Lasley v. . Scales , 179 N.C. 578 ( 1920 )

From the facts properly presented, it appears that, on 26 March, 1919, plaintiff, a stockholder of defendant, the mercantile company, instituted suit, under the provisions of the statute, to dissolve the corporation for nonuser of the powers, Rev., ch. 21, sec. 1196. Complaint and answer filed at Spring Term, 1919, Superior Court of Stokes County.

That on notice duly issued and facts admitted in the pleadings, etc., there was judgment entered in cause, 4 October, that said corporation go into liquidation, and J. W. Hall was appointed receiver to collect the assets, etc., and subsequently, at Fall term, Superior Court, Stokes County, before his Honor, Bryson, Judge, further orders were made in said cause that W. Read Johnston, Esq., be appointed to take and state an account of the affairs of the corporation, with a view to a distribution of the assets, and that the receiver, J. W. Hall, as commissioner of the court, make sale of the property of the corporation, and report to the court concerning it.

That after the filing of the pleadings in the principal cause, and prior to the adjudication thereon of McElroy, Judge, defendant, A. M. Scales, advertised the real estate of the corporation for sale, on 6 October, 1919, under a deed of trust antedating the suit, and made, so far as appears, to secure a debt to the defendant, the Union Bank and Trust Company, of $3,100, etc. Thereupon the plaintiff instituted the present action to restrain the sale, and filed affidavits showing the pendency of the action by him to dissolve the corporation and the filing of the pleadings therein, and also of a lis pendens, purporting to affect the property of the company, etc. That the mortgage or deed of trust is on all the realty of the company, consisting of several brick stores worth near $20,000; that the advertisement for sale under the deed is done at the instance of the defendant corporation, which has bought up a large part of the minority stockholders, and in connection with the Union Trust Company, the secured creditor is endeavoring to force a sale of the property with a view of buying it in by a syndicate to be formed for the purpose, and, if the proposed sale is allowed to proceed, it will result in a great sacrifice of the property, and to the irreparable injury of plaintiff and others in like case, etc. There were affidavits in denial of these averments, and thereupon the restraining order was entered, as stated. We have held at the present term, in Lasley v. Mercantile Co., ante, 575, that where the right to dissolve a corporation at the instance of a stockholder has been conferred by statute, and a Superior Court, having jurisdiction, may, by virtue of its general equitable powers, and by express provision of the law, Rev., ch. 21, sec. 1204, "dispose of all questions arising in the proceeding and make all such orders, injunctions, and decrees therein as justice and equity may require, and at any place in the district." And in furtherance of the principle, it is held for law in this jurisdiction that, while all valid and existent liens will be respected, a court, in the exercise of the powers referred to, may take charge of the property of the corporation, affected by such liens, whether by deeds of trust or other, and make sale of the same through its own appointees, and in disregard of the minor requirements of the deeds or other instruments, etc., where such course works no substantial impairment of the value of the security, and is for the best interest of the owners and others having claim upon the assets. McLarty v. Urquhart, 153 N.C. 339; Pelletier v. Lumber Co.,123 N.C. 596; Manning v. Elliott, 92 N.C. 48.

In McLarty v. Urquhart, suit of foreclosure, in disregarding a requirement that the property be advertised in the New York Herald, and which requirement would entail or cost out of all proportion to the value of the property, the Court approved a decision in Manning v. Elliott, to the effect that a Court is not bound to decree a sale in strict accordance with the terms of the deed. "In this respect, it should exercise a sound discretion, having due regard under the circumstances of the case for the rights of the debtor and creditor." And in Pelletier's case, supra, the power of the Court to control and regulate the disposal of an insolvent corporation property in the hands of the receiver is fully recognized, andAssociate Justice Douglas, in denying right of sale under prior lien without leave of Court, said: "Property in the actual or constructive possession of the receiver is in custodia legis, as the possession of the receiver is that of the Court, he being merely the hand of the Court. This exclusive possession of the receiver does not interfere with or disturb existing liens, preferences or priorities, but simply prevents their execution by holding the property intact until the relative rights of the parties can be determined.

"Another essential object sought to be obtained by the appointment of a receiver for an insolvent corporation is to prevent a sacrifice of its assets by a multiplicity of suits and petty executions. Both of these objects would be destroyed by permitting any one, no matter what may be his title, or claim to interfere with property in custodia legis without leave of Court, by which such custody is held," etc.

These general principles are in accord with well considered authority in other jurisdictions. Wiswall v. Sampson, 55 U.S. (14 Howard), p. 52, cited with approval in Pelletier's case; Scott v. Crawford, 16 Texas Civil Appeals, p. 47; American Bank v. McGilligan, 152 Ind., p. 582, and their proper application to the facts presented fully support the order restraining a sale by the trustee, it appearing that such a sale would withdraw the great bulk of the corporate property from the control of the court having jurisdiction of the matter, and probably result in a great sacrifice of the assets.

The injunction could more properly have been applied for by motion in the principal cause, and, to maintain it as an independent suit, the receiver should be made a party plaintiff, for it is more especially his province to institute and maintain actions to preserve the property for the benefit of all parties interested. At the time of suit commenced, however, he had not been appointed, and it appeared that present action was required.

On the record, we think it better that this suit be now consolidated with the principal case, to the end that, with all parties before it, the court will be enabled to make an authoritative and final disposition of the cause, and of all questions involved and presented in the same. Ins. Co. v.R. R., ante, 255, citing Blackburn v. Ins. Co., 116 N.C. 821, and MonroeBros. v. Lewald, 107 N.C. 655.

Modified and affirmed.