Minkler v. United States Sheep Co.
| Citation | 62 N.W. 594,4 N.D. 507 |
| Decision Date | 05 January 1895 |
| Docket Number | 6731 |
| Court | United States State Supreme Court of North Dakota |
Appeal from District Court, Cass County; McConnell, J.
Action by J. I. Minkler against the United States Sheep Company. From an order appointing a receiver of its property defendant appeals.
A. S Drake, for appellant.
Newman Spalding & Phelps, for respondent.
This is an appeal from an order appointing a receiver to take charge of all of the property of the defendant, and devote it to the payment of the defendant's debts. The action is in the nature of a creditor's bill, and the receiver was asked for upon the grounds that the plaintiff had in a former action obtained a judgment against the defendant, and caused execution to be issued thereon, and such execution had been returned wholly unsatisfied; that defendant was insolvent, and its securities were scattered throughout the state, and liable to be lost and wasted; that the business of the defendant had been mismanaged by its president and directors; that it was indebted to a large amount; and that, unless a receiver was appointed, the property would be wasted and squandered. The defendant was alleged to be a corporation organized under the laws of this state, and doing business at Fargo. This application was presented to the court ex parte, and an order was made thereon appointing a temporary receiver, enjoining defendant from disposing of its property, directing that the property of defendant be turned over to the receiver, and that the defendant show cause before the court on December 18, 1893, why the receivership should not be made permanent. This order, with a copy of the petition upon which it was based, was served upon the defendant on December 6, 1893. No attempt was ever made to discharge this order, nor was any appeal taken therefrom. On December 18, 1893, the defendant filed its verified answer to the petition, in which it specially denied that it was insolvent, or that its property had been lost, wasted, squandered, or mismanaged, or that it had not property to satisfy said judgment; and alleged affirmatively that its principal place of business, as fixed by his charter, was at Leeds, in Benson County, and that no execution had ever been issued upon said judgment to the sheriff of said county, and that plaintiff held collateral security for his debt, which he had not sought to exhaust; that defendant owned unincumbered live stock in the State of North Dakota of the value of $ 10,000; that the temporary appointment of receiver was made without notice, and upon an application verified only by one of the attorneys, and not by plaintiff in person, and that before the return of the execution defendant by its officers, exhibited to the sheriff personal property of the value of $ 5,000, upon which the sheriff refused to levy. Substantially these same statements were made in what is termed the "answer" to the order to show cause. Upon these pleadings the court, on the 21st day of December, 1893, signed an order making the temporary receivership permanent, directing the transfer by defendant to the receiver of all property of every kind and nature belonging to the defendant, authorizing the receiver, if he deemed it for the best interests of the creditors, to continue the business of the corporation under the direction of the court, and clothing the receiver generally with all the powers necessary and usual for closing up the financial affairs of a corporation. It is from this order that the appeal is taken. As neither affidavits nor oral evidence are presented to the court, we are required to pass only upon the rights of the respective parties under the pleadings as hereinbefore set forth.
It is first urged against the complaint that it was insufficient to warrant the appointment of a receiver because it does not show that plaintiff had exhausted his remedies at law in this; that it does not show that any execution upon the judgment obtained by plaintiff against defendant had ever been issued to the sheriff of the county of defendant's residence, nor does it show any excuse why an execution was not so issued. It is not material whether we consider this receiver as appointed under Subd. 4, § 5015, Comp. Laws, which provides that a receiver may be appointed where judgment has been obtained and execution issued upon the judgment and returned unsatisfied, or whether we consider him appointed under subdivision 6 of that section, which authorizes receivers to be appointed in cases where receivers had heretofore been appointed by the usages of courts of equity. The power to appoint receivers for the purpose of enabling a creditor to obtain satisfaction of his judgment in cases where judgment had been obtained and execution issued and returned unsatisfied had long been recognized by courts of equity before the statutory provision contained in subdivision 4 originated. That subdivision is but a declaration of the law as it had theretofore been administered by equity courts. Child v. Brace, 4 Paige 309; Ballentine v. Beall, 4 Ill. 203, 3 Scam. 203; Taylor v. Bowker, 111 U.S. 110, 4 S.Ct. 397, 28 L.Ed. 368. And, alike under the statutory provision and under the authority vested in courts of equity, independent of statute, it is held that before a receiver can be appointed in cases of this character it is absolutely necessary that the creditor should have exhausted all legal remedies, and it is absolutely necessary that he should have caused execution to issue upon his judgment, and that such execution should have been returned unsatisfied, in whole or in part. This is elementary, but see Dunlevy v. Tallmadge, 32 N.Y. 457; Adsit v. Butler, 87 N.Y. 585; Taylor v. Bowker, 111 U.S. 110, 4 S.Ct. 397, 28 L.Ed. 368; Preston v. Colby, 117 Ill. 477, 4 N.E. 375; Wadsworth v. Schisselbauer, 32 Minn. 84, 19 N.W. 390; 4 Am. & Eng. Enc. Law, p. 374, and note 3. In the case of Paulson v. Ward, 4 N.D. 100, 58 N.W. 792, the writer of this opinion in speaking of this requirement for the issuance and return of execution, classed it as a purely formal requirement. That remark was not called for in that case, and was ill considered. In one sense, and in many cases, the requirement is formal, but it is always intended to subserve a very important purpose. The issuance and return of execution unsatisfied is regarded as the best evidence that the creditor has in good faith exhausted his remedy at law, and the courts have ever been strenuous that it should appear that the creditor's efforts had been in all respects bona fide, and made with the absolute intent and purpose of collecting the debt through the ordinary processes of the courts...
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