Wyman Co. v. Farmers Elevator Co.
| Decision Date | 06 October 1930 |
| Docket Number | 6849 |
| Citation | 232 N.W. 259,57 S.D. 377 |
| Parties | C. C. WYMAN & CO., et al, Respondents, v. FARMERS ELEVATOR CO., Appellant. |
| Court | South Dakota Supreme Court |
FARMERS ELEVATOR CO., Appellant. South Dakota Supreme Court Appeal from Circuit Court, Faulk County, SD Hon. J. H. Bottum, Judge #6849—Affirmed O'Keeffe & Stephens, Pierre, SD Attorneys for Appellant. F. E. Snider, Faulkton, SD Fowler, Carlson, Furber & Johnson, Minneapolis, MN Todd, Fosnes & Green, St. Paul, MN Sterling, Clark & Grigsby, Redfield, SD Attorneys for Respondents. Opinion filed Oct 6, 1930
This appeal is from an order overruling demurrers to an amended and a supplemental complaint of the plaintiffs. On account of their length these pleadings cannot be set forth in full. The plaintiff, C. C. Wyman & Co., hereinafter called the Wyman Company, and the plaintiff, Deere & Webber Company, hereinafter called the Webber Company, are creditors of the defendant company holding some, but inadequate, security for their several claims. Defendant company is insolvent. The relief sought in the amended complaint is a judgment decreeing that defendant is indebted to the Wyman Company in the sum of $19,297.04 and to the Webber Company in the sum of $12,798.70; that all of the property and assets of the defendant be decreed to be a trust fund, to be held for the benefit of the plaintiffs and all other persons who on final hearing of this cause may be found to be entitled to receive the same; “that said property and assets be converted into money by sale or otherwise as the Court may direct, and the proceeds arising from said sale of said property and assets may be applied, first, in the discharge and payment of the encumbrances thereon for the preservation of other assets of the defendant, according to the rights and equities of the respective holders thereof, that an account may be taken as to the mortgages, liens and encumbrances held by these plaintiffs respectively, the validity thereof established as well as the encumbrances and liens held by other creditors of the defendant; and that all such mortgages, liens and encumbrances may be enforced herein under the direction of the court, and that the assets of the company may finally be distributed among those who are entitled thereto, and that the business of the defendant be discontinued and finally wound up; that immediately the Court appoint some discreet and proper person or corporation as Receiver in equity with the usual powers of Receivers in like cases, to take charge and possession and control of all of the property and assets, legal and equitable, including all books, records and papers of and belonging to the defendant, and to continue and carry on its business as a going concern under the orders and direction of the Court, subject, however, to such conditions and limitations for the protection of the creditors and all other persons interested in said property and assets as the Court may determine; that said Receiver be empowered to sell and dispose of the property and assets of the defendant, and otherwise reduce the same to cash from time to time as the Court may order and determine, and to have such other power and authority as the Court may deem expedient and wise; that all of these things be done during the pendency of this suit as well as afterwards.”
Prior to the filing of this amended complaint in December, 1927, and at the time of filing his original complaint on April 8, 1927, the trial court entered an order appointing a receiver pendente lite. The receiver so appointed proceeded, as ordered, to operate the elevator and hardware business of defendant company and to collect the notes and accounts receivable and to dispose of all the merchandise and physical properties of the defendant corporation.
On or about August 4, 1927, the defendant answered denying that its debts aggregated the amount claimed by plaintiffs, alleged that plaintiffs’ security was adequate for the payment of any indebtedness due them, denied that it was insolvent, and alleged certain counterclaims.
Prior to the date of this answer, the receiver made a report setting out the bid of one Benson for the elevator buildings and equipment, the hardware store building and fixtures and the stock of merchandise therein, also that, after disposing of the foregoing the only assets remaining would be the accounts and notes receivable, and asked for an order confirming the sale to Benson. This report was brought on for hearing on order to show cause. At this hearing one Hanson and other stockholders of defendant company made higher bids for the property. The defendant by written response at said hearing objected to the Benson offer or to any sale at that time, and said that, if the property was to be sold, it should be sold to the Hanson bidders in order that the stockholders and guarantors of the defendant’s obligations should be given an opportunity to recoup so far as possible any loss occasioned by the sale at that time. The trial court ordered and confirmed the sale to the Hanson bidders. Thereafter, in December, 1927, by leave of court after hearing on order to show cause, the plaintiffs served and filed the amended complaint demurred to. On February 8, 1928, defendant demurred to this amended complaint. Thereafter, on March 9, 1928, after hearing at which the defendant appeared by counsel and consented to the sale, the trial court confirmed the sale of the bills and accounts receivable by the receiver. This consent by defendant was on the ground that the sale was as advantageous to it and that as much could be realized thereby as could be realized by liquidation by the receiver or by plaintiffs as pledgees of the bills receivable so sold, but the order recited: “The defendant does not, by consenting to this sale, waive any defenses to the main action.”
Thereafter, but before any order had been made on defendant’s demurrer of February 8, 1928, the plaintiffs filed a supplemental complaint dated May 31, 1928. It repleaded all of the allegations of the amended complaint, alleged the facts contained in the foregoing statement and that the receiver had reduced to cash substantially all of defendant’s assets, including that which constituted the security of plaintiffs’ claims; that after disbursing $24,783.47 under the order of the court the receiver had on hand $10,534.41 of which $3,500 should be paid to the Wyman Company and $3,780 to the Webber Company as being the proceeds of the sale of security held by them; that the amount still due the Wyman Company was $4,807.64 and to the Webber Company $9,607.54, and that the balance after distributing the $7,280, as above stated, would be insufficient to pay more than 15 per cent of the amount due unsecured creditors, including the unsecured balances due plaintiffs. The prayer of the supplemental complaint was as follows:
“Wherefore the plaintiffs pray judgment as in the Amended Complaint herein and that their expenses and disbursements incurred as herein alleged in connection with the caring for, securing and renewing of their collateral security and in and about the collections made thereon may be determined and confirmed and approved in the several sums herein alleged and that the right of the respective plaintiffs to retain and apply the balances after paying such expenses and disbursements to their respective indebtednesses and interest may be approved and confirmed; that the plaintiff, Webber Company, may have an accounting herein from the Receiver for the proceeds of the goods held by the defendant under conditional sales contract as herein alleged and that the remaining property so held...
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