Malott v. Shimer

• Decision Date: 13 June 1899
• Docket Number: 18,907
• Citation: 54 N.E. 101,153 Ind. 35
• Parties: Malott, Receiver, v. Shimer, Administratrix
• Court: Indiana Supreme Court

54 N.E. 101

153 Ind. 35

Malott, Receiver, v. Shimer, Administratrix

No. 18,907

Supreme Court of Indiana

June 13, 1899

From the Marion Superior Court.

Affirmed.

John G Williams, for appellant.

Ayres Jones & Hollett, for appellee.

OPINION

Hadley, J.

Appellant was, by the circuit court of the United States for the district of Indiana, in 1896, appointed receiver of the Terre Haute & Indianapolis Railroad Company, and while he was operating the railroad of said company, as such receiver under the orders of the court, appellee's intestate, while traveling on said railroad as a postal clerk, was killed in the state of Illinois by the alleged negligence of the defendant.

Appellee brought this suit to recover damages for the death of her husband without first obtaining leave of said circuit court so to do. Appellant demurred to the complaint, for want of jurisdiction in the Marion Superior Court over the subject-matter of the action. The demurrer was overruled. Answer by general denial, trial by jury, and verdict and judgment for plaintiff for $ 5,000. The overruling of the demurrer to the complaint and appellant's motion for a new trial are the only errors assigned.

Whether appellant, acting as a receiver under appointment of the United States Circuit Court, can be sued in a state court, without previous leave from the appointing court, is the only question presented by the demurrer. We perceive no useful purpose to be attained by a review of the decisions as they existed prior to 1887. It is sufficient to state that the weight of authority held to the general rule that the possession of a receiver was inviolable, and that other courts could not acquire jurisdiction over the subject-matter of the trust without specific authority so to do from the court appointing the receiver. But the application of the doctrine to railroads traversing more than one state, that were being operated by receivers, became productive of such great and manifold hardship to citizens who became claimants under the receiver, as to demand a modification of the rule. To invest a receiver, who had assumed the role of a common carrier and who solicited and received business over long lines of railway, with the special privilege of requiring all persons injured by acts or transactions of his to seek redress in the court of his appointment, where they would be denied the right of trial by jury, and subjected to heavy expense, was found to be so oppressive and unreasonable that some of the federal courts, prior to 1887, entered general orders in such cases, granting claimants against the receiver authority to sue in the state courts in the county where the cause of action arose.

In the case of Dow v. Memphis, etc., R. Co., 20 F. 260, on page 268, Caldwell, J., in stating reasons for such an order, said: "Where property is in the hands of a receiver simply as a custodian, or for sale or distribution, it is proper that all persons having claims against it, or upon the fund arising from its sale, should be required to assert them in the court appointing the receiver. But a very different question is presented where the court assumes the operation of a railroad hundreds of miles in length, and advertises itself to the world as a common carrier. This brings it into constant and extensive business relations with the public. Out of the thousands of contracts it enters into daily as a common carrier, some are broken, and property is damaged and destroyed, and passengers injured and killed by the negligent and tortious acts of its receiver and his agents. In a word, all the liabilities incident to the operation of a railroad are incurred by a court where it engages in that business; and, when they are incurred, why should the citizen be denied the right to establish the justice and amount of his demand, by the verdict of a jury in a court of the county where the cause of action arose and the witnesses reside? If the road was operated by its owners or its creditors, the citizen would have this right, and when it is operated for their benefit by a receiver, why should the right be denied?"

Congress, taking cognizance of the evils and hardships flowing from the rapidly increasing railroad receiverships, in 1887 enacted a statute which provides as follows: "That every receiver or manager of any property appointed by any court of the United States may be sued in respect of any act or transaction of his in carrying on the business connected with such property, without the previous leave of the court in which such receiver or manager was appointed; but such suit shall be subject to the general equity jurisdiction of the court in which such receiver or manager was appointed, so far as the same shall be necessary to the ends of justice." 25 U.S. Statutes, p. 436.

In the recent case of Ray v. Peirce, 81 F. 881, in an application to remove to the United States Court a suit brought against his receiver in a state court, Baker, J., said concerning the conditions that led to the enactment of the above statute: "Such are the general principles of the law, uninfluenced by legislation applicable to receiverships. The consequences flowing from these principles of the law were found to be intolerably burdensome to persons having small claims and demands against the insolvent or against the receiver for his acts or transactions in his official capacity. To compel the claimant to prosecute a suit against the receiver of a railroad for a small demand in the court of his appointment, generally remote from the claimant's residence, involved such inconvenience and expense as to amount in many cases to a practical denial of justice. Even an application to the court who appointed the receiver for leave to sue in another court nearer the residence of the claimant and his witnesses was found to be inconvenient and expensive, and frequently such applications were met with denial. With the multiplicity of railroad receiverships the evil became so intolerable that legislation was found necessary to secure relief. Section 3 of the act of March 3, 1887."

Appellant contends that the right conferred by this statute extends only to suits in other federal courts, and that "it confers no jurisdiction of any kind, or in any manner upon any other courts." We cannot yield our assent to this proposition. Little relief from the mischiefs sought to be remedied would be attained by this sort of construction, and we should not adopt it unless its provisions will admit of no other. It is the duty of a court, in construing a remedial statute, to give it that interpretation, if not inconsistent with its terms, that will promote and advance the remedy intended by the lawmakers. Section two of the same act provides that a receiver appointed by a federal court to manage or operate property in his possession, shall do so in conformity to the valid laws of the state in which the property shall be situated, and in the same manner that the owner would be required to operate it if in possession; that is to say, it makes receivers of a federal court, operating a railroad and dealing with the general public as a common carrier, amenable to state laws in the same manner, and by the same rules of liability, that apply to rival corporations managing their own similar property. The two sections construed together clearly indicate that the object Congress had in view was to put receivers operating railroads under orders of federal courts upon the same footing as owners operating their property in the same territory, so far as concerns the legal liability of such...