Case ID: ohio-np-ns_28/html/0401-01.html
Source: Caselaw Access Project
Author: {"author": "Snediker, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Common Pleas Court of Montgomery County.
    Miami Savings & Loan Association v. Arnold Bros.-Weiss, Inc., et al.
    Decided February 26, 1931.
    
      Sigler & Dentinger and Burkhart, Heald & Pickrel, for plaintiff.
    
      O. J. Meyers, for The Gebhart-Wuichet Lumber Co.
   Snediker, J.

The Gebhart-Wuichet Lumber Company is a defendant herein and in its cross-petition, for a first cause of fiction, recites that there is due and owing it t from thé" de-’ fendant Arnold Bros.-Weiss, Inc., for materials and mill-work sold it, the sum of $5,233.32. For a second cause of action it says that on or about December 13, 1928, it made and filed for record in the office of the recorder of Montgomery county, Ohio, two affidavits for mechanic’s lien against lots 10 and 11 on the Brookdale plat, this county; that said lots were owned by the defendant Arnold Bros.-Weiss, Inc., and that within thirty days after the filing of these liens proper notice thereof was personally served on Arnold Bros.-Weiss, Inc., and John Froug, receiver for it.

The claim that there was an actual service on Arnold Bros.-Weiss, Inc., has been abandoned by this crosspétitioner. It still insists, and it is not denied by the plaintiff, that service of notice was made on John Froug, the receiver of Arnold Bros.-Weiss, Inc.

Such was the state of the record when the hearing was had before a special master. He found that:

- “The Gebhart-Wuichet Lumber Company had separate contracts with the owner as materialman for lumber and millwork for the houses on lots 10 and 11, Brookdale. (64505.) There is due this claimant from the owner $2,802.95 under the contract for lot 10, and $2,520.94 under the contract for lot 11. Separate affidavits for lien were duly made and filed on December 13, 1928, and within time, and copies served on the receiver for the owner, but no other service was made of the copies. An officer of the owner company had actual knowledge of the filing of the liens within the thirty-day period.”

And later he says:

“The liens of the Gebhart-Wuichet Lumber Company in case No. 64505 on lots 10 and 11, Brookdale, are invalid for failure to serve copies of the lien affidavits upon the owner or his agent.
The steps required by the statute to be taken to prove a lien must be strictly complied with, and the remedial provision of the act; Section 8323-8, cannot be invoked to excuse compliance or enlarge the rights to secure lien.”

..No materials were sold or delivered by cross-petitioner to the receiver.

The Code provision with respect to the copy of affidavit which is to be served on the owner is found at Section 8315, as follows:

“Every person filing such affidavit as provided in the preceding section shall, within thirty days after the filing thereof, serve on the owner, part owner, or lessee, of such premises, or his agent, a copy thereof; but if neither of such persons can be found within the county where such premises are situated, then such copy shall be served by posting the same in some conspicuous place on said premises within ten days after the expiration of said thirty days.”

To begin, it may be said that the only capacity which a receiver sustains as agent is in his representation of the court. So that we may not here regard him as the agent of the corporation of which he is receiver. Did he become the owner or part owner of the premises in question through his appointment by the court? That appointment was made under favor of Section 11897 et seq. of the General Code, which reads as follows:

“Under the control of the court a receiver may bring and defend actions in his own name as receiver; take and keep possession of the property; receive rents; collect, compound for, and compromise demands; make transfers; and generally do such acts respecting the property as the court authorizes him.”

The entry appointing the receiver contains the following language:

“It is therefore ordered that John Froug be and he is hereby appointed receiver of all of the debts, property, equitable interest, things in action, and real estate, belonging to said defendant; that the receiver, upon being duly qualified, proceed to appraise the property, collect the debts, and to dispose of said property under the further order of the court. And the said parties herein and all other parties having any of said property in their possession or under their control are hereby ordered to deliver the same,. and all other persons owing any such money belonging to said defendant corporation are hereby directed to pay over the same to the said John Froug as such receiver on his demand.”

