Close v. Brictson Mfg. Co.

• Decision Date: 16 May 1931
• Docket Number: No. 8901.,8901.
• Citation: 49 F.2d 751
• Parties: CLOSE et al. v. BRICTSON MFG. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

49 F.2d 751 (1931)

CLOSE et al. v. BRICTSON MFG. CO.

No. 8901.

Circuit Court of Appeals, Eighth Circuit.

April 6, 1931.

Rehearing Denied May 16, 1931.

Robert J. Webb, of Omaha, Neb. (Mulfinger & Webb and H. M. Kelley, all of Omaha, Neb., on the brief), for appellants.

H. V. Mercer and E. J. Lien, both of Minneapolis, Minn., for appellee.

William M. Giller, of Omaha, Neb. (M. E. Culhane, of Minneapolis, Minn., Frank L. Weaver, of Omaha, Neb., and R. A. Bielski and D. S. Elliott, both of Sioux Falls, S. D., on the brief), for Martin Engebretson.

Before STONE and BOOTH, Circuit Judges, and DEWEY, District Judge.

STONE, Circuit Judge.

This is an appeal from an order charging appellants with certain expenses of a receivership in a case filed by them and in which they sought and obtained the appointment of a receiver, which appointment was by this court adjudged to be improper. The order from which this appeal was taken was entered June 24, 1929. The allowances charged against appellants consisted of $1,000 allowed to the receiver for services, expenses, and attorney fees, and $8,295.81, representing amounts paid by the receiver upon orders of the court for storage, drayage, rental, and other matters in connection with the care and administration of the property in his hands as receiver.

Appellants make several contentions here.

I. The main contention is that this decree was not on a motion to tax costs and was without notice to appellants after the case had been dismissed as to them.

In August, 1921, eight stockholders of the Brictson Manufacturing Company filed a bill in the District of Nebraska before Judge Woodrough wherein, inter alia, they prayed a receivership of that company. A receiver was appointed and apparently took possession on September 3, 1921. An appeal from such order was determined by this court in an opinion filed April 5, 1922. 280 F. 297. In that appeal it was determined that the receivership proceedings were improper and that the order appointing the receiver be reversed "with directions that the receiver be required to return all property in his hands to those from whom he received it, that he be thereupon discharged, and that the bill be dismissed at complainants' costs." 280 F. 297, 301. The trial court (Judge Woodrough) failed to carry out the mandate.

In the meantime, various other stockholders had presented a petition in intervention to the trial court. The company filed a motion for action in compliance with the mandate. On that hearing, the court (August 3, 1922) announced: "* * * I therefore will suspend for the present the obedience to that part of the mandate which orders me to turn the money over to the party from whom the receiver got it, who was O. A. Brictson;" and "for the present, therefore, I merely order the money impounded in the hands of the receiver until further proceedings are had on the petition as to intervention;" and "the order will now be entered suspending action on that part of the mandate which requires the money to be turned over to Mr. Brictson and granting leave to file the petition of intervention." An order was entered that day "that the petition of the plaintiffs, filed herein, be, and the same is hereby, dismissed at plaintiffs' costs. * * * That leave be, and the same is hereby granted to file said petition of intervention, and distribution of assets in the receiver's hands is hereby suspended until a hearing on same." Case 7932, p. 22.

The result was a mandamus proceeding here to enforce the mandate. Therein this court found such writ justified, but, out of consideration to Judge Woodrough, did not at once order the writ, but said: "When he is advised of the views here expressed he will, doubtless, at once comply, and there will be no occasion to issue the writ; but on his failure to do so within a reasonable time it will be directed that the writ issue." 284 F. 484, 487. The mandate thereon is dated October 30, 1922, and was received by Judge Woodrough on November 13, 1922. A few days thereafter, but of date November 13, 1922, the trial court made an order "that the receiver be required to return all property in his hands to those from whom he received it, and that he be thereupon discharged, and that the bill of complaint be dismissed at complainants' costs." On November 21, 1922, the receiver filed a detailed report of receipts and expenditures. On the same day this report was approved, and the receiver allowed $2,000 for his services. This was treated by the court as "the final report" of the receiver, the receiver was ordered to retain sufficient funds to pay the claims filed against him as shown in the report, and "upon complying with the order heretofore made by this court pursuant to the mandate of the Court of Appeals the said receiver be discharged."

