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5. RECEIVERS 69-POWERS-POSSESSION OF, and one A. Van Dressar.

The petition, PROPERTY.

among other things, prayed for an injuncA receiver for a corporation cannot compel a vendor under an executory contract with tion to restrain a sale of certain real estate the corporation for the sale of lands to give alleged to belong to the Boston & Texas Cortitle and possession thereof, without the prior poration, under an order of sale issued out payment of the purchase price, where the con- of the district court of McMullen county on tract so provides, and where the company had no such right.

a certain foreclosure judgment in favor of [Ed. Note.-For other cases, see Receivers, R. H. Brown and to restrain Lee C. Ayars, Cent. Dig. $$ 124, 125; Dec. Dig. Om69.] trustee in a deed of trust for the benefit of 6. RECEIVERS 32-APPOINTMENT-GROUNDS. the Continental Trust Company, from sell

A bill for the appointment of a receiver ing about 7,000 acres of land in McMullen which alleges that the company is insolvent, but can make payment if it is allowed time, states county by virtue of the powers conferred upno ground for the appointment of a receiver, on him in said deed of trust, which was givsince to do so would be equivalent to declaring en to secure the payment of a series of notes, a moratorium by judicial decision.

all of which will more fully appear in the [Ed. Note.-For other cases, see Receivers, further statement of this case. Cent. Dig. $8 45–50, 64; Dec. Dig. Omw 32.]

It is alleged that the Boston & Texas Cor7. RECEIVERS 3-APPOINTMENT_GROUNDS.

A bill which has for its sole object the ap- poration owned 7,000 acres of land in Mcpointment of a receiver will not be entertained; Mullen county and an oil lease on about 1,100 a receivership being ancillary to the main suit acres of land adjoining the 7,000-acre tract, wherein a cause of action exists, and which must be asserted independently of the right to and that this corporation owned another a receivership.

tract of land adjoining the first two, of [Ed. Note. For other cases, see Receivers, about 11,360 acres, which was purchased by Cent. Dig. $ 3; Dec. Dig. On3.]

S. A. Hopkins from R. H. Brown. The alle8. CORPORATIONS Ow553 – APPOINTMENT OF gation is that Hopkins, while he took this RECEIVER-GROUNDS.

The mere fact that a corporation is insol- conveyance in his own name, in fact, bought vent is not sufficient ground for the appoint- and held it for the Boston & Texas Corpora

receiver therefor, without a showing tion, and he asked that title thereto be deof some equity in favor of complainants. creed out of him and into said corporation,

[Ed. Note.-For other cases, see Corporations, subject to the payment of the vendor's lien Cent. Dig. SS 2201-2216; Dec. Dig. em 553.]

notes upon which R. H. Brown foreclosed. 9. CORPORATIONS Ow553 - APPOINTMENT OF It is further alleged that Hopkins has a conRECEIVER-GROUNDS.

The fact that the creditor of a corporation tract to purchase the capital stock of the attempts to assert an unjust debt and to Artesian Belt Railroad, and that this concharge usury does not justify the appointment tract is also for the use and benefit of the of a receiver, since ample protection may be af- Boston & Texas Corporation, and Hopkins forded by injunction.

[Ed. Note. -For other cases, see Corporations, also asks that his rights under this contract Cent. Dig. SS 2201-2216; Dec. Dig. 553.] of purchase be decreed to be in the Boston

& Texas Corporation. Appeal from District Court, McMullen

The Artesian Belt Railroad matter came County; F. G. Chambliss, Judge. Suit by Mrs. M. C. Brown and others who has intervened in this suit, made a con

about in this manner: H. E. Hildebrand, against the Continental Trust Company and

tract with the West Texas Bank & Trust others. From two orders relating to the con- Company, executor of the estate of C. F. Sim. trol of complainants' property by a receiver, mons, deceased, under order and approval of in two cases tried together, defendants ap- the probate court of Bexar county, whereby peal. Reversed, and orders appointing receiver vacated.

he agreed to purchase the capital stock of

the Artesian Belt Railroad for the sum of McFarland & Lewright, of San Antonio, $200,000, the sum of $25,000 having been paid Beasley & Beasley and J. E. Daugherty, all in cash, and the remainder was on deferred of Beeville, and Lane, Wolters & Storey, and payments, the bank, as such executor, holdPaul Kayser, all of Houston, for appellants. ing the stock to secure the balance of the A. J. Bell, W. W. Walling, Cobbs, Eskridge purchase money, amounting to $175,000. & Cobbs, and H. C. King, Jr., all of San An- This contract was sold by Hildebrand to tonio, for appellees.

