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United Sanders Stores, Inc. v. Messick

Supreme Court of Arizona

December 31, 1931

UNITED SANDERS STORES, INC., a Corporation, Appellant,
C. W. MESSICK, Appellee

APPEAL from an order of the Superior Court of the County of Maricopa. J. C. Niles, Judge. Order affirmed.

Messrs. Baker & Whitney and Mr. Lawrence L. Howe, for Appellant.

Messrs. Cox, Moore & Janson, for Appellee.

Mr. Herbert B. Shoemaker, Mr. Luther P. Spalding, and Mr. Floyd M. Stahl, Amici Curiae.


[39 Ariz. 324] LOCKWOOD, J.

C. W. Messick, hereinafter called plaintiff, filed a suit in the superior court of Maricopa county against United Clarence Saunders Stores, Inc., a corporation, United Sanders Stores, Inc., a corporation, A. E. Sanders, L. E. Sanders, H. D. Sanders, G. C. Partee, K. C. Van Atta, and C. L. Patterson, asking, among other things, that a receiver of the corporations be appointed. Notice was duly served on all the defendants, but only the corporation last named answered. After a hearing, at which all the parties were represented, a receiver was appointed and from the order of appointment this appeal was taken by the corporation only.

There are some six assignments of error, several of which contain three or four subdivisions each, but we think the appeal

Page 431

can be determined by the answers to two questions of law only, and we consider these questions in their logical order. The first is whether or not the court had jurisdiction under the facts of the case to appoint a receiver. The record shows that plaintiff's complaint was filed on March 6, 1931, and an order to show cause why a receiver should not be appointed was immediately served on [39 Ariz. 325] defendants. On March 12th the United Sanders Stores, Inc., hereinafter called the corporation, as successor to the United Clarence Saunders Stores, Inc., filed a demurrer to the complaint and also answered. The demurrer was overruled in part and sustained in part, and a new party, Piggly Wiggly Southwestern Company, a corporation, ordered brought in. Immediately thereafter and before an amended complaint was filed, the court proceeded to take oral testimony and consider documentary evidence, and on March 19th a receiver for the corporation was appointed. The appeal was taken on March 23d "from that certain order appointing a receiver, made and entered in the above entitled cause in said court on the 19th day of March, 1931. . . ."

The statute governing the appointment of receivers reads as follows:

"The superior court or the judge thereof may appoint a receiver in an action pending, when no other adequate remedy is given by law for the protection and preservation of property, or the rights of parties therein, pending litigation in respect thereto." Section 3881, Rev. Code 1928.

It will be noted therefrom that the jurisdictional requirements are (1) that there be an action pending, and (2) that there is no other adequate remedy for the preservation of property and the rights of the parties therein pending the litigation.

Under the law, an action is commenced by the filing of a complaint, and from that time it is "pending" until there be a final judgment or an order of dismissal. Seeger v. Young, 127 Minn. 416, 149 N.W. 735; Cain v. French, 29 Cal.App. 725, 156 P. 518. The mere sustaining of a demurrer to a complaint is not even an appealable order; much less, then, could it be a dismissal of the action. We think, therefore, [39 Ariz. 326] that it is immaterial for the purposes of this appeal whether or not the court erred in overruling the demurrers to portions of the complaint, and that it was not error to require appellants to go to a hearing on the appointment of a temporary receiver after sustaining a demurrer to certain paragraphs of the complaint. There certainly was an "action pending" within the meaning of the statute. But was there any other adequate remedy at law for the preservation of the rights of the parties? This depends to a great extent on the facts of the case, and we must, of course, in passing on this question, interpret the evidence before the court in its strongest light in favor of plaintiff. From this evidence, considered in such manner, it appears the material facts are as follows:

In October, 1928, a corporation was organized under the laws of Arizona, named "Clarence Saunders Stores, Incorporated," with a capital stock of 15,000 shares of preferred stock of the par value of $100 each, and 300,000 shares of common stock of no par value. Shortly after its organization, the Corporation Commission of Arizona authorized it to sell 1,500 shares of its preferred stock at $100 per share, and 50,000 shares of common stock at $1 per share, and further authorized it to issue to A. E. Sanders, one of the defendants herein, 151,000 shares of common stock, in consideration of the transfer by him to the corporation of a license to operate food stores in Arizona and New Mexico under the name "Clarence Saunders, Sole Owner of My Name," which license he had acquired conditional upon the payment of certain future sums to Clarence Saunders Corporation, a foreign organization, and the further consideration of the transfer to the corporation of an option to purchase certain grocery-stores then operating in Tucson, Arizona, under the name of [39 Ariz. 327] "Cashway Markets." This stock was duly issued to A. E. Sanders, and its issuance gave him complete control of the corporation and its board of directors, at least up to an alleged transfer of the 151,000 shares of stock by him in September, 1930. The option to purchase the Cashway Markets was never exercised, and the license to operate the "Clarence Saunders, Sole Owner of My Name," stores was ...

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