Case Name: M. OYAMA v. THOMAS B. STUART, AS THIRD JUDGE OF THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT OF THE TERRITORY OF HAWAII, AND M. KOMEYA, Y. ISHII, U. KOBAYASHI, T. MITAMURA AND JOS. G. PRATT
Court: Supreme Court of the Territory of Hawaii
Jurisdiction: Hawaii
Decision Date: 1915-08-02
Citations: 22 Haw. 693
Docket Number: 
Parties: M. OYAMA v. THOMAS B. STUART, AS THIRD JUDGE OF THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT OF THE TERRITORY OF HAWAII, AND M. KOMEYA, Y. ISHII, U. KOBAYASHI, T. MITAMURA AND JOS. G. PRATT.
Judges: Robertson, C.J., Watson and Quarles, JJ.
Reporter: Hawaii Reports
Volume: 22
Pages: 693–707

Head Matter:
M. OYAMA v. THOMAS B. STUART, AS THIRD JUDGE OF THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT OF THE TERRITORY OF HAWAII, AND M. KOMEYA, Y. ISHII, U. KOBAYASHI, T. MITAMURA AND JOS. G. PRATT.
Petition' eor Writ oe Prohibition.
Argued July 15, 1915.
Decided August 2, 1915.
Robertson, C.J., Watson and Quarles, JJ.
Prohibition — when writ lies — proceeding without jurisdiction.
Prohibition lies to restrain the continuance of a receivership where the order appointing the receiver was beyond the power of the judge to mate, even though the judge has jurisdiction of the subject matter of the suit in which the order was made.
Same — remedy 6y appeal.
Prohibition does not ordinarily lie where the party may obtain relief by appeal, hut where a void interlocutory order results in the seizure of property, and under the circumstances there is no other adequate relief for the party whose rights have been invaded, a case permitting the use of the writ appears.
Same — raising question of jurisdiction in loioer court.
The question of jurisdiction should, as a general rule, he raised first in the lower court, hut if the question has once been raised in the case and ruled on adversely, it need not be repeated in immediate connection with the order attacked.
Receivebs — ground for appointment — danger of loss or injury.
As a basis for the appointment of a receiver the plaintiff must show, not only that he has an interest in or right to the fund or property, but that the possession of the property by the defendant was obtained by fraud; or that the property itself, or the income arising from it, is in danger of loss from the neglect, waste, misconduct or insolvency of the defendant.

Opinion:
OPINION OP THE COURT BY
ROBERTSON, C.J.
(Quarles, J., dissenting)
On June 3, 1915, M. Komeya and others filed in the circuit court at chambers against S. Koshima and others a bill in equity in which the complainants prayed that the copartnership alleged to exist between the parties he dissolved, am) that a receiver be appointed "to take charge of the property of the said partnership, and to collect assets thereof." Upon the filing of the bill, on the application of the complainants, and upon the averments contained in the bill, the circuit judge made an order appointing Joseph Lightfoot, Esq., as such receiver. This was done without notice to the defendants. On June 12, M. Oyama, one of the defendants (the petitioner here), filed a motion to vacate the order appointing the receiver upon the ground, inter alia, that said Lightfoot was the attorney for the complainants and therefore, was not a suitable or proper person to act as receiver. On July 1, Lightfoot was removed and Joseph Gr. Pratt, Esq., was appointed receiver in his place. In the meantime Gr. Nakamura,,another defendant, filed his answer to the bill, and the defendant Oyama interposed a demurrer setting up, among other grounds, that "said bill is without equity upon its face and is utterly barren of allegation necessary and required to secure the cognizance of a court of chancery with respect to the prayer thereof" and that said bill "is vague, indefinite, uncer tain and wholly insufficient to form a basis for the interposition of a court of equity." The demurrer was overruled. The present proceeding is a petition by M. Oyama for a writ of prohibition against the circuit judge in which the foregoing facts are recited, and it is alleged that the receiver has taken full charge and possession of the property of the copartnership, that the order appointing the receiver was made without authority or jurisdiction on the part of the judge, and that there is no equity in the bill upon which the order was based. The object of this petition is to prevent further proceedings in the cause. Upon the petition an order to show cause was issued, and the judge has filed his return to the petition in which he sets forth his view that he acted within the jurisdiction conferred by law upon circuit judges sitting in equity, and that if any error was committed it is to be corrected through the regular procedure of an appeal or writ of error. He also points out that "the order appointing Joseph G. Pratt was not objected to by petitioner .or any one else, and no complaint has been made in reference thereto hy motion or otherwise against the appointment so made of said Pratt."
