Lehman v. Trust Co. of America

• Decision Date: 20 April 1909
• Citation: 49 So. 502,57 Fla. 473
• Parties: LEHMAN et al. v. TRUST CO. OF AMERICA.
• Court: Florida Supreme Court

49 So. 502

57 Fla. 473

LEHMAN et al. v. TRUST CO. OF AMERICA.

Florida Supreme Court

April 20, 1909

Headnotes Filed May 25, 1909.

In Banc. Appeal from Circuit Court, Manatee County; Joseph B Wall, Judge.

Bill by the Trust Company of America against Richard Lehman and others. Decree for complainant, and defendants Lehman appeal. Reversed.

Syllabus by the Court

SYLLABUS

While the appointment of a receiver in litigation is to a large extent within the sound judicial discretion of the chancellor, to be exercised or not according to the circumstances and exigencies of each particular case, yet there are certain well-established rules that should be observed in exercising such discretion: '(1) That the power of appointment is a delicate one, and to be exercised with great circumspection. (2) That it must appear the claimant has a title to or lien upon the property, and the court must be satisfied by affidavit that a receiver is necessary to preserve the property. (3) That there is no case in which the court appoints a receiver merely because the measure can do no harm. (4) That fraud or imminent danger, if the immediate possession should not be taken by the court must be clearly proved. (5) That, unless the necessity be of the most stringent character, the court will not appoint until the defendant is first heard in response to the application.'

It is well settled that, except in rare cases, the receiver must be a person who is indifferent between the parties litigant, and must remain so, giving to neither party favor or advantage. In executing the orders of the court, he acts as and for the court, and should be as unbiased as the court itself.

The chancellor has no power, in authorizing a receiver of the properties of a corporation to borrow money, to order that the receiver's certificates issued for such loan shall be a prior and superior lien over the lien of a prior existing judgment against a third party upon property which had been conveyed by such judgment debtor to such corporation subsequent to the rendition of such judgment.

COUNSEL Axtell & Rinehart, for appellants.

Sparkman & Carter, for appellee.

OPINION

TAYLOR, J.

The appellee, The Trust Company of America, as complainant below filed its bill in equity in the circuit court of Manatee county against the Manatee Light & Traction Company, a corporation, for the foreclosure of a trust deed or mortgage made by the latter company upon all of its properties, real and personal, to secure an issue of $100,000 of its bonds. The appellants, Richard Lehman and Max Lehman, as surviving partners of the former firm of D. Lehman, were made parties defendant to said bill, under the allegation that they claimed to have some interest in the premises covered by said mortgage, but that the same is subordinate and subject to the lien of said mortgage. The bill alleges that one Nina H Graham was the holder of a majority in amount of the bonds secured by said mortgage, and that, default having been made by said mortgagor in the payment of interest due on said bonds, on her initiative, under the express terms and provisions of said mortgage, the complainant, as trustee, had declared the whole of such bonds, principal and interest, to be due and payable. The bill prayed for foreclosure, for the appointment of a receiver for the mortgaged properties, and for leave to the receiver to borrow money for betterments upon receiver's certificates, which should be decreed to be a first lien upon such properties. The defendant the Manatee Light & Traction Company, by John A. Graham, its president, filed an answer to the bill, in which it is alleged that said corporate defendant, since the execution of said mortgage, had changed its corporate name to the Manatee Light & Power Company. It admits all the allegations of the bill to be true, and states that it has no objection to the foreclosure of said mortgage.

The defendants Richard Lehman and Max Lehman, as surviving partners of the firm doing business formerly under the firm name of D. Lehman, answered the bill, alleging That on the 14th day of May, 1897, said firm recovered a judgment for $8,433.65 in the circuit court of Duval county against John A. Graham, and that a duly certified transcript of such judgment was filed for record and duly recorded in the office of the clerk of the circuit court of Manatee county and there duly indexed on the 10th day of November 1902, and from that date constituted a lien upon all real estate of said John A. Graham situated in said Manatee county. That subsequent to said November 10, 1902, said John A. Graham, being the owner thereof, conveyed by deed to the defendant Manatee Light & Traction Company the lands described in the bill of complaint, to wit: Lots 1 and 2, block B. Smith's addition to Braidentown. That the lien of the said judgment against said property constitutes a valid and subsisting lien, prior to any lien or pretended lien of the complainant. Said answer, upon information and belief, further alleges that the bonds of the said Manatee Light & Traction Company, claimed in the bill to be owned by Nina H. Graham, do not in fact belong to her as against these defendants, but that said bonds in truth and in fact belong to and are the property of John A. Graham, and that the attempted transfer and assignment of said bonds to the said Nina H. Graham was in fraud...