Case Name: SCANDINAVIAN-AMERICAN BANK v. WENTWORTH LUMBER CO. et al.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1921-07-12
Citations: 101 Or. 158
Docket Number: 
Parties: SCANDINAVIAN-AMERICAN BANK v. WENTWORTH LUMBER CO. et al.
Judges: Burnett, C. J., and Johns and Brown, JJ., concur.
Reporter: Oregon Reports
Volume: 101
Pages: 158–168

Head Matter:
Argued June 1, motion to dismiss denied July 12,
reversed and remanded July 12, 1921.
SCANDINAVIAN-AMERICAN BANK v. WENTWORTH LUMBER CO. et al.
(199 Pac. 626.)
Appeal and Error — Objection of Persons Appealing not Being Parties Held Raised too Late by Motion to Dismiss Appeal.
1. The court which in an action at law appointed a receiver having on notice to the plaintiff and receiver, and without objection,, entertained on the merits a motion by third persons for an order turning over to them, pursuant to an assignment by defendant, the funds in the hands of the receiver after paying the claims of plaintiff, the receiver, and his attorney, motion of the receiver,, to dismiss the appeal of sueh persons from an adverse adjudication,, on the ground that they were not parties to the cause and that; they should have brought an action against the receiver, raises the; question too late.
Receivers — Claims Against may be Entertained on Motion Without Action.
2. The court which appoints a receiver may entertain a claim; against him by motion without requiring resort to action, and this without a formal order of intervention being entered.
ON THE MERITS.
Corporations — Appointment of Receiver in Action by Single Creditor Held not for All Creditors, so That Assignment of Assets by Corporation is Valid,
3. Appointment of a receiver under Section 1108, subdivisions 4, 8, Or. L., for preservation of the property of a defendant corporation in an action .at law against it by a single creditor, cannot be considered as one for all the creditors, so that an assignment by the corporation, in good faith and for a valuable consideration, of the assets in the hands of the receiver .after payment of the claims of plaintiff, the receiver, and his attorney, is valid; such assets, though in the receiver’s hands, remaining the property of the defendant subject to the rights of such receivership.
From Multnomah: Robert Gr. Morrow, Judge.
Department 2.
On May 10, 1919, the plaintiff, Scandinavian-American Bank, commenced an action against defendant, Wentworth Lumber Company, upon a promissory note for $1,300, and to recover a balance of about $250 on a bill of exchange. In January, 1920, plaintiff dismissed the action on a note for $1,300. The demurrer to the cause of action on the bill of exchange having been overruled, the defendant, Wentworth Lumber Company, failed to answer further. A receiver was appointed in that action to protect the property of the corporation, and to conserve and protect the interest of its creditors. On January 24, 1920, the Wentworth Lumber Company executed and delivered to W. E. Richardson and S. T. Richardson, its attorneys, an assignment and transfer of the balance of the funds in the hands of the receiver after the payment of the claims of plaintiff, the receiver and his attorney. Due notice of such assignment was given on January 26, 1920, to plaintiff and the receiver. On March 22, 1920, the Richardsons filed their motions for an order of the court requiring the plaintiff, the receiver and his attorney to present •their claims to the court for settlement, and that the residue in the hands of the receiver after the payment of such claims be ordered turned over to them. Due notice of this motion was given to plaintiff, the receiver and his attorney, as well as to the general creditors of defendant who were not parties to this action, but who requested that they be heard. This motion was heard on May 13, 1920. All' of the persons notified were present, and were heard on the motion. The court overruled the motion, stating in the orders therefor, as follows:
“Thereupon W. E. Eichardson and S. T. Eichardson exhibited to the court the original assignment executed by the Wentworth Lumber Company, a copy of which is attached as Exhibit ‘ A’ to their said motion, and then and there offered to call the secretary of the Wentworth Lumber Company and produce original records of the Wentworth Lumber Company to show that the board of directors thereof at a meeting thereof duly called for that purpose, and upon due notice of all the members thereof of said meeting, did, by a majority of all the members of said board of directors duly had and taken, order and direct that the said assignment exhibited to the court be made; and directed the president of the Wentworth Lumber Company, C. H. Leadbetter, to execute said assignment in the name and as the act and deed of the Wentworth Lumber Company to W. E. Eichardson and S. T. Eichardson and to deliver said assignment to them. But said offer was denied for the reason that the good faith and regularity of said assignment was conceded and not questioned. That the real question raised by this motion was whether or not the appointment of the receiver of the defendant in this cause, who is a private corporation, is a receiver whose duties are to collect together the assets of the defendant to hold for the sole advantage of the plaintiff to satisfy such judgment as it may obtain and the costs of this cause, or whether such funds should be distributed pro rata to all creditors of defendant. That if said receiver has the power only to hold the assets of the defendant for the satisfaction of such judgment as plaintiff may recover in this action, and the costs and expenses of this cause; then that the motion of said- W. E. Richardson and S. T. Richardson should be allowed: but if such funds are for the benefit of all creditors of the defendant and held by the receiver for distribution amongst all creditors of defendant, then that said motion should be disallowed.”