In the bill of complaint it was, in substance, averred that the parties complainant and defendant were copartners engaged in the business of banking; that the defendant Nakamura was appointed president and manager of the bank; and the defendant Komeya was appointed cashier; that almost immediately after entering upon the management of the hank the said Nakamura began to lend large sums of money to his friends upon their unsecured promissory notes, and loaned at various times sums of money aggregating the sum of $6000 to one Yamamoto (a defendant) well knowing him to be financially irresponsible and unable to repay the money loaned; that the said Nakamura borrowed from the bank, on his own unsecured note, t]ie sum of $16,328.85 upon which there remains unpaid the sum of $13,-328.85; that on or about February 28, 1912, the complainant Komeya and certain other members of the firm were obliged to borrow upon tbeir private credit in the neighborhood of $19,000 with which to meet the demands of depositors; that since said date, although all checks have been paid on presentation, the said Komeya and other partners have been constantly compelled to borrow money on their own credit so as to deposit the same in the bank and so keep it running; that on March 21, 1912, the partners removed Nakamura and appointed Komeya to take charge of' the affairs of the bank; that the partners, from time to time, have tried to raise money so as to place the bank on a sound financial basis, but all such efforts have been in vain; that the liabilities of the bank, exclusive of capital account, amount to $23,171.40, and the collectable assets amount to $23,743.31; that at the close of business on June 2, 1915, there w<as cash on hand in the sum of $44.33; that it is impossible to carry on the business; that it is necessary that the bank be closed, that a receiver be appointed to take charge of the property of the firm and collect its assets; and that the liability of each partner be ascertained, and the partnership dissolved. The rather scanty averments of the bill, though showing the failure of the venture and mismanagement of the business, fall short of showing fraud or insolvency, or the inability of the partners to agree upon a settlement and winding up of the business.
The substance of the bill has not been stated for the purpose of considering whether the demurrer of the defendant Oyama was properly overruled, for if error was committed in that respect it could be corrected, if the bill shall have not in the meantime been amended, only upon appeal or writ of error after final decree. The question presented for determination here is whether the averments of the bill, taken as true, authorized the appointment of the receiver. Upon the facts averred did the circuit judge have power to make the order of appointment? It does not necessarily follow that because the court had jurisdiction of the parties and of the subject matter of the suit, i. e. the dissolution of the copartnership, that it had the legal power to make the order in question. "The writ of prohibition lies to restrain any unauthorized proceedings by an inferior tribunal in a cause of which it has jurisdiction, as well as where the cause is without its jurisdiction." 2 Spelling, Ex. Rem. (2nd ed.) Sec. 1726; 32 Cyc. 605, 606; Quimbo Appo v. People, 20 N. Y. 531, 542; State v. Dist. Court, 22 Mont. 220, 233; State v. White, 24 So. (Fla.) 160, 168; Cas Co. v. Holt, 66 S. E. (W. Va.) 717; Cronan v. District Court, 15 Idaho 184. Under our statute (K. L. 1915, Sec. 2688) the writ lies when "the cause or some collateral matter arising therein" is beyond the jurisdiction of the court. And this court has held that the writ will issue to restrain the continuance of a receivership in a suit for the cancellation of a power of attorney, for discovery and accounting, where the object of the receivership had been accomplished; Sumner v. Perry, 11 Haw. 372; to restrain the punishment by contempt proceedings of the failure to comply with an order to pay temporary maintenance from which , an appeal had been taken and was pending in a suit by a wife for maintenance, Dole v. Gear, 14 Haw. 554; to restrain the enforcement of a void order to pay alimony made in a divorce case, Andrews v. Whitney, 21 Haw. 264; and against the enforcement of an injunction in a suit for the specific performance of a contract against persons who, though joined as parties, had no interest in the subject-matter of the suit, see Honolulu Athletic Park v. Lowry, 22 Haw. 475, 477.
