Interior Securities Co. v. Campbell

• Decision Date: 03 February 1919
• Docket Number: 4233,4239.
• Citation: 178 P. 582,55 Mont. 459
• Parties: INTERIOR SECURITIES CO. v. CAMPBELL et al. CARTERSVILLE IRRIGATED LAND CO. v. INTERIOR SECURITIES CO. et al.
• Court: Montana Supreme Court

178 P. 582

55 Mont. 459

INTERIOR SECURITIES CO. v. CAMPBELL et al.

CARTERSVILLE IRRIGATED LAND CO. v. INTERIOR SECURITIES CO. et al.

Nos. 4233, 4239.

Supreme Court of Montana

February 3, 1919

Appeal from District Court, Rosebud County; H. Leonard De Kalb Judge.

Action by the Interior Securities Company, a corporation, against Donald Campbell, as receiver, and others. After a hearing injunction was denied, and a trial upon the merits resulted in a judgment dismissing plaintiff's complaint and the cross-complaint of the Cartersville Irrigated Land Company and plaintiff and land company each appeal from the judgment and from the order overruling motion for new trial. Appeals were consolidated. Judgment and order in each instance affirmed, and injunction heretofore granted by Supreme Court dissolved.

Geo. W. Farr and Loud & Leavitt, all of Miles City, for appellant.

Gunn, Rasch & Hall, of Helena, and Donald Campbell, of Forsyth, for respondents.

HOLLOWAY J.

In a suit to foreclose a mortgage pending in the district court of Rosebud county, wherein the Northwestern Trust Company, mortgagee, was plaintiff, and the Cartersville Irrigated Land Company, mortgagor, and the First National Bank of Forsyth were defendants, Donald Campbell was appointed receiver of the property in controversy. Thereafter on August 3, 1916, a decree by consent was rendered and entered, which, among other things, provided that the receivership should be continued; that the land company should convey the mortgaged property to the receiver; that the receiver should sell the property or so much thereof as should be necessary to realize a sum sufficient to pay all costs and expenses and satisfy the mortgage indebtedness; and that the residue, if any, should be reconveyed to the land company. The decree fixed the minimum price for which each legal subdivision could be sold, and authorized the receiver to accept cash for one-third of the sale price and promissory notes payable to the trust company and secured by mortgage on the property sold, for the remaining two-thirds. For the purposes of his trust the receiver was authorized to treat such notes as cash and credit the receipts from the sales upon the indebtedness after deducting the expense. The decree prescribes the manner of conducting the sales and enumerates certain terms which should be contained in any mortgage securing deferred payments.

On September 3, 1917, the receiver entered into a contract with the Interior Securities Company, by the terms of which he agreed to sell to that company all the land then held by him (excepting 1,146 acres) for the sum of $180,000 (in round numbers), one-third payable in cash and the remainder to be represented by the securities company's note payable to the trust company and secured by a mortgage upon the property sold. Thereafter the receiver declined to carry the agreement into effect, unless and until the same was approved by the court, and this action was instituted to enforce specific performance, and, as ancillary relief, to secure an injunction pendente lite restraining the receiver from selling these lands to any other person. The trust company and land company were joined with the receiver as defendants, and all answered. The land company made common cause with the plaintiff, while the receiver and the trust company interposed substantially the same defenses. After a hearing, the injunction was denied, and a trial upon the merits resulted in a judgment dismissing the complaint of the plaintiff and the cross-complaint of the land company. Plaintiff and the land company each appealed from the judgment and from the order overruling its motion for a new trial. These appeals have been consolidated. Upon application of the appellants this court issued an injunction pending the determination of the appeals.

This cause was tried to the lower court upon the theory that an independent action may be maintained to compel a receiver to specifically perform a contract entered into by him, and we shall determine the appeals upon the same theory without, however, expressing any opinion as to its correctness.

1. In view of the allegations contained in plaintiff's complaint, it would seem that it is estopped to say that Mr. Campbell was not receiver; but whether he was technically a receiver, a trustee, or a master in chancery, is of little consequence in our view of the case. For convenience only he will be designated "receiver." He was not merely the agent of the parties to the foreclosure suit, but was an officer of the court. When he took possession of the property, it thereby passed into the custody of the law. His authority was limited by the terms of the decree, and plaintiff, contracting with him, did so at its peril.

The fact that the decree was entered by consent did not change the status of this officer from what it would have been had the decree been entered after contest, for a decree by consent has all the force and effect of a judgment in invitum (Harding v. Harding, 198 U.S. 317, 25 S.Ct. 679, 49 L.Ed. 1066; 15 R. C. L. 645; 23 Cyc. 729), with the additional characteristic that it is nonappealable ( Corby v. Abbott, 28 Mont. 523, 73 P. 120).

2. If this contract had been fully executed, the resulting transaction would have constituted a judicial sale. A sale made pursuant to a decree of court in an action to foreclose a mortgage instituted under section 6861, Revised Codes, is a "judicial sale." Black v. Caldwell (C. C.) 83 F. 880. We agree with appellants that under our statute such sale, if made, would not have required confirmation by the court in order to pass title to the purchaser. Mr. Campbell was the officer designated by the court to carry its decree into effect, and the decree itself was the authority by virtue of which the property was to be sold. Thomas v. Thomas, 44 Mont. 102, 119 P. 283, Ann. Cas. 1913B, 616.

But granting that the court's approval of the contract was not necessary to authorize the sale and that confirmation of the sale, if made, would not have been necessary to pass title, still it does not follow that appellants are entitled to a decree awarding specific performance. They cannot insist that this contract should be enforced if as a matter of fact the receiver exceeded his authority in entering into it, and that he did exceed his authority is manifest.

The decree directs the receiver to sell the property and by necessary implication authorizes him to make proper conveyance. By the terms of the contract he...