Grimes Sav. Bank v. McHarg

• Decision Date: 14 November 1933
• Docket Number: 42281
• Citation: 251 N.W. 51,217 Iowa 636
• Parties: GRIMES SAVINGS BANK, Appellee, v. MAGGIE MCHARG et al., Appellants, J. G. MYERLY, Intervenor, Appellee
• Court: Iowa Supreme Court

251 N.W. 51

217 Iowa 636

GRIMES SAVINGS BANK, Appellee, v. MAGGIE MCHARG et al., Appellants, J. G. MYERLY, Intervenor, Appellee

No. 42281

Supreme Court of Iowa, Des Moines

November 14, 1933

REHEARING DENIED FEBRUARY 15, 1934.

Appeal from Polk District Court.--LOY LADD, Judge.

This is an action commenced by plaintiff corporation against the defendants to set aside certain deeds and subject the land described therein to the lien of a judgment previously obtained against the defendant Maggie McHarg. J. G. Myerly filed a petition in intervention. Defendants filed a plea in abatement to plaintiff's petition; plaintiff filed a motion to dismiss defendants' plea in abatement; and defendants filed a motion to dismiss intervenor's petition.

Plaintiff's motion to dismiss the plea in abatement was sustained defendants' motion to dismiss intervenor's petition was overruled. Defendants appeal.

Affirmed.

C. E Hunn and H. S. Hunn, for appellants.

J. G. Myerly, for appellees.

KINTZINGER, J. ALBERT, C. J., and ANDERSON, and KINDIG, JJ., concur, STEVENS, J., MITCHELL, J., (specially concurring).

OPINION

KINTZINGER, J.

The only questions raised in this appeal are whether or not the court erred in dismissing defendants' plea in abatement; and in overruling defendants' motion to dismiss Myerly's petition of intervention. The facts upon which the questions raised are to be determined are substantially as follows:

In January, 1930, the plaintiff bank obtained judgment against the defendant Maggie McHarg for about $ 9,400 and interest. That, during the period of the indebtedness upon which said judgment was obtained, the defendant Maggie McHarg, in October, 1925, conveyed two tracts of land aggregating 176 acres to the defendant Ethel Kuefner. This action was commenced in September, 1930, to set aside the above-named conveyances on the grounds they were made with the intent of hindering, delaying, and defrauding her creditors, and especially this defendant, and were made without any consideration whatsoever. Thereafter certain judgments were rendered against Ethel Kuefner by other creditors. In April, 1932, the real estate in question was conveyed to the defendant C. E. Hunn, trustee, for the benefit of all of her creditors.

The defendants Maggie McHarg, Ethel Kuefner, and Albert Kuefner filed their answers to the petition in this action in July, 1931, and the defendant Hunn, trustee, filed his answer in December, 1932. The answers in substance plead a general denial.

In March, 1933, a receiver was appointed for the plaintiff bank. Until that time the bank was a going concern. The inventory filed by the receiver does not list the judgment in question as one of the assets of the bank, and the receiver makes no claim thereto in this action, and has not intervened. Neither is there any showing that the plaintiff corporation has been actually dissolved, or that the corporation has ceased to exist.

The answers of all the defendants except the trustee were on file almost two years, and the answer of the trustee Hunn for several months prior to the appointment of a receiver for the plaintiff bank.

In May, 1933, the defendants filed a plea in abatement, and as grounds therefor allege in substance as follows:

1. The appointment of a receiver for the plaintiff bank and that the action abates for lack of a proper party plaintiff.

2. That the judgment in question was no longer the property of the plaintiff bank, but, by virtue of certain agreements between the bank and some of its directors, one of the directors became subrogated to all rights of the bank in said judgment; that the bank is no longer the owner of said judgment; that the receiver has no right, title, or interest therein; that neither the plaintiff nor the receiver are proper parties in interest; and therefor have no right to pursue this action.

3. That other creditors of the defendants are proper parties to this action, but were not brought in.

J. G. Myerly, an attorney, on June 1, 1933, filed a petition in intervention claiming a common interest with plaintiff in the relief prayed for in plaintiff's petition, alleging his employment by the plaintiff bank in securing the judgment against Maggie McHarg upon which plaintiff's action is founded. He also alleges that, pursuant to his employment as attorney for plaintiff in that action, he performed many and valuable services, resulting in the judgment in question, for which he duly filed and effected an attorney's lien against said judgment. The defendants moved to dismiss the petition in intervention on the ground that the intervenor fails to show any interest or ownership in the subject-matter of the suit.

The lower court sustained plaintiff's motion to dismiss the defendants' plea in abatement, and at the same time overruled the defendants' motion to dismiss intervenor's petition of intervention.

