his receipt, by himself as trustee, to himself as receiver, and depositing the amount in the bank through which the corporation appears to have carried on its business. The respondents then sued out this appeal, and assign various errors as to all the rulings of the register and the chancellor upon the receiver's account adverse to the corporation, or to the respondents, and to the allowance of compensation to the receiver, and to the taxing of costs against the corporation or trust fund. The complainant also sued out a cross-appeal, and assigns as error the dismissal of the amended bill and the refusal of the chancellor to allow the complainant, who was the receiver, a credit for salary as president of the corporation, which office he had filled for a long time, and held at the time of the dissolution of the corporation.

It is unnecessary on this appeal to decide whether or not the original bill contained equity, or whether or not it would justify the appointment of a receiver as originally filed, for the reason that it was decided on a former appeal by this court, in a learned and able opinion by Justice Haralson, that the averments and proof under the former bill did not make out a case for the appointment of a receiver. Much stress is laid by counsel for appellants and appellee, in their briefs, upon an expression of Justice Haralson in the former opinion, as follows: "It may be, without more, that the facts stated in the bill would be sufficient on which to appoint a receiver in this case; but the answer under oath denies the material averments of the bill on which this contention rests." It clearly appears that this statement by Justice Haralson was dictum at most. It could not now affect the rights or remedies of any of the parties to this suit on this appeal to determine whether or not the original bill contained equity, or whether it justified the appointment of a receiver, for the reason that the court decided on a former appeal that the receiver was improperly appointed, and the chancellor has decided, and with him we concur, that there was no equity in the amended bill, though the chancellor seems to base his opinion upon the ground that there was a variance in the original. As to this it is not necessary for us to decide. Suffice it to say that the bill as amended was without equity, and properly dismissed. We are unable to see how the chancery court, or this court, could better administer the affairs of the corporation through the five trustees than the trustees themselves could administer it, in the absence of a showing of incompetency, insolvency, or fraud on the part of the trustees. There is no allegation in either the original or the amended bill that the corporation is insolvent, or that the trustees are incompetent, or that any fraud was attempted to be perpetrated upon the corporation, the stockholders, or any one else. The most that does appear, either from the allegations or the proof, is that the parties were about to make a sale or a lease of the property, which was not the best sale or the best lease that could be made. That the receiver, who was one of the trustees, and complainant, was a man of large experience in the affairs of corporations, having been president of defendant for a number of years, and being such at the time of its dissolution, and that he was a man of great capacity for work of this kind, and that he could manage and had managed the affairs of the corporation better than they were being managed and would be managed by the five trustees named, or a majority thereof, were matters conceded.

We see no reason why the trustees of the corporation, under the statutes of Florida set out in this case and under the decree of the circuit court of Escambia county, Fla., dissolving the corporation and directing that its affairs be wound up by the trustees, did not have sufficient power to sell or lease the property of the corporation, whether it be land or personal property. If they had no such power under the statutes and under the decree of the circuit court of Escambia county Fla., it is difficult to see how the chancery court of this state could give them any greater powers of disposition. These trustees were the original directors of the corporation. The statutes of Florida above referred to provided that these same officers of the corporation should be the trustees. These statutes provide that the settlement of the affairs of the corporation so dissolved shall be managed as prescribed in cases of voluntary dissolution. This section, among other things, provides that the trustees shall have full power to settle its affairs, collect its outstanding debts, and divide the money and other property among the stockholders. Neither these statutes nor the decree of the court of Florida contemplates that the trustees need the aid of any other court to dispose of the property. There is no distinction made between the real and the personal property of the corporation, and it is difficult to see how they could wind up the affairs of the corporation and divide and distribute the proceeds without a sale. Section 2155 of the Revised Statutes of Florida of 1892, among other things, provides that the corporation dissolved shall be continued as a body corporate for three years after dissolution to enable it to dispose...