Mann v. Gaddie

• Decision Date: 24 December 1907
• Docket Number: 1,619.
• Citation: 158 F. 42
• Parties: MANN v. GADDIE.
• Court: U.S. Court of Appeals — Fifth Circuit

158 F. 42

MANN v. GADDIE.

No. 1,619.

United States Court of Appeals, Fifth Circuit.

December 24, 1907

Isaac Hardeman, Geo. S. Jones, and A. L. Miller (Miller & Jones Hardeman & Jones, Haygood & Cutts, and W. A. Wooten, on the brief), for appellant.

John I Hall and Olin J. Wimberly, for appellee.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

SHELBY Circuit Judge.

This is a suit brought by W. M. Gaddie, alleging that he is a citizen of North Carolina, against Frank R. Mann, Thomas J. Wooten and C. M. wise, all citizens of Georgia, the Citizens' Bank of McRae, a corporation under the laws of Georgia, and T. P. Trigg and W. E. White, partners composing the firm of Trigg & White, citizens of Virginia. The bill alleges the making of the following contract:

'Georgia, Telfair County:

'This agreement made and entered into, this 29th day of November, 1904, by and between Frank Mann, Thomas J. Wooten, W. M. Gaddie and C. M. Wise, whereby the said parties are offering for sale a tract of land on the Ocmulgee river (about 17,000 acres) and the said C. M. Wise is to have the sale of said property, and in case of a sale then all parties hereto to share equally in the net profits of said sale.

F. R. Mann. 'Thomas J. Wooten. 'W. M. Gaddie. 'C. M. Wise.

'Witness: A. J. Walker, J.P.'

It is alleged that under this contract Mann and Wooten were to secure options on timber and timber lands, and that Wise and Gaddie were to secure purchasers therefor, the profits to be equally divided between the four; that Mann and Wooten secured the options, which, in some instances, consisted of escrow deeds and leases, and that these options, deeds, and leases were placed in the Citizens' Bank of McRae, which was to deliver them when the agreed purchase money was paid; that Gaddie and Mann were unable to find a purchaser, and that in 1906 Mann, in whose name the options were taken, secured a purchaser in Trigg & White, who paid $5,000 in cash, and were ready to pay the balance of the purchase money, and that Mann had excluded and ignored Gaddie and Wise, and was denying that they had any interest in the profits. Gaddie, the complainant, therefore prayed for an injunction to prevent the consummation of the trade with Trigg & White and the delivery of the options, deeds, and leases by the bank, for the appointment of a receiver for the options, deeds, and leases, and for an accounting from Mann for his interest in the contract.

After the bill was filed, orders were made granting an injunction and appointing a receiver. From the interlocutory order appointing a receiver, this appeal is taken.

The 10 assignments of error may be condensed or grouped for the purpose of this decision:

First. The court erred in appointing a receiver and in granting the injunction, and in not accepting a bond tendered by Mann.

Second. The court erred in not dismissing the case for want of jurisdiction.

1. The bill was presented to the judge and indorsed 'Filed' on June 29, 1906, and on the same day the judge made an order at chambers appointing J. A. Dunwoody 'temporary' receiver, and ordered him to take possession of the property described in the bill and all moneys arising from the sale of any property described in the bill. An injunction was also issued as prayed for. The learned judge in appointing the receiver held that the case made by the bill was one of 'urgency, and which, under the provisions of the Georgia Code, render proper the appointment of a receiver. ' No notice was given the defendants that an application would be made to appoint a receiver. The Georgia statute provides that:

'Under extraordinary circumstances a receiver may be appointed before and without notice to the trustee or other person having charge of the assets. ' Civ. Code Ga. 1895, Sec. 4904.

