Case Name: GIBBONS et al. v. ATLAS SUPPLY CO.
Court: Oklahoma Supreme Court
Jurisdiction: Oklahoma
Decision Date: 1941-04-15
Citations: 190 Okla. 505
Docket Number: No. 29797
Parties: GIBBONS et al. v. ATLAS SUPPLY CO.
Judges: WELCH, C. J., CORN, V. C. J., and GIBSON and HURST, JJ., concur. OSBORN and ARNOLD, JJ., dissent. RILEY and BAYLESS, JJ., absent.
Reporter: Oklahoma Reports
Volume: 190
Pages: 505–514

Head Matter:
GIBBONS et al. v. ATLAS SUPPLY CO.
No. 29797.
April 15, 1941.
Rehearing Denied Nov. 18, 1941.
Dissenting Opinion Nov. 18, 1941.
Second Petition for Rehearing Denied May 5, 1942.
124 P. 2d 969.
John Barry and T. G. Chambers, both of Oklahoma City, for plaintiffs in error.
Charles L. Yancey, H. L. Douglass, and Wm. Roy Kirby, all of Oklahoma City, for defendant in error.

Opinion:
DAVISON, J.
This action was commenced by plaintiffs in error, as plain tiffs, to recover damages against the defendant in error, as defendant. The judgment of the trial court was for the defendant, and the plaintiffs have appealed. All parties will hereinafter he referred to by their proper names or trial court designations.
The substance of plaintiffs' alleged cause of action is that the defendant wrongfully caused the interest of plaintiffs in certain producing oil and gas properties in Oklahoma county to be included in a receivership then pending in cause No. 89478 of the district court of said county during the early part of the year 1936. Said cause was a mortgage foreclosure action instituted by Globe Oil & Refining Company against oil operators by the name of Larkins and Warr, and other parties having interests in the properties involved.
Prior to March 30, 1936, Larkins and Warr had become indebted to the defendant in a sum exceeding $15,000 for materials the defendant company had furnished said firm for use on various properties, including those in question. After filing materialman's liens on said properties, the defendant was allowed by order of the court to intervene in cause No. 89478, supra. The defendant's petition in intervention sought foreclosure of its liens, as well as the extension of the receivership in said cause, to include the entire 7/8ths or working interest in the leases involved and the interests of the plaintiffs therein. At a hearing on said petition held upon notice to the attorneys of Larkins and Warr and the receiver, the trial court, on April 1, 1936, entered its order extending the receivership as the defendant had requested. On April 9th the court entered an order impounding the proceeds of the oil runs from the leases.
Thereafter, on May 15, 1936, plaintiffs filed a motion in which they sought to have the above-mentioned orders of April 1st and April 9th vacated. After a hearing and recommendation or report upon said motion by a referee theretofore appointed in said cause, plaintiffs filed objections to the referee's report, and on June 5, 1936, the matter was passed to be heard and considered by the court on its merits at a later date.
On November 30, 1936, plaintiffs renewed their motion to vacate and modify the above-mentioned orders, same was heard by the referee, and on February 2, 1937, the referee made a report upon the matter containing various findings of fact and conclusions of law to the effect that said motion should be sustained. Thereafter, the court, on March 22, 1937, entered its order sustaining said motion, confirming the report of the referee, vacating the previous order extending the receivership to plaintiffs' interest, and discharging said interest from said receivership. Said order was never appealed from, and in March, 1938, plaintiffs commenced the present action, taking the position, both in the trial court and in this appeal, that said order established their claim herein that the extension of said receivership to include their interest was wrongfully obtained, same being res adjudicata of their right to recover from the defendant in this action for the damages they had suffered by reason of said allegedly wrongful receivership.
It seems to be agreed by all of the parties to this appeal that section 773, O. S. 1931 (12 Okla. St. Ann. § 1551) governs proceedings such as we are concerned with herein. Said section reads in part as follows:
"A receiver may be appointed . . . First. In an action . . . by a creditor to subject any property or fund to his claim . on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed or materially injured."