Hopkins, as the latter and the Boston &

Texas Corporation allege, for the use and CARL, J. Appellees, Mrs. M. C. Brown, benefit of this corporation; and Hopkins S. A. Hopkins, and the Boston & Texas Cor- says he is willing that such purpose be made poration, a South Dakota corporation, effective and consummated by the court debrought this suit in the district court of Mc- creeing his interest therein and thereunder Mullen county against the Continental Trust to said corporation, subject to the payment Company, J. F. Saddler, Lee C. Ayars, the of the balance of the purchase money. Guarantee Life Insurance Company, R. H. The petition shows that the Boston & Brown, West Texas Bank & Trust Company, Texas Corporation is incorporated for $300,executor of the estate of C. F. Simmons, de- 000; that complainant M. C. Brown owns ceased; also against Kirby Lumber Company one share of the stock, and S. A. Hopkins owns $164,000; that in 1911, 1912, and kins and E. O. Burton, R. R. Russell, and 1913 the Boston & Texas Corporation made, Emma Smith as sureties on a certain bond, executed, and delivered to M. C. Brown, and to foreclose for about $225,000 on the

$ complainant, as trustee for the benefit of the stock of the artesian Belt Railroad. King-Crowther Corporation, promissory notes The petition also sets out that about aggregating $42,384.90, which notes were pay- January 23, 1912, the Boston & Texas Corable on demand to the said M. C. Brown, and, poration executed and delivered to Lee C. in addition, the Boston & Texas Corporation Ayars a deed of trust on the 7,000 acres of owes said M. C. Brown, as trustee for the land to secure the payment of thirty-four King-Crowther Corporation, on open account, notes for the sum of $5,000 each, or a total the sum of $56,500, for money advanced dur- of $170,000; twenty-six of which notes being ing the years 1913 and 1914; that the King- payable to the order of the Continental Trust Crowther Corporation was chartered under Company five years from their date, conthe laws of the state of Maine; the notes taining the customary default clauses in rebear 7 per cent. interest; that $25,000 of the gard to the failure to pay interest, and the money so borrowed by the Boston & Texas 10 per cent. attorney's fee clause, all payable Corporation was used for the purchase of at Houston, Tex., and eight notes for $5,000 material, etc., that went into the construc- each, payable to the order of the maker, tion of an extension of the Artesian Belt which said last notes were indorsed by said Railroad from the town of Christine, the Boston Corporation, and delivered over to the terminus of the railroad, to Crowther, such Continental Trust Company. They were also money being so advanced upon the distinct indorsed in blank by S. A. Hopkins. These understanding that the Artesian Belt Rail- eight notes were payable three years from road was not to be responsible for any por- their date. These last notes, representing tion of said money so expended, and the $40,000, it is charged, were given as a bonus King-Crowther Corporation expressly waived for the $130,000, which the Boston & Texas a lien on the railroad when the money was Corporation really expected to obtain in said advanced. And it is claimed that said money loan. But it is charged that only about is owing to the King-Crowther Corporation $64,700 was actually furnished the Boston by the Boston & Texas Corporation.

Company by the Continental Trust Company, The petition charges that the Boston & and that, if the remaining $65,000 had been Texas Corporation was chartered for the pur- furnished as per agreement, the section of pose of owning and developing real estate the road from Christine to Crowther could for mineral purposes and for boring and drill- and would have been completed, thereby ing for oil, coal, kaolin, and other minerals, greatly enhancing the value of the oil land and for such other purposes as are germane to such an extent that a large part of the and incident thereto; that on 1,100 acres land would have been worth $1,000 per acre, leased the Boston & Texas Corporation has and the other lands would be worth from about 23 oil wells, all of which under proper $25 to $70 per acre; and if these things had care and attention would produce a large all happened, the Boston & Texas Corporaquantity of valuable lubricating oil; that tion would have been able to pay out and on the 11,360 acre tract there is about 3,000 then have money. But they charge that the acres of proven oil land, the value of which, Continental Trust Company refused to furunder proper development, would be mate- nish any more money after it had furnished rially increased; and that on the 7,000 the $65,700. The 7,000 acres of land was acre tract there is about 4,000 acres of prov- the only land or property which the Boston en oil land. And it is alleged that the Bos- & Texas Corporation had which was clear of ton & Texas Company has expended about liens, and, when it was mortgaged to secure $400,000 in developing said oil field. It is the loan from the trust company, it could not further contended that these fertile oil fields get any more money with which to complete are so remotely situated from railroad facil- said railroad, and by the breach of its conities that it is necessary to a full enjoyment tract the trust company has prevented the of their hidden treasures that the Artesian completion of the railroad. The eight bonus Belt Railroad be extended into them, or to notes above referred to are charged to be the thriving city of Crowther, in the midst usury, and prayer is made that they be canof them, but that about one year before the celed. suit was filed the West Texas Bank & Trust The petition further states that, in addiCompany took said railroad away from H. E. tion to the $65,000 advanced, the Continental Hildebrand, since which time the bank has Trust Company guaranteed the payment of been operating same through a manager, about $22,000 to the Kirby Lumber Company when Hopkins and Hildebrand are entitled for ties and bridge material, but have reto enjoy the luxuries of running the same; fused to pay for same, and the lumber comand, further, unmindful of the fact that the pany has filed suit in the district court of West Texas Bank, as executor, had taken Harris county against the Boston & Texas said railroad out of the hands of Hildebrand Corporation and Hopkins, which suit has and Hopkins, and was so operating said road, embarrassed the defendants therein in decial aid. When Hopkins bought the 11,360, further discussion of this case. At the hearacres of land, he gave in part payment six ing J. 0. Terrell was appointed receivernotes for $13,000 each, and these are the "of all the properties, rights, and franchises of notes R, H. Brown declared due and obtained the Boston & Texas Corporation and of the judgment on, mentioned above in this opin- his petition for said company, including the

