City of Spokane v. Amsterdamsch Trustees Kantoor

Decision Date30 October 1897
PartiesCITY OF SPOKANE ET AL. v. AMSTERDAMSCH TRUSTEES KANTOOR ET AL. [1]
CourtWashington Supreme Court

Appeal from superior court, Spokane county; James Z. Moore, Judge.

Action by the city of Spokane and others against the Amsterdamsch Trustees Kantoor, the Northwestern Milling & Power Company and others, to set aside certain conveyances, a mortgage, a judgment in foreclosure, and sale thereunder, for an injunction and a receiver. From an order refusing to vacate prior orders awarding an injunction, and appointing a receiver, and continuing the injunction and receiver pendente lite, defendant the Amsterdamsch Trustees Kantoor appeals. Reversed.

Binkley, Taylor & McLaren and Graves, Wolf &amp Graves, for appellant.

William H. Plummer, for respondent city of Spokane.

Samuel R. Stern (Cyrus Happy and W. T. Birdsall, of counsel), for respondents Bowen and Weil.

ANDERS J.

The Spokane Falls Water-Power Company is a corporation organized and existing under and by virtue of the laws of this state. Prior to May 20, 1895, it was the owner of certain real estate in the city and county of Spokane, upon which it appears there was a valuable water power. On that day it sold and conveyed said real estate, together with all its franchises and privileges, to an alleged domestic corporation, known as the Northwestern Milling & Power Company, for the expressed consideration of $150,000 in cash and 2,500 shares of the capital stock of said company, of the par value of $100 each. Immediately thereafter, the Northwestern Milling & Power Company executed to the Amsterdamsch Trustees Kantoor a mortgage or deed of trust of all the property so purchased, to secure a loan of $300,000, for the period of 10 years, with interest at 6 per cent. per annum, payable semiannually. Subsequently the said company erected a sawmill upon these premises, costing $50,000, and also expended the sum of $40,000 in the construction of a flouring mill, which has never been completed so as to be capable of being operated. Default was made in the payment of interest upon the amount loaned, and the appellant herein instituted proceedings in the superior court of Spokane county to foreclose its mortgage or deed of trust. Judgment was rendered in that proceeding foreclosing the plaintiffs' mortgage, and an order of sale of the mortgaged property was made by the court and delivered to the sheriff for execution. Thereafter the property covered by the mortgage was regularly sold by the sheriff, and appellant became the purchaser, for the full amount of its debt and interest, and thereafter entered into possession of the premises. About this time the receiver (who had theretofore been appointed by the court) of the property and effects of the Northwestern Milling & Power Company was proceeding to sell its equity of redemption in the mortgaged premises. At this stage of the proceedings, the plaintiffs and respondents, claiming to be stockholders in the Spokane Falls Water-Power Company, instituted this action, on behalf of themselves and all other stockholders similarly situated to set aside the conveyance from the Spokane Falls Water-Power Company to the Northwestern Milling & Power Company, the mortgage by the latter to appellant, the judgment in the foreclosure proceeding, and the sale made by virtue thereof, and for a preliminary injunction. The complaint is too voluminous and circumstantial to be set forth at length in this opinion, but it may be said generally that it alleged facts and circumstances tending to show that the transfer of this property was illegal, fraudulent, and void, and that appellant was cognizant of and privy to the fraud; that the sale was illegal, in that the same was neither authorized by the actual stockholders of the corporation nor executed by the legal trustees; that the alleged resolution of the stockholders authorizing the sale was made by persons who were not in fact such stockholders; and that the whole scheme was conceived and carried out for the purpose of seizing and selling the property of the water-power company, and using the proceeds thereof for the benefit of the parties engaged in the fraudulent transaction. Upon the filing of the complaint, and upon motion of the plaintiffs, an order was made by the court awarding an injunction against the defendants, and appointing a receiver of the property in question; and the court, at the same time, ordered the defendants to show cause at a day specified why such injunction or restraining order and the order appointing the receiver should not be continued in force until the final hearing of the cause. On the return day of the order to show cause, appellant appeared, and filed affidavits in opposition to those filed by the plaintiffs, and asked that the said orders be vacated as to it, on the ground that no case had been made against it by the allegations of the complaint or by the proof adduced before the court. The court, however, upon the hearing, declined to vacate either of said orders, and continued the injunction and the receiver pendente lite. From that portion of said orders affecting the defendant Amsterdamsch Trustees Kantoor, this appeal is prosecuted.

The order granting the injunction is as broad and comprehensive as it could well have been made. By it the appellant was enjoined from prosecuting or taking any steps in any action or proceeding against the Northwestern Milling & Power Company, except herein; and from selling or interfering with any of the property or rights, franchises, or alleged equities of redemption in the property described in the complaint; and from executing any deed or conveyance of said property, or taking any deed, or doing any act which might tend to give legal color or force to any claim, interest in, or lien upon, said property. It is alleged in the complaint that, at the time this action was commenced, plaintiffs filed a lis pendens in the cause, and that they also, at the time of the sale of the property under the decree of foreclosure, gave notice of their alleged claim thereto and rights therein. As to the injunction, it is claimed by appellants (1) that it should not have been granted, for the reason that the plaintiffs' rights were fully protected by the filing of the lis pendens under the statute; and (2) that it should not have been issued even if the lis pendens did not completely protect the rights of plaintiffs, because it was not shown, either by the allegations of the complaint or by the proof, that there was any necessity or reason for its issuance. We think that these contentions are not without force. It is conceded that the property in question is real estate, and the proof seems fairly to show that the defendants were in possession of it at the time of the commencement of this action, and claiming a right to the property, and the possession thereof, by virtue of having purchased it at the sale made in pursuance of the judgment and decree of the superior court. Under such circumstances as are here disclosed, courts of equity will generally refrain from interfering with the possession of the defendant, unless it is shown that such interference is necessary in order to protect the plaintiff from irreparable injury. And in all cases the right to the relief must be clear and reasonably free from doubt. Tongue v. Gaston, 10 Or. 328. It is only when there is no other sufficient remedy that injunction will be granted. Any injury in this case that could result to the plaintiffs from the continued possession of the property in controversy by appellant would be such as might result either from a sale or an attempted...

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