Opinion ID: 2106827
Heading Depth: 1
Heading Rank: 1

Heading: Cause of Action Against Robert V. Edgarton

Text: In his cause of action against Robert V. Edgarton, Mr. Candee alleges that Mr. Edgarton's conduct as the original receiver of his property caused Mr. Candee injury on two different theories: (1) that Mr. Edgarton permitted a second receiver, Joseph G. Koll, to be appointed over all debts, property, equitable interests, rights and things in action of the plaintiff contrary to law; and (2) that Mr. Edgarton violated his common law trust as receiver by failing to take into his exclusive custody all of the property of the plaintiff. We hold that the complaint fails to state any cause of action against Mr. Edgarton on either theory. Chapter 273, Stats., 1973, provides the procedure for supplementary proceedings. In a supplementary proceeding a judgment creditor who has executed against the property of the judgment debtor and the execution has been returned unsatisfied within the last five years can make the judgment debtor answer concerning the extent and whereabouts of property which may be subject to execution to satisfy the judgment debt. Secs. 273.03 (1) (a) and (b), Stats., 1973. Supplementary proceedings are held before a court commissioner, and orders of the court commissioner to the judgment debtor to appear and answer concerning his property must be filed with the  clerk of the court in which the judgment is entered. Sec. 273.035, Stats., 1973. Under sec. 273.08, Stats., 1973, the court commissioner may order any property of the judgment debtor or due to the judgment debtor, not exempt from execution, to be applied toward the satisfaction of the judgment. In addition, sec. 273.04, Stats., 1973, permits a receiver to be appointed as follows: A receiver may be appointed but before appointing a receiver the court or judge shall ascertain, if practicable, whether any other supplementary proceedings are pending against the judgment debtor, and if there be any, the plaintiff therein shall have notice to appear and shall have notice of all subsequent proceedings in relation to such receivership. There shall be but one receivership at any time.  [Emphasis supplied.] [1] The plaintiff asks this court to imply a private right of action in a judgment debtor who is damaged by the appointment of more than one receivership at a time, in violation of sec. 273.04, Stats., 1973. Even though a statute does not expressly provide a civil remedy for those injured by its violation, this court will imply such a remedy if it concludes that the legislature intended such a remedy to exist. McNeill v. Jacobson, 55 Wis.2d 254, 198 N.W.2d 611 (1972). In McNeill this court said: `The legislative intent to grant or withhold a private right of action for the violation of a statute, or the failure to perform a statutory duty, is determined primarily from the form or language of the statute. The nature of the evil sought to be remedied, and the purpose it was intended to accomplish, may also be taken into consideration.' 55 Wis.2d at 258-9. Thus whether a private right of action is to be implied is a matter of legislative intent. Sec. 273.04, Stats., 1973, was first enacted as sec. 209, Ch. 120, Laws of 1856. Chapter 120 was entitled, An Act to Simplify and Abridge the Practice, Pleadings and  Proceedings in the Courts of this State. That caption in itself is strong evidence that sec. 273.04 is procedural and not intended to confer a new substantive right. Prechel v. Monroe, 40 Wis.2d 231, 161 N.W.2d 373 (1968). As originally enacted in 1856, sec. 273.04, Stats., stated that before appointing any receiver, the judge shall ascertain, if practicable, by oath of the party or otherwise, whether any other supplementary proceedings are pending against the judgment debtor; and if there be any, the plaintiff therein shall have notice to appear before him, and shall likewise have notice of all subsequent proceedings in relation to such receivership, and no more than one such receiver shall be appointed. In Kellogg v. Coller, 47 Wis. 649, 658, 3 N.W. 433 (1879), a court commissioner appointed two different receivers of the same debtor for two different judgment creditors. In Kellogg this court discussed the application of sec. 273.04 when two or more judgment creditors have commenced supplementary proceedings: This section also contemplates that different proceedings may be pending at the same time, the only restriction upon a junior proceeding being that creditors prosecuting prior proceedings shall be notified of the pendency thereof, and that but one receiver shall be appointed. Inasmuch as the receiver is an officer of the court, and subject at all times to the control of the court, and is required to give sufficient security for the faithful performance of his trust, it is of but little practical importance whether one is appointed in the first or subsequent proceeding. If an improper person be appointed, the court, on motion and proof of the fact, will remove him and appoint some suitable person. Yet we think it the proper practice, especially where the first proceeding is being diligently prosecuted, to suspend the appointment of a receiver in a subsequent proceeding, leaving the appointment to be made in the first. . . . Should a junior proceeding be instituted before the officer who issued the prior order for the examination of the judgment debtor, such examination should be first had in the prior proceeding, especially if the same is being  diligently prosecuted. The same rule should be observed although the junior proceeding be instituted before another officer.  After a receiver has been appointed in the first proceeding, and has duly qualified as such, we see no objection to the appointment of the same receiver in all other proceedings against the same debtor. This is little more than a formal matter. The receiver should not be required, however, to give additional bond on such subsequent appointments, unless the court so order. [Emphasis supplied.] [2] In Kellogg this court thus considered the problem of multiple receivers to be matters of practice and form. In 1938 this court by rule amended sec. 273.04, Stats. In place of no more than one such receiver shall be appointed, the court substituted the sentence: There shall be but one receivership at any time. The court amended this rule pursuant to its authority to regulate pleading, practice, and procedure in judicial proceedings in all state courts. By statute, rules promulgated by the supreme court do not abridge, enlarge or modify the substantive rights of any litigant. Sec. 251.18, Stats. Therefore, by amending sec. 273.04, Stats., 1973, the court could not have created any substantive right, unless such rights were created by the statute as originally enacted. Kellogg shows they were not. The plaintiff contends that the fact sec. 273.04 is procedural should not preclude this court from implying a private right of action for its violation since many procedural statutes create remedies. See, e.g., Chapter 275, Stats., 1971, Ejectment; Chapter 276, Stats., 1971, Partition; Chapter 278, Stats., 1971, Foreclosure. However, these examples illustrate that procedural statutes which provide remedies do so explicitly. They provide no authority for creating by implication an independent substantive claim in tort when there is no compliance with those procedures.  [3-7] A statutory right of action will be implied only when the person who seeks to sue upon that right is the person that the statute was primarily intended to protect. McNeill v. Jacobson, supra at 258. The primary purpose of a single receivership is not to protect the debtor's interest in his property, though it may also have that effect. The purpose of a single receivership rule is to preserve the debtor's nonexempt property for the benefit of the specific judgment creditors whose claims the receiver represents. A judgment creditor who first begins supplementary proceedings against a particular judgment debtor obtains an equitable lien upon the debtors nonexempt property that is prior to the equitable lien of a judgment creditor who commences a supplementary proceeding thereafter. Kellogg v. Coller, supra . A second receiver appointed on behalf of the second judgment creditor has no power to apply assets to the second judgment debt until after the senior judgment has been fully satisfied. A second receiver who has collected assets for a second judgment creditor before the first judgment creditor is satisfied must turn those assets over to the receiver appointed for the first judgment creditor. Kellogg v. Coller, supra . Thus the single receivership requirement is not intended to protect the judgment debtor from the added expenses of a second receiver of his property even if it will incidentally have that effect. Thus a judgment debtor, for whom a second receiver has been appointed contrary to law, has no independent cause of action in tort against the second receiver or anyone else who participated in the appointment merely by virtue of the violation of the one receivership rule. [8] The second theory of liability alleged against Mr. Edgarton is that he breached his common law duty to the plaintiff as receiver by failing to take into his exclusive possession all the property of the debtor. In order to  evaluate this theory of liability, it is necessary to consider the duties and liabilities of a receiver in aid of execution. A receiver appointed in aid of execution under Chapter 273, Stats., 1973, must not be confused with the receiver authorized under sec. 268.23, Stats., 1973 (renumbered sec. 813.23, Stats., 1975), or receivers of insolvent debtors appointed under Chapter 128, Stats. A receiver appointed under sec. 128.05, Stats., acts for the benefit of the insolvent debtor and all of his creditors. Harrigan v. Gilchrist, 121 Wis. 127, 237, 99 N.W. 909 (1904). However, the rights, powers, and duties of a receiver appointed in supplementary proceedings are limited to the purpose of such proceedings and those for which the receiver was appointed. United States Rubber Products, Inc. v. Twin Highway Tire Co., 233 Wis. 234, 288 N.W. 179 (1940); 33 C. J. S. Executions, sec. 391 (1942); 30 Am. Jur.2d, Executions, sec. 857 (1967). See also: 1 Clark on Receivers, sec. 225 (3d ed. 1959). [9, 10] Thus a receiver in aid of execution may not be ordered to manage the debtor's property or operate his business. See also: United States Rubber Products, Inc. v. Twin Highway Tire Co., supra. Similarly, a court commissioner may not authorize a receiver in aid of execution to seek out unknown assets. A receiver in aid of execution is authorized to collect those assets revealed by the examination of the debtor, take possession of them, apply them to the satisfaction of the judgment, and return the excess to the judgment debtor. Upon order by the court, the receiver may sue to recover the debtor's property against adverse claims by a third party, and in such a suit the receiver stands in the shoes of the judgment debtor and can take and dispose of only such interest in the judgment debtor's property as the debtor may have had on the date of the receiver's appointment. Nick v. Holtz, 237 Wis. 407, 297 N.W. 387 (1941). Thus  although a receiver is typically authorized by his order of appointment to take control of all the judgment debtor's nonexempt property, he need actually do so only to the extent necessary to satisfy the claims of the judgment creditors he represents or the claims of judgment creditors to which the receivership has been extended. In United States Rubber Products, Inc. v. Twin Highway Tire Co., supra at 244, this court held that, when the court commissioner appointed the receiver of the debts, property, equitable interests, rights, choses in action, chattels, business, and good will of the judgment debtor, all of his beneficial interest therein passed by operation of law to the receiver in so far as necessary to effectuate the purposes of supplementary proceedings.  [Emphasis supplied.] The parties misinterpret this passage in United States Rubber when they assert that a receiver upon his appointment is vested with title to all of the debtor's property. Title to all of the debtor's property can vest in a receiver only by statute. 1 Clark on Receivers, sec. 226 (3d ed. 1959). Under sec. 128.19, Stats., a Chapter 128 receiver is vested by operation of law with title of the debtor as of the date the petition for the proceeding is filed. No such statute exists with respect to Chapter 273, Stats., 1973, receivers. A Chapter 273 receiver in aid of execution acts not as administrator of the debtor's estate but as a collection agent for the specific judgment creditors whose interests he represents. [11] Mr. Edgarton thus had no duty to take exclusive possession of all of Mr. Candee's property if all of Mr. Candee's property was not needed to satisfy the $10,000 judgment he was appointed to aid in realizing. The complaint does not allege that Mr. Edgarton has failed to take possession of property necessary to satisfy this judgment or that he has damaged the property which he has taken under his control. Neither at the hearing on the demurrers nor in his brief on appeal does the plaintiff suggest  that such a breach of Mr. Edgarton's duty as receiver could be alleged. For this reason, no cause of action against Mr. Edgarton as receiver of the plaintiff's property is stated in the complaint, and the trial court properly sustained Mr. Edgarton's demurrer with prejudice.