Raymond v. Gilman

• Decision Date: 09 July 1930
• Citation: 151 A. 248,111 Conn. 605
• Court: Connecticut Supreme Court
• Parties: RAYMOND v. GILMAN et al.

151 A. 248

111 Conn. 605

RAYMOND v. GILMAN et al.

Supreme Court of Errors of Connecticut.

July 9, 1930

Appeal from Superior Court, New London County; Earnest C. Simpson Judge.

Action by Gilbert S. Raymond, receiver of the New London County Agricultural Society, against George H. Gilman and another for specific performance of a contract for purchase of realty. Judgment for plaintiff, and defendants appeal.

No error.

On February 20, 1929, Martin E. Jensen, a life member of the New London County Agricultural Society, a corporation without capital stock, brought an action, returnable on March 5 1929, for the appointment of a receiver for the society. On March 8th, following, Gilbert S. Raymond was appointed permanent receiver, and an order was made for the sale, by the receiver, of the property of the corporation. The facts found relating to the appointment and order of sale, as well as those pertaining to the advertising of the sale and the sale itself, which are pertinent to the present inquiry, are set forth in the opinion.

On May 1, 1929, the plaintiff receiver, through an auctioneer, sold at public auction, for the sum of $15,750, the real estate of the corporation, subject to a mortgage for $25,000, to the defendants, who were the highest bidders at the sale, and the defendants paid the plaintiff $2,000 on account of the purchase price. On the same day, after the sale, the plaintiff, and the defendant George H. Gilman, in behalf of himself and his brother Francis Gilman, executed the bond for deed, constituting the contract now sued upon.

On May 17th, a motion to confirm the sale was brought on for hearing, and no objection was made to the confirmation of the sale or the approval of the receiver's deed, but the matter was not then passed upon by the court. On May 27th the receiver filed a formal return setting forth his doings with reference to the advertising, the sale, and notice of hearing on confirmation, and the court then ratified and confirmed the sale and approved the deed submitted. On June 1st the receiver tendered the deed to the defendants to be delivered upon the payment by them of $13,750, but the defendants refused to pay the same and accept the deed, and ever since have refused to do so. On June 10th the defendants filed a motion to vacate the order of the court ratifying and confirming the sale to them, which motion, after hearing, was denied; from this action the defendants took no appeal.

Thereafter the receiver brought the present action, by complaint dated July 8, 1929. The defendants, in their answer, alleged together with other matters not pursued on this appeal, in substance, that the title tendered them by the receiver is unmarketable, in that the appointment of Raymond as permanent receiver was void because of insufficient notice of hearing thereon, and in that the sale was not advertised and made in accordance with the order therefor, in the respects hereinafter mentioned. The trial court ruled adversely to these claims and held the receiver to be entitled to a decree of specific performance, from which judgment the defendants appeal.

George H. Gilman, of Norwich, for appellants.

Edmund W. Perkins, of Norwich, for appellee.

Argued before WHEELER, C.J., and MALTBIE, HAINES, HINMAN, and BANKS, JJ.

HINMAN, J.

The appellants claim that the appointment of Raymond as permanent receiver is void, because of a deficiency in notice given of the hearing on the appointment. In this state the power to appoint receivers of corporations, both with and without capital stock, is expressly vested in the superior court by statute (section 3443, Gen. St. 1918, as amended by section 3 of chapter 151 of the Public Acts of 1919). The details of procedure in making appointments, both temporary and permanent, are prescribed by rule (sections 50, 51, Rules of Superior Court [Practice Book 1922, pp. 252, 253J). Section 51 provides that " all appointments of receivers shall be temporary appointments, unless made by the court after the return day of the action, and upon full notice and opportunity to be heard to all concerned." Succeeding provisions clearly contemplate that the court shall order notice of hearing on the appointment of a permanent receiver to all parties concerned " by causing a written or printed notice thereof to be mailed, postpaid, to all known creditors and to all stockholders of record *** at least six days before such hearing," also " by public advertisement if it seem advisable." It appears that such notice was not ordered or given, as to this hearing, in the present case.

The finding shows that the receivership action was returnable on the first Tuesday of March (March 5th) 1929. Service was made on the defendant society, which duly appeared by its attorneys, who, on March 6th, filed an answer admitting the allegations of the complaint. No move was made for the appointment of a temporary receiver, but a motion was filed, on March 4th, for the appointment of a permanent receiver and appraisers and for an order authorizing the receiver to sell the assets of the corporation. The fact that the motion was filed a day before the return day is of no moment. Hearing on this motion was claimed for and held at the short calendar session on March 8th, and the requested orders were granted.

No question is made as to the sufficiency of the grounds, set forth in the complaint and admitted by the defendant corporation, to warrant the appointment of a receiver. The court had jurisdiction of the necessary parties to the suit-the plaintiff, a life member of the society, and the defendant, the society itself-and of the subject-matter of the controversy-the property of the corporation. Its judgment appointing the receiver therefore was not void or a nullity for lack of jurisdiction, and is not open to collateral attack. 1 Clark on Receivers, § 305; High on Receivers, § 39a; Vallery v. Denver & R. G. R. Co. (C. C. A.) 236 F. 176, 178; Harned v. Beacon Hill Real Estate Co., 9 Del. Ch. 232, 80 A. 805; Detroit Trust Co. v. Lawrence, 235 Mich. 136, 209 N.W. 61. The effect of the omission to give notice to known creditors and to the life members of the society was, at most, to render the appointment vulnerable to seasonable direct attack by such creditors or members. The same judgment which appointed the receiver ordered notice of limitation of claims by advertisement and by mail to each known creditor on or before March 31, 1929, and notice of hearing on the motion to confirm the sale, May 17, 1929, was mailed to the creditors and life members. No objection was made to the confirmation of the sale, nor does it appear that any one, except the defendants in the present action, has questioned the regularity of the appointment of the receiver. A party entitled to notice of an application for the appointment of a receiver-even of his own property-may waive such notice by failure to interpose a timely objection thereto. Cogswell v. Second National Bank, 76 Conn. 252, 56 A. 574; Nutter v. Brown, 58 W.Va. 237, 52 S.E. 88, 1 L.R.A. (N. S.) 1083, 6 Ann.Cas. 94; 23 R. C. L. p. 40. It follows that the only persons who could have been prejudiced by the omission complained of have waived any right to attack the validity of the appointment even were they disposed to do so, and the record discloses no such inclination on their part.

The defendants, as the successful bidders, became, from the time they entered into the contract of purchase, parties to the proceedings. Rice v. Ahlman, 70 Wash. 12, 126 P. 66; Clark on Receivers, § 489a. As such they had the right to interpose objections to the confirmation of the sale. The order of confirmation, being final in its nature, as to the particular parties and matters affected by it, could have been appealed from by them. Barber v. International Co., 74 Conn. 652, 657, 51 A. 857, 92 Am.St.Rep. 246; Links v. Connecticut River Banking Co., 66 Conn. 277, 283, 33 A. 1003. They took no such appeal, but on June 10, 1929, filed a motion to vacate the order, on what grounds it does not appear. This, after hearing, was denied, but no appeal was taken or attempted. We conclude that the validity of the title to the real estate in question is not impaired by the deficiency in notice of hearing on the appointment of the receiver.

On March 8, 1929, the receiver was ordered to sell the assets of the corporation, including both real and personal estate, as a whole, at public auction, on May 1, 1929, the premises to be sold free and clear of all mortgages, except one to Charles D. Greenman, trustee, for $25,000, and was directed to advertise the sale by publishing a notice thereof containing a description of the real...