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CULVER LUMBER AND MANUFACTURING COMPANY v. CULVER.
[81 Ark. 102, 99 S. W. 391.]
CORPORATION.-One Who Owns a Majority of the Shares of the stock in a corporation is entitled to control its business. (p. 26.) CORPORATION-Grounds for Receivership.-When the officers of a foreign corporation are recklessly and extravagantly managing its affairs, involving it in debt, and converting its property to their own use, and the board of directors, though requested, refuse to interfere, the interposition of a court of equity and the appointment of a receiver are proper. (p. 27.)
CORPORATION-Mismanagement.-Courts of Equity have no authority to dissolve a foreign corporation or wind up its business, but they may, in case of mismanagement in its affairs, take charge of its property within their jurisdiction and enforce the rights of creditors and stockholders in respect thereto. (p. 27.)
Proceedings-Nonsuit.-After a receiver for a corporation has been appointed, creditors have intervened, and proved their claims, and the corporate property has been sold, the court will not permit the plaintiff to take a nonsuit, and will deny a motion to discharge the receiver. (p. 27.)
JUDICIAL SALE.-The Approval of a Judicial Sale by the chancellor will not be disturbed on appeal when no abuse of discretion appears. (p. 28.)
W. E. Beloate and F. G. Taylor, for the appellants.
Morris M. Cohn and John W. & Joseph M. Stayton, for the appellees.
104 BATTLE, J. On the 25th of August, 1902, Mary C. Culver instituted this suit against the Culver Lumber and Manufacturing Company in the Lawrence circuit court, on the equity side, which was afterward transferred to the Lawrence chancery court, it having been created after the institution of this suit.
Am. St. Rep., Vol. 118-2 (17)
Plaintiff alleged in her complaint, substantially, as follows: She is a married woman and a resident of the state of Missouri. The defendant is a corporation, organized under the laws of the state of Missouri. Its capital stock amounts to $300,000, divided into shares of $100 each, of which she owns and holds as her separate estate seventeen hundred and twenty-five shares, which is much more than one-half of the stock. It has been engaged in the business of sawing and manufacturing lumber and the selling of the same, and at the commencement of this suit was so engaged, with its mills at or near Sedgwick, in Lawrence county, in this state. It established, in 1902, in the state of Arkansas a planing-mill with expensive machinery and facilities for making and furnishing the trade with all kinds of dressed lumber, sash, doors, mill and finishing work; and in the course of its business acquired considerable property, both real and personal, exceeding in value $500,000, and contracted an indebtedness. in about the sum of $250,000. At a meeting of the board of directors, held in January, 1902, H. A. Culver was selected and appointed general manager of the business of the defendant, Elias W. Culver was elected president, Edgar W. Culver, treasurer, and Joe E. Culver, secretary. In March, 1902, the president, secretary and treasurer, without authority from the board of directors, 105 purchased real estate, and recklessly, extravagantly and unnecessarily expended about. $5,000 in building offices, and Edgar W. and Joe E. Culver, respectively, secretary and treasurer, have so extravagantly and recklessly conducted the business of the company that it became largely involved, and by such recklessness and extravagance alarmed the large creditors of the company, and caused them to induce the president to make an agreement in writing in and by which J. H. Jarrett and Frank I. Buckingham, of moderate means, were to be placed without bond, in the absolute charge and control of the entire business of the defendant yielding about $40,000 to $60,000 a month. Such managers are inexperienced in the management of similar business, and, if allowed to control, will in a short time cause loss to defendant, if it does not render it bankrupt, and will imperil and wreck it financially. They have already taken possession of all the property at Kansas City, Missouri, and Kansas City, Kansas, "and refuse to act or conduct the business of the defendant under the directions or proper orders of its officers and managers, but that, in
stead, they are arbitrarily refusing to permit its officers, directors and legal managers to have any voice or control in the management of its business, and when its manager has drawn checks to pay for material used in the conduct of its business, they have refused to pay or permit the payment thereof, and are threatening, under and in pursuance of the alleged contract, to take charge of the business and property in the state of Arkansas, and hold and operate the same to the exclusion of the defendant or its board of directors or managing officers." Plaintiff "has requested the board of directors and officers of the defendant to bring suit to set aside said contract and take management of such business again, but they have refused and neglected to do so."
Plaintiff further stated that at the mills of defendant in this state, and elsewhere, "are employed about four hundred persons, and that there is now due to them in small sums, respectively, about $5,000, and that there is due on pay-days, twice each month, to said hands about $2,000 or $3,000 each pay-day, and that, being a foreign corporation, said sundry individual employés can attach the property of defendant to satisfy their claims and costs incident thereto, and that said proceedings would entail a large 106 amount of costs and would wreck said property; that the employés and creditors are threatening to attach, and such attachment would cause a large amount of defendant's property to be sacrificed and lost, and that, for the protection of all creditors and the rights of the plaintiff and other stockholders, it is necessary that said property in this state be held intact as a manufacturing plant, at least until the product belonging to the defendant can be manufactured and disposed of"; and that if this is done its debts can be paid in a short time.
Plaintiff asked the court, first, to "issue an order restraining and enjoining all of the officers in this state of the defendant, or anyone acting for them in the state of Arkansas, from removing, selling, mortgaging or otherwise disposing of the property, real and personal, in this state, and also restraining them and enjoining all persons from interfering in this state with the business, assets, property or affairs of the defendant; second, that the court appoint a suitable person as receiver to take charge and control of all the property of defendant within the state of Arkansas, with the power to manage, control and operate it, if necessary, under the orders of this court, as may from time to time be