Carter v. Mitchell

• Decision Date: 19 May 1932
• Docket Number: 3 Div. 978.
• Citation: 225 Ala. 287,142 So. 514
• Parties: CARTER ET AL. v. MITCHELL ET AL.
• Court: Alabama Supreme Court

142 So. 514

225 Ala. 287

CARTER ET AL. v. MITCHELL ET AL.

3 Div. 978.

Supreme Court of Alabama

May 19, 1932

Rehearing Denied June 23, 1932.

Appeal from Circuit Court, Montgomery County; Leon McCord, Judge.

Bill for appointment of a receiver by H. J. Mitchell and others against the Grand Lodge, Knights of Pythias, of North America, South America, Europe, Asia, Africa and Australia of the State of Alabama, and others, with intervention by William H. Carter, as receiver. From the decree, the intervener and others appeal.

Reversed and remanded.

John W Altman, of Birmingham, and Inzer, Inzer & Davis, of Gadsden for appellants.

Hill, Hill, Whiting, Thomas & Rives, of Montgomery, for appellee Grimes, as receiver.

FOSTER J.

This appeal was taken by Carter, as receiver appointed by the Jefferson court, and Adams and Butts who were respondents in the original bill, and all were interested in the preservation of the mortuary fund. Carter, as receiver, appeared in this case as the representative of the Jefferson court, and to protect the interests of which he was receiver. The interest they all had was only to protect the funds of the order, and none of them had a direct personal interest in the final decree. Their appeal was for the joint benefit of all those thus interested, and we think that their joint assignments of error showed such interest as justifies a consideration of them by this court. An appeal by an intervener so interested is permissible. Louisville Mfg. Co. v. Brown, 101 Ala. 273, 13 So. 15; 3 Corpus Juris, 639.

On the 25th day of August, 1930, complainants filed the bill in this cause, and prayed for the appointment of a receiver of the Grand Lodge, Knights of Pythias of Alabama, an Alabama corporation and a fraternal benefit society for colored people. On the same day the court appointed a receiver, and on the 26th day of August he qualified as such. The bill alleged that there was pending in the circuit court of Jefferson county a suit by other members of the order seeking the appointment of a receiver of a portion of its properties, but that such court had made no valid appointment of a receiver, and none had qualified or was in charge of its effects, and a large part of its property was not in any manner involved in that suit.

On September 27, 1930, a plea to the jurisdiction of the court was filed setting up the fact that the Jefferson court had appointed a receiver, which appointment was then in effect, and a motion was made to vacate the appointment of the receiver in Montgomery.

On November 13, 1930, the court overruled the motion to vacate such appointment. On November 21, 1930, this court granted a petition for a rule nisi to the judge of that court to show cause why a writ of prohibition for want of jurisdiction should not issue to him and directing that further proceedings in said receivership be suspended. Upon the hearing of such petition this court held on January 22, 1931, that the Jefferson court had made an effective order appointing a receiver still in full force, and that the Montgomery court had exceeded its jurisdiction in making the appointment, and we also denied a rehearing on March 12, 1931. Strother v. McCord, 222 Ala. 450, 132 So. 717.

The pleadings and proof show that by a provision of the constitution the endowment funds of the order, consisting of the mortuary and expense funds, shall be kept separate from the Grand Lodge funds, and shall not be used by the Grand Lodge. Constitution, art. 28. Each member was required to pay monthly $1 to the endowment treasurer, 80 cents of which went into the mortuary fund, and 20 cents the expense fund of that department. Article 31. It appears that this was subsequently amended so that 70 cents went to the mortuary fund, 20 cents to the expense, and 10 cents to amortize the amount which had been paid out of that fund for Grand Lodge expense in violation of the constitution. In addition to such sum of $1, they also paid 20 cents a month for the use of the Grand Lodge. Article 25.

A diversion of mortuary funds was one cause assigned for the appointment of a receiver by the Jefferson court. Grand Lodge v. Shorter, 219 Ala. 293, 122 So. 36; Id., 222 Ala. 404, 132 So. 617.

This is upon the theory that such mortuary fund is a trust which can, pursuant to the constitution of the order, be used for death claims only. It is the fund required by sections 8449, 8450, Code. The latter section of the Code also prohibits its use for the payment of debts and obligations other than death claims. When the receiver was appointed in the Montgomery court, that court approved the appointment by him of an actuary to determine the net worth of that fund as compared with the requirements of section 8449. That report showed its value to be far in excess of such requirements. The receiver also reported certain outstanding debts of the Grand Lodge, and other claims not chargeable against the mortuary fund.

