Case ID: va_69/html/0057-01.html
Source: Caselaw Access Project
Author: {"author": "Anderson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Smith v. Butcher.
    January Term, 1877,
    Richmond.
    1. Appointment of Receiver — Power to Rent Real Kstate. —In a suit by a judgment creditor to subject the real estate of liis debtor to pay liis debt, where there are deeds of trust on the property and numerous judgments against the debtor, which are to be ascertained and their priorities fixed, and the real estate is not sufficient to pay all the debts, the court may appoint a receiver to take possession of the property and rent it out.
    2. A receiver may be appointed by the judge in vacation.
    8. Same — Power to Collect Rents. — A receiver may be directed to collect from tenants of the real I estate rents due as well as such as may become due. !
    The only questions involved in this case, on this appeal, were whether it was a proper case for the appointment of a receiver, and whether’a receiver could be appointed by the judge in vacation.
    In May 1.869 John Butcher filed his bill in the circuit court of I'auquier county, in which he alleged that he is the creditor of George W. F. Smith by three judgments. That Smith is the owner of large and valuable tracts of land in Fauquier county, which are subject to his numerous judgment and deed of trust creditors. That these lands are not sufficient to pay the recorded liens upon them, nor would the rents and profits pay the interest. He refers to two deeds of trust executed by Smith: one executed in May 1850, by which he conveyed to John F. Marye a tract of nine hundred and eighty-seven acres, to secure a debt of $10,000 due to Thomas W. Anderson; and another executed in March 1866, by which he conveys *to James V. Brooke and J. M. Forbes, all his lands and personal property to secure a great number of creditors. That previous to the execution of this last deed many judgments had been recovered against Smith, and the plaintiff’s among them. And making George W. F. Smith, the trustees, and other parties, defendants, he prays that all the creditors by judgment and deed of trust of Smith may be convened, and their debts and priorities ascertained; that the title and value of the said lands may be enquired into; that the real estate may be sold for payment of the i debts; that in the meantime a receiver may be appointed, and for general relief.
    Smith answered, admitting his large indebtedness, but insisting that his lands, which had been greatly injured during the war, had been greatly improved since by his labor and management; and protesting strongly against the appointment of a receiver, which he insisted would be injurious to his creditors as well as himself.
    In September 1869 the court made a decree directing a commissioner to take ail account of and report to the court, the debts binding upon the real estate of G. W. F. Smith, the persons to whom due, their amounts, character, and their just and legal priorities, and also to report the character and value, fee simple and annual, of the real estate in the bill mentioned, with the liens on each tract respectively.
    In' July 1870 the commissioner made his report. The whole amount of debts reported was $145,856.86, and the value of the real estate was reported at $71,720.02. To this report Smith filed exceptions. And the cause coming on to be heard in September 1871, the court recommitted the report with the exceptions to a commissioner, with directions to inquire ’’’further into the matters and things therein contained, and whether any portion of the real estate had been ordered to be sold in any other suit.
    Tn January 1872 John and Berkely Ward, administrators de bonis non with the will annexed of B. Ward, one of the creditors of George W. F. Smith, gave him notice that they would apply to the judge of the circuit court of Fauquier county to appoint a receiver of all the real estate reported to be held by j him in the case of Butcher v. Smith and others. And the commissioner to whom the report had been committed with exceptions reported that, if all Smith’s exceptions were sustained, he would still owe about the sum of $135,000. And he further stated, that though he had given notice to Smith of the time of taking the account, he did not appear before him. That on the lllh of December 1871 he had issued a written notice to Smith, giving him a detailed statement of the exceptions not sustained by any evidence in the cause or which was in reach of the commissioner, and notifying said Smith that unless such evidence was produced on or before the 2d of January 1872 the commissioner would proceed to make up his report, and that Smith’s exceptions ’ not sustained by the evidence would be overruled. That Smith not having made his appearance, the commissioner proceeded to make up his report, when, on the 10th of January, Smith appeared and declared his inability to produce at that time the evidence required in the cause; and the commissioner agreed to wait with Smith until the last of the first week in February. Owing to this delay the commissioner has not completed his report, but believes that the figures given in the foregoing statement are approximately correct. And on the 3d of April 1872 the commissioner filed a *statement of the debts of Smith on his own account of $110,328.29, and security, $23,294.22; to which Smith filed numerous exceptions. This statement was made after the order appointing a receiver was made.
    It further appears that there were four other causes pending in the same court, in three of which lands had been sold under decrees, which, or some of which, had been purchased by Smith, and in which there had been decrees for the sale of said lands for payment of part of the purchase_ money, and in one of these causes a receiver had been appointed to take possession, &c., of the land involved in said suit.
    In opposition to the appointment of a receiver Smith filed the written request of several of the creditors that the lands might be permitted to remain in his hands; and he proved by a number of witnesses, that his lands having been desolated during the war, he had since that time repaired the wastes, by. opening the ditches, rebuilding the fences, and bringing the land into a good state of cultivation, so that its value had been greatly enhanced.
    On the 16th of March 1872 the judge of the court made an order in vacation by which he appointed the sheriff of Fauquier county (Joseph H. Nelson) a receiver _ of the real estate of George W. F. Smith, naming the different tracts (except that portion of which he was appointed receiver in the suit of G. W. F. Smith v. Pat. H. Smith); and the said Nelson was directed to collect all rents due for the year 1871 upon any of the above tracts of land, and to rent out for the year 1872, for cultivation or grazing, such portions of any of said tracts as were not then rented, to the best advantage, reference being had to the preservation of the property as _ well as to the' interests of the creditors. *And the tenants in possession were directed to attorn and pay their rents to Nelson, &c.
    From this decree Smith applied to a judge of this court for an appeal; which was allowed.
    
