Best Inv. Co. v. Whirley

• Decision Date: 24 March 1976
• Docket Number: No. 18818,18818
• Citation: 536 S.W.2d 578
• Parties: BEST INVESTMENT COMPANY et al., Appellants, v. Donald H. WHIRLEY et ux., Appellees.
• Court: Texas Court of Appeals

Page 578

536 S.W.2d 578

BEST INVESTMENT COMPANY et al., Appellants, v. Donald H. WHIRLEY et ux., Appellees.

No. 18818.

Court of Civil Appeals of Texas,

Dallas.

March 24, 1976.

Rehearing Denied May 6, 1976.

W. Bruce Monning, Wynne & Wynne, Wills Point, for appellants.

Lawrence Fischman, Chris Weil, Weil, Craig & Fischman, Dallas, for appellees.

CLAUDE WILLIAMS, Chief Justice.

This is an interlocutory appeal by Best Investment Company and B. J. Wynne from an ex parte order appointing a receiver. Donald H. Whirley and wife filed their verified petition in which they alleged that on July 25, 1975, they had recovered a judgment against Joe A. Irwin in the sum of $34,960 which said judgment had become final and had not been superseded. They sought (1) an ex parte appointment of a receiver to take possession of Joe A. Irwin's property so that it would be available to pay the judgment and (2) a temporary restraining order enjoining transfer of Irwin's property. On Friday, October 3, 1975, the judge of the 160th District Court of Dallas County, Texas, without notice to Best Investment Company or B. J. Wynne, appointed a receiver. Best and Wynne appeal only from that part of the judgment appointing a receiver ex parte. We reverse because (1) the record fails to show great emergency and imperious necessity for immediate appointment of a receiver; (2) no specific lien on the property is shown to exist; and (3) inadequacy of other remedy has not been shown.

Since the receiver was appointed ex parte and without notice of any kind to Best and Wynne, neither of whom were parties to the original suit, we must look to the allegations of fact contained in the Whirley petition to determine the propriety of the order granted in such a peremptory fashion. In such petition, verified by Whirley's attorney, after alleging the finality of the judgment against Irwin, it was alleged that such judgment constitutes a lien upon the real property of Irwin in Dallas County in that an abstract thereof was duly recorded in the abstract of judgment records in said county on October 1, 1975. It was further stated that Irwin purports to be the owner of substantial property, real and personal, consisting of real estate, notes secured by real estate, contract rights and choses in action arising out of sales or transfer of real estate, and capital stock evidencing his ownership in Best Investment Company. It is stated that legal title to much of the real estate owned by Irwin is in the name of Best Investment Company who holds such legal title for the benefit of Irwin. It is further stated that Best Investment Company is also the payee and obligee of some of the above described notes, contract rights and choses in action. On or about September 18, 1975, pursuant to Tex.R.Civ.P. 621a the Whirleys commenced the oral deposition of Irwin ancillary to and in aid of the judgment theretofore obtained against Irwin, for the purpose of discovering assets of Irwin subject to execution and satisfaction of the judgment. Although subpoenaed and served with a subpoena duces tecum to produce books of accounts and records, deeds, muniments of title and other evidence or indicia of ownership of property, real or personal, Irwin failed and refused to comply with such subpoena duces tecum on the date set but did agree to return on October 1, 1975, to produce the documents demanded. On such date, Irwin appeared but did not produce all of the documents and books of accounts and records required by the subpoena duces tecum. On that occasion defendant Irwin stated that he had transferred or was in the process of transferring all of his property, or interest in property to defendant Wynne for the benefit of Wynne and the wife of defendant Irwin, and purported in consideration of legal and other services to be rendered by defendant Wynne. It was then alleged that any transaction between Irwin and Best, as transferors, and Wynne as transferee, 'made or contemplated are not in the regular course of business, are done secretly, constitute a transfer of the entire assets of Irwin, for inadequate consideration, and in contemplation of the pending litigation between plaintiffs and defendant Irwin and the consequences of the judgment rendered therein and are and were with the intent on the part of defendant Irwin to hinder, delay or defeat plaintiffs in the satisfaction of their judgment against defendant Irwin' so that such transactions are fraudulent and void as to plaintiff. Plaintiffs ask that a receiver 'be appointed to take physical custody of the capital stock of Irwin in Best Investment Company, as well as all notes, contract rights, choses in action owned by Irwin, legally or beneficially, whether standing in his name or in the name of Best Investment Company, and receive from each obligor thereon all sums that may become due, and take such other action as the court may prescribe for the preservation of such property for the benefit of the parties as their interest may appear.'

