Baker v. Denver Tramway Co.

• Decision Date: 06 November 1922
• Docket Number: 10335.
• Citation: 210 P. 845,72 Colo. 233
• Court: Colorado Supreme Court
• Parties: BAKER et al. v. DENVER TRAMWAY CO. et al.

210 P. 845

72 Colo. 233

BAKER et al. v. DENVER TRAMWAY CO. et al.

No. 10335.

Supreme Court of Colorado, En Banc.

November 6, 1922

Rehearing Denied Dec. 4, 1922.

Error to Distric Court, City and County of Denver; Clarence J Morley, Judge.

Suit by Albert J. Baker and others against the Denver Tramway Company and others. From a judgment of dismissal, plaintiffs bring error.

Reversed.

John A. Rush and Foster Cline, both of Denver, for plaintiffs in error.

Gerald Hughes, of Denver, for E. Stenger.

H. S Robertson, of Denver (A. E. Bogdon, of Denver, of counsel) for Denver Tramway Co.

TELLER J.

Plaintiffs in error brought suit in the district court of the city and county of Denver to have adjudged invalid an ordinance of said city purporting to grant to defendant in error the Denver Tramway Company the right to construct and operate a street railway on Downing street in said city. Defendants filed separate demurrers, challenging the jurisdiction of the court and the sufficiency of the complaint. The demurrers were sustained, on the ground that the complaint did not state a cause of action. The plaintiffs elected to stand upon their complaint, and the cause was dismissed. It is now before us on error.

The complaint alleged ownership by plaintiffs of property abutting upon Downing street along which the defendant company had obtained from the city council, by an ordinance, a so-called revocable permit to construct and maintain a track as a part of its main line; that the company had theretofore obtained from the city a franchise to operate in certain named streets, not including Downing street, which franchise had been granted by a vote of the taxpaying electors, according to the provisions of article 20 of the state Constitution, and that said article 20 expressly prohibited the granting by the city of Denver of any franchise relating to any street, alley, or public place, except upon the vote of the qualified taxpaying electors; that the so-called permit was in effect a franchise upon which no vote had been had. The complaint further alleged that the permit was in no proper sense revocable, since the right to revoke it at any time prior to May 15, 1926, a period of nearly five years from the date of the permit, was conditioned upon the city's repaying to the company 80 per cent. of the amount paid out and expended under said permit, not including costs of repairs. There were other allegations of the complaint which need not be considered.

The question of jurisdiction raised by the demurrers, and now argued by defendants in error, was not determined in the trial court, and plaintiff in error does not discuss it, on the stated ground that it cannot be considered here, because no assignments of error have been filed raising the question. Such is not the rule. Under rule 34 of this court (161 P. x), we may consider any error appearing of record, though counsel may not discuss any error not assigned. The general rule is that the question of jurisdiction may be raised at any stage of an action, and that, too, without an assignment of error on the subject. 3 C.J. p. 1343.

The defendant company was in the hands of a receiver appointed by the United States court of the district of Colorado, and it is contended that, unless plaintiff obtained from that court leave to sue the receiver, the state court did not obtain jurisdiction of the person of defendants, or of the subject-matter of the suit, and that an allegation in the complaint that leave, had been granted was necessary. Counsel for defendants in error concede that, under a federal statute, receivers appointed by United States courts may be sued without leave therefor having been first obtained. They insist, however, that the statute in question applies only to cases in which the possession of property by the receiver is not affected. The statute (section 66 of [72 Colo. 236] the United States Judicial Code [U. S. Comp. St. § 1048]) is as follows:

'Every receiver or manager of any property appointed by any court of the United States may be sued in respect of any act or transaction of his in carrying on the business connected with such property, without the previous leave of the court in which such receiver or manager was appointed; but such suit shall be subject to the general equity jurisdiction of the court in which such manager or receiver was appointed so far as the same may be necessary to the ends of justice.'

