Capital City Water Co. v. Weatherly

COLEMAN, J. By proceedings in the nature of a quo warranto', the court having jurisdiction thereof., rendered a judgment vacating the charter, and annulling-the' corporate existence of the Capital City Water Company, the appellant. Immediately thereafter George Weath-erly, the. appellee, filed, the present bill,- and,’applied for the appointment of. a receiver, to bake-charge of..- alj-' the assets of the dissolved corporation, and. for the-firhe'beihg to continue the business of the' corporation.. Notice, was given of the application for the appointment of a receiver [414] and on the 21st of December 1894 the court set the hearing for the 26th day of December 1894. On the 22nd of December upon motion of complainant, the court issued an order restraining the respondent, its agents, attorneys and employes from making change of possession or disposition of the money, property and effects of said corporation, and on the same day, to-wit the 22nd of December without further notice the court made an order appointing receivers as prayed for in the original bill. The order appointing the receiver, recites that the respondent has not been notified “of the change of the hearing and was not present,” and the order further states that “said appointment is made without requiring the complainant to give bond.” The appeal is prosecuted from the decree of the court appointing a receiver. By act of the legislature, approved December 14th 1894, page 226, Acts 1884-5, it was enacted as follows : “Section 1. Be it enacted by the General Assembly of Alabama, That when application is made to the chancellor, judge or register for the appointment of a receiver, without notice to the party or parties adversely interested the chancellor, judge or register before makiug the appointment must require the complainant to enter into bond ,in such sum,as in the opinion of the chancellor,judge or register may be sufficient to cover any damages which may result from such appointment if the same is vacated, payable to and with sureties approved by the register of the court in which the suit is pending, with condition to pay all damages which any person may sustain by the appointment of the receiver, if such appointment is vacated. ■ “Sec. 2. Be it further enacted, That when the application for the appointment of a receiver is made upon notice to the party or parties adversely interested of the time and place when the same will be made, or when suoh adverse party or parties appear, it shall be discretionary with the chancellor, judge or register to whom the application is made to require such bond before making the appointment.” And at the same session of the legistature by a subsequent act, approved Feb. 18th 1895, Acts 1894-5., p. .585, it was enacted as follows : - . . •• ■ • ‘.‘Section 1. Be id enacted by the General. Assembly of ■Alabama, That-when application is made to. the chancel [415] lor, judge, or register for the .appointment of a receiver, the chancellor judge, or register before making such appointment, must require the complainant to enter into bond, in a sum as such chancellor, judge, or register may prescribe, payable to and with good and sufficient sureties to be approved by the register of the court in which the suit is pending, with condition to pay all damages which any person may sustain by the appointment of the receiver if such appointment is vacated. Sec. 2. Be it further enacted, That any person injured by the appointment of the receiver, in the event such appointment is vacated, may recover by suit on, such bond, in his own name, all damages so sustained not exceeding the penalty of the bond.” It is unnecessary to consider at this time the effect of the later act upon the first as the appointment was made after the first act, but before the enactment of the second. There is no room for controversy, that the appointment was made without “requiring the complainant to give bond,” contrary to the express provisions of the statute, and without authority. The appellee attempts to evade the force and effect of the statute, upon the ground, that the respondent was in contempt, and therefore not entitled to notice of the application for a receiver, and being in contempt was not entitled to be heard to question any ruling or order made by the court. The only foundation for the charge of any act of contempt, by the respondent, is to be found in the recitals of the order of the court appointing a receiver and is contained in the following words: “This cause comes before me at this time on the application of complainant for a receiver * * * and it appearing to the court that one W. B. Rice, has since the postponement of this application filed a bill in the United States Court asking for a receiver and that application has been made to a judge of said court for the appointment of said receiver, and this defendant has answered said bill joining in a request for said appointment.” The order then proceeds to consider the case made.by the bill, and ascertains therefrom, that complainant is entitled to 'a. receiver and.makes the appointment. There is. nothing in this recital to .authorize- the inference,. that proceedings for a contempt had been instituted against, the respondent; and that-it had. been adjudged guilty, nor-. did-the [416] facts stated without more, authorize the equity court “mero motu,” to conclude that respondent was in con-, tempt. Independent of this view, had it appeared that respondent had committed an act of contempt in facie curise, such an act would not have authorized the court to utterly disregard the positive requirement of the statute which declares that before making the appointment of a receiver without notice, the chancellor, judge or register must require the complainant to enter into bond, ” &c. Where notice of the application for a receiver is not given, the court is without authority. The discretion of the court to appoint receivers, without requiring bond of the complainant, is limited to cases where notice of the application has been given to the adverse party. The appellant has submitted an elaborate ai’gument in support of the contention, that the bill is without equity, and that in no event can a receiver be appointed under the facts of the case as averred in the bill. The contention arises upon the construction of sections 1690, 1691 and 1692 of the Code which read as follows : “1690. All corporations whose powers expire by limitation, all which are dissolved by forfeiture or any other cause, exist as bodies corporate for the term of five years after such dissolution, for the purpose of prosecuting or defending suits, settling their business, disposing of their property, and dividing their capital stock, but not for the purpose of continuing their business. “1691. Upon the dissolution of any corporation, unless other persons are appointed by the general assembly, or by a court of competent authority, the managers of the'business of the corporation at the time of its dissolution, by whatever name known, are the trustees of the stockholders and creditors, authorized to settle, the affairs of the corporation, dispose of such property as is necessary to pay its debts, and divide among the stockholders ■ the money and property remaining afterpayment óf such debts and the necessary expenses. “1-692. Such persons have authority to sue for and r'eóovér the ’debts and property of the dissolved corporation, in its corporate ñamé, and are jointly and severally Responsible- to its creditors to the éxteñt of the property which-may come into their hands.” [417] Complainant by tlie bill avers that the respondent was under contract to furnish the citizens of Montgomery with water, that the only source of supply of water to the inhabitants is by the operation of the water works plane, and that by express provision of the statutes, after the decree of dissolution it was prohibited from continuing the business, and that by statute “the managers of the business of the corporation at the time of the dissolution” have no such authority, and that it is necessary for the public interest that the water works be continued in operation. In addition to the averment that complainant is an inhabitant or resident of the city, it also shows that he is a creditor of the respondent. The equity of the bill was not raised by motion to dismiss the same nor by demurrer. In fact the respondent had no opportunity to plead to the bill. We do not think it necessary at this time to anticipate the questions which may arise in the further prosecution of the cause. The only question before us, is as to the appointment of the receiver. We hold that by virtue of the statute the court erred in the appointment, without requiring bond, and a decree will be here rendered setting aside andean-nulling the appointment, and remanding the^cause. Reversed, rendered and remanded.