As the part of their petition for injunctive relief, the Whirleys alleged that the property sought is intangible and evidenced only by notes, contracts and similar documents and, as such, such property may be easily concealed, transferred or placed beyond the jurisdiction of the court. Therefore, they requested an injunction, ex parte, to enjoin Best and Wynne to deliver possession of the personal property and refrain from making any transfer of such property.

Relying solely on these allegations, the trial court immediately and without notice appointed a receiver and authorized and directed such receiver to make demand upon Irwin, Best and Wynne to produce and deliver to him 'all notes, contracts, contract rights, or accounts and choses in action and other muniment of title or indicia of ownership thereof with respect to which the defendant Joe A. Irwin and/or the defendant Best Investment Company is or was the obligee . . ..' It was further ordered that Irwin, Best and Wynne be ordered and directed to immediately deliver into the possession and custody of the receiver named all 'notes, contracts, contract rights, choses in action and any muniment of title or other indicia of ownership thereof with respect to which the defendant Joe A. Irwin and/or Best Investment Company were or are the obligees . . ..' Irwin, Best and Wynne were restrained and enjoined from transferring, secreting and encumbering or placing beyond the jurisdiction of the court any property, real, mixed or personal, now or previously standing in the name of Irwin and/or Best Investment Company.

The statutory authority for the appointment of a receiver in Texas is found in Tex.Rev.Civ.Stat.Ann. art. 2293 (Vernon 1971) which provides:

Receivers may be appointed by any judge of a court of competent jurisdiction of this State, in the following cases:

(1) In an action by a vendor to vacate a fraudulent purchase of property; or by a creditor to subject any property or fund to his claim; or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff or any party whose right to or interest in the property or fund or the proceeds thereof is probable, and where it is shown that the property or fund is in danger of being lost, removed or materially injured.

Appellants have mounted a constitutional attack upon our statute contending that the appointment of a receiver without notice violates the due process laws of the Fourteenth Amendment to the Constitution of the United States. In view of our holding, subsequently announced, that the trial court was in error in granting the application for appointment of receiver ex parte we do not reach the constitutional question.

It has been judicially determined that the right to appointment of a receiver ex parte and without notice rests within the trial court's discretion. Such discretion, however, is subject to judicial review. Corsicana Hotel Co. v. Kell, 66 S.W.2d 760 (Tex.Civ.App.--Dallas 1933, no writ); Ellis v. Filgo, 185 S.W.2d 739 (Tex.Civ.App.--Dallas 1945, no writ); and Shell Oil Co. v. Turnbow, 142 S.W.2d 559 (Tex.Civ.App.--Texarkana 1940, no writ).

In recognition of the fact that appointment of a receiver without notice is one of the most drastic actions known to law or equity and should be exercised with extreme caution and only where great emergency or imperative necessity requires it, our courts have uniformly been reluctant to grant such harsh relief. Morris v. North Fort Worth State Bank, 300 S.W.2d 314 (Tex.Civ.App.--Fort Worth 1957, no writ). It has been held that appointment of receivers on ex parte application is to be made only in exceptional and extreme cases, Solomon v. Mathews, 238 S.W. 307 (Tex.Civ.App.--Amarillo 1922, no writ); and that appointment of receiver without notice to adverse party is one of the most drastic remedies known to the court and should be exercised only in extreme cases where right thereto is clearly shown and only then in exercise of great caution by the courts when the status of the property cannot be maintained and rights of applicants protected pending a hearing by a restraining order or temporary injunction or any less drastic remedy. Head v. Roberts, 291 S.W.2d 483 (Tex.Civ.App.--Fort Worth 1956, no writ); Marion v. Marion, 205 S.W.2d 426 (Tex.Civ.App.--San Antonio 1947, no writ); Wilkenfeld v. State, 189 S.W.2d 80 (Tex.Civ.App.--Galveston 1945, no writ); Keep 'Em Eating Co. v. Hulings, 165 S.W.2d 211 (Tex.Civ.App.--Austin 1942, no writ); Great Eastern Oil Co. v. Lewis, 49 S.W.2d 527 (Tex.Civ.App.--Dallas 1932, no writ); Hunt v. State, 48 S.W.2d 466 (Tex.Civ.App.--Austin 1932, no writ). A receiver may be appointed without notice or opportunity for adverse party to be heard only in extreme cases wherein there is great emergency and imperious necessity for immediate appointment, Johnson v. Williams, 109 S.W.2d 213...