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

• Decision Date: 31 July 1929
• Docket Number: 5326
• Citation: 279 P. 713,48 Idaho 182
• Parties: J. B. ELDRIDGE, Respondent, v. PAYETTE-BOISE WATER USERS' ASSOCIATION, a Corporation, Appellant
• Court: Idaho Supreme Court

279 P. 713

48 Idaho 182

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

No. 5326

Supreme Court of Idaho

July 31, 1929

APPEAL AND ERROR-WHO MAY APPEAL-SERVICE OF NOTICE OF APPEAL-ADVERSE PARTIES.

1. Under C. S., sec. 7153, requiring notice of appeal to adverse party, an "adverse party" is party to original action or proceeding or one who has been brought in by order of court, or who has been allowed to intervene in original action; and hence it was unnecessary to serve notice on creditors of corporation, who had presented claims to receiver, for although they might be adversely affected by appeal judgment, only parties to record are entitled to notice.

2. Since only "party aggrieved" may appeal, under C S., sec. 7151, stockholder not in privity with corporation and who did not appear as party, could not appeal from an order allowing claims against corporation.

3. While merely filing claim with receiver did not make the creditor of corporation a party, creditor whose claim was disallowed by receiver, by filing objections to receiver's report pursuant to leave of court, voluntarily appeared and became a party, and as such was entitled to appeal from an order allowing claims of other creditors.

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

Motion to dismiss appeal. Denied.

Motion to dismiss the appeal of Kollenborn denied. Costs to appellant Kollenborn Brown to pay his own costs.

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

An examination of the notice of appeal shows that appeal is "From the whole of said judgment."

It does not seem to require any argument that when an appeal is taken from the whole of a judgment in which judgment creditors occur that the judgment creditors are adverse and must be served, for they cannot help but be affected by a reversal of the judgment. This court held as late as Mahaffey v Pattee, 46 Idaho 16, 266 P. 430, quoting from Lind v. Lambert, 40 Idaho 569, 236 P. 121: "An adverse party within the meaning of C. S., sec. 7153, means any party who would be prejudicially affected by a modification or a reversal of the judgment or order appealed from."

This court also held in Glenn v. Aultman and Taylor M. Co., 30 Idaho 727, 167 P. 1163, that "The appeal is subject to dismissal for the reason that all of the adverse parties were not served."

This has been the rule since Jones v. Quantral, 2 Idaho 141, 153, an opinion rendered in the year 1886, appearing as far back as 9 P. 418. Hence we see this appeal violates every rule and pronouncement made by this court in the last forty-three years, a few of which follow: Lambert v. Paysee, 45 Idaho 564, 263 P. 1001; Lind v. Lambert, supra; Williams v. Sherman, 34 Idaho 63, 199 P. 646; Green v. Morrison, 37 Idaho 420, 216 P. 1035; Kinzey v. Highland Livestock & Land Co., 37 Idaho 9, 214 P. 750.

T. A. Walters and Walter Griffiths, for Appellant.

It is not necessary to give notice of appeal, or to make those parties to the appeal whose rights will not be affected by a modification or a reversal of the judgment. (Hanrick v. Patrick, 119 U.S. 156, 7 S.Ct. 147, 30 L.Ed. 396; Anthony Investment Co. v. Arnett, 63 Kan. 879, 64 P. 1024; Mohr v. Byrne, 132 Cal. 250, 64 P. 257; Watson v. Noon Day Min. Co., 37 Ore. 287, 55 P. 867, 58 P. 36, 60 P. 994; Egan v. Estrada, 6 Ariz. 248, 56 P. 721; Day v. Sines, 15 Wash. 525, 46 P. 1048; Eccles v. United States Fidelity & Guaranty Co., 72 Neb. 439, 100 N.W. 942; Crane v. Hensler, 196 Ind. 341, 141 N.E. 51, 146 N.E. 577, 148 N.E. 409; Boyd v. Greer, 70 Ind.App. 77, 123 N.E. 122.)

GIVENS, J. T. Bailey Lee and Wm. E. Lee, JJ., concur. Budge, C. J., dissents.

OPINION

GIVENS, J.

At the instance of plaintiff, a receiver was appointed to take charge of the property of defendant corporation. A large number of creditors filed claims, some of which were disallowed. Exceptions were filed to the report of the receiver by owners of certain of the disallowed claims as follows: J. B. Eldridge, First National Bank of Caldwell, Walter Griffiths, C. M. Rankin, L. J. Magee, Naomi Lambert and W. H. Kollenborn.

