Brandt v. Allen

• Decision Date: 26 October 1888
• Citation: 40 N.W. 82,76 Iowa 50
• Parties: BRANDT v. ALLEN ET AL.
• Court: Iowa Supreme Court

76 Iowa 50

40 N.W. 82

BRANDT

v.ALLEN ET AL.

Supreme Court of Iowa.

October 26, 1888.

Appeal from district court, Polk county; W. F. CONRAD, Judge.

On the 31st day of January, 1887, one B. F. Allen was appointed receiver of the Monarch Insurance Company, and qualified and entered upon the discharge of the duties required by the appointment. On the 8th day of the next month Allen resigned, and was succeeded by plaintiff. On the 23d day of May, 1887, the plaintiff filed his petition in this proceeding, entitling it as in the original action for the appointment of a receiver. The petition makes Allen and one H. L. Swords parties defendant, and alleges that Allen, prior to January 31, 1887, was the president and general manager of the Monarch Insurance Company, and as such officer had possession and control of the property of the company; that when plaintiff was appointed receiver, Allen retained almost all of the valuable assets of the company, with intent to convert the same to his own use; that he now holds a large portion of such assets, and has combined with Swords for the purpose of defrauding the company and its creditors by appropriating to the use of himself and Swords the assets of the company of which they have possession; that among said assets is a note for $10,000, bearing 6 per cent. interest, which is particularly discribed; that said note is the property of the company, and was under the control of Allen while he acted as receiver; that he failed to turn said note over to plaintiff, and that defendants are endeavoring to negotiate the same, and that, unless restrained, they will succeed, and will convert the proceeds to their own use; that Swords was formerly an officer and stockholder of the company; and that both defendants are insolvent. Plaintiff asks that defendants be enjoined from negotiating or otherwise disposing of the note; that they be required to deposit it with the clerk of the court pending the determination of their claim thereto; that they be required to appear at a time to be fixed by the court for examination touching the disposition of the assets of the company, and that such other order be made as shall seem proper to the court. Upon the day the petition was presented the court indorsed an order thereon, requiring defendants to deposit the note with the clerk, to be held subject to the further order of the court, and enjoining them from disposing of the note unless ordered by the court. They were also required to appear before the court on the next day for examination. On the 27th day of May defendants filed their answer, protesting therein that they were not parties to the suit, and that no order could made affecting them or property claimed by them, and alleging that the note in suit was personal property of Allen. The answer also contained a general denial. The cause was heard by the court, and an order made, which recited that the court found that the plaintiff had a probable right in the note; that it was under the control of defendants, and in danger of being lost; and directed defendants to bring the note, or its proceeds, if it had been negotiated, into court within two weeks; and restraining defendants from disposing of the note if it had not already been negotiated by the person in New York having it in charge. From this order the defendants appeal.Cummins & Wright, for appellants.

Lehmann & Park, for appellee.

ROBINSON, J., ( after stating the facts as above.)

1. The first question we are called upon to determine is that of jurisdiction. The petition filed by the receiver is entitled and drawn as though it were a part of the original action brought to secure the appointment of a receiver. The defendants insist that the court had no right to require them to appear in the summary manner which it did, and to order the delivery to the clerk of property which one of them claimed to own, for the reason that they were not parties to the original action. That was commenced by S. A. Robertson, a stockholder, as plaintiff. We think this proceeding must be regarded as auxiliary to the original action. It is not prosecuted by the original plaintiff, but by the receiver, to accomplish the purposes of the original action. The receiver is an officer of the court, subject to its control. Code, § 2905; McGowan v. Myers, 66 Iowa, 102, 23 N. W. Rep. 282;Cartwright's Case, 114 Mass. 238; High, Rec. §§ 144, 151; 2 Story, Eq. Jur. § 831. The application for the appointment of a receiver was based, in part at least, upon the alleged insolvency of the insurance company. When the receiver was appointed he became entitled to the custody and control of...