Eldridge v. Payette-Boise Water Users' Ass'n

• Decision Date: 06 March 1930
• Docket Number: 5326
• Citation: 49 Idaho 36,285 P. 1039
• Parties: J. B. ELDRIDGE, Respondent, v. PAYETTE-BOISE WATER USERS' ASSOCIATION, a Corporation, et al., Appellants
• Court: Idaho Supreme Court

285 P. 1039

49 Idaho 36

J. B. ELDRIDGE, Respondent, v. PAYETTE-BOISE WATER USERS' ASSOCIATION, a Corporation, et al., Appellants

No. 5326

Supreme Court of Idaho

March 6, 1930

CORPORATIONS-APPOINTMENT OF RECEIVER-SUFFICIENCY OF COMPLAINT.

1. Receiver may be appointed in Idaho for corporation under C S., sec. 6817.

2. Complaint alleging defendant was indebted to plaintiff in large sum, that defendant's only asset was right to levy and collect asessments, that two boards of directors were contending for control and assessments levied by one ordered discharged by the other, that Federal Reclamation Service was threatening to take over valuable rights of defendant without compensation, and that defendant was unable to meet its obligations or obtain loan to pay them, and unless receiver was appointed property rights of defendant would be wasted held to authorize appointment of receiver.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. B. S. Varian, Judge.

Action for the appointment of a receiver and to enforce a claim. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs awarded to respondent. Petition for rehearing denied.

T. A Walters and Walter Griffiths, for Appellants.

A court has no power in the absence of express statutory authorization to appoint a receiver for a corporation, and the consent of the corporation cannot confer such jurisdiction. (14a C. J., p. 941, sec. 3158; Elliott v. Superior Court of San Bernardino County, 168 Cal. 727, 145 P. 101; Hitchcock v. American Pipe Co., 89 N.J. Eq. 440, 105 A. 655; Barber v. Mexico International Co., 73 Conn. 587, 48 A. 758; Vila v. Grand Island Electric Light etc. Co., 68 Neb. 222, 110 Am. St. 400, 4 Ann. Cas. 59, 94 N.W. 136, 97 N.W. 613, 63 L. R. A. 791; Hollins v. Brierfield Coal etc. Co., 150 U.S. 371, 14 S.Ct. 127, 37 L.Ed. 1113; Bergman Clay Mfg. Co. v. Bergman, 73 Wash. 144, 131 P. 485.)

An order appointing a receiver must be supported by sufficient facts alleged in the complaint and sufficient findings made by the court showing the jurisdiction of the court in the particular case, and also sufficient grounds for making the order. Mere controversies or dissention among the directors or stockholders; or a failure to elect officers, are not grounds for the appointment of a receiver. (14a C. J., p. 945, sec. 3159; Prudential Securities Co. v. Three Forks etc. R. Co., 49 Mont. 567, 144 P. 158.)

Charles F. Reddoch, Wm. M. Morgan, J. B. Eldridge, Thomas E. Buckner, Scatterday & Stone and Barber & Barber, for Respondent.

This court has repudiated the old doctrine of the California and other cases relied upon by the appellant, that a receiver will not be appointed for a corporation at the instance of a private party. (Gibbs v. Morgan, 9 Idaho 100, 72 P. 733; Hall v. Nieukirk, 12 Idaho 33, 118 Am. St. 188, 85 P. 485; Utah Assn. of Credit Men v. Budge, 16 Idaho 751, 102 P. 390, 691; Riley v. Callahan Min. Co., 28 Idaho 525, 155 P. 665; Commercial Trust Co. v. Idaho Brick Co., 25 Idaho 755, 139 P. 1004.)

It is common practice to appoint receivers of corporations when insolvent at the instance of private litigants and contract creditors. (C. S., sec. 6817; Hall v. Nieukirk, supra; Idaho Fruit etc. Co. v. Great Western Co. , 17 Idaho 273, 105 P. 562; Exchange Nat. Bank v. Northern Idaho Co., 24 Idaho 671, 135 P. 747; John V. Farwell Co. v. Craney, 29 Idaho 85, 157 P. 383; Smith v. Solomon Valley Dredging Co., 147 Wash. 69, 264 P. 1009; Davis v. Edwards, 41 Wash. 480, 84 P. 22.)

The late work of Clark on Receivers, sec. 187, subd. a, p. 212, sustains the doctrine of these cases.

Where a simple contract creditor sues a corporation for a judgment and asks for the appointment of a receiver and the answer of the corporation admits the debt due and its insolvency and its inability to pay, and a receiver is appointed, another creditor cannot raise the question that the creditor who obtained the appointment of the receiver was not a judgment creditor even in jurisdictions where that rule is rightly enforced, and consent does not prove or show collusion or fraud. (14a C. J., p. 962, sec. 3181; United States v. Butterworth-Judson Corp., 269 U.S. 504, 46 S.Ct. 179, 70 L.Ed. 380; Northwestern Nat. Bank v. Mickelson-Shapiro Co., 134 Minn. 422, 159 N.W. 948; Enos v. New York & O. R. Co., 103 F. 47; Citizens Bank & Trust Co. v. Union Mining & Gold Co., 106 F. 97.)

GIVENS, C. J. Budge, Lee and McNaughton, JJ., and Koelsch, D. J., concur.

OPINION

GIVENS, C. J.

This case has been before this court on two previous occasions involving a motion to dismiss the appeal (279 P. 713), wherein one of the appellants, Brown, was eliminated and the appeal of Kollenborn permitted to stand on the order of the court disallowing his claim and allowing other claims to which he objected. On motion to strike the brief and transcript and to limit the appeal (283 P. 1040), it was indicated that the limiting of the appeal should be disposed of upon the merits, now presented.

Appellant's assignments of errors may be summed up in two contentions; first, that the trial court did not have jurisdiction to appoint a receiver, and second, that there is no evidence to sustain the order of the court allowing respondent's claim. No assignment of error is based upon the disallowance of appellant's claim.

Appellant did not object in the court below to the appointment of a receiver, nor file anything in opposition thereto, but, on the contrary, after the appointment of the receiver filed his claim.

Appellant urges that a receiver may not be appointed in this state for a corporation. This court has, however, held to the contrary. (C. S., sec. 6817; Hall v. Nieukirk, 12 Idaho 33, 118 Am. St. 188, 85 P. 485; Idaho Fruit Co. v. Great Western Co., 17 Idaho 273, 105 P. 562; Exchange Nat. Bank v. Northern Idaho etc. Co., 24 Idaho 671, 135 P. 747; John V. Farwell Co. v. Craney, 29 Idaho 85, 157 P. 383; see, also, Scattergood v. American Pipe Co., 249 F. 23; Hitchcock v. American Pipe Co., 89 N.J. Eq. 440, 105 A. 655; Smith v. Solomon Valley Dredging Co., 147 Wash. 69, 264 P. 1009; Davis v. Edwards, 41 Wash. 480, 84 P. 22; Clark on Receivers, 2d ed., sec. 187, subd. a, p. 212.)

Appellant also urges that the complaint was insufficient. The complaint in effect alleged that the defendant was indebted to the plaintiff in a large sum; that the only asset defendant possessed was the right to levy and collect assessments; that there were two boards of directors contending for control that the assessments levied by one board had been ordered discharged by the other; that the Federal Reclamation Service, with the acquiescence of one...