State ex rel. Elder v. Circuit Court of Madison County
| Decision Date | 16 January 1937 |
| Docket Number | 26633. |
| Citation | 5 N.E.2d 641,212 Ind. 1 |
| Parties | STATE ex rel. ELDER et al. v. CIRCUIT COURT OF MADISON COUNTY et al. |
| Court | Indiana Supreme Court |
McHale Arthur & Myers, Herbert J. Patrick, and Evans & Hebel, all of Indianapolis, for relators.
Cloe Campbell, Cloe & Cloe, of Noblesville, and Gavin & Gain, Wymond J. Beckett, M. B. Hottel, and N. E. Elliott, all of Indianapolis, for respondents.
This is an original action filed in this court by the relators, Bowman Elder, as receiver of Indiana Railroad, and Indiana Railroad, to obtain a writ of prohibition agianst the Madison circuit court of Madison county, Ind., and Charles E. Smith, judge of the Madison circuit court, to restrain and prohibit respondents from exercising any further jurisdiction over relators or over the property held by Elder as receiver and from requiring relators to appear in the Madison circuit court and answer to a supplemental petition filed therein to enforce a decree of the Madison circuit court. A temporary writ of prohibition was issued by this court and respondents filed an answer setting forth their reasons why such temporary writ should not be made permanent.
From relators' petition and the response filed by respondents the following facts appear:
On December 31, 1924, Arthur W. Brady was appointed receiver of the peoperty and assets of Union Traction Company of Indiana by the Madison circuit court. At the time of such appointment various persons hereinafter referred to as 'tort claimants,' held claims against the Union Traction company and its associated companies on account of injuries to persons and damages to property occurring prior to the appointment of such receiver, which claims aggregated the sum of $142,617.24. After the appointment of the receiver, the tort claimants filed their claims with Brady as such receiver and asserted a right to preferential payment from the funds in the hands of such receiver. On June 25, 1929, the Madison circuit court allowed the claims as general claims against the assets of Union Traction Company but denied to such tort claimants the right of preferential payment and priority over the claims of various mortgage creditors. From the decree of the court denying such prayer, the tort claimants appealed to this court, presenting upon such appeal the question whether or not these tort claimants had a preference and priority over the mortgage creditors.
While such appeal was pending in this court, the receiver filed his petition in the Madison circuit court asking the authority and order of that court to sell at public sale the various assets and properties of the Union Traction Company and its associated companies, and, pursuant to such petition, the Madison circuit court on June 6, 1930, made and entered its decree of sale authorizing, ordering, and directing the receiver to sell the said assets and properties at public sale. The Madison circuit court's decree contained the following provisions with respect to the tort claims:
'The property described in Groups 'A', 'B', 'C', 'D', 'E', 'F', and 'G' shall be sold subject to the following express conditions which shall be binding upon the purchaser or purchasers of said respective groups:
'In the event the judgment of the Madison Circuit Court * * * shall be reversed and thereafter the rights of said tort claimants to a preference over the mortgages * * * shall be finally established and to the extent that such preference shall be so established, the holders of said tort claims shall have a first lien * * * upon the property constituting said respective Groups upon or in connection with which said tort claims originated, which lien shall under such conditions, attach as of the date of the confirmation of the sale hereinafter ordered. * * *
'In the event that said property shall be sold to one purchaser as Group 'J', said property shall be sold subject to the same conditions expressed in the preceding paragraph and said tort claims, if determined to be entitled to preference, and to the extent so determined, shall thereupon constitute a lien upon the entire property so sold as of the date of the confirmation of said sale.