If the bill does not contain such averments as would be necessary to entitle the complainants to the principal relief sought, namely, the dissolution of the partnership, there was no legal ground for the appointment of the receiver. But even if a case for the dissolution of the partnership was shown, as to which we express no opinion, it would not necessarily follow that the facts averred justified the appointment of -the receiver. "Upon a preliminary application for a receiver, the court does not determine the questions arising between the partners, the only question for consideration being whether, upon the facts disclosed, there is an apparent necessity for a receiver to protect the assets of the partnership until the rights of the partners can be definitely determined upon full hearing of the case." 5 Pom. Eq. Jur. Sec. 78. See also, High on Receivers (3rd ed.) Sec. 511; Cox v. Peters, 13 N. J. E. 39. As above shown, the circuit judge may have had jurisdiction of the suit, and yet have been without power to make the order in question.
As a basis for the appointment of a receiver, the plaintiff must show, not only that he has an interest in or right to the fund or property, but "that the possession of the property by the defendant was obtained by fraud; or that the property itself, or the income arising- from it, is in danger of loss from the neglect, waste, misconduct or insolvency of the defendant." 5 Pom. Eq. Jur. Sec. 64; 34 Cyc. 19. See California Feed Co. v. Club Stables, 10 Haw. 209, 214; International Trust Co. v. Decker, 152 Fed. 78, 82; Warwick v. Stockton, 55 N. J. E. 61, 66; Aldrich v. Bag Co., 87 Atl. (N. J.) 65; Gray v. Newark, 79 Atl. (Del.) 739. It would, therefore, follow necessarily, in most cases, that a plaintiff in possession may not obtain the appointment of a receiver for it would be a rare case in which the plaintiff could say that property in his own possession is in danger of loss or injury through any preventable cause. See Smith on Receiverships, Sec. 192; Smith v. Lowe, 1 Edw. Ch. 33; Buchanan v. Comstock, 57 Barb. 568, 579. In the case at bar it appears that at the time the receiver was appointed the complainants were in possession of whatever property and assets the firm had, and there was no attempt made to show that there was any danger of any loss or injury thereto. An order appointing a receiver based upon a showing which, as matter of law, is insufficient, is in excess of the jurisdiction of the court. Cronan v. Dist. Court, supra. We are of the opinion that no legal ground for the appointment of the receiver was shown, and that the order of appointment was made without jurisdiction.
Prohibition does not ordinarily lie where the party may obtain relief by an appeal, "but it does not always follow that because the question of jurisdiction may be determined on appeal prohibition will not lie." Union Feed Co. v. Kaaihue, 21 Haw. 345, 351. Where a void interlocutory order results in the seizure of property, and under the circumstances there is no other adequate relief for the party whose rights have been invaded, a case permitting the use of the writ appears. See St. Louis &c. R. Co. v. Wear, 135 Mo. 230, 257; Havemeyer v. Superior Court, 84 Cal. 327, 397; Cronan v. Dist. Court, supra.
It is contended that the writ should not be granted because the petitioner did not present the question as to the power of the circuit judge to appoint the receiver Pratt to the court below. The rule of practice here invoked rests upon sound reason, and it should be enforced whenever the circumstances so •warrant, as was the case in Union Feed Co. v. Kaaihue, supra. In the case at bar, one of the grounds advanced in the motion to set aside the order appointing Lightfoot as receiver was that "It appears from the bill in said case that the petitioners herein were in possession of the property of said copartnership when said order was made, and were in all things managing, conducting, and controlling the business and affairs of the said copartnership." This presented to the circuit judge the lack of the fundamental ground upon which a receiver could be appointed, namely, that there was danger of loss of or injury to the property of the firm. The motion to vacate the order was granted upon the ground that the receiver then appointed was not a disinterested and impartial person, but in appointing another receiver the circuit judge in effect ruled that the ground above stated was not well taken. We think it was not necessary that the point should have been presented again, and that the rule that the jurisdictional question should be first raised in the lower court was substantially and sufficiently complied with.
We hold that the order appointing Pratt as receiver was made in the absence of jurisdictional facts to support it, and, therefore, that it was beyond the power of the court to make. A writ prohibiting the continuance of the receivership is granted.
A. Perry, and A. 8. Humphreys for petitioner.
J. A. Magoon, and J. G. Pratt, pro se, for respondents.