Benjamin v. Staples

• Decision Date: 26 October 1908
• Docket Number: 13,167
• Citation: 93 Miss. 507,47 So. 425
• Court: Mississippi Supreme Court
• Parties: ANNA L. BENJAMIN v. ALBERT L. STAPLES, RECEIVER

47 So. 425

93 Miss. 507

ANNA L. BENJAMIN v. ALBERT L. STAPLES, RECEIVER

No. 13,167

Supreme Court of Mississippi

October 26, 1908

FROM the chancery court of Jackson county, HON. THADDEUS A. WOOD Chancellor. Mrs. Benjamin, appellant, was complainant m the court below, and Staples, receiver of the Scranton State Bank, appellee, was defendant there. From a decree in defendant's favor complainant appealed to the supreme court.

The opinion of the court states the facts.

Affirmed.

W. R Harper, for appellant.

The appointment of the receiver, being without authority of law was void; first, because the creditors asking his appointment neither obtained a judgment nor held any specific lien of any sort on the property asked to be placed in the receiver's hands; second, because the so-called bill was in reality merely an ex parte petition, containing no prayer for process against anyone, and the court had no authority to appoint a receiver on an ex parte proceeding; third, because, at the time of the appointment of the receiver, there was no suit pending, in the sense understood and required by the law before the chancery court has a right to appoint a receiver. In addition the record shows that the so-called bill had not been legally filed, and no summons had been issued or served upon anyone at the time the order for the appointment of a receiver was made.

It is well settled that a receiver will not be appointed in an ex parte proceeding. Hardy v. McClellan, 53 Miss. 507; Whitehead v. Wooten, 43 Miss. 523; Hoyle v. Moore, 4 Iredell (N. C.) 177; White v. Thomas, 52 Miss. 52.

From the testimony in this case it is evident that the alleged bill was handed to the clerk who marked it filed, and it was then immediately taken out and away and not returned to the clerk until after the order appointing the receiver had been made. Hence the alleged bill was not really on file at the time of the appointment of the receiver. Cooper v. Frierson, 48 Miss. 310; Bank v. Hoyt, 74 Miss. 221, 21 So. 12.

Even if it be conceded that the bill was adversary and not ex parte; that the prayer was sufficient and the filing properly made; yet, we insist, at the time of the appointment of the receiver there was no pending suit. The court will observe that there is a broad distinction between what constitutes the commencement of a suit and the pendency of a suit. The appointment of a reciever is an ancillary proceeding, and can only be had when there is a pending suit, lis pendens. It is settled law that a suit is commenced upon the filing of the bill, but that it does not become a lis pendens until the service of process. Allen v. Maddeville, 26 Miss. 399; Allen v. Poole, 54 Miss. 332; Howell v. Sports, 80 Ala. 70.

Originally it was held that a receiver could be appointed only after service of process and answer filed. Afterwards the rule was modified so that appointment could be made upon notice, after service of process, but before answer. This has been modifiled by our statute law so that a receiver may, in proper cases, be appointed without notice. But we know of no statute or decision dispensing with the necessity of service of process upon the defendant. Surely a defendant will not be required to be deprived of his property without the issuance or service of process, unless some statute clearly and specifically authorizes it.

The alleged assignment made by the bank to the receiver shows a friendliness, at least, if not a collusion, between the creditors asking for a receiver and the bank officers, the manifest purpose of which was evidently to deprive creditors of their right of attachment if prossible. However this assignment is without doubt void, because, in the first place it is a general assignment and the law in reference to general assignments was not complied with. The assignment was executed by the president, and such an assignment, at most, could only be made by the directors, and by them probably only on authority of the stockholders. There is no pretense that any such authority was ever given.

Ford, White & Ford and May, Flowers & Whitfield, for appellee.

The only question to be decided on this appeal is, whether or not the appointment of the receiver was void. This is a collateral attack upon the appointment, and of course it must be found to be void before the attack will avail the appellant,

The several, grounds upon which appellant assails the appointment are included in this one, namely, that she charges that there was no suit pending in the chancery court, at the time of the appointment of the receiver. It is undisputed that the bill was handed to the clerk by reputable counsel to be filed, and it was marked filed by the clerk and not taken from the clerk's office for several hours, and only then by counsel who carried it from the clerk's office in Jackson county over to Gulfport in Harrison county to be presented to the chancellor.

In this state a chancery suit of this kind is pending from the time the bill is filed in such sense as to give a chancellor jurisdiction to appoint a receiver. Hardy v. McClellan, 53 Miss. 511; Barber v. Manier, 71 Miss. 726, 15 So. 890; Pressley v. Harrison, 102 Ind. 14; Beach on Receivers, § 117; Bank v. Hoyt, 74 Miss. 221, 229, 21 So. 12.

The bill for appointment of the receiver was filed for the purpose of having the procedure take the proper course; and process was issued on it on the very day it was filed. It was taken from the files of the clerk only for a very short while, and solely for the purpose of its being presented to the chancellor at Gulfport. It does not appear whether a copy was retained by the clerk in compliance with Code 1906, § 512. There is no pretense that the filing of the bill was for any purpose other than to begin a suit in chancery to recover the claims of the parties complainant therein against the Scranton State Bank and to preserve the property of the bank in which the complainants had an equitable interest. It certainly cannot be earnestly contended that the taking of the bill from the clerk's files in order that it should be carried over to Gulfport for presentation to the chancellor, constituted a legal withdrawing of the suit which had been instituted by the previous filing of the bill.

To satisfy the requirement that there must be a suit pending before appointment of a receiver, it is only necessary that a suit shall have been commenced. The requirement is that there be a controversy between the parties asking for the appointment and other persons interested in the property sought to be placed in the hands of the officer of the court. The fine distinction, made by opposing counsel, between a pending suit and a suit that has been instituted, has no importance in the consideration of the question here before this court. There is no controversy here between the receiver and persons who acquired a claim to the property without notice of pending litigation. We are not insisting, nor do we have to show, that there was any pending suit which had advanced to such stage as to constitute constructive notice to third parties acquiring an interest in the property in controversy. We only insist that here was a case in court giving the chancellor jurisdiction to appoint a receiver. 17 Ency. Pl. & Pr. 686.

The application for and appointment of a receiver may be made at the time of filing the bill or at any time thereafter during the pendency of the suit and until its final disposition. Crowder v. Boone, 52 Ala. 220; Bank v. Kent, 43 Mich. 292; Alderson on Receivers, § 53.

Code 1892, § 574 (Code 1906, § 625), under which the receiver was appointed, would be of little force in a case like this which faced the creditors of the Scranton State Bank on July 27, 1906, if process had to be issued and served before appointment of a receiver could be made. The very reason for the appointment of the receiver without notice was that the directors had closed the doors of the bank two days before, and the creditors did not know what was being done the property and affairs of the bank being in the hands...