Smith-Dimmick Lumber Co. v. Teague, Barnett & Co.

COLEMAN, J. Appellees, contract creditors without a lien, file the present bill in their own behalf and in behalf of other creditors Avho might join, against appellant, a corporation averred to be insolvent, and Avhich had ceased to be a going concern, and prayed for the appointment of a receiver and a sale of its assets to satisfy the claims of complainants. The register, Avithout notice to respondent, appointed a receiver. From the order appointing a receiver, the respondent appealed to the chancellor, and demurred to the bill and moved to dismiss the same for Avant of equity.- Before the day of hearing, the complainants amended their bill, [390] and respondent renewed its demurrer and motion to dismiss for want of equity, and assigned grounds of demurrer. At the hearing the chancellor affirmed the appointment of. the receiver made by the register, and overruled the demurrer and motion to dismiss the bill. Respondent now appeals to this court, and the order and decree of the chancellor are assigned as error. It has been decided that the hearing before the chancellor on the appeal from the .order of the register appointing a receiver, was de novo, and we-hold that the bill as amended, and the affidavits filed, were properly considered on. the question presented- by the appeal.— Heard v. Murray, Dibbrell & Co., 93 Ala. 127; Etowah Mining Co. v. Wills Valley Mining & Mfg. Co., 106 Ala. 492. It is insisted by appellant, that conceding the sufficiency of the averments of the bill to authorize the appointment of a receiver, they were not sufficiently verified ; and further, that the facts stated .did not -authorize the appointment of a receiver without notice to respondent. Upon examination of the record- it appears that there is no verification of the amendment to the bill as such, and that the affidavits filed, related to the extent of the indebtedness of the respondent, on the question of its solvency or .insolvency. In the case of Burgess & Co. v. Martin, 111 Ala. 656, the bill prayed for the appointment of,a receiver. The averments of the bill were sworn to “as being true to the best of his (affiant’s) knowledge, information and belief.”.- The jurat to the original bill in the case at bar. is in the same form precisely. Considering the affidavit in the case cited (111 Ala. supra) we used the following language: “But to construe the affidavit according to the general rule, most unfavorable to the party relying upon it, there is no room for affirmatively saying that it means anything more than the affiant believes the allegations of the bill to be true, though he has neither knowledge nor information of their .truth.” We have then the case of the appointment of a receiver, without notice, upon the single verified fact of the. insolvency of the debtor. The appeal should have been sustained. — Burgess v. Martin, supra; Moritz & Weil v. Miller, Schram & Co., 87 Ala, 331; Thompson v. Tower Mfg. Co., Ib. 733. The bill of complaint is -vague and indefinite. In the last paragraph the pleader uses the following language: [391] “That in so far as the allegations of this amendment are consistent with those contained in the original bill, the amendment and the original bill may be held and considered by the court together; that wherein the allegations of the amendment are antagonistic or inconsistent with those of the original bill, the averments of that amendment may be substituted for those of the original bill.” It is no part of the duty of the court to frame the pleadings of litigants. Parties complainant should present clearly the grounds relied upon for relief, and in such way as to inform the respondents clearly of the issues intended to be presented. The original and amended bill recites several transactions of transfers, mortgages and sales of its property by the respondent to several named parties, but it distinctly avers that these transactions were independent of each other, and were not parts of a general and single purpose to dispose of substantially all of its property by way of preference to certain creditors. It avers also an attempted sale of a large proportion of its property to a purchaser in Florida, and a purpose to remove the same to that state, beyond the reach of its creditors in this state. It avers further that these tranfers and mortgages are void, not as being fraudulent, but because of an indefinite description of the property, and 'failure to separate and distinguish it from other similar property of which that attempted to be transferred and mortgaged constituted an. undivided and undistinguishable part.. Whether that attempted to be sold to the purchaser from the State of Florida included any part of that attempted to be transferred and mortgaged, is not shown. As a bill to have these several transactions or any of them declared and held a general assignment for the benefit of creditors, if such be its purpose, it is wholly defective and insufficient. On the other hand, if the