Jones v. Strayhorn

• Decision Date: 18 February 1959
• Docket Number: No. A-6890,A-6890
• Parties: Ruth Legett JONES et al., Petitioners, v. J. R. STRAYHORN et al., Respondents.
• Court: Texas Supreme Court

Page 290

321 S.W.2d 290

159 Tex. 421

Ruth Legett JONES et al., Petitioners, v. J. R. STRAYHORN et al., Respondents.

No. A-6890.

Supreme Court of Texas.

Feb. 18, 1959.

Rehearing Denied March 25, 1959.

Wagstaff, Harwell, Alvis & Pope, Abilene, Shank, Dedman & Payne, Dallas, Childers & Childers, Abilene, Stubbeman, McRae, Sealy & Laughlin, Midland, Watson & McGee, Roby, Harry G. Dippel, Fort Worth, Fountain, Cox & Gaines, Vinson, Elkins, Weems & Searls, Ben H. Rice, III, Andrews, Kurth, Campbell & Bradley, Richard F. Burns, Willard B. Wagner, Gen. Counsel, Superior Oil Co., Williams, Lee & Kennerly, Houston, Erwin, Wagner & Hodson, Willard B. Wagner, Jr., Houston, for petitioners.

McMahon, Smart, Sprain & Wilson, Abilene, Adkins, Folley, McConnell & Hankins, Amarillo, for respondents.

Will Wilson, Atty. Gen., James H. Rogers and Milton Richardson, Asst. Attys. Gen., for the State.

NORVELL, Justice.

We are here concerned with the allocation of receivership expenses as costs of suit. For convenience we shall refer to the numerous petitioners as the Jones plaintiffs and the respondents (except the State) as the Strayhorn defendants. The State of Texas was an intervening party in the District Court and is aligned with the strayhorn defendants. When necessary, the State will be referred to by name. Upon intervening the State successfully sought the appointment of a receiver and a number of the defendants joined in the application. See, Jones v. Springer, Tex.Civ.App., 256 S.W.2d 1016, wherein the trial court's appointment of a receiver was upheld.

The primary action involved land in Kent County and the title issue was ultimately decided by this Court in favor of the Jones plaintiffs. Strayhorn v. Jones Tex.Sup., 300 S.W.2d 623. Following such decision, the Honorable Lewis M. Williams, sitting for the Honorable Ben Charles Chapman, the regular judge of the District Court of Kent County, held a hearing and on June 17, 1957, entered an order which among other things discharged the receiver and approved provious orders directing the payment of certain monies as compensation for the receiver and his attorney. These items, together with other charges incurred in the course of the receivership, aggregated the sum of $39,052.01. As to this item the following finding and order was made by the trial judge:

'It further appearing to the Court * * * that it is just and equitable that the parties for whose benefit the receivership was ordered should be required to pay the costs of receivership and that neither the receivership nor any act of the Receiver in any manner benefited the property placed in receivership or the parties adjudged to be the owners thereof, or made such property more valuable than it was at the time of his appointment; and resulted in no benefit to the parties adjudged to be the owners thereof and who at all times resisted the appointment of the receiver,

'It is, therefore, Ordered, Adjudged and Decreed that the aforesaid costs of the Receiver and the Receiver's expenses in the total sum of $39,052.01, be, and they are hereby taxed as costs, and are taxes one-half (1/2), jointly and severally, against the Defendants herein, to-wit: J. R. Strayhorn, R. L. Springer, C. E. Leon, W. E. (Mike) Barron, W. W. Barron, E. B. Sullivan, Marvin O'Brien, Charles H. Reimers, the Livestock National Bank of Chicago, and one-half (1/2) against the State of Texas.'

The Court of Civil Appeals reversed the order taxing the receivership expenses against the State and the Strayhorn defendants as costs of suit and held there was no evidence supporting the finding of the trial court above set out. Strayhorn v. Jones, Tex.Civ.App., 312 S.W.2d 582. In so doing the lower appellate court erred.

Judging from the authorities cited in its opinion the Court of Civil Appeals has seemingly confused the rules applicable to the right of the receiver to have his compensation and the expenses incurred by him paid out of the receivership funds with the rules governing the allocation of costs as between the parties. From time to time the receiver, under proper orders of the court, retained certain sums from the receivership fund which he transferred to himself or to his attorney by check duly listed in his final report. No one questions these payments. No one seeks to recover them from the receiver who incidently is not a party to this proceeding, nor affected thereby. The Court of Civil Appeals quotes the following from Taylor v. Taylor, Tex.Civ.App., 91 S.W.2d 394, 398, no writ history:

'The general rule is that the receiver is entitled to reasonable compensation, to be taxed as costs against the property and funds in receivership, and that without regard to the result of litigation, and irrespective of the right of either party to recover costs of court against his adversary.'