This action of the court resulted in another petition for mandamus setting forth the actions of the trial court since receipt of the mandate. This court ordered the writ on February 8, 1923, and it issued as of February 9, 1923. 289 F. 1020. It was received by Judge Woodrough as of February 14, 1923. The writ required Judge Woodrough to "immediately" vacate, etc., the above order approving the reports and accounts of the receiver, "provided, however, that you as District Judge of the United States for the District of Nebraska, on application of the said Ralph M. West as such receiver, or of any of the parties to the suit upon notice to the parties to the suit, may after said order * * * has been vacated and set aside, take testimony, and therefrom determine and ascertain what expenditures, if any, made by said Ralph M. West as receiver were necessary to be made for the preservation of and for the benefit of the property so held in receivership through the hand of said Ralph M. West and thereupon allow to him as credits and as charges to be deducted from the funds in his hands as receiver such expenditures made before the filing of this application, and to tax any sum allowed said receiver for his services as such against petitioners in the cause in which he was appointed such receiver, to-wit, Close et al. v. Brictson Manufacturing Company, no part of same to be paid out of the funds under his control; and Provided, further, that for the sums so allowed such receiver and charged against the funds in his hands as such receiver and for any liabilities incurred by him as such receiver and remaining unpaid, you as respondent will, at the same time, enter judgment for recovery from and over in favor of The Brictson Manufacturing Company and against the petitioner in the cause of Close et al v. Brictson Manufacturing Company, in which said Ralph M. West was so appointed receiver."

On February 16, 1923, Judge Woodrough made an order, solely to comply with the above writ, wherein he set aside his order of November 21, 1922, approving the report and accounts of the receiver, and stated that the receiver or any party to the suit might, upon notice to the parties to the suit, "make application for the taking of testimony and the determination and ascertainment therefrom by me what expenditures, if any, made by said Ralph M. West as Receiver were necessary to be made for the preservation of and for the benefit of the property so held in receivership through the hand of said Ralph M. West, in order that I may thereupon allow to such receiver as credits and as charges to be deducted from the funds in his hands as Receiver such expenditures made before the filing of the application for the writ of peremptory mandamus, and in order that I may tax any sum allowed said Receiver for his services as such against the petitioners in the cause in which he has been appointed Receiver, no part of the same to be paid out of the funds under his control, and in order that for the sums so allowed such Receiver and charged against the funds in his hands as Receiver and for any liabilities incurred by him as Receiver and remaining unpaid, I may as Judge of the United States Court at the same time enter judgment for recovery from and over in favor of the Brictson Manufacturing Company and against the petitioners in the cause of Close et al. v. Brictson Manufacturing Company."

On March 9, 1923, the receiver filed such an application, verified on March 8, 1923. Therein he stated that he had incurred the expenses shown in his report and some since the report; that such were for the preservation and benefit of the property and should be allowed him as credits. Also he stated that he had been acting as receiver since September 3, 1921, and should have an allowance for his services as such. He prayed an order "fixing a time and place for the hearing of this Application and that upon such hearing testimony be taken and that a finding be made that the expenses incurred by your Petitioner were for the preservation and benefit of the funds in his hands, and that he be allowed credit therefor and that a reasonable allowance for his services as such Receiver be made."

Thereafter Judge Woodrough was disqualified, and Judge Munger was designated by the Senior Circuit Judge (Walter H. Sanborn) by designation filed April 10, 1925.

Why the above application of the receiver lay dormant for more than two years does not appear.¹ From statements in this record, in pleadings and otherwise, we gather that an "order to show cause" was directed to the receiver about October 7, 1925, to which he filed an answer verified on October 28, 1925. Neither such order nor the answer appears in this record.

On November 27, 1925, the Brictson Manufacturing Company filed a motion to dismiss the application of the receiver to take testimony "which is based on his application verified by him on the 8th day of March, 1923, and his answer to the court's order to show cause herein is verified on the 28th day of October, 1925." The grounds of such motion were, as stated, "because the same application and answer do not contain facts sufficient to...