'The purchaser or purchasers of such mortgaged property, or any part thereof, his, its or their nominees or assigns, are hereby given and granted the right, at his or their own expense, to defend in the name of Union Traction Company No. 3 or Arthur W. Brady, Receiver, any suits against said Union Traction Company No. 3 or Arthur W. Brady, Receiver, to file, maintain, and prosecute any and all appeals, petitions for rehearing or petitions to transfer in any of said causes, to file briefs and appear by counsel and are likewise granted and given the right to take and conduct all further proceedings which may be necessary in connection with the appeals now pending in the Appellate Court of Indiana with respect to said tort claims heretofore adjudicated by this court; all such proceedings with respect to said last mentioned tort claims may be taken by such purchaser or purchasers, his, its or their nominees or assigns in the name of said Union Traction Company No. 2 and/or in the name of the mortgage trustees of said respective divisions and shall include the right to appear by counsel, file briefs, petitions for rehearing and petitions to transfer and likewise to conduct in the name of said Union Traction Company No. 3 or said mortgage trustees any further proceedings in the court below or in any subsequent appeal in the event said judgment should be reversed.'
By express provisions in the decree credit upon the purchase price was authorized to be given the successful bidder for mortgage bonds of the Union Traction Company and associate companies, and it was also decreed that upon confirmation of sale by the court the deeds executed to the purchaser should operate to release the property from 'all right, title, interest, estate and claim whatsoever, either at law or in equity, of any and all parties to each and every of the above entitled and consolidated causes, * * * except as in this decree otherwise provided.'
Pursuant to the decree of the Madison circuit court, the receiver on July 2, 1930, sold the assets involved in this action to Barnard P. Shearon, who nominated Indiana Railroad to receive the deed of conveyance. The Madison circuit court approved the receiver's report of sale and ordered and approved the execution and delivery of a deed of conveyance to Indiana Railroad, which deed contained a provision that the property was sold and conveyed 'in the manner specified and directed in said decree and upon the terms and conditions therein set forth.' In making payment for the assets so sold upon the receiver's sale the purchaser surrendered and received credit therefor upon the purchase price mortgage bonds of the Union Traction Company, which mortgage bonds, in the case of McCullough et al. v. Union Traction Company of Indiana et al., 206 Ind. 585, 186 N.E. 300, were held to be inferior and junior in order of payment to the claims of the tort claimants hereinabove referred to.
The Madison circuit court confirmed the sale, its order of confirmation containing the following:
'It is further ordered, adjudged and decreed that the respective purchasers of said several parcels of property herein above referred to shall complete the payment thereof either in cash or otherwise as herein above and as in said decree provided * * * and upon such payment being made, the receiver shall execute his receiver's deeds, and proper instruments of assignments * * * and in all cases such properties shall be conveyed subject to the several liens, incumbrances and conditions as set forth in the decree of sale entered by this court June 6, 1930.' (Our italics.)
In his final report showing the disposition of the funds received upon sale of the property, the receiver alleged that he had received no funds which were not subject to preferential claims of mortgagees, pledgees and certain creditors who by decree of June 6, 1930, were adjudged to be preferred and that 'no payments have been made on account of any general or tort claims arising prior to the original appointment' of the receiver, but that said claims, which included the claims of the tort claimants involved in this proceeding, 'are wholly unsatisfied.' The report also contained the following:
'The receivership matters undisposed of at this time, as hereinbefore shown, are, in addition to further disbursement and disposition of the said cash on hand, the following:
'(a) The steps to be taken in the event that the tort claims arising before the receivership, being those scheduled in Exhibit C. be finally adjudged to be entitled to preference.'
In his final report the receiver asked the court to 'finally order and decree the approval of this report and the settlement and termination of said receivership as to all matters and things, except those relating to the disposition of said undisbursed funds and the steps to be taken with respect to the claims above referred to, as to which such order be made as the Court may find expedient and equitable.'
On January 12, 1931, the Madison circuit court approved the report from which the above portions are quoted, and in its order and decree made the following finding:
'The Court also finds that no final decision has been made as to the right to preference on the part of the holders of certain unsatisfied tort claims which arose prior to the appointment of said Receiver on December 31, 1924, which tort claimants are those referred to in paragraph A-11 of Article I of said decree entered June 6, 1930, and listed in Exhibit C of said report, but that the appeal of such tort claimants for the establishment of...
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