I can see no good reason for reversing the judgment of the trial court. The petition alleges 54 separate acts of misconduct, which if true justify the appointment of a receiver. The acts charged are typical of those too many times committed by persons who have control of corporations, who desire to use the corporations for their own selfish interests at the expense of the minority stockholders. Among the more serious charges are these: That the defendants made secret profits for themselves and members of their families, in large sums, at the expense of the corporation; that they fraudulently transferred many pieces of property, belonging to the corporation, to themselves, members of their families and to corporations owned and controlled by them; that they used approximately $1,000,000 of funds belonging to the corporation in the erection of the Skirvin Tower in Oklahoma City, which is owned by one of the corporations controlled by the defendants; that they fraudulently used funds of the corporation to drill wells for oil and gas purposes on leases belonging to the individual defendants or members of their families, and when the wells proved to be dry, the worthless leases were then transferred to the corporation; that they ran about a million barrels of hot oil belonging to the corporation, at less than the market price, and that defendants made secret profits from such transactions. Finally, it is alleged that the defendants organized the Nevada Corporation just before the charter period of the Oklahoma Corporation was to expire for the purpose of transferring the remaining assets of the Oklahoma Corporation to the Nevada Corporation, and that the transfer was made without the consent of all the stockholders of the Oklahoma Corporation. These serious charges of fraud and misconduct were not denied in an answer or at the trial. They stand proved by the introduction of the verified petition in evidence, which undoubtedly made out a prima facie case. 53 C. J. 64-66.
The question before us is: Did the trial court clearly abuse its discretion in appointing a receiver? It is well settled that an application for the appointment of a receiver is addressed to the sound discretion of the trial court, and the appellate court will not reverse a judgment appointing or refusing to appoint a receiver unless the record shows a clear abuse of discretion. McDonald v. Bohling (1924) 102 Okla. 243,228 P. 783; Ellis v. Panther Oil Gas Co. (1935)171 Okla. 552, 43 P.2d 423; Boynton Gas Electric Co. v. Mosier (1937)179 Okla. 232, 65 P.2d 448; 23 Rawle C. L. 10; 53 C. J. 34. This is the rule that should guide us.
The authorities relied on by the majority opinion are primarily for the guidance of the trial court, and no doubt the rules therein stated were considered by the trial *Page 495 judge. In six of the cases relied on, the trial courts had refused to appoint receivers and it was simply held that no abuse of discretion was shown. I think correct conclusions were reached in the four where judgments appointing receivers were reversed. The Frost Case (107 P. 1029) was prosecuted at the instance of a discharged employee who, "without apparent excuse, has endeavored to destroy their (the investor's) confidence in appellant, a proceeding that should receive no encouragement from a court of equity," and it was held that the evidence "shows solvency, careful and capable business management under existing conditions." The Bergman Case (131 P. 485) was prosecuted by the president of the corporation, who admitted his own neglect of duty in that he knew nothing of its business affairs and the acts charged to be wrongful, with knowledge of which the law charged him. No fraud was charged, and it was held that he had an adequate remedy at law. In the McCray Case (4 F.2d 645) it was found that the plaintiff probably "cannot ultimately recover either at law or in equity in this case, and that this litigation ought to cease." In these three cases receivers were asked for going corporations, and it was held that an abuse of discretion was shown in appointing the receivers. The Jackson Case (111 Okla. 73,238 P. 429) was between two individuals and involved ownership of some land, and the order appointing the receiver was reversed because the plaintiff had not shown that he would probably ultimately recover.
None of the cases relied upon in the majority opinion involves a state of facts comparable to those involved in the instant case. The rules stated in those cases, quoted in the majority opinion, must be read in connection with the facts there involved. I am convinced that they do not sustain a reversal here.
On the expiration of the charter of the Oklahoma Corporation the defendants became trustees of its creditors and stockholders under section 9788, O. S. 1931 (18 Okla. St. Ann. sec. 163). Where sufficent cause exists, a receiver may be appointed to displace such statutory trustees. Fletcher, Cyclopedia Private Corporations, sec. 8202; 54 A. L. R. 1134.