pleader intended to have these several transactions recited in the bill declared fraudulent and void, as to complainants, not only are the averments of facts insufficient to show fraud, but there is. no prayer to that effect, unless we consider the prayer for general relief to' include such relief. None of the parties with whom the several recited transactions are averred to have been made, are made respondents to the bill. They are entitled to their. day in court, and cannot be di [392] vested of any right or interest without.a hearing, upon the mere ex parte averments of a creditor of their grant- or. ' .As the bill does not charge that these transactions were fraudulent, and does not pray for their cancellation, and as neither the grantees nor vendees are made parties respondent, and no relief asked as to them, the equity of the bill rests upon the proposition that a simple contract creditor of an insolvent corporation, which has ceased to be a going concern, without alien, has the right to have the. court of equity administer through a receiver the assets of the corporation for the benefit of all the creditors. This is the law in many states, and there is much force in the reasons upon which the principle rests, but in this state the rule is otherwise, adopted after much consideration. The law is that a court of chancery will not take charge of and administer the assets of an insolvent corporation at the suit of its creditors, in the absence of some recognized principle of equity jurisdiction. — O’Bear Jewelry Co. v. Volfer, 106 Ala. 205; Barrett & Co. v. Pollak Co., 108 Ala. 390. We are not aware of any case, in which it was held that the mere “improvidence” of a debtor furnishes the right to the aid of a court of equity; and if fraud be relied upon, .the facts constituting the fraud, must be distinctly averred, and not charged as a mere conclusion. When a debtor is about to remove his property out of the state, so that the plaintiff will probably lose his debt or have to sue for it in another state, the creditor is authorized by statute to sue out an attachment, but the contemplated act of the debtor alone does not entitle the creditor to the aid of a court of equity, or the appointment of a receiver. We have not overlooked the statement in the amendment to the bill, that J. W. Dim-mick was the president of the insolvent corporation, and exercised a controlling influence in its management; that he was liable as endorser to the First National Bank of Montgomery, and also to the Bank of Brewton, and that after such liability accrued, and after the said corporation became insolvent and ceased to do business as a going concern, a condition known to Dimmick and said banks, in order to prefer the said Dimmick and to secure him from all loss by reason of his said endorsement, he procured the execution of two several mort [393] gages to the said several banks, respectively. It may be that if these statements had been followed up with other proper ayerments, complainants’ bill would come within the principle declared in the following decisions, and which did not arise and was not considered in the O’Bear Jewelry Co. case, supra; Corey v. Wadsworth, 99 Ala. 68; Goodyear Rubber Co. v. Scott, 96 Ala. 439; Mary Lee Coal & Railway Co. v. Knox, 110 Ala. 632, 637. The complainants nowhere seek .relief from these mortgages, on the ground of such preference or purpose to secure and indemnify the said Dimmiek. It does not make either of the banks or the said Dimmiek parties respondent. It avers that these mortgages are void for the reason that property conveyed “are parts and parcels of large lots of sawn timber and saw logs, all together in one lot, and that sought to be conveyed being only a small portion of the entire lot in each casé;” that the whole was a bulk, bearing the same marks, etc. We cannot determine from anything in the bill whether complainants propose to have the property conveyed by these mortgages, sold as assets of the corporation or not. The bill' was subject to demurrer, and the demurrer should have been sustained. On a motion' to dismiss a bill for want of equity, all amendable defects should be considered as made. The decree of the chancery court must be reversed and annulled, and a decree rendered which should have been rendered by the chancery court. It is ordered and decreed, that the appointment of a receiver be set aside and annulled, and said receiver is required to file his accounts and vouchers for a settlement of his receivership within thirty days from the date of this decree. It is further ordered and decreed that the demurrer to the bill be and the same is sustained. It is further ordered and decreed that the motion to dismiss the bill for want of equity be sustained, but that complainants have sixty days from this date to amend their bill, as they may be advised; failing in this the chancery court must proceed to dismiss the bill, unless for good cause shown the time for amendment be extended. Beversed, rendered and remanded.