From out of the west the stranger came, down the Blue Ridge Mountains to Martinsville, Va.

Slight and blonde - some would call him callow - he looked to be no more than 30, but had to be older. He showed up unannounced and uninvited a couple of months back, and called on Richard M. Simmons Jr., the head of Martinsville's biggest business, American Furniture Co.

The securities analyst from Sierra Associates who'd made the appointment with Simmons introduced the stranger as his client, Clyde W. Engle of Chicago. Dick Simmons recognized the name.

As politely as it is possible to do such things Engle said his piece: I now own 6 percent of your company, he announced, and I am buying more, enough to make me the biggest stockholder.

It was a surprise to Simmons who had come to work that morning thinking he was not only the chairman of the board and president of American of Martinsville, but also the largest shareholder.

"Mr. Engle asked how I would feel about his being on the company's board of directors," Simmons told other stockholders later. "I told him that I would be opposed to it."

That was the initial confrontation between Engle and Simmons, the first face-off in a struggle with a $65-million-a-year Virginia business at stake.

It is a showdown between quiet country furniture makers and hard-charging urban MBAs who are about as welcome in southern Virginia as the Yankee cavalrymen who swept across the Piedmont more than a hundred years ago.

Engle's reputation preceded him, because American of Martinsville executives recognized him as the man who'd taken over Hickory Furniture, a North Carolina rival in the bedroom suite and sofa business.

Engle's name has become well-known at the Securities and Exchange Commission as well. Three times in the past five weeks, the government stock market regulators have charged Engle and his associates with breaking federal laws in their business dealings.

The two latest SEC cases were filed last Thursday in U.S. District Court in Washington, charging Engle's companies violated securities fraud laws to gain control of one company and failed to file public reports for another firm.

In June the SEC filed a civil suit in Chicago accusing Engle and others of illegally freezing out minority shareholders when they took over a suburban Chicago bank.

Besides the bank, Engle, 36, controls or owns large blocks of stock in a maze of public and private companies stretching from the Atlantic Seaboard to the Rocky Mountains. In recent years he has grabbed control of the North Carolina furniture company, tried without success to take over a Denver sporting goods company and bought and sold businesses ranging from a used car auction and a second-hand hospital supply company to a computer leasing outfit and a pop-up toaster maker.

Engles' companies also include one that was forced into involuntary bankruptcy, another that filed for bankruptcy of its own accord and several that are locked in complex legal battles.

All are unlikely corporate cousins for American of Martinsville.

By no means a mom and pop business, American Furniture is still a family-type operation, the kind of company that gives employees trophies, blenders or television sets for doing a good job.

American's seven factories scattered around Martinsville (population: 19,650) turned out $65.5 million worth of middle American furniture last year, most of it what's known in the trade as case goods - chests of drawers, night stands and the like.

The company's sales increased by 16 percent in 1978 and profits more than tripled, from $666,000 (24 cents a share) in 1977 to $2.1 million (75 cents). The uptrend is continuing this year, with sales for the first half climbing from $16.5 million to $30.5 million and earnings increasing from 11 cents a share to 38 cents.

American pays no dividends and has $19.8 million in retained earnings, a stash of cash that makes the company an attractive takeover target. Like most furniture makers, American's stock is relatively cheap, selling for about $6 a share.

The stock is traded over-the-counter and the 11 men on the board of directors - mostly American officers and local business people - control about a quarter of it. Simmons' 7 percent was the biggest single block until Engle bought 7.3 percent for $651,000 and filed formal notice with the SEC that he intended to increase his holdings to 20 percent.

To keep the purchases secret, Engle made them in street names, through a chain of companies he controls. Reports to the SEC show the American of Martinsville stock was purchased by a company called Telvest. Telvest is a wholly owned subsidiary of Telco Marketing Services Inc. Approximately 83 percent of Telco is owned by Libco Corp. Engle is chairman of both Libco and Telco and according to the SEC owns 51 percent of the stock of Libco. Another 6.5 percent of the Libco stock is in trust funds for Engle's children.

Details of Libco's finances are difficult to obtain because the company is delinquent in filing reports to the SEC. Last week the SEC sued Libco and Engle, seeking a court order to force them to file an annual report for 1978, which was due March 31, and a report for the quarter ended March 31, which was due May 15. The SEC lawsuit says Libco has been as much as 14 months late in making routine reports to stockholders and asks an injunction requiring the company to file on time.

Telco also was sued by the SEC last week in a two-count civil complaint accusing the company of fraud and making false statements in reports to the commission and to shareholders of Outdoor Sports Inc., (OSI) a Denver firm that Telco tried to take over.

