In re Magner

• Citation: 173 Iowa 299,155 N.W. 317
• Decision Date: 18 December 1915
• Docket Number: No. 29728.,29728.
• Parties: IN RE MAGNER.
• Court: United States State Supreme Court of Iowa

173 Iowa 299

155 N.W. 317

IN RE MAGNER.

No. 29728.

Supreme Court of Iowa.

Dec. 18, 1915.

Appeal from District Court, Fayette County; A. N. Hobson, Judge.

This is a complaint of the refusal of the court, at the instance of appellant, who is a creditor, to set aside the final report of the receiver, and to allow appellant to make objections to such report. Reversed and remanded.Grimm & Trewin, of Cedar Rapids, and H. P. Hancock, of West Union, for appellant.

E. H. Estey and W. J. Ainsworth, both of West Union, for appellee.

SALINGER, J.

I. Appellant is a creditor of Magner, who listed his claim with and was allowed it by appellee, the receiver appointed on the application of Forrey, another creditor of Magner. Not enough was realized to pay the creditors in full. On January 31, 1912, the receiver filed final report and application to be discharged upon making final distribution. Approval was made and discharge upon distribution ordered, about January 31, 1912. No notice was ordered or given, unless what is claimed to be actual notice is such, and obviates the need of formal notice, if formal notice be required. On the 15th day of April, 1912, appellant filed petition to set aside said order of approval. It asserts there was no jurisdiction to make said order because no notice was given, and asks permission to file stated objections to said final report. The objections are, in effect, that the report exhibits excessive expenditures, expenditures that could have been obviated, an exorbitant claim for the services of the receiver and of his attorneys, and the attorney's claim should be diminished by the amount of fees claimed to have been paid him, and that the receiver has rendered no account as to the collection and disposition of book accounts owing Magner, and therefore to his estate. It is prayed that the report be set aside and the receiver required to file a supplemental report, showing what has become of said book accounts, whether or not the receiver has taken possession of and accounted for all the property belonging to Magner, and that such supplemental report show in detail the amount of work done by the receiver and his attorney, and the necessity for paying out “such large amounts for clerk hire and the rate of wages paid by them.” It is further prayed that he be required “to make a full and detailed account of his doings as such receiver.” It appears there is not on file, or in the office of the clerk, proof of--

“the service of any notice of the hearing on the final report of R. O. Woodward as receiver of W. A. Magner, and that the record does not show any such notice was ever given * * * to any creditor, or ever filed.”

[1] The court ruled it would “not set aside * * * the discharge and the final report, for the sole reason that no notice has been given.”

Upon this ruling rests the first controversy here. The appellee contends that no statute requires such notice, and that therefore the order at bar should not be set aside for want of such notice. The appellant says that, though no statute may, in terms, require the notice, that is the effect of the germane statute law, and that whether or no statute commands notice, the order is, in the absence of notice, void for denying a day in court to parties interested, and thus making a judicial pronouncement by a proceeding which is not due process of law. The appellee asserts we have settled, as have other courts, that no notice is needed because no statute requires one. We understand him to offer no argument other than stare decisis Of our own cases, the following are relied upon: Williams v. Trust Company, 126 Iowa, 22, 101 N. W. 277, so far from holding that in the absence of statute such notice is unnecessary, goes fully into the question of what is good notice, and says such notice is one which the trial court has inherent power to require before discharging its official, and that if it finds the discharge was secured without compliance with its order, it has the undoubted right to set aside an order so obtained, and if the court exercises this power, a notice that has no signature and is addressed to no one and which is not entered of record until service is made, exhibits an entire lack of notice, and the court is without jurisdiction to enter an order of discharge based thereon. The case does, however, not rule on the effect of want of statute requirement because it turns on obedience to an order that notice be given. The only thing decided is that though notice be not required by statute, the court may yet order it, and if it does, rules of court, requiring the notation of court orders on a calendar or motion docket, require that the receiver note said order thereon, inclusive of the time of the hearing and nature of service, and, then, that the notice in the case was no notice. Kow's Case, 57 Iowa, 20, 10 N. W. 283, is authority merely for the proposition that in the absence of fraud or mistake the final settlement and discharge of an administrator is a binding adjudication upon those interested, subject to a provision of statute that accounts settled in the absence of any person adversely interested, and without notice to him, may be opened within three months, on his application. To the same effect is Patterson's Case, 25 Iowa, 149. In Arnold's Case, 65 Iowa, 570, 22 N. W. 680, the administrator did publish a notice, but, notwithstanding this, we applied the rule of Kow's Case, to wit, that under statute the settlement could be opened arbitrarily within three months, and later than that for fraud or mistake, and that the statute time for arbitrarily opening does not interfere with the functions of a court of equity. It is apparent none of these settle anything for the present controversy.

