"West Va. Utilities Co. v. Dura Glass Mfg. Co.

• Decision Date: 19 May 1925
• Docket Number: (No. 5306)
• Citation: 99 W.Va. 193
• Parties: "West Virginia Utilities Co. v. Dura Glass Mfg. Co.
• Court: West Virginia Supreme Court

99 W.Va. 193

"West Virginia Utilities Co.

v.Dura Glass Mfg. Co.

(No. 5306)

Supreme Court of Appeals of West Virginia.

Submitted May 12, 1925.

Decided May 19, 1925.

Receivers Appointment of Receiver for Corporation by Decree Imposing No Restriction on Creditors Prosecuting Claims Does Not Prevent Independent Suit by Creditor Against Corporation.

A receiver is appointed to take charge of, and preserve the assets of a corporation, with the right to fit up its plant for the resumption of operation. The decree appointing the receiver does not adjudge the corporation insolvent, makes no provision for payment of its debts, does not state that the ultimate purpose of the court is to make an equitable distribution of the property of the corporation, and imposes no restriction on creditors prosecuting their claims. Held: The appointment of such receiver does not preclude a creditor from maintaining an action for judgment against the corporation in an independent suit.

(Corporations, 14a C. J. § 322(i; Receivers, 34 Cyc. p. 222).

Note: Parenthetical references by Editors, C. J. Cyc. Not part of syllabi.

Error to Circuit Court, Monongalia County.

Suit by J. M. Wood and another against the Dura Glass Manufacturing Company, in which defendant West Virginia Utilities Company asked for judgment as against the Dura Glass Manufacturing Company. Action of Utilities Company was dismissed, and it brings error.

Judgment reversed; case reinstated.

Frank Cox, for plaintiff in error.

E. M. Everly and Frank P. Corbin, for defendant in error. Hatcher, Judge:

Upon the application of J. M. Wood and E. B. Stone, a vacation order was entered by the Judge of the Circuit Court of Monongalia County on September 3, 1924, appointing W. R. Chapman special receiver for all the personal property of the Dura Glass Manufacturing Company, and directing him to take possession thereof pending further orders of the court. The receiver was authorized to employ labor necessary to conduct the business, to collect claims due the Glass Company, to institute litigation, if necessary, and to pay all necessary expenses of operating and managing the business, etc. A bill was filed at September Rules by Wood and Stone against the Glass Company and several other defendants, who were creditors thereof, among whom was the West Virginia Utilities Company. The bill alleges generally that the glass business had been poor for months; that the Glass Company had been unable to run its factory at a profit and had therefore been compelled to cease operations; that the Company had large outstanding obligations, and after stat- ing the several amounts the Company owed its other creditors, alleged that it was due the West Virginia Utilities Company the sum of $4,207.75; that the Glass Company had sufficient assets to pay its claims if the property was properly conserved and protected, but if creditors were permitted to secure judgments, issue executions, etc., the creditors and stockholders of the corporation would suffer great loss and damages.

The bill prayed that a receiver be appointed to take charge of both the real and personal property, and to manage and preserve the property of the Company until further order of the court; that the affairs of the Company be settled and closed in due course; that the cause be referred to a commissioner in chancery to ascertain the assets and liabilities of the Company; that its property be sold and applied to the payment of its debts according to their priorities as ascertained and determined, and that the corporation be dissolved.

On September 20, 1924, notice was served on the Glass Company by the West Virginia Utilities Company that on the 11th day of October, 1924, the Utilities Company would ask the circuit court of said county to render judgment in its favor and against the Glass Company for the sum of $5,000.00.

At a special term of the court held on October 1, 1924, upon motion of Wood and Stone, the court also appointed W. 11. Chapman special receiver for the real estate, and the rents, issues, and profits thereof of the Glass Company. The order authorized the receiver to issue receiver's certificates for the care and preservation of the property in an amount not to exceed $5,000.00, and to

'' take such steps as may be necessary for fitting up the plant for resumption of operations, when in his judgment the interests of all persons having liens and claims against the said company would be promoted thereby."

On November 11th, the Glass Company, over the objection of the Utilities Company, was permitted to file a plea setting up the fact that it was in the hands of a receiver, etc. The Utilities Company filed a special replication to the plea and issue was thereon joined. In support of the plea, the Glass Company introduced the record in the chancery cause of J. M. Wood et al. v. the Glass Company. The Utilities Company offered no evidence. The court found in favor of the Glass Company on the issue upon the plea, and dismissed the action of the Utilities Company. The case is here on error.

The right of the Utilities Company to proceed to judgment and execution against the Glass Company in a separate action is not affected by sections 57 and 58 of chapter 53 of the Code, under which the chancery cause of Wood et al. v. the Glass Company is prosecuted. Billmeyer Lumber Co. v. Merchants Coal Co., 66 W. Va. 696.

Counsel for the Glass Company assert that independent of statute, no lien can be perfected or suit prosecuted against a corporation, after a receiver has been appointed for the purpose of making equitable distribution of the entire assets of the corporation, citing: Waggy v. Lumber Co., 69 W. Va. 666; Clinhscales v. Pendle Mfg. Co., 9 S. C. 318; Mutual In. Co. v. Walton Mach. Co., 91 Wash 298; Temple v. Glass Gow. 80 Fed. 441; Attorney General v. Atlantic M. L. Ins. Co. 100 N. Y. 279; Clark on Receivers, sec. 767.

It is old law and uncontroverted, that when, for a corporation adjudged insolvent, a receiver is appointed to wind up its affairs, administer its property and distribute the proceeds thereof among creditors and stockholders, a creditor of the corporation will not thereafter be permitted to perfect a lien against the property in an independent action. A few authorities have gone so far as to inconsiderately state that in nuch case a creditor should not be permitted to ever prosecute nn independent action against the corporation. But the law cited by counsel does not apply to this case. It is true that the bill in the chancery suit prays for dissolution of the Glass Company and the complete administration of its assets; but this receivership must be weighed, not by the prayer in the bill, but by the decree of the court. This decree as heretofore shown, gives the...