Opinion
22679.
SUBMITTED OCTOBER 12, 1964.
DECIDED DECEMBER 3, 1964. REHEARING DENIED DECEMBER 15, 1964.
Equitable petition. Clinch Superior Court. Before Judge Lott.
Sumner Boatright, for plaintiffs in error.
S. B. McCall, Edward Parrish, contra.
1. The motion to dismiss the bill of exceptions on the ground that it contains no valid assignments of error is without merit and is denied.
2. Creditors without lien may not, as a general rule, enjoin their debtors from disposing of property, nor obtain injunction or other extraordinary relief in equity.
(a) While there are exceptions where the circumstances render the rule inapplicable, allegations that the corporation is indebted to plaintiffs, but denies its liability and refuses to pay, is insolvent and is disposing of its assets are not sufficient to allege an exception to the general rule such as would state a cause of action for the appointment of a receiver and an injunction against the defendant's disposing of its assets.
3. The petition failing to state a cause of action for equitable relief and leaving only an action brought by eleven different corporations upon separate and unrelated claims for money judgments against defendant was subject to demurrers alleging that there was a misjoinder of parties plaintiff and that the petition was multifarious and duplicitous.
(a) The ruling that the trial court erred in failing to dismiss the petition, it having failed to set out a cause of action for equitable relief, and as an action at law was multifarious and duplicitous and contained a misjoinder of parties plaintiff, rendered nugatory all subsequent proceedings in the case.
SUBMITTED OCTOBER 12, 1964 — DECIDED DECEMBER 3, 1964 — REHEARING DENIED DECEMBER 15, 1964.
Plaintiffs, eleven named corporations, brought their petition in equity against the defendants, Associated Footwear, both as a partnership (composed of Mr. and Mrs. H. C. Stalvey, Elton O. Tanner, and Donald McCallum) and as a corporation, alleging that they were creditors of defendants upon certain accounts, that the purchases were made while defendants were operating as a partnership, that the assets of the partnership had been conveyed to the corporation and the corporation had assumed the debts of the partnership, but that petitioners had no part in it and the partners were not relieved of liability thereon; that the partners now deny their liability; that the defendant corporation is insolvent and is disposing of its assets each day and becoming more insolvent; that unless equity intervenes and a receiver is appointed, plaintiffs will suffer irreparable loss; that there will be a multiplicity of suits, and that both the defendant partnership and corporation refuse to pay said indebtedness. The prayers were that the court find both partners and corporation jointly and severally liable; that a receiver be appointed to take charge of the assets and an injunction issue to prevent the defendant corporation from disposing of any of its assets, for a show cause order, for other relief as may appear proper, for process, service, etc.
The court granted an ex parte order enjoining the corporation from disposing of its assets and appointing a temporary receiver to take charge of the assets of the corporation. Thereafter the petition was amended as follows: "that the indebtedness sued upon is the indebtedness of the corporation and all reference to said partnership is hereby stricken and withdrawn from plaintiff's petition." After hearing on the question of granting of a temporary injunction and appointment of a receiver and at the close of the evidence, defendant made an oral motion to dismiss the petition, dissolve the injunction, discharge the receiver and return the business to its operation. The motion was denied, a receiver was appointed, and the assets of the business were ordered sold by the receiver and the proceeds held by him until notification of the creditors and until properly distributed by the court. Exception was also taken to the refusal of the court to grant the above motion and to the order to sell the assets.
1. We are of the opinion that there are valid assignments of error on the judgment of the trial court overruling the general demurrer and certain special demurrers and on the order appointing a receiver, granting a temporary injunction, and ordering the receiver to sell the assets of the defendant corporation, and on the overruling of the motion to dismiss the petition. Accordingly, the motion to dismiss the bill of exceptions is denied.
2. When the petition is stripped of all allegations as to the partnership, as was done by the amendment, the allegations relied upon to set out a cause of action for injunction, receivership, and other equitable relief, are as follows: that the defendant corporation is indebted to petitioners for goods purchased from them; that the corporation denies liability therefor and refuses to pay; that the corporation is insolvent, and is disposing of its assets by selling from their stock of merchandise, thereby becoming more insolvent each day; that unless the equitable relief sought is granted they will suffer irreparable harm, and that there will be a multiplicity of suits.
The general rule is that, "Creditors without lien may not, as a general rule, enjoin their debtors from disposing of property, nor obtain injunction or other extraordinary relief in equity." Code § 55-106. There are exceptions where circumstances render the rule inapplicable. Goodroe v. C. L. C. Thomas Warehouse, 185 Ga. 399 (3) ( 195 S.E. 199). Special circumstances that may exist giving creditors without liens right to aid in equity, are insolvency of a debtor who fraudulently transfers property to one in complicity with him and who is disposing of property, or where property is obtained by fraudulent representations. Albany Renssellaer Iron c. Co. v. Southern Agricultural Works, 76 Ga. 135, 169 (2 ASR 26); Cohen v. Meyers, Cohen Co., 42 Ga. 46; Cohen Co. v. Morris Co., 70 Ga. 313; Johnson Co. v. O'Donnell Burke, 75 Ga. 453; Wolfe v. Claflin Co., 81 Ga. 64, 65 ( 6 S.E. 599). No such special circumstances or any other special circumstances as would be an exception to the general rule are alleged in this case. The petition does not allege that the defendant corporation is fraudulently disposing of its assets to defraud creditors, nor that the goods were fraudulently obtained. The allegation of insolvency without more does not state a cause of action for the appointment of a receiver and injunction against defendant's disposing of its assets. Atlanta c. R. Co. v. Carolina Portland Cement Co., 140 Ga. 650 (1) ( 79 S.E. 555); Insurance Center, Inc. v. Hamilton, 218 Ga. 597 (1c) ( 129 S.E.2d 801). See also Barnesville Mfg. Co. v. Schofield's Sons Co., 118 Ga. 664 ( 45 S.E. 455); Dodge v. Pyrolusite Manganese Co., 69 Ga. 665.
3. Since the petition does not state a cause of action for any of the equitable relief sought, what is left is a petition in which eleven different corporations allege separate and distinct causes of action at law upon separate and unrelated claims for money judgments against the defendant.
Obviously, the several plaintiffs cannot join in one action, and it follows that the court erred in overruling the demurrers on the ground of misjoinder of parties plaintiff and on the ground that the petition was multifarious and duplicitous. Smith v. Manning, 155 Ga. 209 (5) ( 116 S.E. 813).
Accordingly, the trial judge erred in not dismissing the petition, it having failed to set out a cause of action for equitable relief, and as an action at law was multifarious and duplicitous, and contained a misjoinder of parties plaintiff. This ruling renders nugatory all subsequent proceedings in the case.
Judgment reversed. All the Justices concur.