Wenzbl v. Palmetto Brewing Co

• Decision Date: 08 December 1896
• Citation: 26 S.E. 1,48 S.C. 80
• Parties: WENZBL et al. v. PALMETTO BREWING CO. et al.
• Court: South Carolina Supreme Court

26 S.E. 1

48 S.C. 80

WENZBL et al.

v.PALMETTO BREWING CO. et al.

Supreme Court of South Carolina.

Dec. 8, 1896.

Corporations — Action by Stockholders — Inspection of Books—Order—Validity— Sufficiency of Petition.

1. Before an order is authorized, directing a defendant corporation to deposit its books with the clerk of the court for plaintiff's inspection, the affidavit on which it is granted should show facts which call for the exercise of the court's discretion, and it must appear that there was a request for the inspection, and notice given to defendant, as required by Code Civ. Proc. § 389.

2. A petition for the appointment of a receiver for a corporation in a suit by a stockholder because of alleged unlawful acts of the president, which merely alleges "that the majority of the stock of said corporation is owned or controlled by the said D. and his relatives and friends, and that the said D. was at the times stated hereinafter, and still is, the president of said corporation; * * * that the stockholders can procure no redress from the management of said company, as the same is entirely in the hand of the said president, D., under whose express directions the unlawful acts have been committed, and to whose profit they have resulted, " is insufficient.

Appeal from common pleas circuit court of Charleston county; W. C. Benet, Judge.

Action by Theodore Wenzel and another against the Palmetto Brewing Company, J. H. Doscher, and others, to enjoin Doscher and certain creditors of the company from exercising any control over the property and franchises of the company, and for the appointment of a receiver. From orders in favor of plaintiffs, defendants appeal. Reversed.

Mitchell & Smith, for appellants.

Mordecai & Gadsden, for respondents.

JONES, J. In this case there are two appeals—one from an order dated January 4, 1896, directing the Palmetto Brewing Company to deposit certain books of the company with the clerk of the court for Charleston county; the other from an order appointing a receiver of said company, dated January 13, 1896. The action was commenced December 31, 1895, by the plaintiffs, two stockholders of the Palmetto Brewing Company, holding 19 of the 2, 000 shares of stock of said company, against the company, its president, J. H. Doscher, and certain creditors of the company, seeking to enjoin the company, its servants and agents, and the president, J. H. Doscher, from exercising or attempting to exercise any control over the property and franchises of said company, to enjoin creditors from prosecuting any action against said company except in these proceedings, and for the appointment of a receiver. On the same day, Judge Benet, on the verified complaint and affidavits submitted therewith, granted a temporary restraining order in accordance with the prayer of the complaint, and further granted a rule to show cause before him at chambers in Charleston on January 8, 1896, why a receiver should not be appointed as prayed for. On the 4th day of January, 1896, without notice having been given to the Palmetto Brewing Company, on an affidavit by one of plaintiffs' counsel that it was necessary for the purpose of the motion to be heard on January 8, 1896, that plaintiffs should have an opportunity to inspect and examine certain books (specified) of the defendant company, and that the truth of many of the applications (allegations?) of the complaint can be established by the said books, Judge Benet granted an order requiring the company to forthwith deposit the said books at the office of the clerk of the court, and on the return of the rule granted the order for a receiver.

As to the order of January 4, 1896. Even if the court has power to grant such an order under section 389 of the Code, which has been doubted (Cartee v. Spence, 24 S. C. 558), the order was improperly granted—First, because it was made without notice, as required in section 389, Code Civ. Proc; and, second, because the affidavit on which it was granted states no facts which call for the exercise of the court's discretion in granting such an order (Jenkins v. Bennett, 40 S. C. 400, 18 S. E. 929). Nor does it appear that any request had been made...