O'Leary's Case, 97 Ark. 372, 134 S. W. 617, Ann. Cas. 1912D, 904, does not moot the question of notice. Its holding is that if the receiver be discharged, an appeal from a judgment in his favor will be dismissed under the rule that if the appellant's right to further prosecute has ceased, the appeal will be dismissed on motion of appellee. Incidentally there is a statement:

“It seems that the defense does not depend upon notice of the application for the discharge being served upon plaintiff”

--and in support, among others, is cited the Jewett Case, 115 N. Y. 166, 21 N. E. at 1037, left col. The Jewett Case is a construction of Herring's Case, 105 N. Y. 340, 12 N. E. 763. In it there is no controversy over want of notice, and notice seems to have been given. The point involved seems to be that a receiver in an action has power to contest any claims against the estate of the corporation without consulting the creditors, and that judgments resulting are binding. The Jewett Case construes the Herring Case to be authority for the proposition that where general creditors are all representedin the action between the receiver and debtors, they are not, as a matter of law or right, entitled to any personal notice of any proceedings in those actions. This language, applied to the facts involved in the Herring Case, means that no notice is required that the receiver is having a lawsuit with a debtor. The cases cited in O'Leary's Case for its support are these: McGhee's Case, 134 Ala. 281, 32 South. 301, which is a naked holding that the discharged receiver may plead the discharge in bar to a suit brought against him as such. Exactly this is the holding of Archambau's Case, 173 Mass. 249, 53 N. E. 816. And so of Gray v. Railway, 156 Fed. 736, 84 C. C. A. 392, which merely holds that a receiver is not liable personally, and therefore an action against him cannot be maintained after the receivership has been closed and the receiver discharged. On the other hand, in Ruggles v. Patton, 143 Fed. at 314, 74 C. C. A. 452, Lurton, Judge, says:

“Nothing is better settled than that an allowance * * * by way of compensation for his [receiver's] services is not subject to the arbitrary determination of the court, but should be made upon a hearing at which the parties interested have an opportunity of contesting the claim.”

It is said in 34 Cyc. p. 473:

“An order allowing compensation to a receiver should be made only after notice and a hearing at which the parties have an opportunity to contest the claim.”

In Crysler's Case, 14 C. C. A. 444, 67 Fed. 388, there was an oral motion made by the receiver's attorneys without notice to appellants, and upon this the circuit court allowed the receiver and his attorney each $5,000 as additional compensation, and at the same time approved certain long reports filed by the receiver. This was done on June 2, 1894. On June 11th, appellants moved to have the court vacate this final allowance, alleging as ground that the allowance was irregularly made without notice; that the interveners were interested in the amount of said allowance; and that they desired to be heard in relation thereto. The motion was denied. The question on appeal does not seem to involve whether the allowance was reasonable in amount. No testimony was offered on that point. The Circuit Court of Appeals says:

“It is obvious that the motion with which we are concerned in the case at hand was not a motion grantable of course because it involved the production of evidence and a judicial inquiry into the nature and extent of the services that had been rendered by appellees and the value thereof. The only point that admits of any controversy is whether it was a special motion of the kind that can regularly be heard ex parte. Mr. Daniels says that it is impossible to lay down any clear rule defining such special motions as may properly be heard ex parte, but that any application addressed to a chancellor, concerning proceedings to be taken in a pending case, that is not” likely to be “regulated by some general order or by any clearly defined rule of practice, must be made on notice. Daniels, Ch. Pl. and Prac. 1513. Also in Isnard v. Cazeaux, 1 Paige (N. Y.)...