Cronan v. District Court First Judicial Districto of State of Idaho

• Decision Date: 26 June 1908
• Citation: 96 P. 768,15 Idaho 184
• Parties: JOHN CRONAN, Plaintiff, v. DISTRICT COURT, FIRST JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND FOR KOOTENAI COUNTY, and WILLIAM W. WOODS, as Judge of Said Court, Defendants
• Court: Idaho Supreme Court

96 P. 768

15 Idaho 184

JOHN CRONAN, Plaintiff, v. DISTRICT COURT, FIRST JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND FOR KOOTENAI COUNTY, and WILLIAM W. WOODS, as Judge of Said Court, Defendants

Supreme Court of Idaho

June 26, 1908

APPOINTMENT OF RECEIVER-JURISDICTION-INTERESTED PARTY-APPEAL-PLAIN SPEEDY AND ADEQUATE REMEDY-SERVICE OF AFFIDAVIT AND NOTICE-WRIT OF REVIEW-PROHIBITION-FACTS ALLEGED IN COMPLAINT-IMMINENT DANGER OF INSOLVENCY-JURISDICTIONAL FACT-RECEIVER-COLLECTION OF DEBT-MANAGEMENT OF PRIVATE CORPORATION-GOING CONCERN-DELAY CREDITORS-PRIVATE CORPORATIONS-DUTY TO PUBLIC-PRESERVE ASSETS.

1.A party seeking relief by writ of prohibition need not necessarily be named as a party in the original action.He may make himself a party by showing that he has an interest in the controversy and by moving to set aside a judgment or order made without or in excess of jurisdiction, and if his motion is denied and an appeal would not be a plain, speedy and adequate remedy, he may have the writ of prohibition issued to protect his rights.

2.Under the provisions of rule 67 of the rules of this court the service of a copy of the affidavit and a notice of the time of hearing the application for a writ of prohibition must be made on the parties in interest.The service in this case held sufficient.

3. Sec 4995, Rev. Stat., declares that the writ of prohibition is a counterpart of the writ of mandate; held, that the same degree of strictness in regard to parties is not maintained in prohibition as in mandate.

4.Under the provisions of sec. 4995, Rev. Stat., a writ of prohibition will be issued upon proper complaint or petition to arrest proceedings which are without or in excess of the jurisdiction of such tribunal, corporation, board or person in all cases where there is not a plain, speedy and adequate remedy in the ordinary course of law.

5.Held, under the facts of this case, if an appeal is authorized, it would not be a plain, speedy and adequate remedy in the ordinary course of law.

6.Under the provisions of subdivision 5, sec. 4392, Rev. Stat., a court or judge has no jurisdiction to appoint a receiver, unless it appears from the application that the corporation has been dissolved or is insolvent or is in imminent danger of insolvency or has forfeited its corporate rights; and where the ground alleged is "imminent danger of insolvency," facts must be alleged sufficient to show such imminent danger.

7.When it is shown by the complaint that a corporation has unencumbered assets, all of which are reasonably worth more than one million dollars over and above the indebtedness of the corporation; Held, that such facts do not show that the corporation is in imminent danger of insolvency, and the judge or court has no jurisdiction to appoint a receiver on such a showing.

8."Imminent danger of insolvency" is a jurisdictional fact, and must be made to appear before a court has jurisdiction to appoint a receiver on that ground.

9.The appointment of a receiver is not justified simply because it is an easy way of collecting a debt, but the creditor must show that he had exhausted his legal remedies and had been unable to collect his debt before a receiver will be appointed to assist him.

10.Under the provisions of sec. 4333, Rev. Stat., prescribing the power of receivers, it was not intended that a court or judge should take charge of the property of a private corporation through its receiver and operate it as is contemplated by the order of the judge in this case.

11.Where it appears that a receiver is sought to forestall the action of creditors in the collection of their claims and the corporation is solvent, the judge has no jurisdiction to appoint a receiver.

12.A court of equity has no jurisdiction to undertake the management of private corporate business, that is, to carry it on as a "going concern" in order to pay the creditors and save something to the corporation.Its duty is temporary and limited to caring for and the preservation of its property, and not to operate the business as a "going concern," especially when it is apparent that the receivership is for the purpose of delaying creditors.

13.Held, under the facts of this case that the judge had no jurisdiction to appoint a receiver and that the peremptory writ of prohibition should issue.

14.Under our statute or law, there is no jurisdiction for the appointment or continuance of a receiver of a private corporation for the purpose of giving it time to raise money to pay its debts.

15.The jurisdiction of the court to appoint a receiver of a private corporation does not exist when the corporation is solvent and a "going concern," and where it is apparent that the appointment of a receiver is to prevent creditors from enforcing their claims by due process of law.

16.A private corporation owes no special duty to the public and its continued operation is not a matter of public concern, and the court in cases of receivers should not go beyond the protection and preservation of its property for its creditors.

17.A court of equity will not appoint a receiver for a private corporation not engaged in public service, and continue the business any further than to preserve its assets and sell the same for the benefit of its creditors.

(Syllabus by the court.)

An original proceeding in this court for a writ of prohibition to prevent the court from further proceeding in conducting the business of a private corporation through a receiver.Peremptory writ granted.

Costs awarded to the plaintiff.

Sanders & Flynn, and Lancaster & McGee, for Plaintiff.

