Citation Numbers: 185 Ky. 499
Judges: Thomas
Filed Date: 10/24/1919
Status: Precedential
Modified Date: 7/24/2022
Opinion of the Court by
Reversing.
Appellant and defendant below, Southern. Traction Company (hereafter referred to as the Traction Company), owns the street railway system in Bowling Green, and it also owns and operates as a part of its system lines over the public roads of Warren county adjacent to the city. On October 25, 1917, the traction company by written contract sold to appellant and de
It was further alleged that the road could be operated with a profit under proper, harmonious and wise management; that there were disagreements among the stockholders of the Traction Company and had been for some time, and that it had not been managed in the proper way, which contributed to its failure to earn a profit on the investment.
The answer in each case admitted the execution of the contract, but denied the other allegations in the petition, and alleged the total, as well as hopeless insolvency of the company; that it owed something like twenty-four thousand dollars, and that it could not be sold for anything as a going concern, or with the obligation on the part of the purchaser to continue its operation. Appropriate pleadings made the issues, and upon final hearing the court perpetuated the temporary injunction which had been granted upon the filing of the suit, after due notice and hearing, and which temporary injunction this court, through Judge Carroll on December 10? 1917, declined to dissolve upon a motion made before him for that purpose and which was considered by four members of this court.
By this appeal the Traction Company and the Mercantile Company seek a reversal of the judgment. Prior to the filing of these suits, and on February 11, 1916, the Potter-Matlock Trust Company, as trustee for bondholders of the Traction Company, filed a suit in the Warren circuit court against the latter company and others, seeking to foreclose a mortgage held by it as such trustee on all of the property of the- Traction Company, upon the ground that it had failed to pay installments, of interests and perhaps some of the matured indebtedness, secured by the mortgage. That suit lingered upon the docket until after the contract above between the Traction Company and the Mercantile Company had been entered into. When that contract was made the trustee, Potter-Matlock Trust Company (to which we will hereafter refer as the Trust Company) indorsed its approval thereon, and on February 20, 1918, about four months after the filing of the present suits, it filed an amended petition in its suit in which it reiterated the allegations of its petition, and further averred that the street railway, if sold as a going concern with the obligation on the part of the purchasers to operate it, would bring very little if indeed a purchaser could be found, and that the proceeds of the sale, if one could be made under those conditions, would be largely insufficient to pay the mortgaged indebtedness, and that it had been offered the sum of twenty-one thousand dollars, cash, for the tangible property, except real estate,
This court in that case reversed the judgment appealed from, and directed “that the property should be offered for sale as a going concern at an upset price of twenty-one thousand dollars, with an obligation upon the part of the purchaser to continue its operation, and if no purchaser can be found at this price and under these conditions then the court should put it in the hands of a receiver to be operated for a year without incurring any expense in excess of the income of the property, and if at the expiration of a year it is found that the road can not be operated so as to yield a reasonable profit to the owners an order should be made permitting the owners or trustee for the bondholders, as the case may be, to sell the road in any manner they please, and for any price that suits them, with the light on the part of the purchaser to-take up the tracks and other equipment and abandon the road, upon leaving the streets and highways occupied by the road and its equipment in as good condition as the remainder of the adjacent streets and roads.”
It will thus be seen that the right of the Traction Company to sell its equipment, including its tracks, for
We, therefore, conclude that not only to prevent contradiction in judgments concerning the same matter, but to avoid confusion, the judgment appealed from should be reversed, Avith direction to enter a judgment conforming to the one directed in our opinion in the PotterMatlock Trust Company case, supra, with the privilege on the part of the appellants to sell the property as therein directed after the receivership test which that opinion also directs.
Wherefore, the judgment is reversed with directions to modify it as herein indicated, and for proceedings consistent "with'this opinion. ..