Opinion
No. 33922.
January 8, 1940. Suggestion of Error Overruled February 19, 1940.
1. CORPORATIONS.
In action by assignee of claims of tenants against plantation companies to recover alleged usurious interest charges, for forfeiture of principal, and for accounting for price received for cotton produced by tenants, nonresident corporation was not a "necessary party" defendant, or "material party" defendant, because of alleged fact that it owned the capital stock of the plantation companies and that it and those companies had the same personnel on their boards of directors.
2. VENUE.
The fact that cause of action of assignee of claims of tenants against plantation companies to recover alleged usurious interest charges, for forfeiture of principal, and for accounting for price received for cotton produced by tenants, may have accrued where the plantations were located, was immaterial in so far as chancery court venue was concerned, as venue was in the county where a necessary party defendant might reside or be found (Code 1930, sec. 363).
3. VENUE.
Where agreement was reached by plaintiff with local defendant's regular attorney that, if attorney would become associated with plaintiff's attorneys in the litigation he could tell the local defendant that he would not be "hurt" by the suit, the trial court did not err in dismissing the suit without prejudice as to all defendants, for want of a necessary party defendant (Code 1930, sec. 363).
4. RECEIVERS.
Trial court properly removed receiver where there was no suit pending on docket when appointment was made, and where receiver, though appointed merely for purpose of safely keeping books and records to await further orders of the court, either willfully or negligently permitted an auditor to have access to the records, private papers, and documents of the defendant, so that he could make an audit for plaintiff and his attorneys, and for other persons who were not parties to the litigation, without authority of the court.
APPEAL from chancery court of Humphreys county; HON. J.L. WILLIAMS, Chancellor.
James O. Eastland, of Ruleville, and Sam L. Gwin, of Greenwood, for appellant.
The chancery court of Humphreys County, Mississippi, should not have entertained the three motions of the defendants, Richard Kinkead, Ashland Plantation Company, and E.M. Herr, respectively, to dismiss the bill of complaint for want of jurisdiction because the defendant, Richard Kinkead, was not liable to the complainant, or for any other reason. The procedure pursued by counsel for the moveants and permitted by the court is not permissible under the laws of this state, and the reason for that is apparent from what transpired in the trial of these motions and the dismissal of the cause and the refusal of the court to permit the bill of complaint then to be amended, assigning as the reason therefor that a bill of complaint dismissed on motion, without prejudice, cannot be amended. If this practice were permissible, then every defective bill of complaint could be dismissed on motion, and the statutes and practice relating to liberality of amendments would be ineffectual. If the defendants in the court below had demurred to the bill of complaint and the demurrers had been sustained, the complainant would have had the right as of course to amend the bill of complaint. The decision by the chancellor sustaining a demurrer might be that the bill of complaint should be dismissed, but, nevertheless, on seasonable application, as in this cause, to amend, the chancellor under the law would be required to grant leave to amend the bill of complaint. Whereas, in the view expressed by the chancellor when he had announced that the motions to dismiss would be sustained, the bill of complaint could not thereafter be amended, even on application made simultaneously with his announcement of his decision. If that is to be declared by this court as permissible, or without error, then hereafter no defendant would demur to a defective bill of complaint, but would much preferably move to dismiss the bill of complaint, knowing that the sustaining of the demurrer would be followed inevitably by leave to amend the bill of complaint; whereas, if the same conclusion were reached by the chancellor on a motion to dismiss, there could be no amendment. The purpose of the law is to bring the merits of the case to issue and to permit amendments for that purpose, so that a trial of the case may be had.
The practice of motions to dismiss a bill for no cause of action which has recognition in some jurisdictions is not allowed with us.
Griffith's Chan. Practice, Sec. 307; Whitney v. Cotten, 53 Miss. 689, at page 693; Majors v. Majors, 58 Miss. 806; Jackson v. Lemler, 83 Miss. 37, at page 45.
