Prudential Securities Co. v. Three Forks, H. & M.V.R. Co.

• Decision Date: 09 November 1914
• Docket Number: 3444.
• Citation: 144 P. 158,49 Mont. 567
• Parties: PRUDENTIAL SECURITIES CO. v. THREE FORKS, H. & M. V. R. CO.
• Court: Montana Supreme Court

144 P. 158

49 Mont. 567

PRUDENTIAL SECURITIES CO. v. THREE FORKS, H. & M. V. R. CO.

No. 3444.

Supreme Court of Montana

November 9, 1914

Appeal from District Court, Gallatin County; Benjamin B. Law, Judge.

Action by the Prudential Securities Company, a corporation, against the Three Forks, Helena & Madison Valley Railroad Company. From an order appointing a receiver, defendant appeals. Order reversed.

Hartman & Hartman, of Bozeman, for appellant.

E. W Wullenwaber, of Three Forks, and John A. Luce, of Bozeman for respondent.

SANNER J.

Without notice and before service of summons the court below appointed a receiver for the properties of the appellant upon a complaint of the respondent, filed on November 1, 1913 seeking a money judgment in the sum of $2,251.24, being the principal sum and protest fee of an unpaid check. As special grounds for the appointment of a receiver it is alleged that the appellant was incorporated on March 20, 1912, for the purpose of constructing and operating a line of railway between Helena and points in the Gallatin valley; that it procured rights of way and has graded a portion of its roadbed, but has failed to complete 15 miles of any part of its line, or any branch or extension thereof, and has forfeited its corporate rights; that it is insolvent and has no property, save the right of way and partially constructed roadbed above mentioned, and some office fixtures, all of the value of $40,000; that it is indebted to various persons to an aggregate amount exceeding such value, and is unable to complete its roadbed or keep the same in repair, and the same is being damaged by the elements and by use of a part thereof as a wagon roadway; that the appellant "allowed the A B. Bennett Company, a creditor of defendant, to file a lien upon said right of way and roadbed on the 2d day of October, 1912, to secure the sum of $27,461.06, * * * and on the 28th day of October, 1912, allowed one G. T. Morris to file a mechanic's lien upon said property for the sum of $360.40," which liens have not been paid or satisfied; that new indebtedness is being constantly created, "thereby tending to diminish the fund out of which the plaintiff and other creditors can recover the indebtedness due from defendant, and, if allowed to continue to do so, said property and fund will be greatly impaired, a large portion thereof lost to the creditors * * * and materially injured; and that there is immediate danger of the same by reason of all the facts herein set forth." Within 20 days after service of summons the appellant filed a demurrer to the complaint, and a motion to strike therefrom all the allegations made in support of the prayer for a receiver, and at the same time moved the court upon several grounds to vacate the order appointing the receiver. The demurrer and motion to strike were overruled. Upon the hearing of the motion to vacate the receivership, the court, over appellant's objection, permitted respondent to file two certain affidavits as in support of the receivership, and later entered an order denying the motion to vacate. The present appeal is from that order.

The principal question presented is whether a sufficient showing was made to warrant the receivership. The respondent contends that a sufficient showing was made under the provisions of section 6698, subd. 5, Revised Codes. Those provisions are as follows:

"A receiver may be appointed by the court in which an action is pending, or by the judge thereof: * * * 5. In cases when a

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