Wagner v. Coen

• Decision Date: 29 November 1895
• Citation: 23 S.E. 735,41 W.Va. 351
• Parties: WAGNER v. COEN et al.
• Court: West Virginia Supreme Court

23 S.E. 735

41 W.Va. 351

WAGNER

v.COEN et al.

Supreme Court of Appeals of West Virginia.

Nov. 29, 1895.

Appointment of Receiver — Trustee for Cred itors—Misconduct—Appealable Decree.

1. Where an assignment or conveyance is made by an insolvent firm to a trustee of the assets of the firm for the payment of the claims of creditors, and it is made to appear in a proper suit in equity that there is danger of the loss or misappropriation of the same, or of a material part thereof, such court may appoint a special receiver of such property, and cause the same to be administered by the receiver under its directions.

2. It is the duty, among other things, of such trustee or assignee, to keep the property and fund thus intrusted to him separate and distinct from his individual funds. He should, when it can be done without inconvenience, deposit the money in bank, or in some like place for safe keeping; and it should be deposited in a separate account in his name as trustee or assignee, so that the fund may at all times be capable of being traced and identified, and the true state of such money account be capable of ready ascertainment.

3. When the trustee or assignee violates this duty to the injury, or the great risk of injury, to those who may be ultimately entitled to the fund, or wastes or misappropriates the fund or a material part thereof, or it is made to appear that there is danger of misappropriation or of loss, from any misconduct of such trustee or his agents, of a material part of such trust property, such court may and should appoint a special receiver thereof, and cause him to duly administer the same under its directions.

4. Where such is the sole purpose of the suit, and the court, by the permanent appointment of such special receiver, adjudicates the principles of the cause, the decree is appealable, though the possession and administration of personal property alone be involved.

A case in which these principles are discussed and applied. (Syllabus by the Court.)

Appeal from circuit court, Ohio county.

Action by Edward Wagner against C. M. Coen and others. Prom an order appointing u receiver, C. M. Coen appeals. Affirmed.

J. B. Sommerville, for appellant.

T. M. Garvin, for appellee.

HOLT, P. On appeal from decree of the circuit court of Ohio county, entered on the 13th day of May, 1894, appointing A. A. Franzheim, sheriff of Ohio county, receiver to take charge of the property of Kerr & Coen. and turn the same into money, and the decree entered on the 17th day of September, 1894, overruling a motion to set aside said order of appointment. The facts are these: John Kerr, J. E. C. Coen, and C. L. Coen were partners, doing business as partners in the sale of furniture, etc., in the city of Wheeling, and, becoming financially embarrassed, by deed dated the 16th day of February, 1894, made an assignment of all their property then in their place of business in the city of Wheeling, and all their assets of every kind anywhere, to Charles M. Coen, as assignee in trust for the creditors of the firm, to be paid ratably, without any preference or priority, and the net residue, if any, to be paid over to the firm. The assignee at once took charge, having given bond, and proceeded to wind up the affairs of the concern. Thereupon Edward Wagner, a creditor of the firm to the amount of some $250, as he claimed, filed his bill on the 23d day of June, 1894, wherein he charged the trustee with a violation of his trusts, in that he was paying certain creditors named in full, giving them a preference, misappropriating the funds, buying goods with the money collected, and selling goods on time, without knowing that he would be able to collect the same, and keeping no proper account of his doings as trustee, praying for the appointment of the sheriff as receiver, etc. The trustee answered, denying some of the charges, admitting some, and justifying his paying certain claims in full by the averment that he and his brother were the heavy creditors, and that they intended to take nothing until all the other creditors had been paid in full. Many affidavits were read pro and con, and among them the affidavit of J. R. Moise, who had been over the books of the trustee, and had inspected his accounts, and ascertained his method of keeping his accounts and of transacting the business. His affidavit, not contradicted, reads as follows: "Wheeling, W. Va., July 27, 1894. A. A. Franzheim, Esq., Special Receiver—Dear Sir: I have made an examination of the accounts of Mr. C. M. Coen, assignee of Kerr & Coen, and have the following report to make: The system for keeping his cash %, adopted by the assignee, was entirely irregular, and it was almost an impossibility to determine what disposition had been made of funds that came into his hands; and, while I have no doubt that all moneys were faithfully accounted for, yet the manner of disposition was faulty and erroneous. Every cent received from parties indebted to the firm should have been turned over to the assignee, and charged to him, and he should have opened an % in bank as assignee, and, as assignee, should have checked...