It is somewhat difficult to conceive the theory upon which the trial court, of its own motion, dismissed the bill of complaint as to Berkshire Fine Spinning Associates, Inc. The bill of complaint alleged that Richard Kinkead, Ashland Plantation Company, a corporation, E.M. Herr and H.T. Odom were each and all of them the agents of Berkshire Fine Spinning Associates, Inc. Summons for Berkshire Fine Spinning Associates, Inc., was served personally by the sheriff of Humphreys County, Mississippi, on the agent Richard Kinkead, as manager of Berkshire Fine Spinning Associates, Inc., and by the sheriff of Leflore County, Mississippi, on each of the other three agents. The first decree of dismissal as to Berkshire Fine Spinning Associates, Inc., was made by the court in response to the motion of the complainant for a decree pro confesso against said corporation. The allegations of the bill of complaint and the return of the sheriffs on the summonses were sufficient, at least prima facie, to bring Berkshire Fine Spinning Associates, Inc., into court, and, even if the motion for a decree pro confesso should have been denied, for which no reason seems to appear, certainly it does not justify such a response from the court. The summonses and the returns of the sheriffs thereon were in conformity to the allegations of the bill of complaint. Berkshire Fine Spinning Associates, Inc., filed no pleading and made no appearance.
The same observations apply with equal force to Silver Creek Company, Inc., alleged in the bill of complaint to be domiciled in Humphreys County, Mississippi.
Counsel for the three defendants filing motions to dismiss the bill of complaint and cause was permitted by the trial court to introduce, over the objection of the complainant, in the hearing of the motions to dismiss, in which Silver Creek Company, Inc., did not participate, a certified copy of a decree of the chancery court of Coahoma County, Mississippi, dissolving, on the ex parte petition of the stockholders, officers and directors of Silver Creek Company, some corporation, in said decree styled "Silver Creek Company," without the appointment of liquidators, and without notice to any person. There was no proof that the corporation involved in that proceeding was identical with the corporation defendant to the bill of complaint, which was designated in the bill of complaint as "Silver Creek Company, Inc.," and alleged in the bill of complaint to be domiciled in Humphreys County, Mississippi.
In no event could that decree of dissolution affect the right of the complainant to sue and recover a decree against the corporation named as a defendant in the bill of complaint, whether it be the corporation named in the bill of complaint and domiciled in Humphreys County, Mississippi, or the corporation named in the decree and therein recited to be domiciled in Coahoma County, Mississippi, nor prevent the complainant, after a decree against the corporation, which is properly the first step to recovery, from pursuing the assets of the corporation into the hands of the stockholders who participated in the distributions of the corporation's assets.
Bates v. Miss. Industrial Gas Co., 173 Miss. 361, 161 So. 133.
No damages were shown, or attempted to be shown, to Ashland Plantation Company or any of the other defendants by the appointment without notice of a receiver in this case, except the attempt to show damages by way of an attorney's fee. No attorney's fees my way of damages should have been awarded against the complainant in favor of Ashland Plantation Company, as was done by the trial court.
The application for the appointment of the receiver in this case was merely ancillary to the relief sought in the bill of complaint, and no attorney's fee should have been awarded against the complainant.
Hunter v. Hankinson, 141 Miss. 279, 106 So. 514; Staple Cotton Cooperative Assn. v. Buckley, 141 Miss. 483, 106 So. 747; Riley v. Hardy, 189 So. 514.
If jurisdictional venue was established by the bill of complaint against any of the three defendants, Richard Kinkead, a resident of Humphreys County, Silver Creek Company, Inc., domiciled in Humphreys County or Berkshire Fine Spinning Associates, Inc., a foreign corporation doing business in Humphreys County, with an agent resident in Humphreys County, then the court acquired jurisdiction for the purposes of the bill of complaint of Ashland Plantation Company, though a Mississippi corporation domiciled in Leflore County and E.M. Herr, a resident of Leflore County, although process for them was served in Leflore County.
