George E. Dilley v. Jasper Lumber Company et al., 103 Tex. 22

Mr. Chief Justice Gaines delivered the opinion of the court. C. S. Basham brought this, suit against the Jasper Lumber Company upon a promissory note, alleging that the saw mill, the running of which was the Lumber Company’s business, was shut down and that work could not be resumed, for the want of ready money, and prayed that a receiver be appointed to operate the mill and to wind up the business. At the same time the Lumber Company filed an answer and joined in the prayer for the appointment of a receiver, which was accordingly done, and W. C.

McClelland was appointed and gave bond and entered upon the duties of the position. On the .... day of April, 1906, (five months after the institution of the suit and the appointment of a receiver) George E. Dilley filed a petition of intervention in which he alleged that' the Lumber Company was indebted to him to the amount of certain notes and attorney’s fees arid that it had executed to him a mortgage to secure the same.

On the 5th day of March, 1906, the court ordered the receiver to sell the property at a sum not less than $35,000, at private sale, and, if not sold in thirty days, then to advertise and sell to the highest bidder for cash. On the 21st day of April, 1906, the order of sale, was modified, the upset price being placed at $15,000. Finally all restrictions were removed from the order of sale, and the receiver was authorized to sell at any price he could get at a public sale.

The property was sold as follows: one engine, heater and pump for $475.15; the property subject to Dilley’s mortgage for $800; 115,000 feet of lumber for $375 and all the residue of the property for the sum of $500, and A. P. Laughlin became the purchaser of the whole. The sale was confirmed by the court. Thereupon came George E. Dilley, the plaintiff in error in this proceeding, and on July 5, 1906, filed a motion to remove W. C.

McClelland as receiver of the property in suit on the ground that the receivership was collusive as between him and the president of the defendant company; that the final modification of the order of sale had been made without notice to the interveners; that the sale of the property was for a grossly inadequate price; that it was his intention to have contested a confirmation of the sale; that on account of some understanding between his attorney and the judge of the court the question of confirmation of the report of sale was taken up at an unexpected hour, when his attorney was not present; and that by reason of the collusion between the receiver and the purchaser at the sale the property was sold at a grossly inadequate price.

The court declined to hear evidence in support of the motion and sustained exceptions to the allegations therein contained. The action of the court in declining to hear evidence in support of the motion is assigned as error and we think the assignment is well taken. If the facts alleged in the motion are true, the sales ought to be set aside.

The aggregate of the money received for the property was about one-tenth of the original price and about one-fifth of the second lowest price at which the receiver was authorized to make the sale. 1 The result was that notwithstanding Dilley had a lien upon property which brought $800, the price was appropriated to pay the receiver’s certificates—and it may be, other expenses of administration. For this error, the judgment must be reversed and the cause remanded.

There is no statement of facts in the record and for this reason the Court of Civil Appeals held, as we think, correctly,, that the other assignments of error could not be considered. The judgment is reversed and the cause remanded. Reversed and remanded.