Lowe Bros. Cracker Co. v. Brooke

Bleckley, Chief Justice. 1. "Waiving several questions as needless to be decided, ■the application for a receiver was defeated when it turned out at the hearing that one of the three original petitioners, to wit the firm of J. J. & J. E. Maddox, was not unsecured, but was a secured creditor. The petition -did not allege that the petitioning creditors represented as much as one third of the whole unsecured indebtedness of the debtor corporation. This being so, in order to prevail it was necessary under the code, section 3149(a), as amended by the act of 1889, that all three of the petitioning creditors should prove to be unsecured. The secured one could not be counted; this left only two, and it was impossible, under the statute on which the proceeding was based, for two to prevail, unless they represented at least one third of the unsecured indebtedness of their debtor. There is no indication in the statute that the security which renders a creditor dis•qualified to petition is to be of one kind rather than another. Personal security will disqualify as effectually as would a mortgage, collaterals or any other species. In ordinary speech, a secured creditor is one who has security for his debt, and if he has this by reason of indorsement, guaranty or suretyship of a third person, lie would be so denominated. We think the statute [251] -contemplates anything as security which would he so regarded according to usage and ordinary modes of ■expression. The statutory meaning of “unsecured” is the same as the popular meaning of that term. 2. When three unsecured creditors are requisite to inaugurate a proceeding, and only two of that class join in it at first, it is questionable whether the place of the third can be supplied by adding another unsecured creditor by amendment pending the imperfect and unauthorized proceeding. But grant that this may be done, certainly the amendment should show on its face that the added creditor is unsecured. The petition was brought in the present case on the 18th of July, and on the same day a temporary restraining order was granted by the judge, who also appointed a temporary receiver. On the 3d of September thereafter the ultimate hearing for interlocutory receiver and injunction came on, and then it was that several other creditors petitioned to be made parties plaintiff, and orders were granted making them such parties. It did not appear from these petitions or orders that any of these added creditors were unsecured. Indeed, they did not present themselves on any idea or theory of taking-the place of the Maddox firm in the original suit, but as additional parties seeking to share in the fruits of that suit, treating it as well brought in the beginning. The Maddox firm remained a party and insisted oil occupying the position of an unsecured creditor. One of the firm swore to the truth -of an amendment to the original petition filed on the same day the new parties were added, but sworn to and allowed previously, which amendment alleged that the debts due each of the complainants in the petition as set out therein are each and all unsecured. It is obvious that this amendment applied only to the claims of the three creditors who complained originally, and in nowise to the claims of the coplaintiffs who became parties after the amendment was verified and allowed. [252] 8. By any fair construction of the evidence as a whole, it is manifest that the Maddox firm was a secured and not an unsecured creditor. The claim of that firm consisted of an acceptance of the corporation indorsed by L. D. Lowe, the president of the corporation, in his personal and individual capacity. There was an effort to prove his insolvency, but this was a complete failure. There can be no doubt that his name on the acceptance, whether he he held as indorser, guarantor or a joint acceptor, affords ample security for the payment of this debt. The facts in evidence make this perfectly clear. The case as one requiring three unsecured creditors to begin and carry it on broke down completely at the hearing on the merits, and irrespective of the minor questions involved in it, the judge erred in appointing a receiver and granting an injunction. Judgment reversed.