McCoy v. Lockridge

STATEMENT BY THE COURT.

This appeal is prosecuted from a decree holding certain stockholders, to whom the assets of the corporation were distributed on its dissolution and surrender of its charter, liable to the payment of certain debts of the corporation.

This is the third appeal of the matters involved, a full statement of the cases appearing in Stuttgart Rice Mill Co. v. Lockridge, 185 Ark. 340, 47 S.W.2d 596, and Wilson v. Lucas, 185 Ark. 183, 47 S.W.2d 8.

Appellee Lozier Lockridge, a rice farmer, delivered his rice to the Stuttgart Rice Mill Company under what the court held to be a toll milling contract constituting the Stuttgart Rice Mill Company his agent. He brought suit for damages against the rice mill company arising out of a breach of the contract and recovered damages in the sum of approximately $4,400. On appeal this court modified the decree and remanded the cause with directions to enter judgment for $483.96. The suit for damages was originally brought on December 23, 1923; and on the last day of March, 1926, the rice mill company sold all its property, and on the 5th day of April, 1926, conveyed the same to the Arkansas Rice Growers' Co-Operative Association, taking a mortgage to secure the payment of the purchase money notes aggregating the sum of $97,875. Immediately after the sale the rice company distributed its assets among its stockholders and on the 6th day of April, 1926, surrendered its charter. One of the daily newspapers in Stuttgart in the issue of Tuesday, the 9th day of March, 1926, on the front page of said paper published a news item under the following heading:

"Co-Op Association Buys All Stuttgart Rice Mill Property,"

after which followed a news item setting forth the sale and details thereof. The Grand Prairie News, a weekly paper in said city, carried an item on the 11th of March, 1926, on the front page thereof headed as follows:

"Rice Growers Buy Stuttgart Mills, Take Over Mills A and B Here and C at DeWitt, Including Properties,"

after which followed a news item setting forth details thereof. The organization of The Arkansas Rice Growers' Co-Operative. Association; its purchase of all the property, real and personal, of the Stuttgart Rice Mill Company and the fact that the rice mill company had quit business was a matter of common knowledge; and appellant knew at the time that the Rice Growers' Association had on or about the 1st day of March, 1926, purchased all the property of the Stuttgart Rice Mill Company.

"Lozier Lockridge, the above-named plaintiff, had no actual knowledge that the Stuttgart Rice Mill Company had surrendered its charter; that it had distributed its assets among its stockholders without making a provision for the payment of such judgment as he might recover against it; that neither the Stuttgart Rice Mill Company, nor any director or agent therefor, gave any public statement, either through the newspapers or by word of mouth with reference to surrendering its charter and distribution of its assets. That a copy of the resolution dissolving the corporation was filed with the Secretary of State, a copy of which is attached hereto, made a part hereof." Certified copies of the resolution of the stockholders dissolving the corporation, were signed by P. R. McCoy as secretary of the corporation, one being filed in the office of the Secretary of State and one in the office of the county clerk of Arkansas County at DeWitt, Arkansas.

No notice of the dissolution of the corporation and the distribution of its assets among its stockholders was published by the Stuttgart Rice Mill Company, and, after the rendition of the original decree, May 11, 1931, in favor of Lockridge and before the filing of this cause, September 21, 1931, an execution was issued against the Stuttgart Rice Mill Company, and the same was returned by the sheriff marked "nothing found."

Attached to the agreed statement of facts was a copy of the resolution of dissolution showing that it was adopted at a stockholders' meeting on March 17, 1926, and certified to the office of the Secretary of State on the 9th day of April, 1926.

Each of appellants pleaded the 3 and 5 year statute of limitations and McCoy denied having been a stockholder and also that he had received any of the assets of the corporation on dissolution. Wilson moved to dismiss the suit against him, claiming the court had no jurisdiction to try it, his residence being in Pulaski County, where he was served with summons, while the residence of McCoy was in Stuttgart, and that there was no joint liability between them.

Appellee claimed that the suit was on a judgment and only the 10-year statute of limitations was applicable thereto. The motion to dismiss was overruled, and judgment was rendered against both of appellants, and this appeal is from that decree. (after stating the facts). No notice of the dissolution of the corporation or the distribution of its assets among its stockholders was published by the Stuttgart Rice Mill Company; and it was admitted that appellee had no actual notice thereof, the agreed statement of facts containing the following stipulation: "No notice of the dissolution of the corporation nor of the distribution of its assets among its stockholders was published by the Stuttgart Rice Mill Company; that after the rendition of the original decree in favor of Lozier Lockridge and before the filing of this cause of action he caused an execution to be issued against the Stuttgart Rice Mill Company and that the same was by the sheriff of Arkansas County returned marked ``nothing found.'"

Appellee's cause of action against appellants, stockholders, could not have arisen until the attempted dissolution of the corporation by the adoption of the stockholder's resolution on March 17, 1926, and its certification to the office of the Secretary of State on April 9, 1926. It is admitted that after the rendition of the original decree on May 11, 1931, and before this suit was filed on September 21, 1931, appellee caused an execution to be issued thereon against the Stuttgart Rice Mill Company and same was returned by the sheriff marked "nothing found."

It was also shown that appellee had no knowledge of any facts that would constitute actual notice of the attempted dissolution of the corporation before the return of the execution "nulla bona"; but a proper following up of that information would have disclosed the actual conditions and thus appellee was charged with notice from then on. The exact date of the execution is not shown in the record, but it is clear, from the agreed statement of fact quoted above, that this execution was issued and returned by the sheriff marked, "Nothing found" sometime between May 11, 1931, the date of the original decree, and September 21, 1931, the date this suit was filed.

Such fraudulent concealment would prevent the running of the statute of limitations until the fraud was discovered, and under the agreed statement of fact herein appellee cannot be said to have been charged with notice thereof until after the nulla bona return of the execution, which would have advised appellee of the true condition had the information been followed up. In Wright v. Lake, 178 Ark. 1184, 13 S.W.2d 826, it was said: "It is well settled in this State that where there has been a fraudulent concealment of a cause of action, the statute of limitations does not begin to run until after the fraud is discovered." (Citing cases). The cause of action was not barred by the five-year statute of limitations, and the chancellor did not err in so holding.

Neither was error committed in overruling the motion to dismiss for want of jurisdiction, appellant Wilson being summoned in Pulaski County, where he resided. This court had held in the case of Wilson v. Lucas, supra, that the liability of stockholders to the payment of the corporation's debts after dissolution was joint and several, and the assets thereof received by them constitute a trust fund for payment primarily of the debts of the dissolved corporation. Moreover, after the court overruled the motion to dismiss for want of jurisdiction, appellant agreed in writing to a hearing by the chancellor of the suits in vacation and necessarily waived any further right to complain of the jurisdiction of the court. Pacific Mutual Life Ins. Co. v. Toler,187 Ark. 1073, 63 S.W.2d 839.

We find no substantial error in the record, and the decree is affirmed.

McHANEY, J., dissents.