      Brooke & Scott and Hunton, for the appellant.
    
      General W. A. Payne, for the appellees.
   Anderson, J.

The appellee,, John Butcher, exhibited his bill in chancery against G. W. F. Smith, to enforce his judgment liens upon his real estate, and to ascertain the amount and priorities of the judgment and deed of trust liens upon the same, and to that end sought to have convened all his lien creditors, and prayed an account, and the appointment of a receiver to take charge of his estate. The defendant, G. W. F. Smith, answered the bill, and a commissioner was directed to take an account of said Smith’s real estate, and of his debts binding the same, and report. The commissioner reported the debts, amounting to $145,856.86, including interest to the 1st of July, 1870; and the real estate valued at $70,720.02. To this report the defendant filed various exceptions, and it was recommitted, the court considering it erroneous. The commissioner, to whom it was recommitted, reported to the court that the defendant had failed to produce any evidence in support of his exceptions, although he had notified him to do so; but that if all he claimed by his exceptions were allowed, it would not reduce his indebtedness below one hundred and thirty-five thousand dollars. He afterwards made a more formal report, a synopsis of which is given in the record, showing the total of G. W. F. Smith’s own indebted-mess to be $110,328.29, and his security debts *to be $23,294.22. To this report also exceptions were filed by the said defendant, and the court without passing upon them recommitted the report to the commissioner for further inquiry.

Prior to the foregoing order, to-wit: on the 16th of March 1872, an order of the court was entered by the clerk in vacation, appointing Joseph H. Nelson, sheriff of Fauquier county, a receiver of the real estate of G. W. F. Smith (except that portion of which he was appointed receiver in the suit of G. W. F. Smith v. Pat. H. Smith) ; that is, of the Dan. O’Connell Smith place, the Walter Smith place, the Chapman purchase, and of the several tracts described in the report of commissioner Hugh R. Garden, and known as Meadowville and Moore’s patent. All of these lands were the subject of litigation, in one or the other of four suits then pending in the circuit court of Fauquier; i. e., Chapman v. Chapman, McVeigh v. Smith, Jett v. Smith, and the case above named, in which the said Jospeh H. Nelson had been previously appointed receiver; and in the case of McVeigh v. Smith, it appears by entry of record that at a circuit court held on the 11th September 1871, Berkeley Ward’s executrix, one of the defendants, by her counsel, filed a notice in writing to the defendant, G. W. F. Smith, of a motion for the appointment of a receiver of said defendant, G. W. F. Smith, in that cause, and in the suit of Butcher v. Smith, and in the suit of Jett v. Smith, which notice was proved, docketed and continued. And in the order entered on the 16th day of March 1872, appointing a receiver, it appears that all the above causes were before the court at the time, and considered together in connection with the cause of Butcher v. G. W. F. Smith and others, in which the order was made, the parties to which suits, and all *other parties having liens upon the lands of the said Smith, having been convened and made defendants in the former suit, and that all the lands which by said order were to go into the hands of the receiver were involved in this and the foregoing suits, all of them in this, and some of them in one and some in another. And it appears from the decretal order itself appointing the receiver, that the motion was heard pursuant to notice to G. W. F. Smith in this cause, of John Ward and Berkeley Ward, a. d. n. c. t. a. of Berkeley Ward, deceased. From this decretal order an appeal was allowed by one of the judges of this court, which raises the question as to the legality of the appointment of a receiver, and is the only question now to be decided.

