Naslund v. Moon Motor Car Co.

• Citation: 134 S.W.2d 102,345 Mo. 465
• Decision Date: 13 December 1939
• Docket Number: 35771
• Parties: Elmer Naslund et al., Plaintiffs, v. Moon Motor Car Company, Defendant, American Hard Rubber Co. et al., Appellants, Catherine Nolan Taylor, Executrix of the Estate of Seneca C. Taylor, Respondent
• Court: United States State Supreme Court of Missouri

134 S.W.2d 102

345 Mo. 465

Elmer Naslund et al., Plaintiffs, v. Moon Motor Car Company, Defendant, American Hard Rubber Co. et al., Appellants, Catherine Nolan Taylor, Executrix of the Estate of Seneca C. Taylor, Respondent

No. 35771

Supreme Court of Missouri

December 13, 1939

[Copyrighted Material Omitted]

Appeal from Circuit Court of City of St. Louis; Hon. John W Joynt, Judge.

Reversed and remanded (with directions).

Burnett, Stern & Liberman, Edwin Grossman and Donald O. Cramer for appellants.

(1) The final account of the receiver and the exceptions filed thereto stand as the complaint and answer of the respective parties, and the burden of proof is upon the receiver to support his account. Johnson v. Central Trust Co., 159 Ind. 605, 65 N.E. 1028; Citizens Trust Co. v. Wheeling Can Co., 199 Ind. 311, 157 N.E. 441; Smith Coal Co. v. Finley, 117 N.E. 506; Oil Fields Corp. v. Meek, 175 Ark. 318, 299 S.W. 29; Commonwealth ex rel. Carson v. Bank, 239 Pa. 254, 86 A. 719; Traction Materials Co. v. Pittsburgh M. & W. Ry. Co., 261 Pa. 162, 194 A. 552; In re Magner, 173 Iowa 299, 155 N.W. 317; Bogert: Trusts & Trustees, sec. 971(a); Weber v. Empire Holding Corp., 41 P.2d 1084, 149 Ore. 503; Heater v. Boston Montana Corp., 75 Mont. 532, 244 P. 501; Merritt v. George, 168 Ga. 497, 148 S.E. 334; Gutterson & Gould v. Lebanon Iron & Steel Co., 151 F. 72. (2) The account of Seneca C. Taylor, Receiver, should be surcharged in the sum of $ 47,047.13 for loss to this estate resulting from his failure to comply with the order to liquidate of December 11, 1930. 53 C. J., p. 139; State Central Savs. Bank of Keokuk v. Fanning Ball Bearing Chain Co., 118 Iowa 698, 92 N.W. 712; Progress Press Brick & Machine Co. v. Sprague, 228 Mo.App. 1116, 65 S.W.2d 154; Henry v. Henry, 105 Ala. 582, 15 So. 916. (3) The account of Seneca C. Taylor, Receiver, should be surcharged in the sum of $ 47,047.13 for loss to this estate resulting from his operation of the business of the Moon Motor Car Company without authority of court. State Central Savs. Bank of Keokuk v. Fanning Ball Bearing Chain Co., 118 Iowa 698, 92 N.W. 712; Hitner v. Diamond State Steel Co., 207 F. 616; United States ex rel. Merchants & Manufacturers Sec. Co. v. Johnson, 98 F.2d 462; Gutterson & Gould v. Lebanon Iron & Steel Co., 151 F. 72; Wire Wheel Corp. v. Fayette Bank & Trust Co., 30 F.2d 318; Cole v. Up-to-Date Tailoring Co., 25 Ohio N. P. (N. S.) 483. (4) Seneca