Marion Mortgage Co. v. Edmunds

Decision Date07 April 1933
Docket NumberNo. 6818.,6818.
Citation64 F.2d 248
PartiesMARION MORTGAGE CO. et al. v. EDMUNDS et al.
CourtU.S. Court of Appeals — Fifth Circuit

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Edward E. Fleming, Richard H. Hunt, D. H. Redfearn, and Mitchell D. Price, all of Miami, Fla., for appellants.

Henry K. Gibson, Bart A. Riley, and S. P. Robineau, all of Miami, Fla., for appellees.

Before BRYAN, FOSTER, and SIBLEY, Circuit Judges.

SIBLEY, Circuit Judge.

Without any notice, general receivers were appointed for all the assets of ten corporations and one individual. Ten days later the defendants who are appellants moved to vacate the order and gave notice for a hearing. At the hearing they presented a full answer under oath and motions to dismiss the bill. The court clarified the former order so as to exclude from its operation two defendants not appealing, and by consent dismissed the bill as to a third one. An order was then passed, which recited that the court found it impossible to hear the matter completely at that time, and that it was satisfied that no one would suffer before the return about a month later of the other District Judge, and "ordered and decreed that said case be continued until the return of Judge Ritter from his vacation." No injunction of any sort was granted. An appeal was taken from the order appointing the receivers, and also from that last referred to, and supersedeas was granted.

It is moved to dismiss the appeal on the ground that neither order is one from which an appeal lies under 28 USCA § 227, the first because ex parte and not upon a hearing, and the second because a mere order of continuance. The pertinent part of section 227 reads: "Where, upon a hearing in a district court, or by a judge thereof in vacation, an injunction is granted, continued, modified, refused, or dissolved by an interlocutory order or decree, or an application to dissolve or modify an injunction is refused, or an interlocutory order or decree is made appointing a receiver, or refusing an order to wind up a pending receivership or to take appropriate steps to accomplish the purposes thereof, such as directing a sale or other disposal of property held thereunder, an appeal may be taken from such interlocutory order or decree to the circuit court of appeals." Whether an ex parte order appointing a receiver is one "upon a hearing" so as to be appealable has not been authoritatively settled. An affirmative answer is given in Joseph Dry Goods Co. v. Hecht (C. C. A.) 120 F. 760, and Haight & Freese Co. v. Weiss (C. C. A.) 156 F. 328, 334, and a negative one in Pacific Northwest Packing Co. v. Allen (C. C. A.) 109 F. 515, and Root v. Mills (C. C. A.) 168 F. 688. An appeal from such an order was upheld in Re McKenzie, 180 U. S. 536, 21 S. Ct. 468, 45 L. Ed. 657, with no discussion of its ex parte character, but there was also an order refusing to vacate the receivership which is said in Pacific Northwest Packing Co. v. Allen to be necessary to render the ex parte order appealable. We incline to think that the nature of the order is important. If it grants on emergency a temporary receivership and provides for an early hearing touching its permanency, the order is but tentative, and does not represent the settled action of the court, and like a temporary restraining order is not appealable. But, if it appoints permanent receivers deliberately and finally with no provision for a hearing, there is a refusal in advance to hear which may well be considered sufficient to justify an appeal. The present order is an unqualified appointment of receivers with instruction to take immediate possession of all property of the defendants, requires reports each sixty days, authorizes the employment and discharge of laborers and agents, the doing of business, and the defense of suits against the defendants. It concludes with a provision that "each defendant is allowed ten days from service of a copy of this order to show cause why the receivership should not be made permanent," but it does not order service nor appoint any time or place for a hearing. We need not and do not decide whether this order was at once appealable. If it was not, because the parties affected had not sufficiently exhausted their means of relief in the lower court, the later order removed that deficiency. The appellants were then present, offering to be heard. The judge, after a partial hearing, refused to complete it and continued the case to be resumed at an unfixed time in the future and before another judge who was not expected to return for a month. The necessary and direct effect was to keep the receivers in office and to confirm their appointment for an indefinite period. An appeal cannot be prevented by thus creating the receivership ex parte and then refusing to complete the hearing of a motion to vacate it. An unappealable temporary restraining order is by Equity Rule 73 (28 USCA § 723) and by 28 USCA § 381 guarded against abuse by strict limitation of its life and by requiring the hearing on it to be given precedence over all business except older matters of the same character. A receivership which without a hearing takes property from its possessor is more drastic, and, if wrongful, is of more disastrous consequence, than a restraining order, and should be even more jealously safeguarded. The order here was not merely the continuance of a case, but operated to reappoint the receivers upon a hearing within the meaning of section 227.

