State Ex Rel. Parsons Mining Co. v. Mcclure

• Decision Date: 16 May 1913
• Citation: 133 P. 1063,17 N.M. 694
• Court: New Mexico Supreme Court
• Parties: STATE EX REL. PARSONS MINING CO.v.MCCLURE, DISTRICT JUDGE.

17 N.M. 694

133 P. 1063

STATE EX REL. PARSONS MINING CO.

v.MCCLURE, DISTRICT JUDGE.

Supreme Court of New Mexico.

May 16, 1913.

Syllabus by the Court.

A proceeding in insolvency against a corporation under chapter 79, Laws 1905, is a “transitory action” in the nature of quo warranto, and the venue thereof, under section 2950, C. L. 1897, may be in the county where either the plaintiff or the defendant resides.

As between courts of concurrent jurisdiction, the first acquiring jurisdiction of the subject-matter of an action is permitted, with certain exceptions, to retain it to the end. Applied to one district court, having jurisdiction of an insolvency proceeding against a corporation, under chapter 79, Laws of 1905, in which a mortgagee of the insolvent corporation is made a party defendant and answers, setting up his mortgage, and another district court, in which, pending the former proceeding, said mortgagee has obtained a decree of foreclosure and sale of the insolvent's property thereunder, the former district court is entitled to retain the jurisdiction first acquired by it, and to administer said estate, to the exclusion of any such decree by the latter court.

A receiver cannot ordinarily take into custody property found in possession of a stranger to the record, claiming title. But where such stranger intervenes in the receivership proceedings, and submits his rights to the court for adjudication, he is not entitled to a writ of prohibition to restrain the court from determining those rights.

Application for writ of prohibition by the State, on the relation of the Parsons Mining Company, a corporation, against J. T. McClure, District Judge. Alternative writ discharged.

A proceeding in insolvency against a corporation under chap. 79, laws of 1905, is a transitory action in the nature of quo warranto, and the venue thereof, under sec. 2950, Comp.Laws 1897, may be in the county where either the plaintiff or the defendant resides.

Wilson, Bowman & Dunlavy and Lorin C. Collins, all of Santa Fé, for relator.

Gibbany & Black, of Roswell, for respondent.

PARKER, J.

This is a proceeding for a writ of prohibition against John T. McClure, as judge of the district court of Chaves county, and against said district court. The facts giving rise to the controversy may be briefly stated as follows:

One R. E. Lund, being a judgment creditor of the Eagle Mining & Improvement Company, instituted a proceeding against said corporation as an insolvent under the provisions of chapter 79 of the Laws of 1905, seeking an injunction against the further exercise of its corporate functions by it, and seeking the appointment of a receiver of its assets. The corporation answered, setting up that all of its property had been conveyed by mortgage deed to one J. H. Fulmer, Jr. Thereupon Fulmer was ordered to be made a party defendant. Upon final hearing, the court made the following finding: “Upon the pleadings and the proofs submitted, it is found by the court that the defendant corporation is insolvent, and cannot, as now conditioned, conduct its business in the future with safety to the public or advantage to the stockholders. A decree may accordingly be drawn, granting the relief prayed in the complaint, and as provided by chapter 79 of the Laws of A. D. 1905.” Thereupon a decree was entered appointing a receiver, but omitting to adjudge insolvency or to enjoin the further exercise of corporate functions by the corporation. This decree was brought to the territorial Supreme Court by writ of error, and the writ was dismissed, on the ground that, there being no injunction, the order appointing a receiver was interlocutory and not reviewable. Eagle Mining & Improvement Co. v. Lund, 15 N. M. 696, 113 Pac. 840.