The court made various orders directing the receiver to pay items of expense incident to the continued operation of that department and the employment of the officers then in charge of its affairs, and to pay certain claims owing by the Grand Lodge, but which were not in fact properly chargeable to the mortuary fund. Our view, as expressed in former opinions, is that such disbursements were improperly made, and that to the extent that such orders related to the mortuary fund, they were laid in error. But though erroneous, if the receiver acted upon them in good faith, his personal liability is not fixed by error in their making. For a receiver is the representative of the court, acting as its administrative officer, and is subject to its valid orders. Sullivan Timber Co. v. Black, 159 Ala. 570, 48 So. 870; High on Receivers (4th Ed.) § 1; 53 Corpus Juris, 135; Provident Life & Accident Ins. Co. v. Elliott, 198 Ala. 230, 233, 73 So. 476; Louisville Mfg. Co. v. Brown, 101 Ala. 273, 13 So. 15.

So that when a receiver disburses funds in his hands by virtue of a valid, though erroneous, order, and under direction of the court, he will be protected in carrying out such instructions, and the court order under which he acts will be a complete defense to personal liability in any action or proceeding, 23 R. C. L. 79-80, note 7; 53 Corpus Juris, 139, 140-142, 309, 173; Montgomery, Trustee v. Enslen, Receiver, 126 Ala. 654, 666, 28 So. 626; State ex rel. Sullivan v. Reynolds, 209 Mo. 161, 107 S.W. 487, 15 L. R. A. (N. S.) 963, 123 Am. St. Rep. 468, 14 Ann. Cas. 198. And this is true though such order is reversed on appeal after such disbursement is made. High on Receivers, § 178; 53 Corpus Juris, 173.

But, to protect the receiver, who is a part of the court, the order must be valid. It must be within the power and jurisdiction of the court. 53 Corpus Juris, 175. If within such jurisdiction, the order is not void, nor subject to collateral attack, and should be obeyed by the receiver, though it is erroneous. But where the court is wholly without jurisdiction to appoint a receiver, its orders relating to his administration of the estate are void. 53 Corpus Juris, 140; Steenrod v. L. M. Gross Co., 334 Ill. 362, 166 N.E. 82.

But there is a well-defined distinction between a total want of jurisdiction and an excess of jurisdiction. The following is taken from our case of Broom v. Douglass, 175 Ala. 268, 279, 57 So. 860, 864, 44 L. R. A. (N. S.) 164, Ann. Cas. 1914C, 1155: "By 'excess of jurisdiction,' as distinguished from the entire absence of jurisdiction, we understand and mean that the act, though within the general power of the judge, is not authorized, and therefore void, with respect to the particular case, because the conditions which alone authorize the exercise of his general power in that particular case are wanting; and hence the judicial power is not in fact lawfully invoked." To the same effect is Bradley v. Fisher, 13 Wall. (80 U. S.) 335, 20 L.Ed. 646, 651.

The case of Crawford v. Gordon, 88 Wash. 553, 153 P. 363, L. R. A. 1916C, 516, is in some respects similar to this one. A state court had appointed receivers. Thereafter a federal court appointed receivers of the same property which took charge of and were operating it-a railroad. During such operation the federal court at first sustained its right to make such appointment, and authorized its receivers to buy some railroad equipment for part cash and partly on credit. The court thereafter reversed its ruling, and held that it had no right thus to proceed, and ordered its receivers to deliver the property to the receivers of the state court. The state court held that the order of the federal court was not void; that the federal court had the primary right to determine its own jurisdiction, and while its receivers were in charge of the property they were at least de facto officers of a court of competent jurisdiction.

It seems to us that it is sound principle that though the court has erroneously determined that certain facts are not sufficient to prevent it from exercising its ordinary function to appoint a receiver, though such order of the court is in real excess of its authority (but it had decided otherwise) and does not confer full protection upon others so dealing with the receiver appointed by a court which had directed such dealings, and though such parties could upon a reversal of such erroneous order be required to make restitution to the funds of the receivership, it does not follow that the court which appointed the receiver, and ordered him to make the payments, could, either because of a reversal of its opinion as to such facts curtailing its authority, or because this court has so determined thereafter require the receiver personally to make restitution. When a court...