A hearing was had on the report and all of the creditors who had filed exceptions to the report of the receiver appeared except Kollenborn. The claims of all creditors who appeared were sustained by the district court either wholly or in part and the receiver overruled in this respect. An order of distribution was entered for the amount of their claims in favor of all creditors, both those appearing and those not appearing, whose claims had been approved by the court.

From this action Kollenborn and F. M. Brown, stockholders in defendant corporation, have appealed, claiming to represent the interests of the other stockholders.

A motion to dismiss the appeal has been filed for the reason, among others, that service of notice of the appeal has not been served on all adverse parties.

The notice of appeal is directed to the plaintiff and defendant, the receiver, and all the creditors who filed exceptions to the disallowance of their claims and appeared at the hearing before the district court.

It is specifically urged in the motion to dismiss that the notice of appeal has not been served on all the other creditors, some forty in number, who made no appearance in the action but whose claims, filed with the receiver, have been approved by the court.

All the creditors, those served and those not served, are interested in having the order allowing their claims sustained. No preferential claims have been allowed.

This court has repeatedly held that service of notice of appeal is jurisdictional and that where such service is not made on all parties whom the judgment on appeal might adversely affect, the appeal will be dismissed.

We may concede that the judgment on appeal in the case before us might adversely affect the creditors who failed to appear at the hearing below, and who, the record discloses, have not been served. But it does not necessarily follow that these creditors should have been served with such a notice. Not all persons whose interests might possibly be adversely affected by the judgment on appeal are entitled to notice but only those persons who are parties. (C. S., sec. 7151.)

The term "adverse party" as used in C. S., sec. 6726, providing for relief from default, has been declared by this court to mean "a party to the original action or proceeding or one who has been brought into the case by the order of the court, or one who has been allowed by the court to intervene or become a party plaintiff or defendant in the action as originally instituted." (Kerns v. Morgan, 11 Idaho 572, 83 P. 954.) We believe that the words as used in C. S., sec. 7153, should be given a similar meaning.

The question of whether a claimant in a receivership action who merely files a claim and makes no further appearance is a "party" to the proceedings is one which, apparently, has been rarely considered by either text-writers or the courts.

Clark in his recent work on Receivers, 2d ed., sec. 649 c, states that "the filing of a claim is not equivalent to a pleading in the case in which the receiver is appointed," citing International Banking Corp. v. Lynch, 269 F. 242.

Discussing the matter further, he says:

"The filing of a claim with a receiver has not the full force and effect of an intervention because the party who files the claim does not, strictly speaking, become a party to the receivership suit. A claim should be verified and when filed with the receiver becomes notice to the receiver of such a claim. The receiver may allow or disallow a claim after thorough investigation as his good judgment and the advice of counsel demand. When this claim is disallowed, the holder of the claim may intervene in the receivership case, ask that he be made a party, and formally present his claim to be heard by the court. He may also, if circumstances of the case demand it, ask leave to sue the receiver on this claim, thereby placing himself in a position to have the judgment of the court reviewed." (Clark, supra, sec. 656.)

Tardy, in Smith on Receivers (2d ed.), states that "only persons who have intervened and become parties or have in some other way obtained a right to do so may object to the allowance of claims presented (to the court) for approval. (Sec. 593.)

And in a note he elucidates this statement as follows: "Creditors may not object to the allowance of claims until they have become parties by intervening and presenting their own claims."

It might legitimately be inferred from these quotations that the writers were of the opinion that creditors who have merely filed a claim with a receiver have not thereby become parties to the receivership proceedings.

This conclusion is borne out by the few decisions which have passed upon similar questions.

In the case of Scott v. Great Western Coal Co., 223 Ill. 271, 79 N.E. 53, a creditor filed a bill against the corporation asking that a receiver be appointed. Other creditors were not made parties, although they did file claims. These same creditors later prosecuted this appeal. The appeal was dismissed on the ground that the appellants were not parties to the record. The court said:

"The plaintiffs in error, claiming to be creditors of the defendant corporation, presented their claims to the receiver. No action was taken by the court allowing or disallowing said claims, nor was leave asked or granted to permit them to file intervening petitions, or to present cross-bills by which their claims might have been adjudicated. The mere filing of a claim...