Marlowe v. Missoula Gas Co.

• Decision Date: 04 October 1923
• Docket Number: 5281.
• Citation: Marlowe v. Missoula Gas Co., 68 Mont. 372, 219 P. 1111 (Mont. 1923)
• Parties: MARLOWE v. MISSOULA GAS CO. ET AL.
• Court: Montana Supreme Court

219 P. 1111

68 Mont. 372

MARLOWE v. MISSOULA GAS CO. ET AL.

No. 5281.

Supreme Court of Montana

October 4, 1923

Rehearing Denied Nov. 10, 1923.

Appeal from District Court, Missoula County; Theo.Lentz, Judge.

Action by Thomas N. Marlowe against the Missoula Gas Company and another.Judgment for plaintiff, and defendants appeal.Affirmed.

Hall & Pope and Elmer E. Hershey, all of Missoula, for appellants.

Harry H. Parsons, of Missoula, for respondent.

GALEN J.

This action was commenced to foreclose a mortgage executed by the defendantMissoula Gas Company as security for its bonded indebtedness.The appointment of a receiver was asked and granted, the plaintiff herein being designated as such receiver.It appears that on July 1, 1909, the Missoula Gas Company executed a mortgage to the American Trust & Savings Bank and Frank H. Jones, both of Chicago, Ill. as trustees as security for the payment of the principal and interest of bonds authorized to be issued to the amount of $500,000.Of such bond issue an aggregate of $150,000, dated July 1, 1909 were issued due July 1, 1921.Provision was made in the mortgage for the substitution of trustees, and, those originally named having resigned, the plaintiff was regularly selected and qualified on the ______ day of August. 1918, as trustee.The property described in the mortgage consists of both real estate and personalty.The realty and chattels enumerated cover all of the property of the Missoula Gas Company, including, among other things, pipes, mains, service connections, corporate and municipal rights, franchises, good will, etc.It is alleged by the plaintiff in his complaint that the Missoula Gas Company is a public service corporation, engaged in furnishing the inhabitants of the city of Missoula with gas.The mortgage was regularly filed for record and recorded in Missoula county, wherein the property mortgaged was located, in December following its date of execution.

The Detroit Stove Works brought suit against the Missoula Gas Company, and on May 15, 1912, caused an attachment therein to be levied upon its real estate.Later that action was prosecuted to judgment, which was regularly entered for the sum of $7,811.49 on July 14, 1913.Judgment was also entered in favor of Northwestern Gas Equipment Company on July 14 1913, against the Missoula Gas Company for $469.26, and on the same date like judgment was entered in favor of Charles H. Dickey and Dickey Bros. for $10,054.60.In all three instances the real estate of the judgment debtor was attached of record in advance of the entry of the judgments.All of the appellants herein filed like answers to the plaintiff's complaint, admitting the assertion of liens on the property of the Missoula Gas Company as judgment creditors superior to those of plaintiff.Further answering it was by each of the appellants alleged:

"That said deed of trust or mortgage was not accompanied by the affidavit required by section 5756 of the Revised Codes of Montana, and said deed of trust or mortgage was therefore void as to this defendant, who was and is a creditor of said Missoula Gas Company, and that by reason thereof the judgment of this defendant as herein set forth was and is a prior lien upon said property described in said deed of trust or mortgage."

Demurrers were interposed to the answers and by the court sustained on February 18, 1920, and the appellants were given 20 days within which to further answer.On May 27, 1920, the Detroit Stove Works, appearing by its counsel, informed the court that it stood on its answer and declined to plead further.On July 10, 1920, the plaintiff, as receiver in the action, moved the court for authority to execute and deliver to Harry H. Parsons, attorney for the plaintiff and as receiver a receiver's certificate for $1,000, and on October 5, 1920, the court directed the issuance of a receiver's certificate as requested in plaintiff's motion.Again, on plaintiff's motion, an order was entered on March 21, 1922, authorizing the receiver to issue additional receiver's certificates to the amount of $4,000.The record does not disclose when the plaintiff was appointed or qualified as receiver, nor that notice of the motions for authorization by the court of the issuance of such receiver's certificates were served on the attorneys for appellants.The default of the appellants was entered on November 6, 1922, and the court minutes recite:

"Elmer E. Hershey, Esq., attorney and counsel for the defendant, appeared in open court and objected to the foreclosure of said deed of trust and all the proceedings upon the ground that that certain receiver's receipts had been issued without notice to said defendant, which objection was then and there by the court overruled."

Thereupon, after hearing all the evidence and proof, the court allowed the receiver, Thomas N. Marlowe, the sum of $10,875.63 as compensation and fees, Harry H. Parsons, as receiver's attorney, the sum of $1,000 as fees, as first liens on said property, and the sum of $7.50 as court costs.The court also ordered judgment on the bonds, including interest, for $260,875, and on the receiver's certificates, including interest, for $38,729.61, and ordered judgment accordingly for the total sum of $311,480.24, and ordered deed of trust foreclosed.Judgment was entered accordingly.The appeal is from the judgment.Although several specifications are assigned, but two questions are presented determinative of the case, which will be stated and considered in their order.

First.Did the court err in authorizing the issuance of receiver's certificates?The statute(section 7149,Rev Codes 1907) provides that a defendant appears in an action when he answers, demurs, or gives the plaintiff notice of his written appearance, or has his appearance entered in open court, and that after appearance the defendant or his attorney is entitled to notice of all subsequent proceedings of which notice is required to be given.It must be conceded that, where no appearance is thus made, no service or notice of papers in connection with plaintiff's applications to the court need be made.There would be merit in appellants' contention, but they lose sight of the fact that defendants may, after appearance, become as effectually in default as though no appearance at all had ever been made.Their general appearance, once entered, entitling them to notice of subsequent proceedings, does not mean that they are entitled to notice in all events indefinitely, whether they meet the court's orders and requirements or not.When they subsequently permit themselves to get into default, they are as effectually out of court, as...