Poage v. Co-Operative Publishing Co.

• Decision Date: 02 April 1937
• Docket Number: 6289
• Citation: 57 Idaho 561,66 P.2d 1119
• Parties: F. I. POAGE, Trustee, Respondent, v. CO-OPERATIVE PUBLISHING COMPANY, a Corporation, Appellant; J. H. BOOR, WELLER ROBINSON, C. J. WURTZ and W. W. DEAL, Trustees, Constituting a Board of Trustees, Intervenors and Respondents, v. MUTUAL NEWSPAPER HOLDING CORPORATION, a Corporation, Intervenor and Appellant
• Court: Idaho Supreme Court

66 P.2d 1119

57 Idaho 561

F. I. POAGE, Trustee, Respondent, v. CO-OPERATIVE PUBLISHING COMPANY, a Corporation, Appellant;

J. H. BOOR, WELLER ROBINSON, C. J. WURTZ and W. W. DEAL, Trustees, Constituting a Board of Trustees, Intervenors and Respondents, v. MUTUAL NEWSPAPER HOLDING CORPORATION, a Corporation, Intervenor and Appellant

No. 6289

Supreme Court of Idaho

April 2, 1937

APPEAL - APPEALABLE ORDERS - ORDER DENYING INTERVENTION-WHO MAY APPEAL-COURTS-JURISDICTION-APPEARANCE-CORPORATIONS-MORTGAGE-RIGHTS OF PARTIES.

1. Orders denying applications for intervention held appealable as "final judgments," so that appeal from final decree was dismissible for failure to appeal from such order within 90 days.

2. Party not aggrieved by judgment has no right of appeal therefrom.

3. Three of four trustees who filed complaint for foreclosure of chattel trust mortgage held not entitled to appeal from foreclosure decree as "trustee interveners," since trustees were not aggrieved, and their rights as holders of bonds secured by trust mortgage or otherwise were not before court.

4. Jurisdiction of general class of cases to which suit in question belongs can be conferred only by law, and cannot be either conferred or waived by litigant.

5. Jurisdiction of person of defendant may be acquired by voluntary appearance, without service of process.

6. Demurrer to complaint for foreclosure of chattel trust mortgage securing bonds on sole ground that debt evidenced by bonds was barred by limitation held a voluntary "general appearance" by which demurrant submitted itself to jurisdiction of court without reservation.

7. Joinder of nonjurisdictional with jurisdictional grounds of defense in answer constitutes "general appearance" which gives court jurisdiction of answering party.

8. Answer to complaint for foreclosure of chattel trust mortgage joining nonjurisdictional grounds of defense with alleged jurisdictional grounds held a "general appearance," giving court jurisdiction of answering party.

9. Participation in trial of chattel trust mortgage foreclosure suit by examining and cross-examining witnesses held a "general appearance," giving court jurisdiction of person of defendant.

10. Party who wishes to insist upon objection that he is not in court must keep out of court for all purposes except to make that objection.

11. Where trustee appointed by court instituted suit to foreclose chattel trust mortgage, defendant filed general demurrer trustee was discharged, trustees named in trust mortgage applied for leave to intervene to obtain foreclosure, and order described as "order granting leave to amend" was entered granting application, court held not without jurisdiction, as respects defendant's person, to enter foreclosure decree, since order was, in legal effect, an order of substitution.

12. Provision of chattel trust mortgage that majority bondholders might control or dismiss any foreclosure suit or vacate judgment or decree therein obtained would be strictly construed for benefit of minority bondholders.

13. Where bonds had been in default for 15 years, and debtor was pleading bar of limitation, majority bondholders could not prevent foreclosure of chattel trust mortgage securing bonds under provision of trust mortgage that majority might control or dismiss foreclosure suit or vacate judgment or decree therein obtained, since, even if majority bondholders were intended to have right to destroy security of minority bondholders, provision to such effect would be void.

14. Trustee, independently of provisions of trust deed, has power, and it is his duty whenever necessity arises, to invoke aid of equity to preserve trust estate, and this power cannot be abridged, even by agreement of parties.

15. As respects chattel trust mortgage securing bonds, trustee must exercise judgment and discretion, having regard to general interests of trust, and, where there are differences of opinion among bondholders, trustee must judge between them and in such case he may be governed by majority, acting in good faith, if what they ask is not inconsistent with trust.

16. Denying right of secured bondholders, who surrendered bonds to intervene in foreclosure suit, unsupported by finding that owners of 75 per cent of corporate bonds had surrendered their bonds, which was condition precedent to binding effect of cancelation of bonds surrendered, held error, where corporation was insolvent, since whether such bondholders should be excluded from participation in distribution of assets realized from sale depended upon whether cancelation of bonds was strictly in accordance with such agreement.

17. Chattel trust mortgage of "following described property" of which mortgagor "is the owner and of which it is possessed, or may hereafter acquire," held to include personalty acquired after execution of trust mortgage.

