Merchants' & Manufacturers' Nat. Bank of Detroit v. Kent Circuit Judge

Decision Date14 April 1880
Citation43 Mich. 292,5 N.W. 627
PartiesMERCHANTS' & MANUFACTURERS' NATIONAL BANK OF DETROIT v. KENT CIRCUIT JUDGE.
CourtMichigan Supreme Court

A suit in equity is not pending until the bill is filed, and the appointment of a receiver before that time is invalid. The law partner of the solicitor for complainant is not a proper person for receiver; he is presumptively as much interested as the solicitor. Where a party had replevied goods about the time of the appointment of a receiver therefor, in a proceeding to which he was not a party, held, that an order enjoining him from interfering with the possession of such property was erroneous, took from him a legal right, and was appealable.

Mandamus.

COOLEY J.

The application for a mandamus in this case brings under review questions of the validity and propriety of the order appointing a receiver. The bill was filed to foreclose a chattel mortgage. The mortgage was by Hebbard & Graff merchant millers of Grand Rapids, to Philip M. Graff, and bore date March 17, 1880. The purpose was to secure the mortgagee for having become accommodation indorser for the mortgagors on a large amount of commercial paper. The mortgage covered "all the flour, wheat, corn, oats, bran and feed owned by the parties of the first part, and situated in the city of Grand Rapids, Michigan, whether on the track or in the mills or warehouses, or in the elevator at Berlin Ottawa county, Michigan; all the barrels, sacks, bags, tools and office furniture and fixtures, including safes, situated in and about and used in connection with their two mills being three large teams and larries, two pairs of large sleighs and one light delivery wagon, and the blankets used with said teams. Also the engine and boiler used in the Valley City Mills, and put in by Hebbard & Graff since their lease of the same, and the shafting and pulleys used by them in connecting the engine with the mill and machinery. Also all the wheat, corn and oats which may be purchased by the parties of the first part and delivered to them in the city of Grand Rapids, either on the track, in store or in their mills, and all flour, feed and bran manufactured by them while any portion of the debts secured by this mortgage remains unpaid."

The mortgage reserved to the mortgagor the privilege of making sales in the ordinary course of their business, and provided that "in case of the non-payment of the said notes, or any of them, at maturity, by the party of the first part, or if the party of the second part shall at any time deem himself insecure, he, ** whether the party of the part shall have paid anything on said notes or not, is hereby authorized to enter upon the premises of said party of the first part, or any place or places where the said goods and chattels, or any part or portion thereof, may be, and take possession thereof, and sell and dispose of the same at private sale or public auction, *** whether any of such notes have matured or not, and apply the proceeds thereof to the payment of said notes as fast as they mature."

A bill to foreclose this mortgage was filed the day after its date. It was alleged therein that one of the notes, the payment of which was secured by the mortgage, was long past due, and that another became due March 17, 1880, and another March 18, the day the bill was filed, and both remain unpaid, and that by reason thereof the whole sum secured by the mortgage, amounting to $38,800, has become due and payable immediately; that by reason of disastrous speculations the mortgagors have become insolvent, and have transferred to complainant the mill property whereon they conducted their business; that the wheat and other unground grain described in the mortgage cannot be profitably sold and converted into money except after being ground; that to manufacture said grain into flour, and other proper products, will yield larger returns, and be more for the interest of all parties concerned, than to sell or dispose of the same in an unmanufactured state; that the total value of all the mortgaged property will not exceed $40,000, and if disposed of at forced or auction sale will not yield more than $30,000, or thereabouts. The bill prays for the appointment of a receiver, and nominates the law partner of the solicitor for complainant as a suitable person to be appointed.

No persons were made parties defendant to this bill except the mortgagors. Late in the evening of March 18th, and before the bill had been filed, it was presented to the circuit judge, at his dwelling-house, and an application made for the appointment of a receiver as prayed. The mortgagors appeared at the same time, by a solicitor of the court, and consented to the appointment. The circuit judge, apparently looking upon the case as an amicable proceeding, in which all parties concerned were working in harmony to preserve and dispose of the property for the benefit of all, made the appointment prayed for. The appointment purports to be one made in open court, but the court was not in session at the time, and the bill not being then filed, there was no cause pending. The order of appointment directed the receiver to proceed to manufacture the grain mortgaged into flour and other proper products, and to sell in the usual course of trade and on credit.

It soon appeared that the proceeding was far from being an amicable one, except so far as the mortgagors and mortgagee were concerned. At the very time the mortgagee was having his bill for foreclosure prepared and obtaining his order for a receiver, other parties were suing out writs of replevin for some...

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2 cases
  • The State ex rel. Klotz v. Ross
    • United States
    • Missouri Supreme Court
    • November 9, 1893
    ...an order on the thirteenth of March expressly ratifying and confirming the order of the third and in terms appointing Klotz anew. Bank v. Kent, 43 Mich. 297; S. C., N.W. 627; Jones v. Schall, 45 Mich. 380; S. C., 8 N.W. 68; Jones v. Bank, 10 Col. 473; S. C., 17 P. 272-276; Anonymous, 1 Atk.......
  • Cobb v. Judge of Superior Court of Grand Rapids
    • United States
    • Michigan Supreme Court
    • April 14, 1880

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