This entry can only be construed within the terms of Section 11897, General Code, heretofore quoted. This section has been on the statute books of Ohio for a number of years, and the relation of a receiver to the court and to the property under his control and in his possession was fully determined by Judge Spear in the case of Chaney v. Maumee Cycle Co. et al., 64 Ohio St., 205, as follows:

“The relation of an assignee and a receiver to the property of an insolvent debtor is in many respects similar. The one obtains title to and authority and power over the property by reason of the joint act of the debtor and the court; the other obtains a like authority by the act of the court alone, not having the title but standing as the ministerial officer of the court, his relation to the property being like that of a sheriff or master in chancery. Bank v. Buckingham, 12 Ohio St., 419. His appointment is an equitable remedy, bearing the same relation to courts of equity that proceedings in attachment bear to courts of law, the appointment being treated as an equitable execution. The purpose is to secure the means for satisfying the final order and judgment of the court in the action, and the effect of the seizure is to place the property seized in the custody of the court. Railroad Co. v. Sloan, 31 Ohio St., 1. By express provision of Section 5590, Revised Statutes, the receiver is given power, under the control of the court, to take and keep possession of the property, and generally to do such acts respecting the property as the court may authorize. This statutory provision establishes a legal right, and this legal right is not affected by the fact that it is conferred in an action in its nature equitable, nor by the fact that it is to be enforced against a claim which would have been good as between the claimant and the debtor. It follows from this that the effect of the appointment, and the seizure of the property by the receiver, was to fasten the claims of creditors upon it and to give that officer control over it for the benefit of creditors, and in this respect his relation to it was, for all practical purposes, the same as that which an assignee would have had. The property thus sequestered was held by the receiver as effectually as an assignee could have held it, or as creditors could have held it by attachment or levy. In no other way than through him could the rights of creditors be worked out, and, in this aspect of the case, he represented the creditors rather than the debtor.
Graham Button Co. v. Spielmann, 50 N. J. Eq., 120; Hebberd v. S. L. & Cattle Co., 55 N. J. Eq., 18; In re W. & H. Co., 70 Conn., 220; Farmers’ L. & T. Co. v. M. E. & M. Works, 35 Minn., 543; Bayne v. Brewery Pottery Co., 90 Fed. Rep., 754; High on Rec., Sec. 454; Smith on Rec., Secs. 230, 231.
We think that, upon principle as well as upon the above authorities .and many others of like import which might be cited, the .right of the receiver to the property in dispute was a legal right to its possession with authority to manage it and dispose of it for the benefit of creditors generally * *

That a receiver, as here stated by Judge Spear, does not acquire title by virtue of his appointment is also held in the 71 Vermont, at page 377, where the court say:

“A receiver derives his authority from the court appointing him and his possession is the possession of the court for the benefit of those to whom the court may decide the property belongs — the title thereto remaining unchanged.”

Also in the 18 Michigan, at page 338, where the court held that the title to land did not vest in the receiver.

And in the 183 Mass., at page 123, where the first syllabus is:

“When a receiver of the property of a corporation is appointed, his custody of the property is that of the court, and the title of the property remains in the corporation.”

Whitehouse, in his work on State and Federal Equity Practice, says, at Section 485:

“An order of court appointing a receiver does not, per se, change the title to the property and vest it in the receiver. The legal title still remains in the original owner and the receiver acquires merely the right of possession as an officer of the court.’’

So that we are constrained to say that John Froug, on the day on which he received the notice of the filing of the mechanic's lien against the corporation of which he was the receiver, had no legal or equitable title to. its property by reason of which he could be designated either an owner or part owner thereof.

It is contended, however, by counsel representing the Gebhart-Wuichet Lumber Company that under the liberal construction clause of the mechanic’s lien law an interpretation ought to be given to the word “owner” which would bring the receiver within'the definition of that term given by Judge Spear in the case of Iroquois Co. v. Meyer, 80 Ohio St., 676, when he says,

“Any intelligent construction of the word ‘owner’ embraces one who is in possession of property by right with the power of control.”

If the receiver is, as has been declared by the Supreme Court in the 12 Ohio St., 419-425, and in the decision of Judge Spear which we quoted, in the 64 Ohio St., at 205, merely a ministerial officer, then he has not the power of control necessary to entitle him to be called an owner or part owner even under the definition of Judge Spear. It is his duty, under his obligation, to obey the orders of the court as to the property placed in his charge and generally to do such acts respecting the property as the court authorizes. A ministerial officer is one who merely follows instructions. So that we may not say that he comes within Section 8823-9, which reads:

“The words ‘owner’ ‘part owner’ or ‘lessee’ used herein shall be construed to include all the interests, either legal or equitable, which such person may have in the real estate upon which the improvements contemplated by this act are made, including the interests held by any person under contracts of purchase, whether in writing or otherwise.”

And notice to him would not be served either on an owner, part owner, lessee, or an agent of either of them, and would not comply with Section 8315, General Code.

The exceptions to the report of the master are therefore overruled.