Woodward v. Smith

• Decision Date: 16 May 1923
• Docket Number: (No. 6701.)
• Citation: Woodward v. Smith, 253 S.W. 847 (Tex. App. 1923)
• Parties: WOODWARD et al. v. SMITH et al.
• Court: Texas Court of Appeals

253 S.W. 847

WOODWARD et al. v. SMITH et al.

(No. 6701.)

Court of Civil Appeals of Texas. Austin.

May 16, 1923.

Rehearing Denied June 13, 1923.

Appeal from District Court, Coleman County; C. E. Dubois, Judge.

Suit by J. C. Smith and others against S. P. Woodward and others, for an injunction and a receiver. From an interlocutory order granting a temporary injunction and appointing a temporary receiver without notice upon an ex parte application, defendants appeal. Affirmed.

Phillips, Brown & Morris, of Fort Worth, for appellants.

Critz & Woodward, of Coleman, for appellees.

BLAIR, J.

This is an appeal from an interlocutory order granting a temporary injunction and appointing a temporary receiver, without notice, upon the ex parte sworn application of appellees. Statement.

This suit was filed in the district court of Coleman county, Tex., on March 15, 1923, at 10:05 o'clock a. m., by the appellees, J. C. Smith, M. W. Martin, H. W. Sadler, and R. E. L. Zimmerman, against the appellants, R. H. Manning, H. L. Douglas, and F. W. Manning; also against S. P. Woodward, and a number of other stockholders in the Ocean Oil & Refining Company, an unincorporated association and partnership; also against Joe Z. Brooks, R. Brooks, and M. S. Asbell, as trustees of said Ocean Oil & Refining Company, as well as against said refining company and its various members and stockholders; also against the Continental National Bank of Fort Worth, Tex. — appellees alleging:

That 16 of the named defendants were residents of Coleman county, Tex., including two of the trustees. That the first two named appellants were residents of Tarrant county, Tex., and the third appellant a resident of Dallas county, Tex. That the Ocean Oil & Refining Company was a copartnership composed of the parties named in the petition and about 2,500 other persons, whose names and addresses were unknown to appellees. That the Ocean Oil & Refining Company was a copartnership, and was formed under a partnership agreement, adopting the name of the Ocean Oil & Refining Company, and having for its purpose an oil and gas enterprise in Eastland county, Tex., where it owned 10 acres of land, which was described in the petition by metes and bounds.

Alleging further:

That it issued $200,000 in shares of stock of the par value of $1 per share, and that its actual value at the time of the filing of this suit was 40 cents per share. That appellees owned, respectively, 175, 100, 50, and 25 shares of said stock. That appellees, therefore, own an interest in said company and its property, and that the appellants and other defendants also own shares of stock in said partnership, the exact extent being unknown to appellees. That, after the formation of said copartnership, and after the issuance of its stock, acting by and through its agents and trustees, it drilled for oil and gas on said lands owned by it, and at the time of the filing of this suit had three producing oil wells of approximately 11 barrels capacity per day, which was of the reasonable market value of $75 and that the gas produced was of the proximate value of $50 per day, making a total daily production of $125. That said partnership owned engines, pumps, tanks, wagons, teams, automobiles, office building, tools, barns, and derricks, aggregating $9,100, and that it also had the sum of $7,500 on deposit in the Continental National Bank of Fort Worth, Tex.

That the defendants Joe Z. Brooks, R. Brooks, and M. S. Asbell were duly elected trustees for the year beginning March 5, 1913, at an annual stockholders' meeting of said Ocean Oil & Refining Company, for the purpose of managing and handling the properties and affairs of the copartnership, which said appointment was to continue one year thereafter and until their successors were appointed. That they accepted the appointment, and undertook to enter into and upon their duties as such trustees, and that the appellants were threatening to and were asserting the right to manage and control the affairs, business, and properties of said copartnership, of which appellees and the other shareholders were owners. That the oil and gas produced from the copartnership premises were being wasted and destroyed, and the funds belonging to the company were being dissipated and exhausted by said Manning, Douglas, and Manning, appellants herein, and that, unless prevented, the affairs, business, and properties of said copartnership would be destroyed. That the pretended trustees, appellants herein, were making, and, if not prevented, will make and execute, unauthorized contracts for said company, and will appropriate the funds to the payment of their purported services, without the permission of the duly elected trustees.