C. Taylor, Receiver, in his final account, should be denied credit for the sum of $ 6938.49 paid to Mr. Hadley and Mr. Spoor for services as "liquidating manager." Broussard v. Mason, 187 Mo.App. 281, 173 S.W. 698. (5) Seneca C. Taylor, Receiver, in his final account should be denied credit for the sum of $ 3373.57 used to pay certain general claims in full and to pay one creditor more than demanded. Sec. 1168, R. S. 1929; Pullis Bros. Iron Co. v. Boemler, 91 Mo.App. 84; Progress Press Brick & Machine Co. v. Sprague, 228 Mo.App. 1116, 65 S.W.2d 154; Hitner v. Diamond State Steel Co., 207 F. 616. (6) A receiver who has mismanaged an estate may be denied a fee for his services. Mr. Taylor should be ordered to repay to the estate $ 15,000 allowed and paid him as a fee for services as Received of this estate. 53 C. J., p. 382; State Central Savs. Bank of Keokuk v. Fanning Ball Bearing Chain Co., 118 Iowa 698, 92 N.W. 712; Kronenthal v. Rosenthal, 144 N.Y.S. 830; Gutterson & Gould v. Lebanon Iron & Steel Co., 151 F. 72; Hume v. Myers, 242 F. 827; Drilling & Exploration Co. v. Webster, 69 F.2d 416; Progress Press Brick & Machine Co. v. Sprague, 228 Mo.App. 1116, 65 S.W.2d 154; Hitner v. Diamond State Steel Co., 207 F. 616. (7) A receiver derives his authority solely from orders of court. Without such authorization he acts at his peril and must justify all expenditures for which he claims credit in his final account. 53 C. J., pp. 137, 143, 158; Tracy on Corporate Foreclosures, sec. 90; Progress Press Brick & Machine Co. v. Sprague, 228 Mo.App. 1116, 65 S.W.2d 154; Henry v. Henry, 105 Ala. 582, 15 So. 916; Thompson v. Phoenix Ins. Co., 136 U.S. 393, 10 S.Ct. 1019, 14 L.Ed. 408; Delvridge v. Kaukauna, 165 Wis. 435, 162 N.W. 478; Lehigh Coal & Nav. Co. v. Central Ry. Co., 35 N. J. E. 426. (8) A receiver's authority for his conduct can be derived only from a written order of court, and alleged orders not entered of record are void and without any legal effect. R. S. 1929, sec. 1826; 15 C. J., 971; Medlin v. Platte County, 8 Mo. 235; Milan, Admr. v. Pemberson, 12 Mo. 598; Maupin v. Franklin County, 67 Mo. 327; Dennison v. St. Louis County, 33 Mo. 168; State ex rel. Klotz v. Ross, 118 Mo. 23; Ledbetter v. Phillips, 187 S.W. 9; Cunio v. Franklin County, 315 Mo. 405, 285 S.W. 1007; Cook v. Penrod, 111 Mo.App. 128, 85 S.W. 676; In re Bates' Guardianship, 70 Okla. 321, 174 P. 743; Gualdin v. Madison, 179 N.C. 461, 102 S.E. 851, 10 A. L. R. 1497; Judge of Probate v. Briggs, 3 N.H. 309; Renshaw v. Cook, 121 Ky. 347, 111 S.W. 377; Atwood v. Lockwood, 76 Conn. 555, 57 A. 279; Newcomb's Lessee v. Smith, 5 Ohio 447; Dimick v. Brooks, 21 Vt. 569; Wade v. Odeneal, 13 N.C. 423; Brown v. Sceggell, 22 N.H. 548; State v. Smith, 12 La. Ann. 349; Parker v. Gregg, 23 N.H. 416.

Harold R. Small for respondent; Carter & Jones of counsel.