We think discretion was abused, both in the original appointment and in its prolongation. By ancient practice receivers were appointed only after answer. Now the power is established to appoint them upon the filing of the bill and without notice, but such an appointment should regularly be a temporary one with an early hearing provided touching its permanency. Ford v. Taylor (C. C.) 137 F. 149. Even a temporary appointment ought never to be made without notice unless notice is impracticable because the person proceeded against is out of the jurisdiction or in hiding, or there is imminent danger clearly shown of loss or destruction or concealment of property and protection cannot be afforded by a restraining order or in any other way. Mann v. Gaddie (C. C. A.) 158 F. 42; Huff v. Bidwell (C. C. A.) 151 F. 563; Joseph Dry Goods Co. v. Hecht (C. C. A.) 120 F. 760; Cabaniss v. Reco Mining Co. (C. C. A.) 116 F. 318; North America Land & Timber Co. v. Watkins (C. C. A.) 109 F. 101; Lehman v. Trust Co., 57 Fla. 473, 49 So. 502; Henderson v. Reynolds, 168 Ind. 522, 81 N. E. 494, 11 L. R. A. (N. S.) 960, 11 Ann. Cas. 977; Pyeatt v. Prudential Ins. Co., 38 Okl. 15, 131 P. 914, 37 Ann. Cas. 1915C, 894; Burton v. Pepper, 116 Miss. 139, 76 So. 762. And the emergency must not have been caused by the complainant's failure to act more promptly. Henderson v. Reynolds, supra; High on Receivers (4th Ed.) § 14. For its request to appoint receivers without notice, this bill puts forward as the specific reason that the complainants feared that the defendants would, if notified, attempt to dispose of the parcels of real estate described in the bill by leasing them under an authority granted by a state court in a case to which complainants were not parties. That authority was more than a month old when the bill was filed. If the bill was itself not a lis pendens sufficient to preserve the complainants' rights in the property described in it, an injunction would have sufficed to prevent any wrong disposition of it, and the first prayer of the bill was for that relief. There was no sudden emergency requiring a receivership without notice for ten corporations that were going concerns. The flimsiness of the pretext specially urged that Florida System, Inc., would make subleases which would work irreparable damage appears in that at the hearing this corporation was by consent dismissed from the bill. Discretion was again abused in continuing the receivership by the last order. The answer of appellants appears to swear off completely the equity of the bill. If the answer is true, there is not sufficient ground for the general receivership. It then devolved on the complainants to overcome the answer and sustain the bill by evidence. If they were prepared with their evidence — and they should have been — the court ought to have given this matter preference over ordinary business and heard it. If they were not prepared, or from any other necessity the hearing had to be postponed for a substantial time, the receiverships should have been vacated or suspended until proofs were made that severally justified them.

We have on this appeal jurisdiction to deal also with the motions to dismiss the bill. Metropolitan Water Co. v. Kaw Valley Drainage District, 223 U. S. 519, 32 S. Ct. 246, 56 L. Ed. 533; Smith v. Vulcan Iron Works, 165 U. S. 518, 17 S. Ct. 407, 41 L. Ed. 810; Cabaniss v. Reco Mining Co. (C. C. A.) 116 F. 318. We will not express an opinion on the contention touching estoppel by judgment, which can more properly be dealt with when the evidence comes in, but only on the contentions that the...

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  • Troup v. McCart
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • February 15, 1957
    ...initial brief, and is relied upon as being the one nearest in point. It is argued that our espousal of the Haynes holding in Marion Mortgage Co. v. Edmunds, supra, aligns this Court with the argument which lies at the base of plaintiff's claim to The trouble with that argument is that Hayne......
  • Boesenberg v. Chicago Title & Trust Co.
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    • June 12, 1942
    ...is a beneficiary of a trust. Handley v. Stutz, 137 U.S. 366, 11 S.Ct. 117, 34 L.Ed. 706. Such was the situation in Marion Mortgage Co. v. Edmunds, 5 Cir., 64 F.2d 248, 252. There plaintiff sought to recover for trust estates funds alleged to have been wrongfully diverted. The court held it ......
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    ...is provided. In the absence of such ameliorating conditions the court has held the order appealable under § 129. Marion Mortgage Co. v. Edmunds, 5 Cir., 1933, 64 F.2d 248; Williams Holding Co. v. Pennell, 5 Cir., 1936, 86 F.2d 230. It seems doubtful to us that the order resulting from the p......
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    • July 26, 1941
    ...Johnson v. Ingersoll, 7 Cir., 63 F.2d 86. The same principle applies to beneficiaries suing in the right of a trustee. Marion Mortgage Co. v. Edmunds, 5 Cir., 64 F.2d 248. Handley v. Stutz, 137 U.S. 366, 11 S.Ct. 117, 34 L.Ed. 706, merely decided that when some of the plaintiffs who sue joi......
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