The SEC suit shows what American of Martinsville's management is up against in resisting Engle's advances, describing a series of Machiavellian maneuvers by Telco to outwit the management of OSI and gain control of that $51 million-a-year company, whose shares are traded on the American Stock Exchange.

As of last April, Telvest was the biggest shareholder of OSI, owning about 21 percent of its stock. The lawsuit charges Telvest, et. al., of "engaged in fraudulent, deceptive and manipulative acts or practices" in attempting to increase its ownership of the company.

OSI's management resorted to an elaborate series of maneuvers of its own to keep out Engle, and some of OSI's tactics have also been overturned by local courts in Colorado.

Fearful that Telvest would succeed in acquiring enough of its common stock to vote in new management at its annual shareholders meeting, OSI last January announced it was creating a new class of preferred stock and would declare a special stock dividend and issue shares of the new preferred to all present shareholders.

The new preferred was immediately spotted as a Trojan horse by Telvest. Among provisions buried in the boilerplate specifications of the new issue was the rule that 80 percent of the preferred shareholders had to approve any merger. That meant that even if Telvest bought 51 percent of OSI common stock, its plans would be thwarted, it would have to get 80 percent of the preferred stock. Telvest sued and got an injunction blocking the stock dividend.

Then OSI management threw up a second defense, asking shareholders to approve a "supermajority" rule, under which 80 percent of the common stock would be needed to consumate a merger. OSI management made clear its intent was "to prevent the possibility of the Engle group or any other person from gaining control of OSI."

Supermajority provisions are frequently adopted by companies that fear they are takeover targets; Geico shareholders approved one earlier this year.

To prevent OSI management from getting the 51 percent of the shareholders vote needed to implement the supermajority rule, Telvest came up with a ploy that the SEC charged was intended to "disenfranchise" OSI shareholders.

Telvest announced that it would make a tender offer for an additional 10 percent of OSI's stock at a premium over the market price. If more than 10 percent of the stock were tendered, OSI said it might buy the additional shares as well.

In order to take advantage of the tender offer, OSI shareholders had to tender their stock to Telvest and give Telvest an irrevocable proxy to vote the tendered shares. The deadline for the offer was 48 hours before OSI's annual shareholders meeting.

Noting that the fine print in the Telvest offer did not require the company to buy any of the shares, SEC lawyers charged the real purpose of the offer was to keep shareholders from voting at the OSI annual meeting. If Telvest rejected the offered stock on the eve of the annual meeting, there would not be time to return the proxies to the stockholders. Without the proxies, the stockholders couldn't vote. OSI might not be able to get a quorum for the meeting and wouldn't be able to adopt its supermajority rule.

A Colorado judge stopped Telco's tender offer in April and the SEC charged last week that the whole scheme was meant to shareholders. shareholders;. The government complaint also accused Telco of making false and misleading statements to OSI stockholders.

The third SEC lawsuit against Engle and associates was filed in Chicago on June 11, amending two previous SEC court cases allegedly freezing out the minority stockholders in a bank.

Engle and associates organized a company called GSC and then arranged to merge with Lincolnwood Bancorporation (LBI) a company traded on the American Exchange, which owned The Bank of Lincolnwood, in a Chicago suburb.

After the merger, Engle's group, which owned 55 percent of GSC, decided the company should "go private," have its stock deleted from the AMEX and no longer be a public company. Shareholder approval was needed, but Engle's group of 13 investors controlled a majority of the stock and did not even tell the 6,400 public investors they were being eliminated.

They utilized a legal provision that allows a corporation to take any action that could be taken at a stockholders meeting without calling a meeting so long as the written consent of a majority of the shareholders is obtained.

Two appraisers evaluated the minority stock and the company paid the minority shareholders $1.15 per share for stock that had a book value of $1.61 per share. Earlier, the SEC charged, Engle agreed to buy stock from some insiders for $2.52 a share.

The SEC contended the bank's shareholders should have been told at the time of the merger that the company planned to "go private."

The government also charged that Engle borrowed $700,000 from GSC by posting as collateral 380,000 shares of Libco stock, which Engle reported was worth $2 million. In fact, the SEC said, at then current over-the-counter prices the stock was worth only $475,000 and probably less than that because the shares could not be readily sold. CAPTION: Picture 1, Employes receive praise and prizes (blender, lower left) from supervisors at American of Martinsville. By Tommy Thompson for The Washington Post; Picture 2, American's chairman of the board, Richard M. Simmons. By Tommy Thompson for The Washington Post