As we view the present case, the only portion of the above-quoted statute involved herein pertains to the interest which a party must have in property to entitle it to apply for a receivership of same. For all that appears from the record herein, the order relied upon by plaintiffs was predicated solely upon a determination that plaintiffs' interest in the leases involved was of such a character that the defendant company had no interest therein by reason of any lien it might have had on account of materials furnished the operators, Larkins and Warr, for use on said leases. Neither the motion of plaintiffs which said order sustained, nor the referee's findings and conclusions . therein confirmed, dealt with the matter of whether said property or the oil runs therefrom were in danger of being "lost, removed or materially injured"; they were both founded upon the primary proposition that the defendant company had no "right to or interest in" such property. Consequently, our decision herein hinges upon the question of whether the order entered in cause No. 89478, abolishing the receivership as to plaintiffs' interest and setting aside the previous order entered therein extending the receivership to said interest, can be deemed a judicial determination that said extension was wrongfully or unlawfully procured because the interest of the defendant, as applicant for said extension in the property thus included in the receivership, was not "probable" within the meaning of said term as used in section 773, supra. The trial court answered this question in the negative, holding that as "a matter of fact, the law at the time of the institution of that receivership proceeding was such as to lead an ordinary, careful, and prudent person to believe that the liens of this defendant, in that action, could legally and properly be charged against" plaintiffs' interest, which was an overriding royalty of 3/8ths of the 7/8ths working interest in the leasehold estate reserved in assignments of the communitized leases covering same to Larkins and Warr, to be free and clear of all expenses except as to l/8th of said interest, upon which plaintiffs were to pay an expense of twelve cents per barrel on the oil produced therefrom.
In its judgment for the defendant, the trial court specifically concluded that the order of discharge relied upon by the plaintiffs was not an adjudication that said receivership was wrongfully procured. With this contention we must agree. The fact that after extending the receivership to include the plaintiff's interest upon application of the defendant, the court in cause No. 89478 thereafter found that defendant's rights did not justify such receivership, was not tantamount or equivalent to a determination that the defendant was not one of the class of parties who might apply for such receivership under section 773, supra. In allowing a party to apply for the receivership of property whose right or interest therein is "probable," the statute does not mean that his claim of right or interest must be free from doubt or already judicially or legally determined. See Willard Oil Co. v. Riley, 29 Okla. 19, 115 P. 1103. If it did, the unfortunate applicant would be compelled to resort to procedure not prescribed by law or subject himself to hazards beyond the contemplation of the law. There is nothing contained in the portion of the proceedings in cause No. 89478 that was introduced into the evidence of the present action to establish that at the time defendant applied for an extension of the receivership to include plaintiffs' interest, it was, from a legal staindpoint, "free from doubt" that said company's lien gave it no right or interest in plaintiffs' interest in the lease, even though the defendant concedes herein that it had notice of the facts concerning said interest. Consequently, in view of the foregoing considerations, we are unable to say that the trial court erred in not regarding the order entered in cause No. 89478, on March 22, 1937, as conclusive upon the question of whether the previous order including plaintiffs' interest in the receivership was wrongfully obtained.
The only argument plaintiffs present besides that wherein they attempt to demonstrate that the above-mentioned order established the elements of the cause of action upon which they sought to recover herein is advanced under their third proposition, which reads as follows:
"The defendant, Atlas Supply Company, having asked for a receiver on in sufficient and fraudulent grounds and on its request a receiver having been appointed and having taken charge of the property and income therefrom of the plaintiffs, and said receivership having been thereafter set aside and held for naught from its inception, it is not necessary in order for the plaintiffs to recover damages for wrongfully procuring the appointment of a receiver to show that the appointment was procured maliciously and without probable cause."
The only way in which plaintiffs attempt to demonstrate the applicability of the foregoing proposition to the present case is by calling our attention to the order discharging the plaintiffs' interest from the receivership as a judicial determination of the falsity and insufficiency of the allegations in defendant's petition for the extension of the receivership to include said interest. The only allegation of fact contained therein that is claimed to have been determined false in said order pertains to the ordering of the materials which defendant furnished. Plaintiffs' argument seems to imply that defendant alleged they were furnished at the "instance, order, and request" of the plaintiffs, but an examination of said petition discloses no such allegation. We find nothing in said petition that unequivocally or with certainty can be construed as an allegation that the materials were ordered by anyone except the defendants, Larkins and Warr. The only other allegations specifically mentioned by plaintiffs' counsel are legal conclusions which depended for their correctness upon whether or not defendant's lien covered the entire leasehold so as to entitle it to an extension of the receivership to all of the interests therein, including plaintiffs'. As we have already demonstrated, whether defendant's petition or application for said extension was authorized by law (sec. 773, supra) did not depend upon the certain correctness of the defendant's conclusions as to its right or interest in the property involved, we perceive of nothing in said allegations to substantiate the premise upon which the operation of plaintiffs' third proposition depends for its operation and applicability. Therefore, plaintiffs' argument in regard thereto is no more effective in demonstrating that the receivership in question was wrongfuly procured than the other arguments advanced. Consequently, the judgment of the trial court to the contrary is hereby affirmed.
WELCH, C. J., CORN, V. C. J., and GIBSON and HURST, JJ., concur. OSBORN and ARNOLD, JJ., dissent. RILEY and BAYLESS, JJ., absent.