“The appointment of a receiver is a matter resting in the discretion of the court.” 2 Dan. Ch. Plead, and Prac. 1715. The same eminent writer says (next page): “The most ordinary cases, in which receivers are granted by the court, are those in which the suit arises out of claims by parties having equitable interests in the property, the subject of litigation. In such cases the court will appoint a receiver, for the purpose of protecting the property, till the question between the parties shall have been determined.” That is precisely this case. Again, “a court will grant a receiver, at the instance of a second incumbrancer, in all cases in which the first incumbrancer is not in possession of the property,” as is the ■case here. Ibid, p. 1718.

The court is of opinion, under all the circumstances disclosed by the record, the complication of the matters litigated, the probably protracted litigation, the insufficiency the property of defendant to pay his debts, and the just claims of the creditors to have the '-"rents and profits applied first to keep down the interest, and then to the reduction of the principal^ the case is one eminently proper for a receiver. But it is objected, that the appointment of the sheriff of the county a receiver in vacation was not within the jurisdiction of the court, and could only be done in open court.

The court is of opinion that the power to appoint a receiver is incidental to the power to award an injunction. And as the latter may be awarded by a judge in vacation, so may the power to appoint a receiver as incidental thereto, in a proper case, be exercised by a judge in vacation. In this case the sheriff of the county was appointed a receiver, which was virtually assigning to him in his capacity of sheriff the duties of a receiver, to be discharged under his responsibilities as sheriff. No new bond was required to be given and no special qualification was necessary to be required of him in his character of receiver, but he was responsible for the discharge of the duties assigned him as receiver under his official bond and qualification as sheriff. Judge Baedwin, in Beverley v. Brooke and others, 4 Gratt. 187, 212, held that the appointment of a receiver is in the nature of an injunction. Kerr on Receivers says (page 12): “It operates as an injunction. An order for an injunction is always more or less included in an order for a receiver. It is not necessary if a receiver be appointed, to go on and grant an injunction in terms.”

The power to appoint a receiver is an important and inherent power of a court of equity, and though it should be exercised with caution, it will he readily conceived that occasions may and do occur, when its exercise in vacation may be important to the ends of justice; and under the circumstances we do not think ”it was improvidently or erroneously exercised in this case, or that the appellant has any just cause of complaint on that ground.

The court is further of opinion, that there was no error in directing the receiver to collect the rents, which were in arrear and uncollected. It appears from the recitals of the decretal order, appointing a receiver, that the cause came on to be heard in part, upon executions against the said G. W. P. Smith, and the returns thereon, which were a charge upon the rents in arrear. And it was proper that the same should be applied to prevent the swelling of the debt by the accumulation of interest, which already greatly exceeded, prima facie at least, the entire estate of the appellant, real and personal. In Kerr on Receivers, page 13, it is said, “if tenants are in possession of real or leasehold estates over which a receiver is appointed, the order should direct them to attorn, and pay their rents in arrear and the growing rents to the receiver. See also 2 Daniell’s Plead. & Prac. 1737. And accordingly we find in the order for receivers of real estate, the tenants of the estates are ; directed to attorn, and pay the rents in or ; rear and growing rents to such receiver. (Sea-j ton’s Forms of Decrees, p. 222.) Upon the whole, the court is of. opinion to affirm the decree of the circuit court, with costs.

The other judges concurred in the opinion of Anderson, J.

Decree affirmed. 
      Receivers—Appointment—Rents—Grantham v. Lucus, 15 W. Va. 425, citing the principal case, holds that pending a chancery suit to subject the debtor’s real estate to the discharge of liens upon it. the court has a discretion to sequester the rents and profits of such real estate and appoint a receiver for the same. Sec, for general principle relating to the appointment and duties of a receiver, Beverely v. Brooke, 4 Gratt. 208 and Adkins v. Edwards, 83 Va. 300.