Burnett v. Smith
Burnett v. Smith
Opinion of the Court
A. F. Smitii and four others, all of whom were stockholders in a common-law' joint-stock association having its principal office and place of business at Celina, Collin county, Tex1., organized, and doing business in the name of the North Texas Consolidated Oil & Gas Company, instituted this suit against J. H. Burnett and six others as trustees of that association.
It was alleged in the petition, upon information and belief, that ihe defendant J. H. Burnett bad wrongfully appropriated to his own use, for salary to himself, certain assets of the company, with the consent of others of the trustees who did not constitute a majority, or that, if the same was done with the consent of a majority of the trustees, such consent was not given at a regular meeting of said trustees. ■ It was further alleged that other sums of money belonging to the company had been used by Burnett for the payment of rentals upon his individual oil leases, and for attorneys’ fees in the defense of suits against him individually, and that the sum of $2,000 had been wrongfully appropriated by Burnett for his own personal use as a commission for the sale of property belonging to the company, all without the consent or authority of other defendants, who were his cotrustees. The petition contained other general allegations of wrongful misappropriations of funds and breaches of trust on the part of some of the defendants without the consent of a majority, coupled with other allegations to the effect that the amounts of such expenditures and the persons who received the same are unknown to the plaintiffs, such allegations being principally upon information and belief.
It was further alleged that the plaintiffs had made inquiries of the defendants to ascertain the condition of the affairs of the •company, but the defendants had refused to give them such information.
It was further alleged that the association was in law a partnership, and the stockholders therein are joint owners of its assets; that the association is insolvent, and that there is now owing to the association the sum of $32,000, which is past due, and plaintiffs prayed for the appointment of a receiver to take charge and control of the entire affairs of the association, and for a final settlement and adjustment and distribution of the assets to all the parties in interest.
The petition contained a specific allegation that the defendants had converted to their own use the sum of $2,346, and plaintiffs prayed for a recovery against them of that amount for the benefit of themselves and other stockholders in the association who did not join with them in the suit
The application for the appointment of a receiver was heard by the trial judge in vacation, and upon that hearing evidence was introduced by both plaintiffs and defendants, and the same has been brought to this court in a statement of facts. After that hearing a receiver was appointed as prayed for, clothed with full power to take charge of and control the entire business affairs of the company, including all of its assets, together with all of its books and records. From that order the defendants have appealed.
“Where there are two or more defendants residing in different counties, in which case the suit may be brought in any county where any one of the defendants reside. * * * ”
It is to be noted in this connection that the assignments presented do not involve *1009 any questions of misjoinder of causes of action or of right of plaintiffs to sue for the individual debt claimed in behalf of other stockholders, as well as for their own benefit, nor of jurisdiction of the court over the amount of the debt plaintiffs show themselves entitled to recover. Under the allegations, plaintiffs would at all events be entitled to recover some portion of that debt.
“The exercise of such appointing powers is purely auxiliary, depending upon the pendency of a suit, seeking some other aid ultimate relief, which is within the jurisdiction of the court. Webb v. Allen, 15 Tex. Civ. App. 605, 40 S. W. 342; Hermann v. Thomas, 143 S. W. 195; T. & P. Ry. Co. v. Gay, 86 Tex. 582, 26 S. W. 599; 25 L. R. A. 52; High on Rec. § 17. It is not only essential that the petition should state grounds calling for the appointment of the receiver to take charge of the property involved in the litigation, but it should also show upon its face an independent cause of action within the jurisdiction of the court.”
In the case of Hermann v. Thomas (Tex. Civ. App.) 143 S. W. 195, Chief Justice Pleasants made the following announcement:
“The general proposition that the right to the appointment of a receiver is not a cause of action, or, in other words, does not exist; independent of some other right, or the infringement of some right, of the plaintiff which would entitle him to maintain an action therefor, and when no cause of action is shown in the petition, and no relief sought, other than the appointment of a receiver, such relief will not be granted is well settled. Cattle v. Bindle, 5 Tex. Civ. App. 18, 23 S. W. 819; Farwell v. Babcock, 27 Tex. Civ. App. 162, 65 S. W. 512.”
In an opinion by Associate Justice Buck, of this court, in the case of General Oil Co. v. Ferguson, 224 S. W. 261, the following is quoted with approval from Folk v. United States, 233 Fed. 177, 147 C. C. A. 183:
“If it seems doubtful whether or not the plaintiff will recover at the final hearing, or whether or not there is imminent danger that the plaintiff will suffer irreparable loss, theapplication for a receiver will be denied, and in the hearing and decision of such a ease all the presumptions are in favor of the defendant in possession under a legal title. A court of equity is sedulous to prevent the successful invocation of its interlocutory injunction, or its appointment of a receiver to perform the function of a successful action of ejectment, and at the same time to avoid the trial of titles indispensable to such an action.”
Many other authorities might be cited announcing the same familiar doctrine.
Clearly there was no ground for the appointment of a receiver for the association as an ancillary process to aid the plaintiffs in the collection of the alleged individual debt of the defendants to the plaintiffs. The trustees representing the association, and all of the stockholders therein, constituted a separate entity from the same persons as individuals and against .whom individual liability was alleged.
Furthermore, while there was evidence tending to support some of the allegations of breach of trust on the part of the defendants, yet other evidence was introduced which so strongly preponderated to refute those charges that the court was not warranted by the proof in awarding summary relief by taking the property out of. the hands of the trustees, and placing it in the hands of a receiver, even though it could be said that plaintiffs’ petition was not subject to the criticisms discussed above.
For the reasons noted, the order of the trial court appointing the receiver is reversed, and said receivership is hereby vacated, and this judgment will be certified to the trial court for further proceedings not inconsistent with the conclusions here reached.
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Reference
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- BURNETT Et Al. v. SMITH Et Al.
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- Published