Taylor v. Vossburg Mineral Springs Co., Limited

• Decision Date: 10 April 1911
• Docket Number: 18,256
• Citation: 128 La. 364,54 So. 907
• Court: Louisiana Supreme Court
• Parties: TAYLOR v. VOSSBURG MINERAL SPRINGS CO., Limited

54 So. 907

128 La. 364

TAYLOR v. VOSSBURG MINERAL SPRINGS CO., Limited

No. 18,256

Supreme Court of Louisiana

April 10, 1911

Appeal from Civil District Court, Parish of Orleans; Fred D. King Judge.

Action by W. R. Taylor against the Vossburg Mineral Springs Company Limited. Proceedings for settlement of the receivership of the defendant. The account filed by Receiver George S. Smith was opposed by R. W. Wilmot and another, and, from the judgment, the receiver and Wilmot appeal. Affirmed in part and reversed in part.

Richardson & Soule, and Lyle Saxon, for appellant Smith.

Rice &amp Montgomery, for appellant Wilmot.

Saunders, Dufour & Dufour, Henry Mooney, and Frank McGloin, for appellees.

MONROE J. SOMMERVILLE, J., takes no part herein.

OPINION

MONROE, J.

Statement of the Case.

The receiver of the above-entitled company filed an account, showing: Cash on hand, $ 5,246.59; debts and charges, $ 2,036.27; balance for distribution among stockholders, $ 3,210.32.

R. W. Wilmot, a stockholder, the Louisiana National Bank, and the Canal Bank & Trust Company (each of the banks through liquidators), claiming as creditors, opposed the items appearing as debts and charges, on the ground that they are unauthorized and excessive; but there is no complaint, here, of the judgment appealed from, in so far as it affects that side of the account, save that Wilmot, who has paid his stock subscription in full, opposes any distribution of the fund on hand, until the other stockholders shall have been compelled to make like payments. And the main questions to be decided are, whether the two banks shall be recognized as ordinary creditors, and whether the receiver shall be held responsible for the balances due on the stock, or shall be ordered to proceed against the stockholders for their collection.

The district court gave judgment in favor of the banks, on their claims, and ordered the receiver to proceed against the stockholders for the unpaid balances, and also directed that the fund on hand be distributed. The receiver and Wilmot have appealed.

The company in question was incorporated, in this city, in August, 1902, for the declared purpose of buying, leasing, operating, and selling mineral springs and hotels, with a nominal capital of $ 100,000, and a board of seven directors, to wit, Henry Mordecai, his brother, and his son, R. E. L. Goldsborough, E. S. Maunsell, and John E. Hollingsworth; Henry Mordecai being named president, Hollingsworth, treasurer and secretary. No money was paid at the time, but Henry Mordecai subsequently transferred to the company a lease of certain property in Mississippi, upon which there are said to be mineral springs, for which he received 667 (out of a total of 1,000) shares of stock, as full paid and nonassessable. Of the 667 shares thus issued to him, he transferred 15 shares to Maunsell, and the other parties mentioned were provided with a few shares, each, either from the same source or from what was called the "treasury" stock (being that which had not been transferred to Mordecai), but, so far as we can gather from the record, neither of them paid any money.

Thereafter Mordecai employed a broker to sell the stock, have it listed in the stock exchange, and "boom" it, which he did; those to whom he sold paying, generally, $ 20 a share, and he receiving 13 shares of the "treasury" stock (as full paid) for his services. In May, 1903, the different holders signed an agreement not to offer any of their stock for sale (save among themselves) before November 1st, and in August they signed another agreement, consisting of a written proposition, by Goldsborough, and acceptance by them, reading, in part, as follows:

"I am willing to take 680 shares of the stock of the Vossburg * * * Company, Limited, at $ 83.33 1/3 a share, * * * on the following terms and conditions, to wit: (Here follows a list of names of stockholders with the shares held by them and included in the contract, which list also includes 125 'treasury' shares.) All this stock is to be paid for by me on the first day of May, 1904, except the 'treasury' stock of the company, 125 shares, which is to be paid for on the first day of March, 1904. * * * I am to furnish a bond, to each seller of stock, by a responsible surety company. * * * It is understood that a brokerage of 5 1/2 per cent. is to be paid on all the stock bought by me, including the treasury stock. * * * It is also understood that a dividend of 5 1/2 per cent. is to be declared by the board of directors and paid out of the proceeds of the sale of the treasury stock, and the same is to be (paid) to me as purchaser. The amount that will be remaining in the treasury, after the payment of the dividends and brokerage herein provided for, will be about $ 4,344.07. It is understood, of course, that those not selling out entirely will have the same dividend on any unsold stock, that is, 5 1/2 per cent., same as I got it."

