Hill v. M. S. Alper & Son, Inc.

• Decision Date: 15 July 1969
• Docket Number: No. 598-A,598-A
• Citation: 256 A.2d 10,106 R.I. 38
• Court: Rhode Island Supreme Court
• Parties: , 6 UCC Rep.Serv. 1112 Henry M. HILL v. M. S. ALPER & SON, INC. ppeal.

Page 10

256 A.2d 10

106 R.I. 38, 6 UCC Rep.Serv. 1112

Henry M. HILL v. M. S. ALPER & SON, INC.

No. 598-Appeal.

Supreme Court of Rhode Island.

July 15, 1969.

Edwin O. Halpert and Samuel A. Olevson, Providence, for the permanent receiver of M. S. Alper & Sons, Inc., the appellant

Arcaro, Belilove & Kolodney, Providence, Saml. J. Kolodney, Providence, for State Land Company, Inc. and Abraham Belilove, appellees.

OPINION

JOSLIN, Justice.

This is a petition by the permanent receiver of M. S. Alper & Son, Inc. for instructions. While the petition nominally relates to the disposition of the proceeds of certain real estate acquired by Alper from the state in the manner hereinafter described, what really was at issue was the right of Abraham Belilove, Esq. to be paid in full for legal services admittedly rendered by and owned to him by the respondent corporation. It was heard by a justice of the superior court sitting within the receivership proceedings, and the receiver, being dissatisfied with his instructions, appeals.

The case has a long history. It began in 1960 when several parcels of land located in the city of Providence and owned by Alper were condemned by the state for highway purposes. See M. S. Alper & Son, Inc. v. Director of Public Works, 98 R.I. 154, 200 A.2d 583. Following the taking the state found that four of the condemned parcels were surplus to its highway construction needs, and in 1962 it granted Laredef Realty Operators, Inc., a neighboring property owner, an easement or right of way over those parcels for five years, and in addition granted it an option to purchase at the expiration of the easement. Alper challenged the grant as an attempted circumvention of article XVII of the amendments to the state constitution. ¹ Its challenge succeeded and a superior court justice ordered the state to make those parcels available to Alper upon the same terms and conditions as it had offered them to Laredef. On appeal decided on February 8, 1965 we sustained. M. S. Alper & Son, Inc. v. Capaldi, 99 R.I. 242, 206 A.2d 859. Our decision, however, did not bring an end to the litigation. When Alper and the state were unable to agree on what were the terms and conditions upon which the lots had been offered to Laredef, another lawsuit followed. Finally, the superior court fixed $21,862 as the price which Alper would have to pay for the parcels and July 1, 1966, as the last day for payment.

Although it had taken approximately four years of troublesome litigation for it to gain the right of repurchase, Alper lacked the funds to meet the price fixed for a reconveyance, and it appeared that the July 1 deadline might come and pass without Alper being able to exercise the right it had struggled so long to attain. As a direct result of Belilove's efforts, however, State Land Company, Inc., a client of his, became interested and it agreed to lend Alper the purchase price. Their agreement called for a purchase money mortgage payable in one year, and the transaction was consummated on June 29, 1966. On the same day Alper and Belilove entered into two agreements. In one Alper appointed Belilove its attorney in fact and authorized him to sell or lease the property and generally to deal with it as he saw fit; and in the other, Alper, although then financially unable to pay Belilove for his past services, made certain agreements looking toward a future settlement of those obligations. What those agreements were, while of considerable pertinence, will be discussed later in this opinion. It should not go unnoticed, however, that the trial justice found them 'eminently reasonable.'

During the following year, Belilove did not dispose of the property under the power of sale, and Alper defaulted in the performance and observance of the terms and conditions of the purchase money mortgage. If a forced sale had then been held the probability was that the only bidders would have been the mortgagee and perhaps Laredef, which needed the property for parking purposes. In order to avoid such a sale and to obtain a larger price for the property than might be obtained at foreclosure, Alper and State Land Entered into an arrangement on June 21, 1967, whereby the property was deeded to State Land, which in turn agreed to sell it at public or private sale at such price as it deemed fair and reasonable. State Land further agreed to apply the sale proceeds first to the payment of the balance due on the mortgage loan, and then to satisfy Alper's obligation to Belilove as fixed by the June 29, 1966 agreement. Although the instrument itself is not explicit on what was to be done with whatever balance might remain after thus applying the proceeds, the trial justice found that its clear implication called for State Land to account to Alper therefor. The receiver does not seriously question that finding. ²

