Young v. Rollins

• Decision Date: 31 October 1881
• Citation: 85 N.C. 485
• Court: North Carolina Supreme Court
• Parties: MARK YOUNG v. W. W. ROLLINS.

85 N.C. 485

MARK YOUNG

v.W. W. ROLLINS.

Supreme Court of North Carolina.

October Term, 1881.

APPEAL from an order appointing a receiver and granting a restraining order made at Chambers in a suit pending in MCDOWELL Superior Court, by Gilmer, J.

By virtue of the act of the general assembly passed on March 13th, 1879, the corporate existence of the Western Division of the Western North Carolina railroad was terminated, and its property and effects vested in the Western North Carolina railroad company, of which it was the offshoot, to be collected and administered in trust for the benefit of the creditors and stockholders. The validity of the enactment and its force and operation were declared in the action brought by the legislative representative appointee against the late president of the defunct organization on an appeal from the judgment of the superior court of Buncombe, rendered at fall term, 1879, heard and determined at January term following by this court. W. N. C. R. R. Co. v. Rollins, 82 N. C., 523.

While the cause was pending in the court on February 10, 1880, the present suit was commenced by summons against the several directors, by name, of the said Western Division, the Western Division itself (as a still existing corporation,) and the said Western North Carolina railroad company, issuing from the same superior court, on behalf of the plaintiff and other stockholders, for the purpose of withdrawing the funds of the said Western Division from the said directors, and placing them for greater security under the control and management of a receiver, in order to their ultimate disposition among the parties entitled thereto. On the same day a preliminary motion for the appointment of a receiver and an injunction was made, which after successive postponements protected by a temporary restraining order, during which the cause was removed to McDowell, was heard at Chambers on June 15th, and allowed, an injunction directed to operate until the hearing, and Benjamin Long designated as receiver to take charge of and manage the property of the extinct corporation. From this interlocutory judgment the defendants appeal.

Messrs. J. M. McCorkle, W. H. Malone and G. N. Folk, for plaintiffs .

Messrs. Merrimon & Fuller, for defendants .

SMITH, C. J., after stating the case.

In the mean time G. M. Roberts, an alleged judgment creditor on March 31st, 1880, also brings suit against the said Western Division for the like purpose of securing its assets by the appointment of receivers, the summons issued in which is returnable to fall term of Buncombe superior court, and was served on the next day on W. W. Rollins, its late president. The complaint put in on April 5th, was followed immediately by an answer in the name of the said Western Division, filed by him and signed by C. M. McLoud, attorney, both director and defendants in the preceding suit, and on the 9th of that month an interlocutory order was made by the judge appointing those two directors receivers with the usual and necessary powers for the effectual discharge of the duties of their offices, upon their entering into the bond with surety which has been given. The general assembly by another act passed March 29th, 1880, appointed commissioners on behalf of the state to sell and transfer “all the right and interest of the state in and to the railway, stock, property and franchises of the Western North Carolina railroad company,” on certain terms and conditions therein set out, to certain persons named as grantees, who on compliance therewith were required to form and “reorganize the company as a new corporation by the name of the Western North Carolina railroad company, the details whereof are specified and set out in the act, and the holders of private stock in the former were to be allowed a pro rata share of the capital stock in the new and substituted corporation. This enactment has been accepted and its provisions were carried into effect by the formation and organization of the new company without dissent from the private stockholders, as appears from the evidence of S. McD. Tate, previous to the making the order and appointment now under review.

With this brief narrative of the material facts, it is quite unnecessary to look into the voluminous testimony and exhibits, accompanying the transcript, for the purpose of ascertaining the past management of the affairs of the Western Division, since its extinction puts an end to the function of its board of directors and other officers, and renders imperative the duty of providing a proper person to take possession of the resources and to manage them in the interest of creditors and stockholders, and this is done in the act dissolving the corporation.

But the effect of subsequent legislation is also to destroy the administering corporation itself, by its absorption with all its property, effects and franchises into the successor company of the same name, formed under the act, and the consequent extinction of the corporate life of the former.

So then at the time when the order under consideration was made, there was no receiver or representative in existence, and it was both necessary and proper that...