There was a separate and similar agreement between Goldsborough and Mordecai, with reference to 50 additional shares of stock belonging to the latter, to which agreement the guaranty of a surety company was attached, and to which was added the stipulation that the stock (certificate) should also be attached; and we infer that thereafter Goldsborough gave his notes, or bonds (guaranteed as agreed), to the different shareholders, and that they, together with the certificates representing the stock of such holders, were deposited in escrow in one or more of the banks, such deposits having, at all events, been made in the Provident Bank. In the meanwhile, the broker employed by Mordecai made offers, at intervals, on the floor of the Stock Exchange, to buy the stock, and the quotations, taken in connection with the guaranteed contracts, deposited in the banks, gave the stock a certain value with those institutions, as a marketable collateral. Precisely at what date the company (meaning the Vossburg, etc., Company) opened accounts with the two banks now before the court the record does not enable us to say.

The liquidators of the Louisiana National Bank allege that, as such, they are creditors in the sum of $ 6,826.21.

"Balances due by the * * * company * * * on general banking account, as more fully shown in detail, in the itemized statement attached to the petition of plaintiff in the suit entitled the Louisiana National Bank v. Thomas J. Henderson et al., No. 74,440 on the docket, * * * consolidated, by order of court, with the receivership proceeding, which statement * * * is made part of this petition. Opponents further aver that said balance, as shown upon said statement, is, as to the principal, made up of one promissory note, and the several drafts described in said statement, * * * said drafts having been discounted, or cashed, by and for the account of said Vossburg * * * Company, Ltd., and the proceeds thereof passed to the credit of said company, and, in due course, drawn by it, all of which, note and drafts, were dishonored at maturity and are held and possessed by opponents, as liquidators aforesaid. * * * Opponents show that, if the said Vossburg * * * Company, Ltd., is not indebted to them * * * upon and for a balance * * * upon general banking account, it is indebted * * * upon said promissory note and drafts, all dishonored for the faces thereof and interest, and for costs of protests; and, in the alternative, opponents hereby proceed and sue, and base their demand, upon said note and drafts. * * * Wherefore opponents pray that this their opposition * * * be maintained, and that the account * * * be amended so as to set forth, with full details, the names of all delinquent stockholders, * * * so as to charge said receiver with the aggregate of said delinquent subscriptions, say, $ 12,000, and ordering him, if the court declines to order him charged with said amount, to sue, without delay, all defaulting shareholders who do not, at once, satisfy their indebtedness. * * * Opponents also pray that they be placed * * * upon said account, for and in behalf of the Louisiana National Bank, as creditors, in the full sum of $ 6,826.21, with interest as claimed above. * * *"

Upon the statement thus referred to and made part of the opposition, the Vossburg Company is charged with a note and certain drafts, together with interest and protest fees; the whole (a few small items of credit deducted) aggregating the amount here claimed. The instruments mentioned may be described as follows:

One note, for $ 2,000, dated April 16, 1904, signed "Vossburg Mineral Springs Co., Ltd., Henry Mordecai, President," made payable 60 days after date, with interest at 8 per cent. per annum, from maturity, to the order of the Louisiana National Bank, and bearing the indorsement, "Secured by pledge of 40 shares of the Vossburg Mineral Springs Co., Ltd., stock." Ten drafts, for amounts between $ 415 and $ 600, drawn by "Henry Mordecai, Prest.," to the order of "Vossburg Mineral Springs Co., Ltd.," and indorsed, in blank, "Vossburg Mineral Springs Co., Ltd., Henry Mordecai, Prest.," all purporting to have shares of "Vossburg" stock attached, all save one dated at New Orleans, all save two accepted by the drawees, two showing that they were protested for nonacceptance and nonpayment, and one showing that it was protested for nonpayment after acceptance. The dates, amounts, and maturities of these drafts are as follows:

April 22, 1904.

$ 455.

June 22, 1904.

" 27, "

455.

" 30, "

" 30, "

480.

July 15, "

May 2, "

500.

" 20, "

" 9, "

585.

" 10, "

" 21, "

420.

" 30, "

June 7, "

420.

15 days sight (June 22)

" 4, "

415.

August 10, 1904.

" 8, "

600.

" 20, "

" 10, "

540.

" 30, "

The liquidators of the Canal Bank & Trust Company (successors to the ...