The question of the application of the statute to this case depends upon whether or not the act sought to be prevented is an act or transaction of the receiver in carrying on the business connected with the property in his charge. This question is answered in the demurrer of the tramway company, which alleges that:

'The complaint affirmatively shows that the matters and things complained of relate solely to, and solely concern the management, operation, possession and administration of the defendant's property in the custody of its receiver.'

This statement is correct. The permit was obtained after the receiver was appointed. It is not, then, a property interest which came to him by the court's decree, as a part of the property to be protected for the creditors. It is a thing sought to be added to that property, the right to which is in question. This is precisely what, according to the statute, makes leave to sue unnecessary. It is 'in respect to an act in carrying on the business connected with said property.' But the objection would not be valid, were this admission not made; nor would it be available if the statute were not in force.

The great weight of authority is to the effect that failure to obtain permission to sue a receiver does not affect the jurisdiction of the court in which the suit is brought. The contrary view is based upon the case of Barton v. Barbour, 104 U.S. 126, 26 L.Ed. 672, which has been assumed to lay down a general rule on the subject. Such is not the case. The opinion, by Justice Woods, is, by its terms, limited to the facts in that case, and no general rule can be derived from it. This decision is said to have been the cause of the enactment of the federal statute above mentioned. Justice Miller strongly dissented, pointing out that the decision was not in accord with the practice of Courts of Chancery in England, in which, if it was thought that a plaintiff in an action was interfering with the functions of a receiver, the court would restrain him by injunction, or punish him for contempt. This eminent judge strongly approved the language of the Wisconsin court in Kinney v. Crocker, 18 Wis. 74, where it is said:

'The authorities relied on by the appellant only show that a court of equity will, on a proper application, protect its own receiver where the possession which he holds under the authority of the court is sought to be disturbed, or where he is sued for any act done by the order or direction of the court. In such cases it will sometimes punish as for a contempt any attempt to disturb the possession of its officer; it will sometimes restrain suits at law, and draw to itself all disputed claims in respect to the subject matter; and sometimes it will allow the suits at law to proceed. But in all these cases it is not a question of jurisdiction in the courts of law, but only a question whether equity will exercise its own acknowledged jurisdiction of restraining suits at law under some circumstances, and itself dispose of the matter involved. It follows that although a plaintiff in such a case, desiring to prosecute a legal claim for damages against a receiver, might, in order to relieve himself from the liability to have his proceedings arrested by an exercise of this equitable jurisdiction, very properly obtain leave to prosecute, yet his failure to do so is no bar to the jurisdiction of the court of law, and no defense to an otherwise legal action on the trial.'

That the question is not strictly jurisdictional appears in Justice Woods' opinion, where it is said:

'But if, by mistake or wrongfully, the receiver takes possession of property belonging to another, such person may bring suit therefor against him personally as a matter of right; for in such case the receiver would be acting ultra vires.'

The court then quotes from the case of Hills v. Parker, 111 Mass. 508, 15 Am.Rep. 63, in which the court, by Justice Gray, said:

'The decree of a court of chancery appointing a receiver entitles him to its protection only in possession of property which he is authorized or directed by the decree to take possession of. When he assumes to take or hold possession of property not embraced in the decree appointing him, and to which the debtor never had any title, he is not acting as the officer or representative of the court of chancery, but is a mere trespasser, and the rightful owner of the property may sue him in any appropriate form of action for damages or to recover possession of the property illegally taken or detained.'

In the Wisconsin case above mentioned it is pointed out that under the rule, which it rejects, a federal court might draw to it all litigation affecting property in the hands of a receiver appointed by such court, thus divesting state courts of jurisdiction, unless the federal court saw fit to grant it. The court further said that state courts should not abdicate their jurisdiction over a great class of actions, unless it was established that they are bound to do so, and that it was not so established.

In Chautauque County Bank v. Risley, 19 N.Y. 369, 75 Am.Dec 347, it was held that a suit against a receiver without leave subjects plaintiffs to the charge of contempt, but does not go to the jurisdiction. The doctrine of the Wisconsin case above stated is approved either by...