Norman v. Trison Development Corp.

• Decision Date: 12 May 1992
• Docket Number: No. 71452,71452
• Citation: 1992 OK 67,832 P.2d 6
• Parties: Ronald NORMAN, Plaintiff-Appellant, v. TRISON DEVELOPMENT CORPORATION, a corporation, Defendant-Appellee, and The Chateau Gardens Group, a California limited partnership and Carl A. Becker, Max L. Eberhardt, and Lynn Eberhardt, general partners of the Chateau Gardens Group, a California limited partnership, Defendants.
• Court: Oklahoma Supreme Court

Page 6

832 P.2d 6

1992 OK 67

Ronald NORMAN, Plaintiff-Appellant, v. TRISON DEVELOPMENT CORPORATION, a corporation, Defendant-Appellee, and The Chateau Gardens Group, a California limited partnership and Carl A. Becker, Max L. Eberhardt, and Lynn Eberhardt,

general partners of the Chateau Gardens Group, a California

limited partnership, Defendants.

No. 71452.

Supreme Court of Oklahoma.

May 12, 1992.

Certiorari to the Court of Appeals, Division 1.

In an action for damages against a discharged receiver and apartment owners for harm occasioned by their negligence in maintaining the apartment premises, the District Court, Oklahoma County, Charles L. Owens, Judge, gave summary judgment to the receiver. The Court of Appeals reversed. On certiorari previously granted,

THE COURT OF APPEALS' OPINION IS VACATED, AND THE TRIAL COURT'S SUMMARY JUDGMENT AFFIRMED.

Arthur S. Bay, Oklahoma City, for plaintiff-appellant.

W.D. Greenwood, Brently C. Olsson, Huckaby, Fleming, Frailey, Chaffin & Darrah, Oklahoma City, for defendant-appellee.

OPALA, Chief Justice.

The dispositive issue on certiorari is whether the absence of notice to an unknown or unascertainable tort plaintiff, who claims to have sustained an injury on property in receivership as a result of negligence in its maintenance, requires us in this case to condemn as facially void the order discharging the receiver and terminating the receivership. We answer in the negative, holding that the discharge and termination order is not subject to a collateral attack on grounds of facial infirmity for want of notice.

THE ANATOMY OF LITIGATION

In a foreclosure suit the trial court appointed Trison Development Corporation [Trison] as receiver to manage the Chateau Gardens Apartments on May 23, 1986. The property was sold at a sheriff's sale on March 17, 1987 and the sale was confirmed March 31, 1987. The trial court discharged the receiver and terminated the receivership on May 13, 1987. Before the sale's confirmation, Ronald Norman [tort plaintiff or Norman], plaintiff, claims to have sustained injuries on March 23, 1987 when he fell down a stairway at the apartment complex. The record is clear that Norman was unaware of the then pending receivership. Norman concedes in his appellate brief that the receiver did not know of his on-the-premises injury. ¹

After Trison's discharge qua receiver, Norman brought an action against Trison and the apartment owners for harm occasioned by the receiver's alleged negligent maintenance of the stairs. Trison moved for summary judgment, arguing that: (1) Norman failed to state a claim upon which relief can be granted, because Trison had been discharged and the receivership terminated, thus putting an end to the receiver's liability qua receiver; (2) Trison was immune from suit qua receiver inasmuch as a receiver is an officer of the court who has no personal liability, and (3) as a court-appointed receiver, Trison was an instrumentality of the State of Oklahoma and thus fell within the protection of the Governmental Tort Claims Act. ² Without revealing the grounds upon which its decision was based, the nisi prius judge gave summary judgment to Trison. The Court of Appeals reversed, holding that the order discharging the receiver and terminating the receivership was facially void for want of notice to the tort plaintiff. ³ The appellate court's conclusion seems to rest on its view that since (a) Trison qua receiver is called upon to respond in damages only in its official capacity, and (b) may not be personally liable, the lack of advance notice to Norman invalidates--as to him--the receivership's order of discharge and termination. ⁴ Trison sought certiorari.

I SUMMARY JUDGMENT

Under our pleading regime, ⁵ if a defendant asserts by motion that the petition fails to state a claim upon which relief may be granted and tenders for consideration materials dehors the pleadings, summary judgment procedure must be utilized. ⁶

In support of Trison's argument that no claim was maintainable against it qua receiver, because the trial court had terminated the receivership and discharged it as receiver, Trison appended to its motion for summary judgment copies of the (1) order appointing receiver, (2) order confirming sheriff's sale, and (3) order approving receiver's final report, discharge of receiver, release of surety, and termination of receivership. Norman responded that the receiver's discharge does not bar a tort claim for harm occasioned by negligence in maintaining the premises when notice of the application for discharge was neither given nor attempted to be made upon a party injured by a receiver's negligence. ⁷

We hold the trial court did not err in giving summary judgment to the discharged receiver. ⁸ This is so because (a) Trison's official-capacity liability qua receiver ended upon its discharge and the receivership's termination (Part II) and (b) the discharge order is not void on the face of the receivership proceedings before us (Part III).

