Frick v. Fritz

• Decision Date: 13 July 1904
• Citation: 100 N.W. 513,124 Iowa 529
• Court: Iowa Supreme Court
• Parties: FRICK v. FRITZ (MORRIS & CUTHBERT, INTERVENERS).

124 Iowa 529

100 N.W. 513

FRICK

v.FRITZ (MORRIS & CUTHBERT, INTERVENERS).

Supreme Court of Iowa.

July 13, 1904.

Appeal from Superior Court of Cedar Rapids; James H. Rothrock, Judge.

This was originally an action aided by attachment to recover judgment on certain notes made payable at Cedar Rapids. The writ of attachment was levied on certain property of the defendant, consisting of cattle, corn, and hay, in Palo Alto county. Subsequently, by amendment, plaintiff asked the appointment of a receiver to take charge of the attached property. Such receiver was appointed, and on his application the cattle were ordered to be removed to Cedar Rapids, and were so removed by him. Thereupon the interveners filed their petition in the case, alleging that they were the holders of chattel mortgages on the cattle antedating the attachment, and asking that the liens of their said mortgages be declared to be superior to plaintiff's claim under his attachment. It was then stipulated between plaintiff and interveners that the cattle might be sold by the receiver, and that the rights of the plaintiff and interveners to the proceeds from such sales should remain the same as their rights in and to the cattle then in the possession of the receiver, and should be determined as though the cattle themselves were in the hands of the receiver at the time the rights of the respective parties should be tried and determined. Judgment was eventually rendered in favor of plaintiff against defendant Fritz in the main action, and in the intervention proceeding it was held that the attachment lien was superior and paramount to the claims of interveners under their mortgages, and on the final report of the receiver he was allowed to retain out of the funds coming into his hands from the sale of the attached property $646.49 for costs and fees of his receivership, and to pay over the balance of the proceeds to the clerk, to be applied on plaintiff's judgment and costs. On appeal to this court the judgment of the lower court, giving priority to plaintiff's attachment over interveners' mortgages, was reversed. Frick v. Fritz, 115 Iowa, 438, 88 N. W. 961, 91 Am. St. Rep. 165. Thereupon a motion was filed by the plaintiff, asking the court to determine what costs in the action were taxable to plaintiff and to interveners, respectively, and what amount of the proceeds of the attached property received by plaintiff from the clerk on his judgment should be by him returned into court. In ruling on this motion the court decided that the amount received by plaintiff on his judgment should be returned, and that the expenses of the receiver, allowed by the court in the sum of $646.49, should be borne by the plaintiff, and, as the sum had been paid out of the proceeds of the sale of the attached cattle, the plaintiff should pay the amount thereof into court for the use of the interveners. From the order of the court directing plaintiff to pay into court the sum allowed for the expenses of the receiver the plaintiff appeals. Affirmed.Crissman & Sargent, for appellant.

Dawley, Hubbard & Wheeler, for appellee.

McCLAIN, J.

The concrete question to be determined on this appeal is whether, when a receiver has been appointed for attached property, the expenses of the receivership shall be deducted from the proceeds of the property, as against an intervener who has established a right to the property as mortgagee prior and superior to that of the plaintiff under his attachment, it appearing that the proceeds of the attached property are not sufficient to satisfy the intervener's mortgage, or whether, on the other hand, the proceeds of the property shall be turned over to the intervener under his claim as mortgagee, and the costs of the receivership shall be taxed to the plaintiff, who has been unsuccessful in the attempted assertion of his right to the property by attachment.

It has frequently been said, in the discussion of questions as to the taxation of the costs of a receivership, that the authorities are in serious conflict. But it will be discovered, on examination, that the rules applicable in such cases are reasonably well settled, without substantial conflict, although, perhaps, there has been some diversity of views as to the applicability of these rules under particular states of fact. The general rule is well established that the expenses of the receivership are to be satisfied out of the property or funds coming into the hands of the receiver, and this rule is so universally accepted as the starting point for all discussion that authorities supporting it need not be cited. Where the object of the receivership is to preserve the property pending a determination of the rights of the parties to the litigation with reference to such property or the proceeds thereof, there is no question but that the successful party, availing himself of the fruits of the litigation, must take subject to the burden of the costs of the receivership, and it is immaterial whether the plaintiff has succeeded in asserting the rights in aid of which the receivership has been asked, or whether the defendant has established the invalidity of plaintiff's claims. Hirsch v. Israel, 106 Iowa, 498, 76 N. W. 811;Hembree v. Dawson, 18 Or. 474, 23 Pac. 264;Beckwith v. Carroll, 56 Ala. 12;Simmons v. Allison, 119 N. C. 556, 26 S. E. 171;Espuella Land, etc., Co. v. Biddle (Tex. Civ. App.) 32 S. W. 582. And this rule is properly applied where the contest is not as to the regularity or legality of the proceedings for the appointment of the receiver, but only as to the disposition of the proceeds of the property or funds. Jaffray v. Raab, 72 Iowa, 335, 33 N. W. 337;Radford v. Folsom, 55 Iowa, 276, 7 N. W. 604;Harrington v. Foley, 108 Iowa, 287, 79 N. W. 64;Gallagher v. Gingrich, 105 Iowa, 237, 74 N. W. 763;St. Paul Title, etc., Co. v. Diagonal Coal Co., 95 Iowa, 551, 64 N. W. 606;Cutter v. Pollock, 7 N. D. 631, 76 N. W. 235. But where the right of the plaintiff to subject the property for which he seeks to have a receiver appointed to the payment of his claim is resisted from the beginning, and the effect of the appointment of a receiver is to subject to the control of such receiver property in which the plaintiff is, as the result of the litigation, found to have had no interest or right whatever, it would evidently be manifestly unjust that, after determination of the case against the plaintiff, he should be allowed to have the expenses of the receivership, which he has occasioned by his unfounded claim, and from which the opposite party derives no benefit, satisfied out of the property itself. Such a result would be inequitable, for it would throw upon defendant the burden of a litigation instituted by plaintiff without right. This court so held in the case of French v. Gifford, 31 Iowa, 428, in which, after reversal of an order for the appointment of a receiver on the ground that such order was improperly made, it was decided that...