Grand Rapids Electrotype Co. v. Powers-Tyson Corp.

• Decision Date: 28 March 1929
• Docket Number: No. 58.,58.
• Citation: 245 Mich. 669,224 N.W. 609
• Parties: GRAND RAPIDS ELECTROTYPE CO. v. POWERS-TYSON CORPORATION (OSTRANDER-SEYMOUR CO., Intervener).
• Court: Michigan Supreme Court

245 Mich. 669

224 N.W. 609

GRAND RAPIDS ELECTROTYPE CO.

v.POWERS-TYSON CORPORATION (OSTRANDER-SEYMOUR CO., Intervener).

No. 58.

Supreme Court of Michigan.

March 28, 1929.

Appeal from Circuit Court, Kent County, Major L. Dunham, Judge.

Bill by the Grand Rapids Electrotype Company against the Powers-Tyson Corporation, for the appointment of a receiver, in which the Ostrander-Seymour Company intervended. Intervener's petition was dismissed, and the intervener appeals. Affirmed.

Argued before the Entire Bench.Gallagher, Shulman & Abrams, of Chicago, Ill., for appellant.

Corwin, Norcross & Cook, of Grand Rapids, for receiver.

POTTER, J.

The Grand Rapids Electrotype Company, a Michigan corporation, a general creditor of the Powers-Tyson Corporation, a Delaware corporation, filed a bill against the Powers-Tyson Corporation, claiming a receiver should be appointed to manage the defendant's business, settle and collect its bills, and pay over the balance to defendant. The bill did not ask for a dissolution of the foreign corporation, did not claim plaintiff was a judgment creditor, and the proceedings for a receiver were not ancillary to any other suit against defendant. The defendant filed an answer, consenting to a receiver, and the court appointed a receiver for the Powers-Tyson Corporation. The Ostrander-Seymour Company intervened, and sought to recover machinery held by the receiver of the Powers-Tyson Corporation, of which intervener claimed title. The receiver contends intervener is not entitled to recover because, though there is a clause in the contract purporting to retain title in the Ostrander-Seymour Company, the instrument is a chattel mortgage, and, not having been filed in accordance with the statute, is voidable, and the Ostrander-Seymour Company is only a general creditor.

1. In People ex rel. Port Huron & Gratiot Ry. Co. v. St. Clair Circuit Judge, 31 Mich. 456, it is said:

‘The directors or other board of management of a corporation having general authority to manage its concerns, are vested by law with the only discretionary power that can exist in any one to carry on the corporate business; and such management cannot be assumed by a court of chancery, or vested in a receiver; neither can it be taken from the board, except under proceedings instituted to wind up the corporation under the statutes. Comp. L. 1871, cc. 206 and 207.

‘The appointment, ex parte, of a receiver to manage the corporate business, and the granting of an injunction in like manner on an interlocutory ex parte application, whereby the control of the business is taken from the directors, are more than irregular, and are absolutely void, as entirely beyond the power of the court, and are such an abuse as may be required to be corrected by mandamus.

‘The nullity of such attempts to divest rights by interlocutory and ex parte orders was somewhat considered in People v. Simonson, 10 Mich. 335, and Salling v. Johnson, 25 Mich. 489. See, also, Barry v. Briggs, 22 Mich. 201.’

The bill of complaint conferred no jurisdiction on the court to appoint a receiver.

Many cases from other jurisdictions are cited to show the consent of the Powers-Tyson Corporation was effective to confer jurisdiction on the court to appoint a receiver. If the facts set forth in the bill of complaint do not confer jurisdiction on the court to appoint a receiver, defendant's consent does not confer it. A court is something more than an arbitrator chosen by agreement of the parties. It can act judicially only when it has jurisdiction of the subject-matter of the controversy; otherwise it acts prejudicially. Jurisdiction of the subject-matter cannot be given by consent, especially where the law has withheld it. Allen v. Carpenter, 15 Mich. 25;Kirkwood v. Hoxie, 95 Mich. 62, 54 N. W. 720,35 Am. St. Rep. 549;Peninsular Savings Bank v. Ward, 118 Mich. 87, 76 N. W. 161,79 N. W. 911;Hull v. Hull, 149 Mich. 500, 112 N. W. 1126;Bradfield v. Bradfield, 154 Mich. 115, 117 N. W. 588,129 Am. St. Rep. 468;Maslen v. Anderson, 163 Mich. 477, 128 N. W. 723;People v. Meloche, 186 Mich, 536, 152 N. W. 918.

The proceedings to appoint a receiver of the Powers-Tyson Corporation were without jurisdiction and void.

2. The contract between the Ostrander-Seymour Company and the Powers-Tyson Corporation provided:

‘Upon default in the payment of either or any of said notes said Ostrander-Seymour Company, their successors or assigns, may Commence suit upon the same which shall not be a waiver of the ...