Heater v. Boston Montana Corporation
| Decision Date | 06 March 1926 |
| Docket Number | 5855. |
| Citation | 244 P. 501,75 Mont. 532 |
| Parties | HEATER v. BOSTON MONTANA CORPORATION et al. MUFFLY v. GOODWIN. |
| Court | Montana Supreme Court |
Rehearing Denied March 26, 1926.
Appeal from District Court, Beaverhead County; Lyman H. Bennett Judge.
Action by Otto L. Heater against the Boston Montana Corporation and others, in which Charles S. Muffly and another were appointed receivers. Mortgages on properties were foreclosed under an agreement that purchaser should pay off unpaid obligations incurred by receiver. Perry B. Goodwin, purchaser, filed objections to certain items in a report and account of Charles S. Muffly, receiver, and on these contested items the court made an order on which judgment was entered, from which such receiver appeals. Remanded, with directions to modify and affirmed.
Walsh & Nagle and Henry C. Smith, all of Helena, for appellant.
Kremer Sanders & Kremer, of Butte, and Franklin King and Linus C Coggan, both of Boston, Mass., for respondent.
On March 22, 1923, an order was duly made in this action appointing Charles S. Muffly and I. H. Brand receivers of all of the properties of the defendant corporations. Under this order Mr. Muffly was given actual charge, management, and control of all the properties of the several corporations located in this state, while Mr. Brand was given control of the business affairs of the corporations, which centered in Boston, Mass. Since the only matters raised on this appeal relate to the accounts of Receiver Muffly, we eliminate Brand from further mention, and shall refer to the former alone as the receiver.
The properties located in this state, and which passed into the hands of the receiver, consisted of a group of about 55 unpatented mining claims, with a large amount of development work done upon them, a 750-ton flotation mill, adjacent to the mining properties and used in connection therewith, situated in Beaverhead county; also a narrow gauge railroad about 40 miles in length extending from Divide Station to the mining properties. There were mortgages upon these properties, given to secure the sum of several million dollars, which were foreclosed in the action, the decrees of foreclosure providing for sales of the various properties by a special master in chancery, and, further, that the purchaser or purchasers, in addition to the sums bid at the sales, should pay off the unpaid obligations which had been incurred by the receiver before the delivery of the property to the purchasers.
Perry B. Goodwin became the purchaser of all the properties, and thereby assumed responsibility for payment of the unpaid obligations of the receivership. After the sales of the property and the confirmation thereof, and on January 19, 1925, the receiver filed a report and account of his doings, in which he set forth claims for his own expenses and compensation, and also claims for allowances to be paid to his attorneys. The purchaser, Goodwin, filed objections to certain of these items, and a partial hearing was had upon them on March 11, 1925, and the further hearing thereon continued to June 15, 1925. On March 11 the receiver filed a supplemental report bringing his accounts down to that date, and on June 15 a second supplemental report was filed bringing the accounts down to that time. Objections were duly filed to these supplemental reports, and the matter submitted to the court for determination on the last-mentioned date. As finally submitted, the items to which objections were made were as follows:
(1) Claim of the receiver for compensation at the rate of $1,000 per month from the date of his appointment.
(2) Claim of receiver as part of his expenses for rent of room at the Thornton Hotel, in Butte, from March 22, 1923, to April 30, 1925, at $3.50 per day, $2,277.20.
(3) Claim for allowance for payment of receiver's counsel, as follows: J. A. Walsh, for services to January 19, 1925, $3,500; J. A. Walsh, for services subsequent to January 19, 1925, $1,500; J. A. Walsh, for services at hearing on March 11, 1925, $350; Howard Toole, services at hearing on March 11, 1925, $350; Howard Toole, expenses, $11.24.
(4) F. B. Layhe, $48.90.
Upon these contested items the court made its order: (1) Allowing the receiver compensation at the rate of $500 per month, a total of $13,382.95, from which was deducted the sum of $6,000 theretofore received by him on that account, leaving a balance of $7,382.95. (2) Reducing the claim for room rent at the Thornton Hotel to the sum of $1,012. (3) Allowing receiver as compensation to his counsel the following sums: J. A. Walsh, $3,500; J. A. Walsh and Howard Toole jointly, $450; expenses of Howard Toole, $11.24. (4) Disallowing in toto the F. B. Layhe item of $48.90.