I. It is the general rule of law that, unless there is a statutory provision forbidding it, a pending action will not be abated because of bankruptcy or insolvency proceedings commenced against a plaintiff, after the original action was commenced. It is also the general rule that the appointment of a receiver will not abate the action, but it may be continued in the name of the original party, unless there is a statutory provision to the contrary. This is especially true where there has been no motion made to have the receiver substituted for the plaintiff, and where the receiver does not voluntarily intervene to claim any interest in the action. In such cases the action may be prosecuted by or against the original party. 1 C. J. 144, section 226; 1 R. C. L. 48, section 51; Weigen v. Council Bluffs Ins. Co., 104 Iowa 410, 73 N.W. 862; Des Moines Savings Bank v. Morgan Jewelry Co., 123 Iowa 432, 99 N.W. 121; Wilsey v. Jewett Bros. & Co., 122 Iowa 315, 98 N.W. 114; Britten v. Sheridan Oil Co., 205 Iowa 147, 217 N.W. 800; People v. Commercial Alliance Ins. Co., 151 N.Y. 640, 45 N.E. 1133, affirming 5 A.D. 273, 39 N.Y.S. 117; Barclift v. First Nat. Bank, 225 Ala. 426, 143 So. 446; Garden of Eden Drainage Dist. v. Bartlett, 330 Mo. 554, 50 S.W.2d 627, 84 A. L. R. 1078; Central Nat. Bank v. Insurance Co., 104 U.S. 54, 26 L.Ed. 693; Lusk Lumber Co. v. Independent Producers Consol., 43 Wyo. 191, 299 P. 1044; Leonard v. Hartzler, 90 Kan. 386, 133 P. 570, 50 L. R. A. (N. S.) 388.

The cases hereinabove referred to, including the Iowa cases cited, have adopted the rule that, where an action has already been commenced, before any receivership proceedings were begun, it may be continued in the name of the original party where other parties are not brought in on motion.

In Weigen v. Council Bluffs Ins. Co., 104 Iowa 410, 73 N.W. 862, we said:

"It will be observed that there is no allegation that the corporation has been dissolved, or that the court, in appointing the receiver, enjoined it from exercising any of its corporate powers. No statute of this state limits the powers of a corporation upon the appointment of a receiver, and those of the defendant were restrained only by depriving it of its property. The right to sue and be sued, conferred by the statute, was retained. No relief was asked against the receiver, and he was not a necessary party, though he might, in the discretion of the court, be permitted, by intervening, to interpose any proper defense to the action. The authorities seem in entire harmony on these propositions."

In Wilsey v. Jewett Bros & Co., 122 Iowa 315, loc. cit. 318, 98 N.W. 114, 115, we said:

"Certainly such proceedings did not operate to abate the same; nor did the fact that plaintiff subsequently failed to schedule the claim sued upon as an asset have any such effect. Section 3476 of [217 Iowa 640] the Code provides that no action shall abate by the transfer of any interest therein during its pendency, and new parties may be brought in as necessary. Now, conceding that the claim was properly an asset, and should have been scheduled, plaintiff still had the right to continue in its prosecution until deprived of that right by some action on the part of the bankruptcy court, or the trustee appointed by it. * * * But aside from this, if there was any wrong committed in not scheduling the claim, it was not a wrong done to this defendant. It was in no sense prejudiced thereby, and there is no principle upon which to rest a holding that its liability became extinguished by reason of such fact."

The rule is settled in this state that the mere appointment of a receiver long after an action has been commenced will not abate the prosecution of the action by the party for whom a receiver has been appointed. If the receiver was the proper party in interest, he could have been brought into the case on motion. Searles v. Life Ins. Co., 148 Iowa 65, 126 N.W. 801, 29 L. R. A. (N. S.) 405; Hawkeye Securities Fire Ins. Co. v. Central Trust Co., 210 Iowa 284, 227 N.W. 637.

The general rule is that the appointment of a receiver for a corporation, which does not operate to dissolve it, does not affect its right to sue or to enforce judgments previously obtained. 14-a C. J. 885; People v. Barnett, 91 Ill. 422; Leonard v. Hartzler, 90 Kan. 386, 133 P. 570, 50 L. R. A. (N. S.) 383; Britten v. Sheridan Oil Co., 205 Iowa 147, 217 N.W. 800. An abatement of a pending action does not result from the appointment of a receiver. Weigen v. Council Bluffs Ins. Co., 104 Iowa 410, 73 N.W. 862; O'Mara v. Newton & N.W. R. Co., 156 Iowa 701, 137 N.W. 942.

II. It is also contended that this action should be abated because it appears that the plaintiff is not the real party in interest. Under this ground it is claimed that the obligation sued on was simply held by the bank as trustee; the same having been equitably assigned to...