That said pretended trustees, appellants herein, were in all things insolvent, and that the appellees and the other joint owners of the property would suffer irreparable injury and their property be wasted and destroyed, and the funds in possession of defendant bank would be withdrawn and placed beyond the reach of the parties interested, and the said pretended trustees, appellants herein, were threatening, and would, if not prevented, mismanage, dissipate, and impair the value of the property and the revenues derived therefrom, and would pay out the funds in the bank to the damage of appellees and all parties interested. That, in order to preserve and protect the gas and oil being produced, the necessity exists for the appointment of a receiver, with power to take charge of and manage and control said properties until such time as it may be determined, in truth and in fact, who are the proper persons to assume the management and control of same. That the necessity of the appointment of a receiver arises because of the controversy existing between appellants herein and the defendants Joe Z. Brooks, R. Brooks, and M. S. Asbell, as each were and are asserting the right to act as agents and trustees of the said copartnership in the management and control of it and its properties, and by reason thereof the affairs of and the properties of said copartnership were being neglected, and would become worthless, and the rights of the parties greatly impaired, unless such a receiver was so appointed.

That, in addition to the properties described in appellees' petition, it is alleged that said copartnership owned and was entitled to other properties in the state, the extent of which is unknown, and that an imperative necessity exists for an auditor to make a correct record of the property, in order that a distribution thereof might be made to the parties owning such stock in said copartnership, and that they might know their pro rata share thereof.

Appellees alleged that Hon. J. O. Woodward district judge of the Thirty-Fifth judicial district, of which Coleman county was a part, was disqualified from hearing and acting in said cause, being a brother to S. P. Woodward, one of the defendants named herein, and an uncle by marriage to one of the Brookses, also a defendant named herein, and was therefore related within the third degree to parties defendants in the suit, and was disqualified from acting or hearing such cause. Appellees prayed for an injunction restraining appellants herein from handling, managing, controlling, or asserting any right or control to or of the properties, funds, and business, or from contracting any indebtedness pertaining to said company, or expending its funds, or exercising any control over its affairs, properties, or business, and directing them to turn over to the receiver to be appointed all records, books, etc., or property of any kind or character belonging to said company, and prayed further for the appointment of a receiver who would be vested with authority to manage and control the properties, and to take charge of the books, records, etc., and have the same audited, as the court may direct.

The petition was duly verified as required by law; and, after filing the same in the district court of Coleman county, in the Thirty-Fifth judicial district of Texas, the court over which Hon. J. O. Woodward presided as district judge, the appellees applied to Hon. C. E. Dubois, Judge of the Fifty-First district of Texas, said application reciting the facts of the disqualification of Hon. J. O. Woodward, and asking for a temporary injunction, and for an order appointing a temporary receiver. Hon. C. E. Dubois, upon the ex parte hearing, granted the temporary injunction as prayed for, enjoining appellants and restraining them from handling, managing, or controlling or asserting the management or control of any of the property, and restraining them from contracting any indebtedness of any kind pertaining to said copartnership, or from expending any of its funds, or attempting to exercise any control of its affairs, business, or properties, and further requiring them to deliver to James Amyx, as receiver, all of the property, together with books, records, and vouchers of said company, and further restraining the bank named from paying out any of said funds, except upon the check of the said James Amyx, receiver, and requiring them to observe the orders of the court; and said court fixed the injunction bond in the sum of $2,000. On the same hearing the said Hon. C. E. Dubois, as district judge, after reciting the fact of the disqualification of Hon. J. O. Woodward, granted the writ of injunction as prayed for, and further made his order appointing the said James Amyx receiver, to take charge of the properties, funds, books, papers, and vouchers, and authorizing him to manage and control the same for the best interest of the...