All the allowed items were ordered to be paid out of the funds in the hands of the special master derived from the sale of the property. Judgment was entered in accordance with the foregoing determinations, from which the receiver has appealed, and he assigns as error the action of the court in reducing his claims for compensation for himself and his attorneys, reducing his claim for expense of the room at the Thornton Hotel, and disallowing the Layhe item of $48.90.
1. At the hearings upon these contested items it appeared that on September 13, 1924, Judge Joseph C. Smith, one of the judges of said court who was then presiding in matters connected with this receivership, made an order fixing the compensation of the receiver at the sum of $1,000 per month. The minutes of the court show that shortly thereafter Judge Smith, deeming himself disqualified from further participation in the case, called in Judge Lyman H. Bennett, the other judge of said court, to assume jurisdiction of further proceedings therein.
To sustain their contention that the court erred in reducing the claim of the receiver for compensation at the rate of $1,000 per month, counsel for appellant in part rely upon the above-mentioned order made by Judge Smith, fixing his compensation at that amount, and say that this order is conclusive against a collateral attack thereon such as is here made, citing the case of Burke v. Inter-State S. & L. Ass'n, 64 P. 879, 25 Mont. 315, 87 Am. St. Rep. 416. On the other hand, respondent contends that this order is void for the reason that it was made by the court of its own motion and without notice to any party in interest.
The whole record of the case, including all the original pleadings and documents filed therein, has been brought up for our examination, and from an inspection thereof it appears respondent's contention that the order referred to was made by Judge Smith without notice to any party to the suit is correct. While this order did not assume to fix and determine the ultimate rights of any of the parties to the proceeding, by directing which of them should be held liable for the payment of the amount of the allowance, it was an intermediate proceeding, one of the successive steps which might have resulted in a final judgment against the properties in the hands of the receiver, or against some of the parties to the suit (State ex rel. Heinze v. District Court, 72 P. 613, 28 Mont. 227); thereby having had the effect of taking from them a portion of the property, or the proceeds thereof, to which they would otherwise have been entitled. Such a judgment would have deprived them of a sum due, as much as would a judgment directing that they pay over that amount, and all this without having been given an opportunity to appear and contest the claim.
In the case of Ruggles v. Patton, 143 F. 312, 74 C. C. A. 450, it is said:
The rule announced in that case is supported by all the authorities which have come to our attention, and among them we cite Bank v. Crysler, 67 F. 388, 14 C. C. A. 444; In re Michigan Cent. R. R. Co., 124 F. 727, 59 C. C. A. 643; In re Magner, 155 N.W. 317, 173 Iowa, 299; Colkett v. Hammond, 172 P. 548, 101 Wash. 416. In the case last cited it was held that an order fixing the compensation of a receiver and his attorneys, purporting to be final, made ex parte and without notice to any one interested other than the receiver and his attorneys, was void.
In face of the record presented to us, which shows that in fact the order in question was made without notice, we hold it was void. The order being void, no right could be predicated thereon, and it is subject to collateral attack. Crawford v. Pierse, 185 P. 315, 56 Mont. 371; Henderson v. Daniels, 62 Mont. 363, 205 P. 964. Therefore, to determine whether the court erred in fixing the amount of the receiver's compensation, resort must be had to the evidence given at the hearing, without reference to the order above mentioned.
In the consideration of this matter we are governed by the rule frequently announced by this court that in an equitable proceeding the findings of the trial court will not be disturbed unless it appears that the evidence clearly preponderates against them. State Bank v. McIntyre, 228 P. 618, 71 Mont. 186; Hartnett v. Sterling, 214 P. 330, 67 Mont. 46; Richardson v. Valier Elevator Co., 215 P. 237, 67 Mont. 227; Wood v. Robbins, 215 P. 1101, 67 Mont. 409; Sanger v. Huguenel, 211 P. 349, 65 Mont. 236. Tested by this rule, can it be said that the evidence clearly preponderates against the determination of the court that the compensation of the receiver should be reduced from the...
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