On July 3, 1967, only 12 days after the conveyance by Alper to State Land, a stockholder instituted receivership proceedings against Alper, and first a temporary and then a permanent receiver were appointed. The institution of those proceedings apparently in no way affected State Land's possession of the property previously deeded to it by Alper, and it continued to hold title until the fall of 1967. Then, in conjunction with the receiver, who was selling contiguous property owned by Alper, it sold the premises at publice auction and, at the closing on December 27, 1967, received a net, after expenses of $46,810.29. By agreement the proceeds were turned over to the receiver and the attorney for State Land Company to be held in escrow by them pending determination of the claims which were being made against the fund by State Land, the receiver, and Belilove. To obtain that determination, the receiver petitioned the receivership court for instructions on how to distribute. A summary proceeding followed. Nobody questioned State Land's right to be paid the balance of $24,917.02 which was due on its mortgage. Belilove, claiming under the June 29, 1966 memorandum-agreement with Alper relating to his fees, asserted his right to one-half of the difference between the sale price and the mortgage indebtedness. The receiver took issue with Belilove and claimed everything in excess of what was owed on the mortgage. In resolving the conflict between Belilove and the receiver, the trial justice adopted the former's interpretation of the June 29, 1966 agreement, and he directed that the fee claimed by Belilove should be paid and that the balance of the escrowed funds should be turned over to the receiver. The receiver promptly appealed. Shortly thereafter, apparently being in some doubt about his right to seek review without having first obtained the appointing court's permission, the receiver applied for such permission, and received its nune pro tunc approval to the appeal he had already claimed.

Initially, there is the procedural question of the receiver's right to appeal. It was raised by Belilove who, in a motion to dismiss the appeal filed shortly after the case was docketed here, advanced two grounds. First, and primarily, he urged that the receiver had no proper interest in disputing the positive instructions he had received from the court which had appointed him and subject to whose directions he was required to act. Secondly, he questioned whether the order appealed from possessed a sufficient degree of finality to permit immediate review. We denied his motion without prejudice. R.I., 248 A.2d 603. He renewed it when the case was argued and we consider it now.

It is, of course, basic in receivership law that a receiver does not have an absolute right of appeal, and that generally he will not be allowed to appal an order of the court whose instrumentality he is and by whose creation he exists except upon its express permission and direction. McKenzie v. Standard Bleachery Co., 109 N.J.Eq. 429, 157 A. 845; Stowell v. Arizona Sav. & Loan Ass'n, 93 Ariz. 310, 380 P.2d 606; Hatten v. Vose, 10 Cir., 156 F.2d 464; Hicks v. First Nat. Bank, 224 Ala. 494, 140 So. 882. Whether the appointing court should give such permission in some states is said to be discretionary. Beilman v. Poe, 120 Md. 444, 88 A. 131; see Schultz v. City of Cincinnati, 8 Ohio App. 140, aff'd City of Cincinnati v. Schultz, 97 Ohio St. 317, 120 N.E. 176. Other courts look at the circumstances of each case. Generally they say that permission should be given when the order sought to be reviewed, if allowed to stand, would diminish the funds otherwise available for distribution to the creditors. Felton v. Ackerman, 6 Cir., 61 F. 225; Kavanagh v. Bank of America, 239 ill. 404, 88 N.E. 171.

In this case, it is not essential that we decide which of the two approaches to take. Under either, it was not error to grant permission. The legal ussues raised by the petition for instructions, if not complex, are at least to some extent novel in this jurisdiction. This alone would justify an exercise of discretion in favor of permitting review. Moreover, the trial justice was obviously aware that a disagreement by this court with his resolution of what was at issue would result in a substantial increase in the receivership assets. These considerations were more than sufficient as bases for the appointing court to grant the receiver leave to appeal. It is of no significance, moreover, that the receiver's request for permission, rather than being antecedent to his claim of appeal, followed it by 13 days.

Belilove also argues that the order appealed from was not final in its nature and was therefore not appealable. That argument may be tested by inquiring whether an appeal would lie is the receiver, instead of having proceeded within the receivership proceedings, had litigated his claim to the escrowed funds by commencing an independent action for an accounting of the proceeds of the sale of the Alper property. This, of course, he could have done. Robers v. Golden Flake Doughnut Shops,...