Upon the remanding of the case to the district court, the Eagle Mining & Improvement Company offered to file an amended answer, setting up certain occurrences since the writ of error was sued out, and hereinafter mentioned, which application was denied. Thereupon, on October 4, 1911, the cause came on for final hearing, and the district court, reciting its former findings, and that its former decree by inadvertence failed to award the injunction, entered a final decree adjudging insolvency, awarding injunction, and appointing the same receiver, who had never qualified under his former appointment, and ordered said decree to take effect nunc pro tunc as of September 18, 1908, the date of the original decree in the case. On March 15, 1912, the relator intervened in the cause, and set up that it was the owner of the property sought to be administered by the court through the receivership, by reason of a certain foreclosure proceeding prosecuted to final decree and sale in the district court of Lincoln county, and by conveyance to it from the said J. H. Fulmer, Jr., the purchaser at the foreclosure sale; that no receiver of the property of the Eagle Mining & Improvement Company had qualified, and hence none was made party defendant: that R. E. Lund, the plaintiff in the receivership case, was made a party and answered; that the receiver appointed by the nunc pro tunc decree of October 4, 1911, qualified and was assuming possession of the property and interfering with the possession of intervener, relator here. It prayed for a decree that it owned the property, and for an order to the receiver to refrain from further interference with the same. A demurrer was interposed to the petition of intervention, but, so far as appears, the same remains undisposed of.

Subsequently, the receiver being still in charge, relator filed a motion in the receivership case to be permitted to install certain machinery, which should not become subject to the receivership. The court denied the motion, but made an order permitting the installation of the machinery, provided it became a part of the estate, and as such subject to the administration of the court through the receivership.

It appears that the domicile of the Eagle Mining & Improvement Company is at Parsons, in Lincoln county, in the Sixth judicial district, and that all of its property was situated in said county of Lincoln, all of its business done there, all of its officers residing there, while the action for the injunction and receivership was begun and prosecuted in Chaves county, in the Fifth judicial district. Most of the property is real estate in the form of mining property.

A consideration of this case naturally involves three propositions, which may be stated as follows: (1) Is the subject-matter of the action within the general scope of the jurisdiction of the Chaves county court? (2) If within the general jurisdiction of that court, what effect did the proceedings have upon the jurisdiction of courts of concurrent jurisdiction? (3) Was the manner of seizing possession of the property lawful; and, if not, does the conduct of the relator waive the error?

[1] 1. A decision of the first proposition above mentioned required an examination into the nature of the action provided by chapter 79, Laws 1905. This act was adopted bodily from the corporation act of New Jersey of 1896, to be found in Parker's New Jersey Corporations, and in which all of the New Jersey decisions are cited and digested. In that state the courts have interpreted the statute in numerous cases. In Gallagher v. Asphalt Co. of America, 65 N. J. Eq. 258, 55 Atl. 259, the United States Circuit Court of New Jersey had taken jurisdiction of the Asphalt Company, and of all of its assets, and, through a receiver, was distributing the same to its creditors, and the objection was made that the New Jersey court had no jurisdiction under the statute to entertain the proceedings; the jurisdiction having been assumed by the federal court. The New Jersey court, after pointing out that the federal court was not assuming to strip the corporation of its power to exercise its corporate functions, but was administering the corporate assets under its general equity powers, overruled the objection and proceeded to discuss the nature of the statutory proceedings. The court said:

“Both sides, I think, conducted their argument somewhat under a misconception in regard to the nature of this act--or at least upon the idea that the suit brought under that act is an action for a receiver--an action necessarily to reach assets and effect their distribution through a receiver. I do not find that that is the main purpose and object of our statute, and the history of our statute strongly indicates that that view is erroneous. In my opinion, our statute, originally passed, as I said, in 1829, provides for a proceeding more in the nature of a quo warranto than of a creditors' bill. It provides for a proceeding which can be pursued to a finish, even though the corporation has no assets whatever. Whether a receiver shall be appointed under our statute, or not, is wholly discretionary with the court, and the receivership is not the essential object of the suit. The discretionary power to appoint a receiver can only be exercised at the time the injunction is ordered, or at some time thereafter. * * * As in the New York act, the direct object of the suit is accomplished by an injunction placing the corporation under disabilities--restraining it from the exercise of any of its franchises. As in the New York act, the receivership is purely discretionary, and, when created, follows the decree for an injunction. A decree for an injunction might go, although there were no assets. The order appointing the receiver could never be made unless the decree passed at the same time, or had already passed, disabling the corporation by the injunction. * * *

Insolvency is one of the jurisdictional facts upon which the decree goes. The decree itself is that the corporation shall be enjoined from the exercise of its franchises. That is the decree. It is often said that our statutory suit is a proceeding in rem--that the status of the corporation...