(1) A receiver is not a trustee in a strict sense, but an officer of the court, and the court itself has custody of the assets in the receiver's charge. Miller, Franklin & Co. v. Gentry, 230 Mo.App. 899, 79 S.W.2d 470; 53 C. J., p. 95, sec. 118; 1 Clark on Receivers, p. 15, sec. 11 (a). (2) Even a trustee is not always liable for a retention of securities. Fortune v. First Trust Co., 274 N.W. 524, 112 A. L. R. 346, 77 A. L. R. 505. Ordinarily a trustee is not liable for retaining real estate. The general order of December 11, 1930, giving authority to sell, did not give final authority for the sale of the real estate at any price obtainable, especially in view of its value and of existing depression values. The court and receiver Taylor rightly concluded the property should be held and not sacrificed. The error in judgment, it would appear, was in a sale, at a sacrifice price, after Taylor's removal, and, as it appears, on further orders of court of August 2nd and August 13, 1935, stating a definite price for sale. Taylor's administration as receiver was an honest one. Every penny spent is admitted to have been duly accounted for. He loaned the estate money, and at the time of his removal in March, 1935, had $ 485.06 still due him for insurance premiums he had advanced. Furthermore, though authorized in May, 1931, to do so, he had not taken the balance of $ 7152.15 allowed him for services, nor did he demand further compensation. He sought and obtained by his final report of May, 1935, merely the unpaid balance for nearly four and one-half years' service.

Bradley, C. Hyde and Dalton, CC., concur.

OPINION

BRADLEY

November 15, 1930, a stockholder of the Moon Motor Car Company, St. Louis, filed suit against the company, alleging mismanagement, dissipation of assets, etc., and asked for the appointment of a receiver. On the same day that the suit was filed, Seneca C. Taylor, a member of the St. Louis Bar, was appointed temporary receiver. November 20, 1930, an amended petition was filed in which certain creditors joined as plaintiffs. December 2, 1930, Taylor was made permanent receiver, and later, other creditors intervened. March 25, 1935, Taylor was removed as a receiver because of his sickness, and George P. Dorris was appointed as successor receiver. May 24, 1935, Taylor filed his final report and application for discharge. October 18, 1935, the American hard Rubber Company and other intervening creditors filed exceptions to the final report, and June 8, 1936, the successor receiver also filed exceptions to the report. These exceptions were, in the main, the same. A trial was had on the exceptions, which resulted in a finding for Taylor, overruling all exceptions, approving the report, and finally discharging Taylor as receiver.

The intervening creditors and the successor receiver filed a joint motion for a new trial, but the successor receiver later withdrew from this motion. The motion was overruled and the intervening creditors appealed. Seneca C. Taylor died May 5, 1937, after the appeal, and the cause was revived here in the name of Catherine Nolan Taylor, executrix of the estate of Seneca C. Taylor.

The final report of the receiver and the exceptions thereto occupy the status of pleadings, the report having the relative status of a petition or complaint, and the exceptions having the relative status of an answer. [Johnson v. Central Trust Co., 159 Ind. 605, 65 N.E. 1028; Citizens' Trust Co. v. Wheeling Can Co., 199 Ind. 311, 157 N.E. 441; Oil Fields Corp. v. Meek, 175 Ark. 318, 299 S.W. 29.] And the analogy continues in that the burden of proof rests on the receiver as upon a plaintiff. [Gutterson & Gould v. Lebanon Iron & Steel Co., 151 F. 72; Commonwealth ex rel. Carson v. Monongahela Valley Bank, 239 Pa. 254, 86 A. 719; In re Magner, 173 Iowa 299, 155 N.W. 317; 4 Bogert's Trusts and Trustees, sec. 971 (9).] At the trial below Taylor took the burden and went forward as does the ordinary plaintiff.

Hereinafter where we use the term receiver, the reference is to Taylor, unless otherwise noted. Objectors contend: (1) That the receiver operated the Moon Motor Car Company plant contrary to the orders of the court, and paid out $ 47,047.13 in expenses for which sum he should not be allowed credit; (2) that the receiver needlessly paid $ 6938.49 to what is termed liquidating managers; (3) that he wrongfully paid $ 2373.57 to certain general creditors whose claims accrued prior to receivership, and paid one receiver...