Gloyd v. Rutherford

• Decision Date: 25 April 1963
• Docket Number: No. 36642,36642
• Citation: 62 Wn.2d 59,380 P.2d 867
• Court: Washington Supreme Court
• Parties: Maurice M. GLOYD, Bud Thorp, et al., Plaintiffs, v. W. R. RUTHERFORD, Defendant and Petitioner, Everett. O. Butts et al., Defendants, The Superior Court of the State of Washington for Pierce County, Frank Hale, Judge, Respondent.

Page 59

62 Wn.2d 59

380 P.2d 867

Maurice M. GLOYD, Bud Thorp, et al., Plaintiffs, v. W. R. RUTHERFORD, Defendant and Petitioner, Everett. O. Butts et al., Defendants,

The Superior Court of the State of Washington for Pierce

County, Frank Hale, Judge, Respondent.

No. 36642.

Supreme Court of Washington, Department 1.

April 25, 1963.

Griffin, Boyle & Ross, Tacoma, for appellant.

Lee, Krilich & Anderson, Tacoma, for respondent.

ROSELLINI, Judge.

This action was instituted by the plaintiffs for an accounting by the defendants Rutherford and Butts, who are officers and directors of Metallo Sales & Manufacturing, Inc. Thereafter, on petition of the plaintiffs, a receiver was appointed to take charge of the property and affairs of the corporation.

When the receiver's report was presented, it showed that the corporation had a possible claim against the defendant Rutherford, who was the president of the corporation, based upon a contract signed by him under the terms of which he purchased 499,500 of the 500,000 authorized shares of stock.

The case came on for trial on June 21, 1962. In accordance with the prayer, contained in the plaintiffs' complaint, the trial court, on June 25, 1962, recessed the trial and directed the defendants to render an accounting to the plaintiffs. On the same day, the report of the receiver came on for hearing, in accordance with notice given by the court on June 22. Although an opportunity was given to the defendant Rutherford, who is the petitioner herein, to present further evidence, he did not avail himself of this opportunity but relied upon arguments of counsel. The court construed the contract and concluded that the petitioner was obliged, under its terms, to turn over a certain formula and connected information to the corporation. An order was entered accordingly, directing the petitioner to deliver the formula and other information to the receiver. A petition for a writ of certiorari was granted.

The correctness of the trial court's determination is not questioned in this proceeding, but the petitioner contends that the court was without jurisdiction to construe the contract and declare the rights of the parties under it.

In beginning his argument, the petitioner cites the general rule that a receiver takes the property of which he has been appointed the same plight and condition and subject to the same equities and liens as he finds it in the hands of the person or corporation out of whose possession it is taken.

It is also the rule, however, that the receiver stands not only in the shoes of the corporation but also in the shoes of bona fide creditors of the corporation. Buckner-Weatherby Co. v. Wuest, 167 Wash. 647, 9 P.2d 1104. In High on Receivers, 4th ed., § 1, it is said:

'A receiver is an indifferent person between the parties to a cause, appointed by the court to receive and preserve the property or fund in litigation pendente lite, when it does not seem reasonable to the court that either party should hold it. He is not the agent or representative of either party to the action, but is uniformly regarded as an officer of the court, exercising his functions in the interest of neither plaintiff nor defendant, but for the common benefit of all parties in interest. * * * Being an officer of the court, the fund or property intrusted to his care is regarded as being in custodia legis for the benefit of whoever may finally establish title thereto, the court itself having the care of the property by its receiver, who is merely its creature or officer, having no powers other than those conferred upon him by the order of his appointment, or such as are derived from the established practice of courts of equity. * * *'

In § 3, p. 5, it is said:

'The jurisdiction exercised by courts of equity in administering relief by the extraordinary remedy of a receiver pendente lite is a branch of their general preventive jurisdiction, being intended to prevent injury to the thing in controversy, and to preserve it for the security of all parties in interest, to be disposed of as the court may finally direct. * * *'

Having placed the receiver in the shoes of the corporation, the petitioner states further that, in order for the corporation to establish its disputed claim to the formula referred to in the contract, it would be necessary for it to commence suit against the petitioner, and reasons that the receiver must do likewise. Unfortunately, the petitioner neglects to cite any authorities sustaining his position in this regard.

It is true, as the petitioner states in his argument, that a court is reluctant to take possession, by its receiver, of property in the possession of third parties claiming title thereto; and ordinarily a receiver who claims such property must institute a separate action. State ex rel. Hunt v. Superior Court, 8 Wash. 210, 35 P. 1087, 25 L.R.A. 354; High on Receivers, 4th ed., § 145; 75 C.J.S. Receivers § 124. However, it is said in 2 Clark on Receivers, 3d ed., § 366, that a court,...