True, there are no physical assets in the hands of the trustees, but if the allegations of the petition are true, as found by the trial court, the Oklahoma Corporation has numerous causes of action to recover back property and assets that have been fraudulently and unlawfully transferred. They have a cause of action to present to the federal court for the return of assets unlawfully transferred to the Nevada Corporation, the transfer being invalid because not consented to by all the stockholders. 14 C. J. 866. Such rights of action constitute assets justifying the appointment of a receiver. See Clark on Receivers, vol. 1, p. 66, sec. 57; Dalsheimer v. Graphic Arts Co. (1916, N.J. Eq.) 97 A. 497. In the last-named case the appointment of a receiver of a New Jersey corporation was sustained to the end that he might sue for the return of assets unlawfully transferred to a Delaware corporation by the same name and organized for the purpose of taking over all the assets of the New Jersey corporation and continuing the business. The decision supports the appointment of a receiver in the instant case. The court used this language, which is pertinent to the issues in the instant case:
"It seems clear, therefore, that the only practicable relief which can be afforded is the appointment of a receiver of the New Jersey corporation, which is now in an insolvent condition, to the end that the receiver may pursue such remedies as are open to him to restore to the New Jersey corporation for the benefit of its creditors and stockholders the property and property rights which have been unlawfully withdrawn from it."
The trial court was evidently of the opinion that a receiver acting under his orders could more effectively recover for the benefit of the stockholders of the Oklahoma Corporation the assets that had been unlawfully transferred than could the minority stockholders scattered over the country. The receiver would be entitled to possession of the books, records, and papers of the Oklahoma Corporation which would enable him to better prepare and try the cases that should be filed for the return of assets. It the receiver fails to secure the return of assets, the possession of the books by the receiver cannot injure the defendants.
The fact that after the appointment of the receiver in the instant case the federal district court also appointed a receiver of the assets of the Oklahoma Corporation is immaterial. By appointing the receiver, the state district court acquired prior jurisdiction of the res. The filing of the appeal with supersedeas did not divest the state court of its jurisdiction, but merely suspended the enforcement of the order appointing the receiver. Section 780, O. S. *Page 496 1931; Cameron v. White (1928) 128 Okla. 251. 262 P. 664; International Chiropractic Congress v. Johnston (1935)174 Okla. 567, 50 P.2d 1115; Waters-Pierce Oil Co. v. State (1907, Tex. Civ. App.) 103 S.W. 836 (companion case to Palmer v. State of Texas, infra); 3 Am. Jur. 194, sec. 532. On the conflict of jurisdiction being called to the attention of the federal district court, I assume it would recognize the prior jurisdiction of the state district court, as would be its duty under the above authorities and the case of Palmer v. State of Texas and Robert J. Eckhart, Receiver of Waters-Pierce Oil Co. (1909) 212 U.S. 118, which case involves a state of facts practically identical with those involved in this case.
I agree with the majority that courts should exercise caution in appointing receivers, especially of going concerns. Too often designing persons seek by receivership actions to get control of concerns for selfish purposes, and not to aid those beneficially interested. It does not appear that this is one of those cases, and I do not believe this is a proper case for this court to show its displeasure at such evils. The fact that actions to recover back the secret profits made by defendants and assets unlawfully transferred may be prosecuted by the minority stockholders is no reason why we should hold that there was an abuse of discretion in appointing the receiver. See Dalsheimer v. Graphic Arts Co., supra. Whether those actions are prosecuted by the minority stockholders or a receiver, the minority stockholders will in any event be compelled to finance them until the assets are recovered. If no assets are recovered, the costs of receivership would be borne by the minority stockholders.
Since I think there is no basis on which to rest a finding that the trial court abused its discretion in appointing the receiver, I respectfully dissent to the majority opinion.
Special Justice LYNCH concurs in this dissent.
On Petition for Rehearing.