H. Talbot Odom and P.D. Montjoy, Jr., both of Greenwood, for appellees.
A motion to dismiss is the proper precedure in chancery where there is a fraudulent joinder of defendants in an attempt to confer territorial jurisdiction on the court which does not appear on the face of the bill.
Griffith's Chancery Prac., Secs. 151, 155, 156; Code of 1930, Sec. 363; Brashier v. J.C. O'Connor Sons et al., 181 Miss. 872, 180 So. 67.
The evidence shows a collusive agreement to confer jurisdiction on the chancery court between Kinkead, the only defendant residing or found in Humphreys County, Mississippi, and the attorneys for the appellee.
Trolio et al. v. Nichols, 160 Miss. 612, 133 So. 207; Nicholson v. G.M. N.R. Co., 177 Miss. 844, 172 So. 306; Arnett et al. v. Carol C. Fred R. Smith, Inc., et al., 165 Miss. 53, 145 So. 638.
Under Section 379 of the Code of 1930 the disposal of pleadings is vested largely in the discretion of the chancery court, and this is true of pleas to the jurisdiction as well as others.
Griffith's Chan. Practice, Sec. 156; Brashier v. O'Connor, 181 Miss. 872, 180 So. 67.
The bill of complaint was properly dismissed as to all of the defendants including Berkshire Fine Spinning Associates, Inc., after it was shown that fraud had been perpetrated on the court.
15 C.J. 800; Townsend v. Smith, 47 Wis. 623, 626, 3 N.W. 439, 32 Am. Rep. 793; 14 Am. Jur., Sec. 173.
The court committed no error in dismissing the case against Berkshire Fine Spinning Associates, Inc., of its own motion and subsequently denying the motion of appellant for a decree pro confesso. The bill of complaint alleges that said corporation is a Massachusetts corporation. The only process shown in the record for this corporation is summons by personal service upon E.M. Herr and H.T. Odom, individually, both residents of Leflore County, Mississippi, and upon E.M. Herr "the Assistant Treasurer of Ashland Plantation Company, a corporation, the agent of the said Berkshire Fine Spinning Associates, Inc.," and also by personal service of summons upon Richard Kinkead, as manager of said corporation.
Mailing process to the home office of the corporation is a necessary part of the service in order to make same effectual and complete.
Columbia Star Milling Co. v. Brand, 115 Miss. 625, 76 So. 557; National Surety Co. v. Bd. of Suprs. of Holmes County, 120 Miss. 706, 83 So. 8; Daniel v. Jordan, 161 Miss. 78, 134 So. 903.
It is the duty of the trial court before proceeding with the trial of any case to determine the necessary jurisdictional facts. It was, therefore, proper and the court's duty to prevent the fraudulent fixation of the venue of this suit and to protect the rights of appellees by granting of the motion for dismissal. Especially was the court's duty made apparent when appellant wholly failed to comply with the statute and thereby gave the court further evidence of his attempted fraud by presenting to the court a void and ineffectual process as his basis for the establishment of the venue of this cause.
Brotherhood of Railroad Trainmen v. Agnew, 170 Miss. 604, 155 So. 205.
The Silver Creek Company was domiciled in Coahoma County, Mississippi, and not Humphreys County, Mississippi.
On a collateral attack against a judgment rendered by a court of general jurisdiction, all jurisdictional facts and recitals in the judgment are conclusively presumed.
Grinstead v. Foute, 26 Miss. 476; Taggert v. Muse, 60 Miss. 870; Cotton v. Harlan, 124 Miss. 691, 87 So. 152; Fed. Reserve Bank v. Wall, 138 Miss. 204, 103 So. 5; Whitney v. Towle, 163 Miss. 418, 141 So. 571; Brotherhood of Railway Trainmen v. Agnew, 170 Miss. 604, 155 So. 205; Starke v. Gildart, 4 How. (5 Miss.) 267; Cockerel v. Wynn, 2 S. M. (20 Miss.) 117; Henderson v. Cargill, 31 Miss. 367.
