Polk v. Johnson

• Decision Date: 25 November 1902
• Docket Number: 3,970
• Citation: 65 N.E. 536,35 Ind.App. 478
• Parties: POLK ET AL. v. JOHNSON
• Court: Indiana Appellate Court

65 N.E. 536

35 Ind.App. 478

POLK ET AL. v. JOHNSON

No. 3,970

Court of Appeals of Indiana

November 25, 1902

From Johnson Circuit Court; Vinson Carter, Special Judge.

Grafton Johnson filed his final report as receiver of the property of James T. Polk, to which James T. Polk and others filed exceptions. From a judgment in favor of the receiver acceptors appeal. (On appeal to Supreme Court, see 160 Ind 292.).

Reversed.

Charles F. Coffin, Leonard J. Hackney and Eldridge & Barker, for appellants.

G. M Overstreet, E. L. Branigin, Miller & Barnett and E. A. McAlpin, for appellee.

OPINION

ROBY, C. J.

The proceedings out of which this appeal arises were had in the lower court upon exceptions filed by the appellant James T. Polk to the amended final report of Grafton Johnson, the appellee, as receiver of the property and estate of said Polk; said Johnson having been theretofore appointed such receiver by the Johnson Circuit Court in a cause therein pending. The appellee, in such report, claimed an allowance of $ 20,000 for his services, and was allowed, upon hearing, $ 9,500 therefor.

Subdivision one of exception two was as follows: "It is shown to the court: That the property and business of the estate of said receivership have at all times been located at the town of Greenwood, whose population was, when the receiver herein was appointed, about 1,000, and was to a considerable degree supported by said business; that said Johnson and his family, when this proceeding was instituted, owned vast properties in and about said town, consisting of business houses and rental dwellings and farming lands, the rental value and rentals of which depended in a great measure upon the continued operation of said business; said business employing the principal part of the labor of said community; that, in addition to said interests of said Johnson in the prosecution of Polk's business, he was conducting a banking business which was patronized by said Polk, and said Johnson at said time was a creditor of said Polk in a large sum, the success of which credit, in a measure, depended upon the value of the plant and business of said Polk, and said value depended almost wholly upon the continued prosecution of said business. In view of the foregoing facts, said Johnson, well knowing that the court, or the judge thereof, would probably not appoint a receiver for said property and business who was objectionable to said Polk, sought said Polk, and importuned him to make no objection to his (said Johnson's) appointment as receiver, and to consent to and to request the court to appoint him as such receiver; that to induce and persuade said Polk so to withhold objection, and to consent and request, said Johnson urged that his above-named interests in the business of said Polk and its successful operation, and his personal friendship for said Polk, were such that he could and would, if appointed receiver, discharge the duties of the trust with diligence and fidelity, and without allowance or compensation other than he would receive from the advantages to said properties and to said banking business and to the amount so owing to him; that by reason of said interests of said Johnson in the success of the business, and by reason of his said promise to discharge the duties of receiver without allowance as aforesaid, said Polk did not object to said Johnson's appointment as receiver, but consented to such appointment, and requested the court and the judge thereof that said Johnson, by reason of his said promises, be appointed receiver of said property and business; that, in addition to his said consent and request for the appointment of said Johnson, other persons interested, personally and as creditors of said Polk, requested the court and the judge thereof to appoint said Johnson, because of the economy to said estate in conducting the receivership without salary, fees, or allowances; that, in view of the facts aforesaid, and of the further facts that said Johnson was well qualified for the duties, he was appointed and acted as receiver of said estate. And of each and all of the foregoing facts said Polk offers to make proof." Upon appellee's motion, this subdivision of the exception was stricken out; appellants excepting thereto. At the trial, appellant Polk took the witness-stand, and certain questions were propounded to him, intended to elicit evidence similar in import to the statements of the exception. Objections were sustained to these questions, and the rulings thereon saved.

1. It may be premised that the appointment of the receiver and the fixing of his compensation are judicial acts; that the court could in nowise be bound by contracts between individuals as to what it should or should not do. Lichtenstein v. Dial (1890), 68 Miss. 54, 8 So. 272.

2. Appellee argues that the agreement set up in the exception falls within this principle, and was against public policy and void, and that there was, therefore, no consideration for his promise. It is not, however, averred that any attempt was made to prevent the exercise of the fullest judicial discretion in making the appointment. It is averred that the appellant Polk was solicited to consent to the appointment of appellee as receiver, and request the court to make such appointment, and to make no objection thereto. All this he might lawfully do. Suggestions and recommendations in such matters by the parties interested therein are not improper, and are often desired by the court. They can be, in the nature of things, nothing except suggestions and recommendations, but they are not forbidden by consideration of public policy or otherwise. Addison v. Bowie (1829), 2 Bland 606; Williamson v. Wilson (1826), 1 Bland 418; Gowan v. Jeffries (1840), 2 Ashm. 296; Bate v. Bate (1876), 74 Ky. 639, 11 Bush 639; Hanover Fire Ins. Co. v. Germania Fire Ins. Co. (1884), 33 Hun 539; High, Receivers (3d ed.), §§ 63-65; Beach, Receivers (2d ed.), §§ 30, 31; Smith, Receivers, p. 62.

3. Withholding such objection and recommending the appointment at the request of appellee constituted a consideration for the promise to relieve the estate from a large item of that expense which makes receiverships onerous and not infrequently destructive, assuming that the things requested to be done and omitted were not illegal. Wolford v. Powers (1882), 85 Ind. 294, 44 Am. Rep. 16; Vigo Agricultural Society v. Brumfield (1885), 102 Ind. 146, 52 Am. Rep. 657, 1 N.E. 382; Keller v. Orr (1886), 106 Ind. 406, 7 N.E. 195. The policy of the law is expressed as follows: "No party or attorney, or other person interested in an action, shall be appointed receiver therein." § 1237 Burns 1901, § 1223 R. S. 1881. The receiver represents the court, occupies a trust relation toward the parties, and ought always to be indifferent between them. The appointment of a creditor who has or may have a private interest to serve is of doubtful propriety, at least, and it may be safely assumed that such appointment would not have been made by the court below over the objection of appellant. In a recent case (Ephraim v. Pacific Bank [1902], 136 Cal. 646, 69 P. 436), cited by both parties, it was held that where a person solicited the appointment as receiver for real estate, and promised the mortgagee thereof to look to the rents alone for compensation, he could not, after the cause was dismissed and the property had passed out of his hands, recover from the mortgagee the amount of an allowance made to him by the court. If this action were between appellant Polk and appellee, the case would be exactly in point. That agreement was not to serve without compensation, but to look therefor to the rents of the real estate. Fixing the amount of compensation by the court was not, therefore, an act conflicting at all with the terms of the agreement.

In Steel v. Holladay (1890), 19 Ore. 517, 25 P. 77, the receiver at the time of his appointment represented to the court that he would not claim compensation, he being interested in the property. Other interested parties seem to have consented to...