The court ordered the receiver to give notice to creditors of defendant lumber company to present their claims to the receiver with a view to the disposition of the funds pro rata among all of the creditors. The Richardsons appealed from the order to this court. Reversed and Remanded.
For appellants there was a brief over the name of Mr. W. E. Richardson, with an oral argument by Mr. 8. T. Richardson.
For respondent there was a brief over the names of Messrs. Norblad & Hesse, with an oral argument by Mr. Frank C. Hesse.
For the receiver there was an oral argument by Mr. M. B. Meacham.

Opinion:
BEAN, J.
The receiver, A. O. Whitcomb, moves to dismiss the appeal for the reason that the Richard-sons, the appellants, were not parties to the cause. The motion was held in abeyance until the argument on the merits.
Section 549, Or. L., provides that: "Any party to a judgment or decree other than a judgment or decree given hy confession, or for want of an answer, may appeal therefrom." Section 548, Or. L., provides that: "An order affecting a substantial right, and which in effect determines the action or suit so as to prevent a judgment or decree therein, , for the purpose of being reviewed, shall be deemed a judgment or decree."
Appellants submit that a person does not necessarily have to be a party to an action to be a party to the judgment; that it is sufficient that he or his property is bound thereby, citing, 1 Freeman on Judgments (4 ed.), Section 174. It appears that the real question is whether the appellants would be compelled to commence an independent action against the receiver in order to assert their claim to the funds in question instead of applying to the court which appointed the receiver. A receiver is an officer of the court, and ordinarily cannot be sued without permission of the court. As stated in High on Receivers (4 ed.), page 293, Section 254, "the rule is established for the protection of receivers against unnecessary and expensive litigation, and in most instances a party aggrieved may have ample relief by application on motion to the court appointing the receiver."
It would not be consistent with good procedure, in a case where a receiver has been appointed, to compel parties making claims to various portions of the property in the hands of a receiver to commence separate actions therefor. The appellants presented their claim to the court, and it was adjudicated adversely to them. This appears to have been done without any objection on the part of plaintiff, and the judgment is apparently binding upon all parties to that action. We think the question is raised too late by the receiver, who is not a party to this action, by presenting the same upon this appeal. Whether a formal order of intervention was entered by the trial court or not is not decisive of the question whether the appellants were proper parties to the judgment. Third persons may become parties to an action by motion or such other way as in the discretion of the trial court may seem proper: High on Beceivers (4 ed.), p. 162, § 139; Davis v. Gray, 16 Wall. 203 (21 L. Ed. 447); Emphringam v. Short, 3 Hare (25 Eng. Ch. Rep.), 461, 470; Noe v. Gibson, 7 Paige Ch. (N. Y.) 513, 515, 516. See, also, Ambrose v. Brown, 42 App. Cas. (D. C.) 25, 30; Ratcliff v. Adler, 71 Ark. 269 (72 S. W. 896). It is stated in Alderson on Beceivers, Section 521, page 717, thus:
"The trial of a case against a receiver by the appointing court is equivalent to a direct authorization of its institution, and the necessity of formal leave to bring the suit is avoided."
The motion to dismiss is denied.