Maxwell v. Missouri Valley Ice & Cold Storage Co.

• Decision Date: 29 September 1917
• Docket Number: 30901
• Citation: 164 N.W. 329,181 Iowa 108
• Parties: HENRY E. MAXWELL, Receiver, Appellee, v. MISSOURI VALLEY ICE & COLD STORAGE COMPANY, Appellant
• Court: Iowa Supreme Court

164 N.W. 329

181 Iowa 108

HENRY E. MAXWELL, Receiver, Appellee, v. MISSOURI VALLEY ICE & COLD STORAGE COMPANY, Appellant

No. 30901

Supreme Court of Iowa, Des Moines

September 29, 1917

Appeal from Harrison District Court.--A. B. THORNELL, Judge.

Modified and affirmed.

J. S Dewell, for appellant.

C. W Kellogg, for appellee.

GAYNOR C. J. LADD, EVANS and SALINGER, JJ., concur.

OPINION

Opinion states the facts.--Modified and affirmed.

GAYNOR C. J.

On the 2d day of June, 1913, the plaintiff was appointed receiver of a corporation known as Iowa Nebraska Public Service Company, a Delaware corporation. His appointment was made by the United States district court of Nebraska, in a suit pending therein to foreclose a mortgage or trust deed covering the property of said corporation in Nebraska and in Harrison County of this state. A copy of the bill in said foreclosure suit and the order appointing plaintiff as receiver was duly filed in the office of the clerk of the district court of the United States for the Southern District of Iowa, on June 7, 1913. Plaintiff duly qualified, and gave bond as required by the order appointing him, and entered upon the discharge of his duties. In the order appointing him receiver, it was provided that he should take charge of all the property of said corporation described in and covered by the trust deed, and manage and operate its business and apply the income and receipts under the order and decree of the court, and do any and all acts which might be necessary to preserve the property and the income of said company.

Among the property so coming into the hands of the receiver was a certain electric light and power plant in the city of Missouri Valley, in Harrison County, Iowa, formerly owned and operated by said corporation. Under the power granted him by his appointment, he took possession of this plant at Missouri Valley and operated the same, and furnished to this defendant electric current from said plant for the purpose of operating defendant's plant, to wit, an artificial ice and cold storage plant. This suit is to recover for power so furnished by the receiver to the defendant company during the months of September, October, November and December. The plaintiff claims $ 445.51, after allowing all credits.

From the pleadings filed, it appears that the plaintiff claims in his petition and amendment that, about June, 1913, he, as receiver, entered into an oral contract with the defendant to furnish electric current for power according to a specific schedule which he sets out. In an amendment, he claims that the prices and values which he charged and for which he seeks to recover are the reasonable prices and values for such services, and that, after allowing all credits on account of such current furnished, there was due him as receiver, $ 445.51.

The defendant in his answer claims that the services rendered were rendered under a contract previously entered into between the defendant and the corporation for which plaintiff was receiver; that the plaintiff simply continued the business under said contract, as a representative and successor of the Iowa Nebraska Public Service Company, and by way of counterclaim, says that the plaintiff failed to comply with the terms of that contract, and by reason thereof, the defendant has been damaged in a sum far in excess of the amount claimed. Defendant denies that there was any new contract between the receiver and the plaintiff.

The real question presented involves the right of the defendant to hold plaintiff, as receiver, to the performance of the original contract between the defendant and the Iowa Nebraska Public Service Company existing at the time plaintiff was appointed receiver, and to mulct him in damages for a breach thereof. It appears that, on September 29, 1913, or thereabouts, the Iowa Nebraska Public Service Company was adjudged a bankrupt. The original contract between the Iowa Nebraska Public Service Company and the defendant, on which defendant relies, provides, among other things, that the service corporation should furnish the defendant, at and for scheduled rates, electric current of 220 volts, in sufficient amounts at all times to continuously operate all of defendant's electric motors at any time during the continuance of the contract, and to at all times continuously furnish such electric current in full quantity desired by the defendant, and should be responsible to the defendant for all loss or damage directly resulting from a failure to furnish such current. Defendants claim that the receiver failed to perform the conditions of said contract and to furnish the current as called for by this contract, and that defendant was, therefore, unable to operate its business, and accordingly suffered damage.

It may be conceded, for the purposes of this case, that the receiver did not comply with the requirements of this contract. It may be conceded that the defendant could not rescind or annul or destroy the efficacy of this contract so far as the service company is concerned. The question here is, Was the receiver bound to perform this contract by reason of his appointment as receiver? This was an executory contract. Of course, a failure to perform it on the part of the service company would be a breach for which that company might be liable. A claim based thereon was a matter for adjustment in the bankruptcy proceedings. The question here is not whether the receiver can repudiate the contract or destroy the validity or binding force of the contract between the defendant and the service company, but whether or not this receiver, as such, is liable to the defendant for his failure to perform. If he had adopted the contract, there would be some basis for holding him liable for its breach. Upon his appointment as receiver, he was not bound to adopt this contract. The property was placed in his custody by the court to be managed under the direction of the court for the benefit of the cestui que trust in the deed. He was not the successor or representative of the service company in any sense. The property was taken by the court, through its receiver, from the service company, placed in the hands of the receiver with direction to manage and control it, under the direction of the court, in the interests of the trustees. Many of the failures which result in drastic actions of this character, involving parties in bankruptcy and requiring a sequestration of their property by the court for the benefit of their creditors, are due to improvident contracts and unbusinesslike methods of the original owner. Courts take possession for the protection and conservation of the property. We say, therefore, that the appointment of the plaintiff as receiver did not bind him to the performance of the contracts of the original owner made before the appointment of the receiver. He may, with the consent of the court, adopt these contracts if, in his judgment, they are for the best interests of the estate which he is called upon to manage, or he may repudiate them, if not for the best interests of the trust. So, unless it is shown by this record that the receiver adopted the contract, the defendant has no standing upon his counterclaim. After appointment, the receiver has at least a reasonable time in which to determine whether he will adopt or reject existing executory contracts. The order appointing this receiver authorized him to operate this plant; to manage it in such manner as, in his judgment, would produce the most satisfactory results consistent with the discharge of the business duties imposed upon him; and to do any and all acts necessary to preserve the property, franchise and income of the defunct company for the benefit of the cestui que trust; to sue, collect and receive the earnings and profits and other income therefrom, and to apply the income and receipts under the order and direction of the court; and to do all acts necessary for the protection and preservation of the property and income.

It clearly appears in this record that, when the existence of this contract relied upon by the defendant was brought to the notice of the receiver, plaintiff, he notified the manager of the defendant company that he repudiated and would not be bound by it; that the manager asked time for further consideration, which was given; that he told the manager at the time that he would furnish power, if needed, at scheduled rates, but not under the written contract; that thereafter the manager told him that they would take the current; that thereafter it was furnished, but not under the contract. This was notice to the company that, as receiver, he...