properties held by S. A. Hopkins as alleged in ion. In the suit filed in Houston on the tract of 11,360 acres described in the pleading notes given the Continental Trust Company and known as the Brown land, of every kind the petition names the Guarantee Life In- and character and description whatsoever and

wheresoever situated, including the cars, locosurance Company and James F. Saddler, Jr., motives, tools, machinery, movable effects, books, as plaintiffs, but it is alleged here that, if books of accounts, records, cash on hand and in those parties bought said notes, they did banks, all rents, profits, issues, tolls, revenues,

, , so with full notice of all the vice contained and income of the Artesian Belt Railroad, in

equity, real or otherwise, wheresoever situated, in the whole transaction. Further, in refer- | whatsoever the said Boston & Texas Corporaence to the stock purchase of the Artesian tion, and to use the same and run and operate Belt Railroad, it is alleged that, if complain the same, and continue the operation and busiants had obtained the same, they could have the business of said companies,” etc.

ness thereof as a going concern, and to transact secured $700,000 in bonds against said rail

The ordinary powers of a receiver are road, out of which they could have paid for conferred in said order, and all parties are rethe said stock, all of which was prevented strained from taking any further action in by the failure of the trust company to fur regard to said properties, except through nish the balance of the money contracted to the court appointing the receiver. The rebe furnished.

ceiver was placed under a $5,000 bond which December 17, 1914, S. A. Hopkins gave a he gave; but the order making such appointdeed of trust on the Brown land to secure a ment contains this clause: large sum of money due the State Bank &

"It is further understood herein that the reTrust Company, and it is claimed that the ceiver at this time shall not take possession of bank or J. H. Haile was a necessary party to or exercise control over the properties or capiBrown's foreclosure suit; and that bank tal stock of the Artesian Belt Railroad Com

pany until further authorized by further order has filed suit to set aside and reopen said of this court." suit in which Brown foreclosed his vendor's

This order was excepted to, and notice of lien and obtained a judgment for approxi- appeal given, and is the order from which mately $94,000 against Hopkins and the this appeal is perfected; and on July 10, Boston & Texas Corporation.

1915, the court entered an order directing The Boston & Texas Corporation owes the receiver to take charge of all the properabout $650,000 including the claims set forth, ties, and this order was appealed from. So

. but claims that it can pay out if it can get the two cases stand upon our docket as No. time to realize on its assets, which can be 5553 and No. 5586, and will be treated both done by building said railroad, through loans together in this opinion. it hopes to make, and if the Mexican and

Hildebrand and the State Bank & Trust European wars do not last too long; but Company and J. H. Haile, as interveners, it says that it cannot pay said debts now joined in the prayer for a receiver. No one on account of the financial stringency. There asked for the dissolution of the Boston & fore it says it is insolvent and on account of Texas Corporation and that its affairs be the matters related its property and assets wound up. are in imminent peril of being dissipated. The pleadings in this case embrace 232 Therefore a receiver is prayed for to take pages of the transcript, and, if we have been charge of all the assets of the Boston & too brief in our statement, it is because of Texas Corporation, including the Artesian our desire to condense as much as we could, Belt Railroad, its stock and physical proper- and yet omit nothing material. ties, as well as the lands mentioned, and for

First, let us analyze the issues and see just injunction to restrain the sale of or inter- what is presented from a legal standpoint. ference with any of said property, except Assuming the facts as pleaded, we find that under order of the court after application S. A. Hopkins had a contract to purchase, is made therefor.