We have had occasion heretofore to decide that this statute is only confirmatory of a principle of equity procedure and jurisdiction. Joseph Dry Goods Co. v. Hecht, 120 F. 760, 764, 57 C.C.A. 64. In the absence of this statute, under extraordinary circumstances, a court of equity may appoint a receiver without notice. The extraordinary circumstances referred to in the statute are the exceptional cases which sometimes occur, and which make it necessary that the court should have the power to act without notice to the defendant. A defendant may be beyond the jurisdiction of the court, or cannot be found, or some urgent emergency may be shown rendering interference, before there is time to give notice, necessary to prevent waste, destruction, or loss; or a case may arise in which notice itself would jeopard the safety of the property over which the receivership is extended. Moritz v. Miller, 87 Ala. 331, 6 So. 269. The jurisdiction, without notice, should never be exercised except in cases of imperious necessity, when the complainant's right is clear and can be protected in no other way. This is the rule wherever equity is administered (Alderson on Receivers, Sec. 121), and has been enjoined and enforced by repeated decisions of this court. North American L. & T. Co. v. Watkins, 109 F. 101, 48 C.C.A. 254; Cabaniss v. Reco Mining Co., 116 F. 318, 54 C.C.A. 190; Joseph Dry Goods Co. v. Hecht, supra.

The rule is, of course, applied in receivership suits by one partner against another. McCarthy v. Peake, 18 How.Pr. 138.

Taking all the averments of the bill as true, no reason is shown for the appointment of a receiver without notice. We heartily indorse an observation of the Supreme Court of Ohio made in a case where the trial court had appointed a receiver without notice to the defendants:

'Under the circumstances of the case, the appointment of the receiver was an unwarranted exercise of judicial power, which it is the duty of this court to reverse and set aside. ' Railway Co. v. Jewett, 37 Ohio St. 649, 659.

2. Immediately after the making of the foregoing order appointing him receiver, Dunwoody demanded and received of the defendant Mann the option contracts described in the bill.

On July 17, 1906, Frank R. Mann, one of the defendants and the appellant in this court, filed a sworn motion in the court below, in which he alleged that the property in controversy consisted only of escrow deeds and options obtained by him for the purchase in fee simple of various tracts of land upon which there is a heavy growth of hardwood timber, and for options for long-term timber leases on other tracts of land; that all of these deeds and options were obtained from the owners of property by him and at his own expense, and that W. M. Gaddie had no right or interest in them; that some of the options had expired since the filing of complainant's bill; and that the others would soon expire, unless closed according to their terms; that, if the options were permitted to expire, it would result in the loss to him of many thousand dollars; that, if he is permitted to protect his rights in the options, he would be able to make a sale at a profit of several thousand dollars; that under the terms of the orders made by the court he was unable to take any steps to protect his rights and to prevent the options from expiring. He therefore moved the court that he be allowed to give a bond in such terms and upon such conditions as may be fixed by the court, to discharge any judgment or decree that may be recovered by the complainant against him, and that, upon the execution of the bond with such sureties as may be required by the order of the court, the temporary receiver heretofore appointed to take charge of the option contracts, and who now has the same in his possession, be directed to deliver them to this defendant. This motion by Mann to be allowed to give a bond came on to be heard on the 22d of September, 1906. At the same time the court heard the application for the appointment of a permanent receiver as prayed for in the bill, and for the granting of an injunction conformable to the prayer of the bill. The court on that day made a decree overruling and denying the motion of Mann to be permitted to give a bond, and granted the application of the complainant for the appointment of a permanent receiver and the issuance of an injunction.

The claim of the complainant is that he is entitled as a partner to one-fourth of the net profits arising from the sale of certain lands on which the members of the partnership had obtained options. The complainant's claim is based on the written agreement between the partners made November 29 1904, which is copied in the statement of the case. The complainant contends that the agreement was extended to additional lands-- in all about 25,000 acres-- and that Mann, through agents, had made a sale of part of these lands, and was endeavoring to deprive the complainant of his rightful share of the net profits. Mann's contention, as shown by the record, is to the effect that no sale was made within the time of the existence of the contract...