The strict and technical rules with respect to parties, which have been shown to apply in most extraordinary remedies, do not apply to a proceeding in prohibition.(Spelling on Injunctions, Prohibitions, etc., 2d ed., secs. 1745, 1746;High on Receivers, 3d ed., sec. 15;Beach on Receivers, Alderson's ed., p. 194;Elliott v Superior Court of San Diego Co.,144 Cal. 501, 103 Am. St. Rep. 102, 77 P. 1109;State v. Superior Court,4 Wash. 30, 29 P. 764;High Ex. Legal Rem., secs. 764, 766, 769, 771a;State v. Superior Court, 15 Wash. 668, 55 Am. St. Rep. 907, 47 P. 31, 37 L. R. A. 111.)

An appeal which can only be heard nearly six months hence does not afford a plain, speedy and adequate remedy for the plaintiff under the facts existing in the case at bar.Prohibition is the appropriate remedy.(Havemeyer v. Superior Court,84 Cal. 327, 18 Am. St. Rep. 192, 24 P. 121, 10 L. R. A. 627;Stein v. Morrison,9 Idaho 426, 75 P. 246;The French Bank, 53 Cal. 495;Bateman v. Superior Court,54 Cal. 285;Fischer v. Superior Court,110 Cal. 129, 42 P. 561;State v. Eighth Judicial Dist. Court,14 Mont. 577, 37 P. 969;State v. Ross,122 Mo. 435, 25 S.W. 947, 23 L. R. A. 534;People v. Weigley,155 Ill. 491, 40 N.E. 300;People ex rel. Port Huron etc. Ry. Co. v. Judge of St. Clair Circuit, 31 Mich. 456.)

The district court has no jurisdiction at the suit of a simple contract creditor, in which the relief sought is a straight money judgment, to appoint a receiver for the property of the debtor, a private corporation, to manage and operate the property as a going concern, and to authorize the receiver in the management and operation of such corporation to issue receiver's certificates of indebtedness "in payment of any accounts or bills incurred in the operation of the business of such corporation."

The appointment of Fred B. Morrill, the general attorney of the B. R. Lewis Lumber Co., as receiver of that corporation, is void under sec. 4331, Rev. Stat., notwithstanding the collusive attempt to evade the provisions of that section.(Sec. 4329, Rev. Stat.;Neall v. Hill,16 Cal. 145, 76 Am. Dec. 508;Jones v. Leadville Bank,10 Colo. 464, 17 P. 272;Bell v. Wood,181 Pa. 175, 37 A. 201;Pairpoint Mfg. Co. v. Philadelphia Watch Co.,161 Pa. 22, 28 A. 1003;Etowah Min. Co. v. Wills Valley Min. Co.,106 Ala. 492, 17 So. 522;Davis v. Flagstaff Min. Co.,2 Utah 74;Baker v. Backus,32 Ill. 79, 115;Mason v. Supreme Court,77 Md. 483, 39 Am. St. Rep. 433, 27 A. 171;Wallace v. Pierce-Wallace Pub. Co.,101 Iowa 313, 63 Am. St. Rep. 389, 70 N.W. 216, 38 L. R. A. 122;Becker v. Hoke,80 F. 973, 976, 26 C. C. A. 282;Tompkins v. Catawba Mills,82 F. 780;Cook on Corporations, 5th ed., pp. 2372-2376, sec. 863;Duncan v. Treadwell Co.,82 Hun, 376, 31 N.Y.S. 340;In re Philadelphia etc.R. R., 14 Phila. 501;East Tenn. etc. Ry. Co. v. Atlantic etc. Ry. Co.,49 F. 608, 15 L. R. A. 109;Hollis v. Brierfield Coal etc. Co.,150 U.S. 371, 14 S.Ct. 127, 37 L.Ed. 1113;Parker v. Moore,3 Edw. Ch. 235;Spooner v. Bay St. Louis Syndicate,44 Minn. 401, 46 N.W. 848;Gibbs v. Morgan,9 Idaho 100, 72 P. 733;Kelley v. Steele,9 Idaho 141, 72 P. 887;Security Sav. & Trust Co. v. Piper, Judge,4 Idaho 463, 40 P. 144;Dalliba v. Winschell,11 Idaho 364, 114 Am. St. Rep. 267, 82 P. 107;Hall v. Nieukirk,12 Idaho 33, 118 Am. St. Rep. 188, 85 P. 485;Hanna v. State Trust Co.,70 F. 2, 16 C. C. A. 586, 30 L. R. A. 201;Raht v. Attrill,106 N.Y. 423, 60 Am. St. Rep. 456, 13 N.E. 282;Beach on Receivers, secs. 32-39, 445;Cortleyeu v. Hathaway, 3 Stock. 39, 64 Am. Dec. 486, and note;Cameron v. Groveland Imp. Co.,20 Wash. 169, 72 Am. St. Rep. 26, and note, 54 P. 1128;Little Warrior Coal Co. v. Hooper,105 Ala. 665, 17 So. 118; and cases cited under last heading supra.)

Counsel for the defendants on the oral argument stated that the creditors of the B. R. Lewis Lumber Co. were numbered by the hundred, some of them being creditors for but a few cents on time checks, and to construe rule 28 to require service of the record upon them all would not only be going beyond the reason of the rule, but would impose such an expense and burden...