Colorado Wool Marketing Ass'n v. Monaghan

• Decision Date: 01 September 1933
• Docket Number: No. 826.,826.
• Citation: 66 F.2d 313
• Parties: COLORADO WOOL MARKETING ASS'N v. MONAGHAN et al.
• Court: U.S. Court of Appeals — Tenth Circuit

66 F.2d 313 (1933)

COLORADO WOOL MARKETING ASS'N v. MONAGHAN et al.

No. 826.

Circuit Court of Appeals, Tenth Circuit.

July 26, 1933.

Rehearing Denied September 1, 1933.

Forrest C. Northcutt, of Denver, Colo. (Jesse G. Northcutt, of Denver, Colo., on the brief), for appellant.

Langdon H. Larwill, of Denver, Colo. (Daniel H. Thomas and H. P. Thomas, both of Salt Lake City, Utah, and Malcolm Lindsey, of Denver, Colo., on the brief), for appellees.

Before PHILLIPS and McDERMOTT, Circuit Judges, and KENNEDY, District Judge.

McDERMOTT, Circuit Judge.

Appellant loaned $3,190.00 to a receiver of a band of sheep, which was all expended in feeding and caring for them pending the litigation. The trial court disallowed $1,754.57 entirely, and postponed $1,435.43 to the mortgage lien of the appellee, The Wasatch Livestock Loan Company, which will hereafter be referred to as appellee. Since the sheep sold for less than the mortgage, appellant was denied any real relief. A statement of the facts and a consideration of one or two well settled principles of law will disclose that appellant's position is impregnable.

The plaintiffs in the receivership suit claimed an interest in a band of sheep upon which appellee held a mortgage. Asserting that those in possession of the sheep were driving them out of the state to avoid an accounting and the jurisdiction of the court, this suit for such accounting and incidental relief was commenced in the state court on November 25, 1931. The appellee here, together with others claiming an interest in the sheep, were made parties defendant. The complaint alleges that it is necessary to obtain feed and supplies to preserve the sheep during the approaching winter, and that the appointment of a receiver is necessary for that purpose. Notice that the application for the appointment of a receiver would be called for hearing on December 1 was served personally on the defendants within the jurisdiction of the court, and a copy mailed to appellee at its office in Salt Lake City.

Upon the date set, none of the defendants appearing, the following order was entered:

"It is Further Ordered that, in order to prevent the removal of said sheep from the State of Colorado, and to preserve said sheep and to protect the interests of all persons concerned, that a Receiver should be appointed to take possession of said sheep and have custody and control thereof until further order of the court.

"It is Further Ordered and Adjudged that Paul Jensen, of Meeker, Colorado, be and he is hereby appointed Receiver and Custodian of said sheep specifically described in the complaint and is authorized and empowered to take possession of said sheep and run and manage the same and to incur such necessary expense as may be required, not exceeding the sum of $5,000.00, until further order of the court.

"It is Further Ordered that said receiver be and he is hereby authorized to issue Receiver's Certificates for expenses and in order to obtain money to defray expenses, and that the same shall constitute a lien upon said sheep, and said receiver is further authorized to make proper arrangements with any person claiming liens upon said sheep, and others, to secure advances from the 1932 wool crop for running expenses.

"It is Further Ordered that any one or more of the defendants not personally served with notice of this application may, upon reasonable notice to the plaintiffs, apply to the court to discharge said receiver for any valid and proper grounds and shall be entitled to be heard for such purpose."

On December 18 the receiver qualified; he found the sheep in the desert country, 55 miles from Meeker; it was 30 degrees below zero; there was 18 inches of snow on the ground; there was no feed for the sheep, and many of them were broken-mouthed ewes or gummers; the herders were without supplies and had not been paid. Money must be raised or the sheep in the custody of the court would perish. The receiver pledged his personal credit to buy feed and supplies and pay the herders.

Appellee did not move for the discharge of the receiver, as invited by the order of appointment; instead on January 2, 1932, it removed the case to the Federal Court. It did not move to discharge the receiver in that court, but on the contrary filed an answer in which it specifically admitted the allegation of the complaint "that it is necessary to obtain food supplies to winter and care for said sheep, and also admits that a competent receiver should be appointed therefor." In its cross bill, appellee alleged that the sheep are "of highly perishable and delicate nature and requires the constant care, attention and management of skilled and expert persons familiar with the custom and usages attendant upon the care and handling of such livestock, and requires and will continue to require large sums of money from month to month in the care, handling and feeding thereof, and is in the possession of the plaintiffs all of whom are wholly without funds and unable to properly care for or manage the said property or to supply or obtain such funds and said property is not attended by sufficient or competent and skilled herders or other persons skilled and competent in the handling thereof and is not properly being cared for or herded or managed, but on account of the incompetent manner in which it is handled, and of the present winter season, is rapidly becoming impoverished and declining in value, and will continue to become impoverished and decline in value and a great portion or all thereof may become unable to subsist throughout the said winter season and may die, and this defendant's security thereby lost, unless sufficient funds for the proper care and management thereof are supplied and a competent and skilled person in that behalf appointed receiver thereof, and unless such receiver be appointed, this defendant will suffer great irreparable loss and injury for which it has no speedy or adequate remedy at law. That this defendant is ready, willing and able at all times to do and perform equity herein."

The Federal court took no affirmative action upon this application of appellee for a receiver; all parties were apparently satisfied with the conduct of the receiver appointed by the state court, for no effort was made to disturb his possession or powers, except as hereafter noticed; on the contrary, all parties recognized and dealt with him, and repeated orders of court were entered upon stipulation of appellee permitting the receiver to expend the moneys, here sought to be recovered, for the preservation of the sheep.

In the meantime the state court, on January 11, entered an order authorizing the receiver to borrow money from appellant. The state court had lost jurisdiction by the removal, and this order was a nullity; it was however superfluous, for the order of appointment made when the state court had jurisdiction, authorized the receiver to borrow money to preserve the sheep.

On January 14, 1932, the receiver arranged with appellant to borrow $3,190.00 to pay bills accrued for caring for the sheep and to provide funds for future care, and gave his receiver's note, secured by a lien on the 1932 wool clip, therefor. A draft for the proceeds came to the receiver on January 20, was deposited to his credit in a bank, and checks for $1,754.57 given and honored before service of an order issued on January 22, at the...