18. As respects whether chattel trust mortgage covered after-acquired property, it is sufficient where intention of parties that after-acquired property should be covered by mortgage and held as security for debt is manifest from language of instrument.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. John C. Rice, Judge.

Appeal from decree of foreclosure of trust mortgage. Affirmed as to appellant Mutual Newspaper Holding Corporation and reversed as to appellant Co-operative Publishing Company and remanded for further proceedings.

Judgment affirmed as to appellant Holding Company. Judgment against the Publishing Company reversed and cause remanded. Costs awarded to appellant Publishing Company.

Geo. H. van de Steeg, Donald Anderson and S. Ben Dunlap for Appellants.

Intervention can take place only when there exists a legal action pending between two persons. Poage, trustee, never having had any legal existence for lack of jurisdiction to appoint him, the original action was not an action between two persons; it was a nullity, and intervention is impossible. One cannot intervene by "joining with the plaintiff" when the plaintiff has no legal existence and is not a legal person, and has been discharged. (I. C. A., sec. 5-322; Lusks' Administrators v. Kimball, 87 F. 545.)

The mortgagor has the right to interpose as a defense to the foreclosure of this mortgage, the fact that a majority in amount of the bondholders are not asking the foreclosure. (Rowe v. Louisiana Agricultural Corp., 155 La. 241, 99 So. 206; Employers' Reinsurance Corp. v. Boston Mut. Life Ins. Co., 45 F.2d 593.)

Restrictions contained in the trust mortgage in the nature of "no action" clauses as in the mortgage in this case, which provides that the trustees must foreclose the mortgage upon the written request of a majority in amount of the outstanding bonds, and that such majority has the right to control the foreclosure action up to sale, are held reasonable and valid in the general view of the courts, and purchasers of the bonds are bound thereby. (Jones on Bonds and Bond Securities, sec. 811, at pp. 290, 291; Thayer v. South Side Foundry, etc., 112 W.Va. 134, 163 S.E. 821; Employers' Reinsurance Corp. v. Boston Mut. Life Ins. Co., 45 F.2d 593.)

It was error for the court to deny the Protective Committee, being the holders of $ 9,500 in principal of these bonds, having full power of attorney to act for the owners thereof, the right to come in as parties defendant and set up their rights. (I. C. A., sec. 5-324; Weiser Irr. Dist. v. Middle Valley Irr. Dist., 28 Idaho 548, 155 P. 484.)

This may be done at any time before the decision of the court. (First Nat. Bank v. Bews, 3 Idaho 486, 31 P. 816; Smith v. Rader, 31 Idaho 423, 173 P. 970; Bublitz v. Reeves, 40 Cal.App. 75, 180 P. 28.)

There is not now and never has been a legal action pending for the foreclosure of the mortgage given to the trustees because no legal entity or person existed as party plaintiff when this action was commenced. There can be no action without a party plaintiff and there can be no party plaintiff except a legal entity. (47 C. J., p. 18, par. 16; St. Paul Typothetae et al. v. St. Paul Book Binders' Union, 94 Minn. 351, 102 N.W. 725, 3 Ann. Cas. 695; Proprietors of Mexican Mill v. Yellow Jacket Silver Min. Co., 4 Nev. 40, 97 Am. Dec. 510.)

Restrictions contained in the trust mortgage in the nature of "no action" clauses as in the mortgage in this case, which provides that the trustees must foreclose the mortgage upon the written request of a majority in amount of the outstanding bonds, and that such majority has the right to control the foreclosure action up to sale, are held reasonable and valid in the general view of the courts, and purchasers of the bonds are bound thereby. (Jones on Bonds and Bond Securities, sec. 811, at pp. 290, 291; Thayer v. South Side Foundry, etc., supra; Employers' Reinsurance Corp. v. Boston Mut. Life Ins. Co., 45 F.2d 593.)

A. L. Anderson and Hallock, Donald & Banta, for Respondents.

The trustees had the right to intervene in the action for the foreclosure of the mortgage. (Sec. 5-322, I. C. A.; People v. Green, 1 Idaho 235; Berlin Machine Works v. Bradford Candy Co., 21 Idaho 669, 123 P. 637; Oro Fino etc. Min. Co. v. Cullen, 1 Idaho 113; Houston Real Estate Inv. Co. v. Hechler, 44 Utah 64, 138 P. 1159.)

The provision in the mortgage to the effect that a suit or action for its foreclosure should be subject to the control of a majority in amount of the bondholders is invalid, since it attempts to provide against a remedy in the ordinary course of judicial proceeding and oust the jurisdiction of the courts. (Guardian Trust Co. v. White Cliffs Portland Cement & Chalk Co. et al., 109 F. 523; Guaranty Trust & Safe Deposit Co. v. Green Cove Springs & M. R Co., 139 U.S. 137, 11 S.Ct. 512, 35 L.Ed. 116; New York...