First National Bank of Laramie v. Cook
| Decision Date | 31 December 1904 |
| Citation | 76 P. 674,12 Wyo. 492 |
| Parties | FIRST NATIONAL BANK OF LARAMIE ET AL. v. COOK, AS RECEIVER, ET AL |
| Court | Wyoming Supreme Court |
Original Opinion of April 25, 1904, Reported at: 12 Wyo. 492.
Rehearing denied.
Herman V. S. Groesbeck, for defendants in error.
ON PETITION FOR REHEARING.
There does not appear to be in the record any application in writing by which the plaintiffs in error sought to enforce their liens; this is a fatal omission. The sale of the cattle under the order was not for the purpose of carrying on the business of the partnership, but to create a fund for the payment of the expenses of administering the trust, there being no funds of the partnership in the hands of the receiver. The entire object of the receivership was to settle the affairs and concerns of an insolvent co-partnership, and this would have been done speedily and economically if the receiver had not been interfered with. The property should have been sold, all just liens satisfied, and the entire matter settled by one simple, direct and speedy proceeding without encumbering the estate with the expenses of foreclosure proceedings in three or four different actions. If the plaintiffs in error had pursued their remedies long before the appointment of a receiver there would have been no trouble. A receiver is the same whether he acts upon the application of a creditor in an action where all other creditors are parties, or in supplementary proceedings. He becomes a trustee, not only for the creditor making the application, but of other creditors and stockholders. (Gillett v. Moody, 3 N. Y., 479; Talmadge v Pell, 7 N. Y., 347; Davis v. Gray, 16 Wall 203.) A court appointing a receiver acquires certain rights and assumes certain obligations, and the expenses which the court creates in the discharge of those obligations are burdens on the property taken possession of, irrespective of the question who may be the ultimate owner, or who may have the preferred lien, or who may invoke the receivership. (Kneeland v. Trust Co., 136 U.S. 89; Ry. Co. v. Bledso (Tex.), 20 S. W., 1135.) The receivership in this case is somewhat analogous to that of a receivership of railway corporations and mining companies, where the business may be and ought to be carried on for a limited period in order to protect the interests of all concerned. No hazards of a mercantile business are incurred or contemplated. The court has the power to make the expenses of the receiver chargeable on the property in his hands, though the right should be exercised with caution. (Gillan v. Nussbaum, 95 Ill.App. 277.) Although, generally, a court of equity cannot without the consent of all lien creditors authorize the receiver of an insolvent private corporation whose business is not affected with any public interests to issue certificates which will be a paramount lien on the property for the purpose of carrying on the business of the corporation, yet it will be done when it is necessary to preserve the property or franchises. (Ins. Co. v. Iron Co., 68 F. 623.) A receiver may for good cause shown be permitted to continue a partnership business until a sale of the property or the end of the litigation. The compensation of the receiver, however appointed or for what purpose, should be allowed where it is necessary to conduct the business in order to avoid loss or depreciation of the property during receivership. Such compensation allowed should not be narrowed to what it would have cost the judgment debtor, as the lienors have been guilty of laches and neglect in not promptly enforcing their claims. The compensation is discretionary with the court. (Stuart v. Boulware, 133 U.S. 78; Mann v. Poole (S. C.), 26 S. E., 229; Iron Co. v. Blevins, 34 S. W., 828; Land Co. v. Bindle, 32 S. W., 582; Reinhart v. Min. Co., 94 F. 901.)
The matter of granting or refusing leave to enforce liens is addressed to the discretion of the court; and such discretion is not subject to review unless it has been abused. The court ordered the receiver to report as to the validity and justice of the claims, and if he reported adversely then they were allowed to bring actions against the receiver. This was not a final order that was prejudicial to the plaintiffs in error because they should have awaited the receiver's report, and there has been no ruling adverse to them upon their liens, but merely a reference to the proper party as a master to ascertain their apparent justice and validity, whereupon the matter could be reviewed by the court. The court followed the usual practice in such cases. The order being discretionary, appeal will not lie.
Proceedings for appointment of the receiver were taken on January 5, 1903, and possession was taken on January 7th; the order for the sale was made about January 22d, and the order of the commissioner granting leave to enforce securities was made on the 24th. This delay was unreasonable, and should be held tantamount to the consent and acquiescence in the appointment. (Brown v. Iron Co., 134 U.S. 535; Allen v. R. R. Co., 3 Woods, 316; Gypsum Co. v. Adsit, 105 Mich. 497; Rumsey v. R. R. Co., 154 Mo. 215; In re Purifier Co., 86 Mich. 149; Hardt v. Levy, 79 Hun, 348.)
Upon the whole case we think the court has misconceived the scope of this salutary statute, which is remedial in character and which has been properly invoked in this action by a diligent creditor. The point that the court or Judge is not authorized to settle disputes between the debtor and third persons applies merely where the Judge may order property or earnings of the debtor to be applied on execution without the appointment of a receiver and where the debtor has confessed upon his examination that he owns such property. We cannot see that it has any bearing upon the administration of a receivership.
ON PETITION FOR REHEARING.
In this case both parties have filed petitions for a rehearing. The defendants in error seek a rehearing upon all the points generally involved in the cause, while the plaintiffs in error ask for a rehearing upon certain points only in reference to the expenses of the receiver. We will consider first the petition of the defendants in error.
At the outset it is suggested in the brief of counsel for the defendants in error that there does not appear in the record any application in writing upon which the plaintiffs in error sought to enforce their liens, and that this omission was overlooked in the argument at the former hearing. This is a mistake of counsel and not of the record, since the bill of exceptions contains the written applications. Counsel persists in misconceiving the nature, object and force of this proceeding, and seems to understand that it is an action for the purpose of winding up the affairs of an insolvent partnership. He states in his brief in support of the petition for rehearing that Counsel evidently observes no impropriety in the employment of a purely statutory proceeding in aid of an execution, which may be prosecuted before and determined by a District Judge in vacation or chambers, and whose orders therein need not necessarily be court orders, for the equitable closing up of the business of a co-partnership judgment debtor, marshaling its varied assets, determining the rights, interests and priorities of all its creditors, and adjudicating the claims and liens of third persons upon real estate; and all this in a proceeding where by all the authorities other creditors and claimants to the property of the judgment debtor are neither necessary nor proper parties, and where the only notice ever given to the firm in question was a notice to an alleged resident and managing partner to appear and answer touching the property of the firm. No petition was filed against the firm alleging insolvency or any other reason for winding up its affairs at the instance of a single creditor. Nor do we find any process bringing the partnership and its creditors into court for any such purpose. This erroneous conception of the proceeding, and the functions and powers of the receiver constitutes the fundamental error in the case. This is in no proper sense a suit or proceeding for winding up the business and affairs of an insolvent partnership. (Price v. Price, 21 A.D. 597, 47 N.Y.S. 772.) Had it been such a proceeding, brought in a court with ample jurisdiction and with power to bring in all...
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