Damages by way of attorney's fees were proper in the instant case.
Pearson v. Kendrick, 74 Miss. 235, 21 So. 37; First Nat. Bank v. U.S.F. G. Co., 162 Miss. 807, 140 So. 229.
Argued orally by H. Talbot Odom, for appellant.
The decree here appealed from, rendered by the Chancery Court of Humphreys County, dismissed the bill of complaint of the appellant as to all of the appellees, without prejudice, on the ground that the local resident named therein had been improperly joined as a defendant for the purpose of conferring territorial jurisdiction in that county, and for other reasons hereinafter mentioned.
As purchaser and assignee of certain claims or demands of eleven negro tenants against their landlords, respectively, for alleged usurious interest charges, forfeiture of principal, and failure to fully account for the price received for cotton produced by such tenants during the years of 1937-1938, the appellant brought this suit against the appellees, Silver Creek Company, a corporation under the laws of this State, domiciled in Coahoma County until its dissolution by decree of court in November, 1937; Ashland Plantation Company, which was likewise a Mississippi corporation, domiciled in Leflore County; the Berkshire Fine Spinning Associates, a Massachusetts corporation, the post-office address and place of residence or domicile of which are not stated; E.M. Herr, a resident citizen of Leflore County, who was the general superintendent of the Ashland Plantation Company and its duly appointed agent for service of process; and Richard Kinkead, a resident citizen of Humphreys County, who is alleged to have been the superintendent of the Silver Creek Company in said county.
Service of process was had on both the Ashland Plantation Company and Silver Creek Company in Leflore County only, by delivering a copy thereof to the said E.M. Herr, as agent. The only process issued for the Berkshire Fine Spinning Associates, the non-resident corporation was directed to the Sheriff of Humphreys County, and the return thereon shows that it was served on Richard Kinkead, as manager. Summons was also served on Kinkead personally as an individual defendant.
The theory upon which the nonresident defendant was alleged to be liable for the claims sued on was that it owed the capital stock of the Silver Creek Company and Ashland Plantation Company, and that the three corporations had the same personnel on their boards of directors, etc. However, the chancellor was in our opinion amply warranted in reaching the conclusion from the allegations of the bill of complaint that the non-resident corporation was not a necessary or material defendant, since it clearly appears that some of the appellant's assignors were tenants on the plantation operated by the Silver Creek Company in Humphreys County while the remainder of them were tenants on lands in said county which were being farmed by the Ashland Plantation Company, and neither of which said domestic corporations were shown to have been found in Humphreys County, the process for each of them having been served as aforesaid on E.M. Herr, as their agent in Leflore County.
The fact that the cause of action may have accrued in Humphreys County is immaterial in so far as chancery court venue is concerned. As was said in the case of Brashier v. J.C. O'Connor Sons et al., 181 Miss. 872, 180 So. 67, 69. "The chancery courts of this state have their own venue statute, section 363, Code of 1930." In all cases not otherwise provided for, such as the case at bar, the venue is in the county where a necessary party defendant may reside or be found.
As to the defendant Kinkead, he is alleged to have been the superintendent of the plantation in Humphreys County, "commonly known as the Silver Creek property," and directed the farming operations, contracted with the laborers and settled for the labor thereon, and marketed and sold the cotton grown on said plantation. It was neither alleged that he kept the books nor that he personally received any part of the proceeds from the sales of cotton grown by any of the tenants who assigned their claims to the appellant. Moreover, after the bill of complaint had been prepared, naming the said Kinkead as an individual local defendant, and before it was filed with the clerk, the record shows without dispute that an agreement was reached with said defendant's regular attorney that if he would become associated with appellant's attorneys in the litigation "he could tell Mr. Kinkead that he would not be hurt by the suit." Therefore, the court below was not in error in dismissing the suit, without prejudice, as to all of the defendants, for want of a necessary party defendant in Humphreys County at the time the bill of complaint was filed. Griffith's Chancery Practice, Section 156; Section 363 of the Code of 1930; Trolio et al. v. Nichols, 160 Miss. 611, 612, 132 So. 750, 133 So. 207; and Brashier v. O'Connor et al., supra. Even though the appellant did not intend, at the time the bill of complaint was prepared, to make any agreement with the local defendant to save him harmless in the litigation, the fact remains that at the time the suit was actually filed it was understood that he was not to be "hurt" by the suit; and he was therefore no longer a necessary defendant except for the purpose of giving the chancery court of Humphreys County territorial jurisdiction. This is true notwithstanding that the agreement was made as an inducement to his attorney to accept employment from the appellant. The question here is whether at the time the suit was filed he was a necessary defendant in view of the agreement, without regard to the consideration which brought it about.