No one questions this rule. It is simply beside the point. It may be conceded at the outset that the Strayhorn defendants had a good-faith yet invalid claim to the property involved in this litigation. It may likewise be conceded it was not improper for a receiver to be appointed to take charge of the property pending the final outcome of the suit. However, this circumstance does not in itself determine the issue of the allocation of costs as between the parties. In the nature of things, the appointment of receiver must be based upon a preliminary estimate of the situation and while in this case we may assume that the parties who sought the appointment of a receiver were actuated by worthy motives, it nevertheless requires small 'prophetic ken' to invision a case in which an adequate showing for a receivership could be made upon the preliminary application; yet, upon final hearing and thorough investigation the whole scheme might be exposed as a clever device to use our judicial tribunals as a means of depriving a rightful owner of his property through a studied program of harassment and oppression. While the bona fides of the unsuccessful claimant may be an item to be considered by the trial judge in taxing costs it is by no means controlling.

The matter with us is governed by Rules Nos. 131 and 141 of the Texas Rules of Civil Procedure which read as follows:

Rule 131. 'The successful party to a suit shall recover of his adversary all costs incurred therein, except where otherwise provided.'

Rule 141. 'The court may, for good cause, to be stated on the record, adjudge the costs otherwise than as provided by law or these rules.'

These provisions seem to be a statement in rule form of the general practice. It is stated in Corpus Juris Secundum that:

'In the absence of statute, the receivership expenses may be adjudged against one or the other of the parties or apportioned between them in the discretion of the court.' 75 C.J.S. Receivers § 303(a), p. 981.

The same authority points out that the apportionment of costs should be controlled by equitable principles and recognizes that while the ultimate success or failure of the party who requests the appointment of a receiver is not in itself controlling, it is nevertheless a prime factor in determining who shall ultimately pay the costs of the receivership. 75 C.J.S. Receivers § 303(b), p. 982.

The distinction between the receiver's right to compensation and the allocation of costs was pointed out in the early case of Espuella Land & Cattle Company v. Bindle, 11 Tex.Civ.App. 262, 32 S.W. 582, 583, no writ history. The Court said:

'We think the receiver's fees must be considered a part of the court costs, within the meaning of this statute, and, as such, are entitled to be paid out of the moneys that came into his hands. Ellis v. Vernon Lce, Light & Water Co., 86 Tex. (109), 113, 23 S.W. 858; Id., 4 Tex.Civ.App. 66, 23 S.W. 856. We see no reason why this statute ¹ does not apply to a case in which the defendant is successful, as well as to one in which the plaintiff recovers. We do not, however, hold that it would prevent the court from making a proper equitable adjudgment of these costs, as between the parties to the suit, nor that a defendant is in any manner deprived of such remedies as he might otherwise have had, such a reconvention or separate suit for damages, to protect himself against loss occasioned by wrongfully taking his property from his possession, and having it squandered by an expensive receivership.'

While the trial judge was authorized to vary the general rule as to taxing costs, if in his opinion the equities of the case required it, he did not choose to do so in the present case and set forth in his order the reasons which prompted him to tax the costs against the unsuccessful parties to the litigation in accordance with Rule No. 131. There is something to be said in favor of such action. Receivership is one of the harshest remedies known to the law. When it is used to deprive an owner of the use of his property, injury invariably results. He who invoked the remedy must be prepared to assume some risk, for it cannot be said the final outcome of the lawsuit is a matter which should be disregarded in taxing costs, and we cannot rest the matter entirely upon the preliminary estimate of the need for a receivership.

While it was finally adjudged that the Jones plaintiffs were the owners of the real property involved, the effect of the decision of the Court of Civil Appeals was to saddle such parties with all the costs and expenses of the receivership and to deny to them a recovery over against the unsuccessful claimants who procured the receiver's appointment over their protests and objections.

As the trial judge undoubtedly had the discretionary authority to adjudge costs, the controlling question in this case is, Did he abuse his discretion in failing to adjudge such costs against the Jones plaintiffs?

The cases which have held that a trial judge has abused his discretion in adjudging costs, including receivership expenses against the successful party, are those in which it...