II

THE DISCHARGED RECEIVER'S LIABILITY QUA RECEIVER ENDED WITH

ITS DISCHARGE AND THE RECEIVERSHIP'S TERMINATION

When property or a business is placed in receivership, the court takes possession of the assets through its court-appointed receiver. A receiver is an officer of the court ⁹ who holds property and funds coming into his hands by the same right and title as the person for whose title he is the receiver. ¹⁰ In his official capacity a receiver may incur liability for negligence in the performance of his duties which results in injury to invitees on the property any recovery due the tort plaintiff is payable out of receivership funds. ¹¹

The purpose and effect of a receiver's discharge and the receivership's termination is to release the receiver in his official capacity. ¹² A discharged receiver's official liability ends when he has delivered assets or property in his possession pursuant to a court order. This legal result follows from the notion that the court has deprived the receiver of the means to satisfy and discharge any judgment that might be rendered against him qua receiver. ¹³ In short, the discharge order operates as a bar to any liability claims pressed against the receiver in his official capacity.

Much like any other judgment or order, receivership proceedings may be reopened and a discharge order vacated, inter alia, on § 1031(Third) grounds ¹⁴ of irregularity in obtaining the decision. ¹⁵ There is no evidentiary material in this record showing that the receivership had been or ever was sought to be reopened by process initiated in the foreclosure suit, the very case in which it was instituted. Absent an order reinstating the receivership or holding the discharge and termination facially void, the trial court was left here with no choice but to exonerate Trison qua receiver on the principle that upon the receiver's facially regular discharge and the receivership's facially regular termination, a receiver is not liable in his official capacity.

III

THE ORDER DISCHARGING THE RECEIVER AND TERMINATING THE

RECEIVERSHIP IS NOT VULNERABLE TO COLLATERAL

ATTACK FOR LACK OF NOTICE

This tort case comes postured as a collateral attack on the receiver's prior discharge order entered in another proceeding--the foreclosure action. The tort plaintiff seeks to avoid the legal effect of this order by asserting that it is void on the face of the proceedings for lack of advance notice to him. A decision is facially invalid if, on an inspection of the record proper, it is apparent that one or more of the requisite jurisdictional elements--the subject matter or in personam cognizance or the court's power to render a particular decision--is shown to have been absent. ¹⁶ A facially void judgment may be attacked at any time; it may be vacated in the very same case in which it was entered or in some collateral proceeding. ¹⁷ A judgment or order is not facially invalid if evidence extrinsic to the proceedings is necessary to show a jurisdictional infirmity that makes the decision fatally defective. ¹⁸

Whether a tort claimant against the receiver may be entitled to notice of discharge proceedings depends on the circumstances surrounding the claim and on whether lack of notice would have an adverse effect on his interest. ¹⁹ When significant property interests are adversely affected or likely to be affected, notice is one's constitutional due. The likelihood of adverse consequences from lack of notice must be shown on the face of the proceedings in order to render a judicial act facially invalid. ²⁰ Notice is a jurisdictional requirement as well as a fundamental element of due process. ²¹ Due process is violated when judicial power is exercised upon process not reasonably calculated to apprise interested parties of the pendency of an action, ²² and lack of notice constitutes a jurisdictional infirmity. ²³

When an interested party is known or ascertainable from the face of receivership proceedings, lack of notice to that party would facially invalidate a receiver's discharge. From an examination of the receivership proceedings included in this record, ²⁴ we cannot conclude from a four-corners' examination that the tort plaintiff was entitled to notice. His name does not appear anywhere in the four corners of the receivership proceedings. An unknown or unascertainable tort claimant with a mere contingent interest--i.e., a chose in action ²⁵--does not fall into a class which by law is per se entitled to notice. A tort plaintiff is not always adversely affected by a receiver's discharge. He has the burden to show by more than a "lawyer's argument" ²⁶ that under the facts lack of notice makes the receiver's discharge order fatally defective.

The validity of the receiver's discharge was not properly litigable in this tort case. The face of the receivership proceedings does not make it apparent that the receiver's discharge is facially void as to Norman. We hence hold that because...