The appellant also contends that the court below was in error in removing a receiver who had been appointed, without notice, to take charge of and safely keep, until the further order of the court, the books of account, records, documents, ledgers, journals, cash books, gin records, cotton books, the account of the sales of cotton and cottonseed, tenants accounts, and all other records, papers and documents pertaining to the business of any of the corporate defendants; and in assessing damages against the appellant and the sureties on his bond in connection with the appointment of the receiver without notice.
It is stated in Section 470 of Griffith's Chancery Practice that, "while a receiver may be appointed at any stage of the case and whenever the necessity arises or is shown, no receiver will ever be appointed except in a suit already pending on the docket. Consequently, if the appointment be made before the bill therefor is actually filed the appointment is void." In support of this statement of the rule, there is cited the cases of Barber v. Manier, 71 Miss. 725, 15 So. 890; Bank of Meadville v. Hardy, 94 Miss. 587, 591, 48 So. 731. In the case at bar, the proof discloses that the bill of complaint was not filed in the office of the chancery clerk in Humphreys County on March 31, 1939, until after the order appointing the receiver had been signed earlier that day in an adjoining county. Hence there was no suit pending on the docket when the appointment was made.
But, the decree of the chancellor which removed the receiver, discharged the receivership, and awarded damages, need not rest alone upon the legal objection hereinabove mentioned. It developed from the proof on the hearing that the receiver, who had been appointed merely for the purpose of safely keeping the books and records aforesaid to await the further orders of the court, either wilfully or negligently permitted an auditor to have access to the records, private papers and documents of the defendants for a period of six to eight weeks, during which time he made an audit thereof for the appellant and his attorneys, and for other persons who were not parties to the litigation, and all without authority from the court. Having thus, by means of the receivership and audit, illegally gained access to the information contained in these books, records, etc., the appellant made bold to serve notice on the receiver, at the hearing of the motion filed by certain of the appellees to discharge the receivership and dismiss the bill of complaint for want of territorial jurisdiction, that the appellant and other persons had succeeded in acquiring claims against the defendants, disclosed by such audit, similar to those here sued on, aggregating between $226,000 and $275,000, the majority of which are alleged to be held by appellant. In other words, the appellant sued for an accounting and then proceeded to open the books, which the receiver had sealed up, and take an accounting for himself and on behalf of other persons who were strangers to the lawsuit, without the court having first ordered an accounting to be had.
If these claims are due and owing for usurious rates of interest charged and for failure to correctly account for the proceeds of cotton sold, as claimed, or otherwise, then the courts will lend their aid, if invoked in a lawful manner, to the enforcement of their payment. To that end, the law makes ample provisions as to how an inspection of books and records may be had, with the privilege granted to take copies, and under certain circumstances their production in court may be required, but the courts must preserve the integrity of legal process against such a flagrant abuse as is disclosed by the record in the case at bar. The action of the chancellor in dismissing the bill of complaint, without prejudice, and in removing the receiver and assessing only such damages as would constitute a reasonable attorney's fee, was a considerate and lenient exercise of the court's authority and a reasonable performance of its duty in the premises.
Affirmed.