through transfer from Hildebrand, the capiThe Continental Trust Company denied tal stock of the Artesian Belt Railroad; that all the material allegations, and especially $175,000 of the purchase price had not been that it was insolvent, and that the eight paid, and the West Texas Bank & Trust notes were an usurious charge against the Company, as executor of the estate of C. F. Boston & Texas Corporation, and tendered Simmons, deceased, held that stock as securisame up to be canceled.

ty until that debt was paid. It is true that The court issued the temporary injunction all of that stock except eight shares was prayed for, and set the hearing for receiver held by the San Antonio Loan & Trust for May 28, 1915, at Floresville. The defend- Company to secure a debt C. F. Simmons ants answered, and all demurred generally owed his former wife, but that is a matter to the sufficiency of the application, denied of no consequence, because it would not the material allegations, and made special change the legal title to the stock.

is executory, because the purchase price had the Thirty-Fourth Legislature (General Laws, not been paid, and the stock was not, and p. 225), it is provided: would not be, delivered until that sum was "That article 1121, subdivision 16 of title 25, paid. Hopkins alleges that, while he made chapter II, of the Revised Statutes of the state the contract of purchase for the stock in his of Texas, 1911, be amended so as to hereafter

read as follows: own name, it was, in fact, made for the "'For the establishment and maintenance of Boston & Texas Corporation. He claims oil companies with the authority to contract for no rights in it personally, and asks that same for, develop and use coal and other minerals,

the lease and purchase of the right to prospect be decreed to the corporation. Since this petroleum and gas; also the right to erect, build stock contract is executory, whether it be and own all necessary oil tanks, cars and pipes Hildebrand, Hopkins, or the Boston & Texas necessary for the operation of the business of

same.' Corporation, they neither had the legal title

"All private corporations heretofore created to the property, but only the right to com- under the provisions of subdivision 16, article plete the purchase by paying the price and 1121, chapter II, title 25, Revised Statutes of then obtain a title. It is not different from Texas of 1911, shall, in addition to the powers

therein enumerated, have the power to contract a man who buys land, and the vendor's lien for the lease and purchase of the right to prosand superior title are reserved until the pect for, develop and use gas; also erect, build balance of the purchase money is paid. The and own all necessary oil tanks, cars and pipes title there remains in the seller; the purchas- necessary for the operation of the business of

. er only having the right to complete the pur

This contention is made because of the chase and obtain a title by paying the price. provision that, among other things, they may It would be a monstrous proposition of law own tank cars, ships, etc. And it is a matif the purchaser of this stock could demand ter of common knowledge that oil companies and receive the stock without first paying do own and operate tank cars; but that is a for same. And here payment of the $175,000 very different matter from owning and opis not even tendered; but it is proposed to erating a railroad. Nearly every circus do, through a receiver, what no one would owns its private cars, but we have never contend that Hopkins, or Hildebrand would known of a circus owning a railroad, nor do have the right to do as individuals, namely, we believe that the mere fact that they own get possession of the stock without first cars would give them the right to own a paying for it. A receiver takes no greater railroad. title to or right in property than the owner The Boston & Texas Corporation is a prohad prior to the receivership. The appoint-ducing oil company, organized under the ment of a receiver does not do away with laws of a foreign state, and is not a pipe line rights fixed by contract, and the very same company; so that, when it comes into this contract under which right to the stock is state to do business under a permit, it could here asserted provides that the executor have no greater powers than is permitted to should hold same until the purchase money similar corporations under subdivision 16 of should be paid.

article 1121 of the Revised Statutes of this [2] But it is asserted that under the con- state. And the most liberal construction of tract of purchase of the railroad stock by this statute would not give this oil company Hildebrand, under order of the probate court the right to own this railroad, even if its conof Bexar county, the physical properties of tention be granted that the contract intendthe railroad were to pass. To this we need ed to convey the physical properties of the only say that the probate court could only Artesian Belt Railroad; and if the corporaauthorize the sale of the stock, because that tion could not own the road, it could not do is what C. F. Simmons owned. The fact that through a receiver what it could not do actthe stock represented practically the road-ing for itself under its own board of direccertainly the control-would not alter the

tors. So the railroad matter furnishes no situation. The road itself is controlled by ground for a receiver. a board of directors.

