Lyle v. Sarvey

Whittle, L, delivered the opinion of the court. The primary purpose of this suit was to wind up the affairs of the Charles Lyle Drug Company, a corporation engaged in the retail drug business in the city of Roanoke, to pay its indebtedness, and distribute the surplus assets among the stockholders. The plaintiff, Mrs. A. E. Sarvey, and her two sons, Charles and Edward Lyle, constituted the principal stockholders. Charles Lyle was a druggist, and the president and general manager of the company, and Edward Lyle the attorney who brought the suit, representing both plaintiff and defendant. The creditors were neither made parties nor informed of the litigation.- In the petition and answer of the company to the bill, by Charles Lyle, its president, the assets were estimated at $9,930 and the liabilities at $2-,000. It was also averred that the president and general manager had tendered his resignation, and the defendant united in the prayer of the bill for the immediate appointment of Edward Lyle as receiver. The answer wras accompanied by the affidavit of Edward Lyle, that the corporation was solvent “and possessed of assets sufficient to pay. all its creditors in full.” Upon the same day the judge of the Hustings Court made an order appointing Edward Lyle receiver, and requiring him to execute bond with approved security in the penalty of $,6,000-. He was directed to collect the assets of the company, and sell the stock and fixtures to the best advantage ; to pay the expenses incident to the receivership; to rent the necessary buildings to preserve the property until sold; and also to report, from time to time, his proceedings as receiver. — 231 — Within a short time after the date of this order a number of creditors of the company intervened, and at their instance the cause was referred to a commissioner to take an account of debts and assets, and report any other matter deemed pertinent. On May 2S', 1903, the commissioner returned his report, in which he says the receiver had neglected to- furnish a statement of his transactions, although repeatedly requested and repeatedly promising to do so. At the request of the creditors, he made up his report in the absence of such statement, returning therewith a copy of a letter written by the receiver to counsel, under date of December 7, 1900, admitting that he had taken possession of the stock of goods of the company of the inventoried value of $3,721.32, and open accounts due the company to the amount of $2,500', of which he thought $1,000 could be reasonably expected to be collected. The commissioner reported the debts proved, but did not report ivhat assets had come into the hands of the receiver. Therefore, on February 14, 1903, the report was recommitted to another commissioner, who returned his report September 19, 1903, in which he charged the receiver with $3,721.32, the inventoried value of the stock of goods, and $1,000' in open accounts. He also reported that the White Front Pharmacy was really the property of the defendant company. With respect to the conduct of the receiver, the commissioner reports that he had used every means given him by the law to compel the production of books and papers of the Charles Lyle Drug Company and the White Front Pharmacy, without avail; that counsel for the receiver stated that he would close his account by July 25, but failed to do so, and the commissioner kept the account open until September 19, 1903, relying-upon the continued promises of the receiver to produce the books, together with the statement of his accounts as receiver; when, finding that further indulgence would be fruitless, he returned his report. — 232 — On December 30tb following, tbe receiver, over tbe objection of creditors, gave bis deposition in tbe canse, tbe object of wbicb was to extenuate bis conduct in failing to settle bis accounts,’ and to reduce bis liability as. ascertained by tbe report of tbe commissioner. . ■ • At tbe final bearing of the cause, April 30, 1904, tbe .court sustained tbe motion of creditors to-suppress .tbe deposition of tbe receiver, and, overruling bis exceptions to tbe report, (save only to so much thereof as .ascertained tbe "White Front Pharmacy to be tbe property of .the defendant company), confirmed tbe report, and directed tbe receiver to pay the debts established thereby. Prom that decree this appeal was allowed. The bare recital of the foregoing facts would seem to afford complete justification for tbe action of tbe court.' In bis belated deposition tbe receiver undertakes to excuse bis flagrant- neglect of duty to make reports, as required by law:and'the order appointing him, on the grounds that during- bis receivership 'bis time was engrossed with public duties as State senator, and tbe continued absence from tbe State of bis brother, Charles Lyle, who was engaged-as a traveling salesman, and who, by reason of bis position of .president and.general -manager of tbe company, was familiar with its affairs. "When it is remembered that about three years. bad elapsed between tbe appointment of tbe receiver and tbe final settlement of bis.account by tbe commissioner, it is not surprising that .the court declined to accept these frivolous excuses and refused to grant tbe receiver further indulgence. Tbe statute under which be claims tbe right to. have his rejected deposition read is as follows: “In a suit in equity, a deposition may be read, if returned before tbe bearing of the cause, or; though after an interlocutory decree, if it be as to a matter not thereby adjudged, and be returned before a final decree.” Va. Code, 1904, sec. 3362. In construing that statute this court observes: “But tbe right is not an absolute one. Tbe statute