
    RECEIVERS — LAKESIDE COMPANY.
    [Cuyahoga Circuit Court,
    February 12, 1900.]
    Moss National Bank v. Lakeside Co. et al.
    Caldwell, Marvin and Hale, JJ.
    1. Receivers — Prospect oe Suits by Creditors.
    Where no trouble is shown in the directorship and the whole machinery of the corporation is intact and working harmoniously, the fact that certain creditors are about to bring action to enforce their claims is not ground for the appointment of a receiver.
    2. Receivers — Statute against Appointing Stockholder.
    The fact that directors decided that they would put the corporation in the hands of a receiver, to prevent creditors from taking action, having secured a bondholder to bring the action, guaranteeing him against any expense, does not amount to a consent which should set aside the plain provisions of the statute against the appointment of a stockholder as receiver.
    3. Receivers — Jurisdiction and Control oe Property.
    Where it appears that the property of a corporation, which has been placed in the hands of a receiver in one county, at the suit of a bondholder, is located in another county, and that an independent action will be necessary or is pending in such county to adjust liens and sell the property, it is proper that the control of the property should be left with the court in the county where the property is situated, and, if a receiver is necessary, that he should be appointed there.
    Error to the Court of Common Pleas of Cuyahoga county.
   Hale, J.

We have come to the conclusion in this case that there was no good ground for the appointment of the receiver. That is the first proposition, taking the allegations of the petition as true. .

The petition alleges the nature of the corporation known as The Lakeside Company, and that it has a bonded indebtedness of $35,000, and then adds: “That said company is indebted to a large number of other persons for monies loaned and for purchases made, and otherwise, to the amount of $30,000 in addition to the bonds aforesaid : that some of said creditors are threatening to bring actions upon their said claims against the defendant company; and that the business of said Lakeside Company is of such a peculiar nature that if suits were brought by said creditors it would so impair said company in carrying forward its summer work with the patrons of said work, as to almost totally destroy its business and greatly impair thereby its earning capacity, and work to the detriment and loss of the bondholders, who hold by virtue of the mortgage liens upon said property.’-’

Plaintiff says that he is the owner of $5,000 in amount of said bonds, and that he brings this suit not only for the benefit of himself but for such other of the bondholders and creditors as may be desirous of coming into and availing themselves of this suit: That said defendant company is at present so embarrassed by said bonded indebtedness and said general indebtedness, that it is unable to continue said business and thereby to protect said property from suits and/levies which would materially lessen and injure the security of plaintiff and said bondholders. That said company is likewise insolvent, and that unless the court will appoint a receiver to taire possession and charge of said business, the property covered by said mortgage, which consists, in addition to said land, of a large number of buildings, a dock, machinery and pipes, etc. (which will need constant care and attention during the summer season as well as through the fall and winter) will be in danger of being materially injured and the security greatly impaired.

The gist of all that is, that it.is necessary to prevent creditors from bringing their action and enforcing their claim against this corporation to have a receiver appointed.

We do not believe that where no trouble is shown in the directorship and the whole machinery of the corporation is intact and working harmoniously, that the fact that certain creditors are about to bring action to enforce their claims is a good ground for the appointment of a receiver.

Again, the appointment of McKim as a receiver was expressly forbidden by the statute. At the time of his appointment as receiver he was a stockholder, director and treasurer of this corporation, coming within the direct prohibition of the statute.

But it is said that there was consent and by the consent of all the parties this was procured. The consent of all the parties to the suit at the time the receiver was appointed was the consent of the corporation. There was a plaintiff in the case, but the action grew out of this proceeding of the corporation as shown by the following records of the directors:

“Lakeside, Ohio, Sept. 28, 1897.
“It was moved by C. E. Griswold and seconded, that this board take such steps as is necessary to place this company in the hands of a receiver. Motion carried.”

The meeting then adjourned for dinner to 1:3o.

“Lakeside, Ohio, July 20, 1897.
“Pursuant to an adjournment, the board of directors of the Lakeside Company met at hotel at 1:3o. There were present Briggs, etc., — Briggs, Vice President, in the chair. On motion it was decided to elect by ballot a man for receiver. The first ballot resulted in three votes being cast for C. S. McKim. On motion of Griswold, this choice was made unanimous.

The directors having decided that they would put this corporation in the hands of a receiver to prevent creditors taking action, they secured the plaintiff to bring this action, but he was guaranteed against any expense; the corporation was to pay the expense of counsel, etc.

H. L. Peeke and Noble, Pinney & Willard, for plaintiff in error.

Carpenter & Young, for defendants in error.

Now the consent of the parties to the appointment of this receiver under the circumstances, we do not think was a consent that should set aside the plain provisions of the statute.

It is said that this receiver has been conducting the business of the coporation since his ippomtraont, and, satisfactorily. We have no critic cism to make on the manner in which the receiver had done his business and done the work But we do not see why the directors could not just as well have done ¿f; McKim was one of them.

Again the suit was commenced in this county, and all the property was situated in Ottawa county. To adjust the liens and sell this property, an independent action must necessarily be brought in Ottawh county to adjust the liens and sell the property, making this suit here a sort ot a fifth wheel to a coach.

But we are satisfied with this holding from the statement that is made to us outside of the record, not as a foundation for the holding, that a suit is already commenced in Ottawa county to adjust these liens, and in our judgment, it is entirely proper that the control of this property should be left with that court pending the litigation. If it is necessary to work out the rights of the parties to this action for a receiver to be appointed, that court can take charge of the whole matter.

The result is that we are decidedly of the opinion that the motion made to discharge this receiver should have been granted; that there had been no such consent or acquiescence as would prevent the court from right-iully sustaining the motion, and ior the error in overruling the motion no such consent or acquiscence as would prevent the court from rightfully sustainng that motion, and for the error in overruling the motion instead of sustaining that motion, the judgment is reversed, and the cause remanded for further proceedings.  