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Francis v. Camel Point Ranch, Inc.

Court of Appeals of Colorado, First Division

July 18, 2019

Larry Francis, individual and minority shareholder, Fred Karsten, individual and minority shareholder, and Dennis Kelly, individual and minority shareholder, Plaintiffs-Appellees,
v.
Camel Point Ranch, Inc., a Colorado corporation, Defendant-Appellant.

          Mesa County District Court No. 16CV30433 Honorable Brian J. Flynn, Judge

          Wheeler Trigg O'Donnell LLP, Scott S. Barker, Kenneth E. Stalzer, Denver, Colorado, for Plaintiffs-Appellees

          Coleman & Quigley, LLC, Joseph Coleman, Isaiah Quigley, Denver, Colorado, for Defendant-Appellant

          OPINION

          GROVE, JUDGE.

         ¶1 In this case, as best we can tell, one or more shareholders of defendant, Camel Point Ranch, Inc. (appellants), appeal the trial court's order dissolving the corporation. They purport to do so on Camel's behalf, notwithstanding their failure to get approval from - or even consult with - the receiver whom the trial court appointed to wind up the corporation's affairs. Because we conclude that only the receiver may act on behalf of the corporation, we dismiss the appeal.[1]

         I. Background

         ¶2 A group of investors formed Camel[2] in 1987 to purchase 1480 acres southwest of Grand Junction in Mesa County. The land, Camel's only material asset, was to be used by its shareholders for hunting and recreation. Camel had ten original shareholders, who together constituted the original board of directors. Over time, two of the original shareholders sold their shares and one investor bought in to the corporation, leaving a total of nine shareholders.

         ¶3 After years of discord culminated in a corporate management deadlock and a failure to elect new officers at two consecutive annual meetings, plaintiffs, Larry Francis, Fred Karsten, and Dennis Kelly, who were three of the nine shareholders, filed a claim for judicial dissolution under section 7-114-301(2), C.R.S. 2018. In a merits order issued after a five-day bench trial, the trial court entered a decree of dissolution under section 7-114-304, C.R.S. 2018.

         ¶4 The merits order stated that the trial court would "appoint a receiver to manage the business and affairs of Camel and to wind up and liquidate its assets," and that the receiver "shall have all authority and power to run Camel and protect its assets . . . and all powers reasonably necessary to carry out [those] duties." The order appointing the receiver followed a short time later, and stated in relevant part:

The receiver 'may exercise all the powers of the corporation, through or in place of its board of directors and officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors.' C.R.S. § 7-114-303(3)(b). The receiver shall have all authority and power to run Camel and protect its assets. . . .

         ¶5 Camel did not appeal the order appointing the receiver, but it - or, more precisely, attorneys apparently working on behalf of one or more of Camel's officers - did timely file a notice of appeal of the district court's final order on the merits. The notice of appeal, however, was filed without the approval of either the receiver or the trial court.[3] The receiver's lack of involvement, together with the officers' lack of authority to act on behalf of the now-dissolved corporation, prompted plaintiffs to file a motion to dismiss the appeal. We grant that motion for the reasons outlined below.

         II. Discussion

         ¶6 We do not reach the merits of the trial court's dissolution order because we hold that once the receiver was appointed, the right to appeal vested in him. Appellants, therefore, without having made any demand on the receiver to appeal (and without requesting relief from the trial court if the receiver refused), cannot take up the corporate mantle and appeal the trial court's order in Camel's name. Accordingly, we dismiss the appeal.

         A. Effect of a Receiver's Appointment on Corporate Powers and Authority of Shareholders and Officers to Act on ...


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