Campau v. Detroit Driving Club

• Decision Date: 25 April 1902
• Citation: 130 Mich. 417,90 N.W. 49
• Court: Michigan Supreme Court
• Parties: CAMPAU et al. v. DETROIT DRIVING CLUB (MORAN et al., Interveners).

90 N.W. 49

130 Mich. 417

CAMPAU et al. v. DETROIT DRIVING CLUB (MORAN et al., Interveners).

Supreme Court of Michigan

April 25, 1902

Appeal from circuit court, Wayne county, in chancery; Robert E Frazer, Judge.

Bill by Daniel J. Campau and others against the Detroit Driving Club in which Fred T. Moran and another intervene. From an order dismissing the intervention, interveners appeal. Reversed.

Fred A. Baker, for appellants.

Moore &amp Moore (Otto Kirchner, of counsel), for appellees.

LONG J.

The Detroit Driving Club is a corporation, and in 1899 owned and possessed the race track and grounds in Grosse Pointe, near Detroit, together with a quantity of personal property used in connection with the race track. The real estate was incumbered with a first mortgage of $75,000 and a second mortgage of $60,000. March 30, 1899, the complainants obtained two judgments against the Detroit Driving Club in the circuit court for Wayne county; one of these judgments being for $18,366 and costs, and the other for $10,343.72 and costs. March 31, 1899, execution was issued on these judgments. April 4th, one of these executions was levied on the race track grounds of the club, and also upon the personal property used in connection with the race track. April 22d, execution on the other judgment was returned unsatisfied. April 24th, the judgment creditors' bill in this cause was filed. December 7th, Daniel J. Campau was appointed receiver under said judgment creditors' bill of all the property and assets of the Detroit Driving Club. At the time of the appointment of the receiver, no sale had taken place under the execution levy. April 3, 1900, long after the receiver had been appointed and had qualified, the sheriff sold the race track and grounds under the execution levy to Daniel J. Campau, Francis F. Palms and George M. Vail for $18,692.47, and the following day he sold the personal property to the same parties for $1,089, the aggregate amount realized being the amount due upon the judgment, with costs and expenses of sale. The execution was returned satisfied. The execution sale was made without leave of the court, and without any application being made to the court, and the only purchaser at the execution sale was Daniel J. Campau, the receiver appointed by the court. April 15, 1899, the People's Savings Bank recovered judgment in the circuit court for the county of Wayne against the Detroit Driving Club for $14,170 and costs. November 16th, execution was issued on said judgment, and on November 23d it was levied upon the race track and grounds of the club at Grosse Pointe. November 29th, said judgment was assigned by the bank to Fred T. Moran and Worthy L. Churchill, the intervening petitioners in this case. February 6, 1901, the intervening petitioners filed their petition, setting up the fact that the execution sale was made without leave of the court, and praying that it might be declared illegal and void by a decree of the court. They also prayed that the real and personal property of the club might be decreed to be sold free and clear of all liens and incumbrances, and that the proceeds of the sale be paid into court for distribution among the secured and unsecured creditors of the Detroit Driving Club, according to their respective rights and priorities. They also prayed that the liens and incumbrances, of every name and nature, upon said real and personal property, might be ascertained, and the rights and priorities of the several claimants determined. On the filing of this petition, an order to show cause was granted. On the return day of the order to show cause Daniel J. Campau filed an objection and answer. Subsequently, a hearing was had before the circuit court of Wayne county. June 27, 1901, an order was entered dismissing the petition. Omitting the formal part, the order of dismissal is as follows: '(1) The court finds that, notwithstanding the appointment of the receiver in this cause, the complainants herein had a legal right to sell the race track and real estate of the Detroit Driving Club on the execution levy made by them thereon before the appointment of said receiver, without obtaining leave from the court to make such execution sale. (2) The court finds that it was legally competent for the complainants, notwithstanding the fact that said Daniel J. Campau was receiver, to become the purchasers of said property on such execution sale. (3) It is ordered and decreed that the said second intervening petition be, and the same is hereby, dismissed.' The intervening petitioners appeal from the above order. Several claims are made by counsel for complainants in the creditors' bill filed why this second intervening petition cannot be maintained.

1. It is said that, after the receiver was appointed, and before he had taken possession of any property, it was all sold under said execution levy. It appears that this property was sold March 3, 1900. Mr. Campau was appointed receiver of all the estate, both real and personal, on December 7, 1899. At the time of his appointment he was in possession of this property as the chief executive officer of the corporation. He qualified as receiver, and on the 29th of December, 1899, three months before the execution sales of March 29 and April 3, 1900, he, as receiver, filed petition in this cause for leave to borrow money and conduct races; and the petition was granted. In that petition he made the following statement: 'He has heretofore been appointed receiver of all the property of the above-named defendant, and he has filed his bond as such receiver, entered upon the duties of his office; and said defendant has assigned to him, as such receiver, all of its property, and he has taken possession of the same.' It appears also in such petition that the property he had taken possession of consisted of the race track and the personal property. The first intervening petition filed in this cause was answered by Mr. Campau and sworn to on the 17th day of March, 1900, about two weeks before the execution sales, in which Mr. Campau states that 'he was appointed as receiver, and that he is now in possession of the property and assets of the club as such receiver.'

2. It is claimed by complainants' counsel that the charges contained in this second petition (now before us) are substantially the same as those made in the first, the only difference being that in the second petition it is alleged that between the filing and the hearing of the first petition the property was sold under complainants' execution. We think this is not according to fact. The first intervening petition was filed for the removal and discharge of Mr. Campau as receiver and the appointment of a disinterested person in his place; that he (Mr. Campau) be required to give an accounting of his management of the affairs of the club; that the liability of Mr. Campau for neglecting, failing, or refusing to apply the first earnings of the club and its subsequent earnings to the payment and liquidation of said indebtedness to the People's Savings Bank, as he was directed to do by the action and resolution of the board of directors, be ascertained and determined, and the amount thereof be established by a decree of the court, and that a personal judgment or decree be entered against Mr. Campau therefor. The second intervening petition was not filed until February 6, 1901. The only object of this petition is to obtain a decree declaring the execution sales illegal and void because they were made when the property was in the hands of the court by its receiver. Incidental to this relief, the petition prays that direction may be given to the receiver to sell the real and personal property of the corporation free and clear of all liens and incumbrances, and distribution made of the proceeds among the secured and unsecured creditors. This second intervening petition is based upon a fact which occurred after the first petition was filed, viz., the execution sales of March 29 and April 3, 1900. Thus it appears that the only object of the second intervening petition is to obtain a decree declaring the sales void. The denial of the first petition is no bar to the filing of the second intervening petition.

It appears from the record that the execution levy held by the petitioners under the assignment from the People's Savings Bank was subsequent to the one held by the complainants, and it was prior to the appointment of the receiver on the judgment creditors' bill. Under our statutes relative to execution sales the petitioners had a right to redeem from the prior sales at any time within 15 months from the day the sale was made. Section 9185, Comp Laws 1897. ...