does not say tbe deposition — 233 — shall be, but it may be read. It could hardly have been intended that after a cause had been referred to a commissioner and ample opportunity offered both parties to introduce their witnesses, and aftér the commissioner had made his report and the cause was ready for a hearing, that one of them should have the absolute right'at aiiy time thereafter to bring forward his testimony, deliberately or negligently withheld without cause from the commissioner, and demand it shall be read upon a controverted matter of fact, passed upon by the commissioner and'made the subject of the report. Such a construction -would be but a premium for negligence, and would place in the power of one or the other of the parties, in many cases, to protract litigation almost indefinitely. Whether testimony thus delayed will be heard must in every case depend upon a sound judicial discretion to be exercised upon the facts.of the case, the nature of the evidence, the reasons given for the delay, and a variety of circumstances which must be adjudged as they arise. The niaxim- that the laws assist those who are vigilant, not- those who sleep over their rights, applies not only to the operation of statutes, but to the action of suitors in the conduct of their suits. In the case before Us, the reading of the appellees’ depositions would have involved a continuance of the cause when it was ready for- a hearing, a recommittal of the commissioner’s report, and a reopening of the case for the introduction of other testimony, and a prolongation of the controversy. The adoption of such a' rule would not only be unjust in this particular case, but it would furnish an extremely bad precedent in other cases.” Richardson v. Duble, 33 Gratt. 730, 740. 'The pertinency of the language of the learned judge in the case above cited to the facts of this case warrants the extended quotation from his excellent opinion.1 Indeed, the. views therein expressed apply with stronger reason to this case, where the court was dealing with its own receiver. The evidence was ample to sustain the findings of the commissioner. The receiver had already in the pleadings, pre — 234 — pared by himself as counsel, in bis affidavit to the answer, and in his letter to counsel for creditors, solemnly admitted that the assets were sufficient to discharge all liabilities of the company; and, after having persistently disobeyed the orders of the court, and neglected to avail himself of two opportunities of settling his account before its commissioners, when the cause was ready for final hearing, to have granted further delay would have been an abuse rather than a proper exercise of the court’s discretion under the statute invoked, and would have tended to bring reproach upon the administration of justice. In dealing with receivers the court cannot tolerate a practice which would place them on the footing of ordinary debtors, and render it as difficult to compel the disbursement of funds in their hands as to enforce the collection of a controverted demand. A receiver is the hand of the court, and it is his duty to yield prompt and unquestioned obedience to all its lawful decrees. It follows from these views that the rulings of the trial court complained of by appellant are without error, and the decree in that aspect of the ease must be affirmed. Under Rule IN., appellees assign as cross-error the action of the court in sustaining the exception of appellant to that part of the last report in the cause which ascertained that the White Front Pharmacy was the property of the Charles Lyle Drug Company. • ■ The evidence upon which that finding was founded may be summarized as follows: The license was originally, and for several years thereafter, taken out in the name of the Charles Lyle Drug Company, and. the store in which the business was conducted was leased to that company until December 1, 1900. Executions in the hands of the sergeant of Roanoke, prior to and at the time of the institution of this suit, against the Charles Lyle Drug Conrpany, were levied indifferently upon the goods in both stores, and the receiver on May 2., 1902, told the sergeant that the branch store was the property of the defendant company. He furthermore informed that officer, to whose hands — 235 — tlie estate of his mother, Mrs. A. E. Sarvey, deceased, was committed for administration, that although the business of the White Front Pharmacy, at one time, had been conducted in the name of his mother, she neither owned it nor knew that it was in her name. This statement was made after the death of Mrs. Sarvey when the sergeant applied to Edward Lyle for the assets to pay the debts of the White Front Pharmacy. Both stores were under the general management of Charles Lyle, and the employees understood that the branch store belonged to the Charles Lyle Drug Company. It also appears that when the White Front Pharmacy was sold by Charles Lyle the cash payment and notes were made to Edward Lyle. There was other evidence tending to establish the Charles Lyle Drug Company’s ownership of the branch store; and, taken as a whole, the evidence was quite sufficient to sustain the report of the commissioner in that regard. The decree in that respect is, therefore, erroneous and must be reversed, and the cause remanded for further proceedings to be had therein, not in conflict with this opinion; and in future decrees providing for the payment of - demands against the company, the amount of each demand, with the date from which interest is to be computed, should be specifically set forth. Spoor v. Tilson, 91 Va. 279, 33 S. E. 609; People's National Bank v. Virginia Textile Co., ante, p. — , 51 S. E, 155. Reversed in part.