[5] And when we come to consider the [3] We are told that, if the West Texas 11,360 acres of land known as the Brown Bank & Trust Company could operate a rail- land, we find that this is also a purely execuroad, then there is no reason why the Boston cause the vendor's lien and superior title

tory contract for the sale of the land, be& Texas Corporation could not do the same; were reserved until the notes, upon which if one corporation could do it, another could. foreclosure was obtained, should be paid. It The bank, under its rights to act in a trust has long been held in Texas that such a sale capacity, was acting as executor, and natu- leaves the title in the vendor, and what the rally voted the stock in the selection of direc- purchaser has in such case is the right to tors who operated the road. Ordinarily, a pay the debt and secure a title. Neither bank probably could not own a railroad, but Hopkins nor the Boston & Texas Corporathe handling of the stock as executor is quite tion had more than a right to pay for said a different matter.

land and thereby obtain a title. A receiver [4] It is contended that the Boston & would have no greater right, and we find Texas Corporation could own the railroad, that no tender of the purchase money is what they are seeking to avoid. This land , ed independent of such receivership, and the was constructively in the hands of the sher- corporation, as such, has no right to ask for iff, who had seized the same under an order a receiver for itself. of sale, based on the foreclosure judgment, [8] If it be conceded that this corporation and neither Hopkins nor his corporation is insolvent, that is not sufficient ground for could take it away from him without paying the appointment of a receiver, without a that debt, and they did not need a receiver to showing of some equity in favor of the plaindo this.

tiffs. First lien creditors will not be hinder[6] The fact of the business is this whole ed or delayed in the collection of their debts, proceeding appears to be based upon the idea except upon a clear showing of some threatof gaining a little time until the hard times ened illegal waste or destruction of the proppass; for the applicants say in their bill: erty, and that protection may be obtained by

"Complainants believe that this court should an injunction. It is urged that the wars in take judicial knowledge of the present financial Mexico and in Europe have made it difficult condition now prevailing throughout this coun- to finance this undertaking, and if the court try on account of the Mexican war and great will appoint a receiver and build the railroad European war, that is now being felt in the whole financial world, and stay the hand that into these oil fields, the corporation will be would take from the unfortunate debtor who is able to realize large sums for its lands, and struggling to meet his obligations, as these com- can pay out. As to how long these wars will plainants are, and even now at great sacrifice complainants are negotiating and have contracts last is not stated in the bill, and as to dewhich, if consummated, will enable them to pay veloping an oil field, this court knows of no all creditors who are pressing them. What more uncertain or speculative proposition. these complainants most value, next to eternity, The bill admits that the parties themselves is a little time, and this they pray through the equity powers of this court.

Poverty wants have been

have been unable to carry through their some things; luxury many; avarice all things. plans successfully, and it is not made to apThese complainants, though poor, want a little pear how the receiver could do that which time; these creditors want all, that they may they have failed to do, unless it be that he live in luxury; but this court has the equity could get possession of the railroad stock power to stay their hands, and it is prayed.

and land without paying what is admitted We cannot but commend the candor of this to be the purchase price. But we have seen fervent prayer of the able counsel, but at that the receiver would have no greater the same time it reminds us of that honest rights than the parties themselves would old lawyer who, in having his client swear to have. an application for a continuance, said:

[9] As to the controversy with the Conti"This application is not made for delay, but nental Trust Company, no ground for a reto gain time.”

ceiver is there shown, because, if their debt Hard times is not recognized in law as a is not just, and usury has been charged, the ground for a receiver, nor had we ever sup- court could render ample protection against posed that a receiver was a panacea for the the sale by its injunction powers. The petiills of a time of financial stringency.

In- tion or bill shows that the trust company is deed, if we were so to treat the matter, it a first lienholder on 7,000 acres of land ownwould be equivalent to declaring a moratori-ed by the Boston & Texas Corporation, but um by judicial decision-a thing the Legis- we are unable to see how the relief sought lature of this state expressly declined to do. against the trust company demands the ap

[7] Hildebrand and Hopkins are not suing pointment of a receiver for the one seeking the Boston & Texas Corporation, except that that relief. they ask for a receiver. So, as to them, it

We therefore conclude that the trial court is purely a suit for a receiver, and the courts was in error in appointing the receiver, and of this state, as well as all other recognized also in thereafter making an order placing authorities, have uniformly held that a bill him in charge of the properties. which has for its sole object the appointment So the judgments in causes No. 5553 and of a receiver will not be entertained. This No. 5586 are reversed, and the orders apcourt has only recently so held in an opin-pointing a receiver and placing him in charge ion written by its Chief Justice. Toomey v. are vacated, together with all other orders First Mortgage Trust Co., 177 S. W. 539. A in connection with the receivership, and the receivership is ancillary to the main suit receiver is discharged. The clerk of this where a cause of action exists and is assert-court will accordingly so certify.

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