Court Opinion

ID: 5168558
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:50:54.517921+00
Date Added: 2024-06-11T08:25:58.512266
License: Public Domain

ON REHEARING.
SULLIVAN, J.
— This is a petition for rehearing. Counsel for respondent urges that the conclusion reached by the court *644was upon the theory that respondent’s supplementary proceedings were based upon the provisions of sections 4506-4510, under chapter 2 of the Eevised Statutes of 1887, entitled “Proceedings Supplementary to Execution,” and contends that that conclusion is error; and it is contended that the ■ proceedings referred to were brought under section 4339, chapter 5, of said Eevised Statutes, entitled “Supplementary Proceedings.” 'Counsel admits that, as said sections 4339 and 4510 are supplementary in character, they may be construed together, but that it would be impossible to present a petition to a district judge which would entitle a petitioner to the order contemplated in the petition in this case, or that would entitle him to any relief whatever, as the facts upon which this proceeding was predicated do not show the conditions contemplated under the provisions of said chapter 3. It is also contended that the proceedings passed upon in this case do not in any way involve the discovery of property of the judgment debtor in the hands of a third party, held adversely to such debtor, but that the contention is, the property in controversy came into the hands of Northern Pacific Eailroad Company and Northern Pacific Eailway Company legally, but that it was purchased with notice of respondent’s debt against the property; that said property was purchased under the foreclosure sale by said railroad company cum onere, and that the property itself is subject to the debt of the respondent; and that the most important question involved is One of priority of liens, and that such priority cannot be tried or determined by way of the provisions of said chapter 3. This, we believe, sets forth fairly and fully the contention of the respondent. Counsel for the respondent concede that the main question submitted to the judge at chambers was the question of priority of Hens, and also urge that the proceedings from which this appeal arose were instituted under the provisions of section 4339 of the Eevised Statutes, which section is as follows: “A receiver may be appointed by the court in which an action is pending or has passed to judgment, or by the judge thereof: T. In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to his claim, or between partners or others *645jointly'owning or jointly interested in any property or fund, 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. 2. In an action by a mortgagee for the foreclosure of his mortgage and sale of the mortgaged property, where it appears that the mortgaged property is in danger of being lost, removed or materially injured, or that the condition of the mortgage has not been performed and that the property is probably insufficient to discharge the mortgage debt. 3. After judgment to carry the judgment into effect. 4. After judgment to dispose of the property according to the judgment or to preserve it during the pendency of an appeal, or in proceedings in aid of execution, when an execution has been returned unsatisfied, or when the judgment debtor refuses to apply his property in satisfaction of the judgment. 5. In the ease when a corporation has been dissolved or is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights. 6. In all other' cases where receivers have heretofore been appointed by the usages of courts of equity.” In the opinion in this case the court held that the original order appealed from was void for the reason that the judge exceeded his jurisdiction in making said order, and that his jurisdiction was limited to making the orders provided for by section 4510 of the Revised Statutes. In a careful consideration of the petition for a rehearing, we find no reason to change our views as therein expressed in regard to the provisions of that section of the Revised Statutes.
The petition in this matter sets forth the facts that an execution had been issued in the original case, and returned nulla Iona. Also, that by reason of a pretended sale, the exact nature of which the petitioner was not able to state, said Coeur D’Alene Railway and Navigation Company attempted to sell the property in question to the Northern Pacific Railroad Company, and that said last-named company now claims to be the owner of all of said property, and that whatever interest said company has in and to said property is subordinate and inferior to the rights of the petitioner. Petitioner prays that the claims *646and interest of said Northern Pacific Railroad Company and the Northern Pacific Railway Company be declared subsequent, subject, and inferior to the said judgment of the petitioner. Evidently said petition was framed with a view of asking relief in aid of execution. Subdivision 4 of section 4329 provides for the appointment of a receiver in proceedings in aid of execution when an execution has been returned unsatisfied. Said section does not prescribe the proceedings necessary to be had in such eases. In order, then, to ascertain the necessary proceedings to be had in such cases, we turn to title 9, chapter 2 of the Revised Statutes, entitled “Proceedings Supplementary to the Execution,” and there we find rules laid down for the procedure in supplementary proceedings in aid of execution. Subdivision 4, section 4329, and sections 4507-4510, found in said chapter 2, relate to the same subject, and must be construed together. Said section 4329 contains no provisions authorizing the judge at chambers to determine the priority of liens of conflicting claimants, as was done in this case. That section authorizes the judge in certain cases to appoint a' receiver; nothing more. Under the provisions of said section 4510, upon certain facts being shown, the judge may authorize the judgment creditor to institute an action, and may forbid the transfer or other disposition of the property or debt involved. That is the extent of the judge’s jurisdiction. He cannot proceed, and determine the conflicting claims, as was done in this proceeding. A proper suit must be brought for that purpose. . The United States circuit court of appeals, in deciding the question of removal of the case of Navigation Co. v. Spalding, 35 C. C. A. 295, 93 Fed. 280, evidently understood that said petition was to a state court, and to be determined by a court. It holds that a petition to a state court a airing the appointment of a receiver in aid of execution, as authorized by a state statute, and that a judgment previously obtained in such court be declared a first lien on property as against others claiming an interest therein, is purely an ancillary proceeding for the enforcement of a judgment, and is not removable. That decision proceeded upon the theory that the application to appoint a receiver and to have the priority of *647Hen. determined was made to and to be tried by a state court, when, as a fact, said application was directed to tire court, but was heard and determined by the judge at chambers. Had a proper suit been brought in court for the purpose of determining the priority of liens, and to have a receiver appointed, and said Northern Pacific Companies made defendants, and brought into court, the court would have had jurisdiction to try such suit, which would have been ancillary and supplemental to that of Navigation Co. v. Spalding, 35 C. C. A. 295, 93 Fed. 280. But said proceedings were heard and determined by the judge, and not by the court. The judge at chambers had no jurisdiction to determine in that proceeding the priority of liens as between said judgment creditor and said Pacific Companies. The circuit court of appeals evidently understood (and it is so) that the petition for the appointment of a receiver and for a determination of the priority of liens was to be heard and determined by the district court, and not by the judge at chambers, as was finally done. The court, in the opinion, says: "The same may be said with respect to the petition to the state court to declare a priority in favor of the judgment in the original suit.” The state court had jurisdiction to hear and determine that matter, but the district judge did not have such jurisdiction. The whole difficulty in this matter apparently arose out of the fact that the priority of the liens referred to was determined by the district judge, instead of by the court.
Counsel for petitioner contend that whether the question of priority of lien can be heard and determined at chambers by the judge depends altogether upon the construction of the statute, and that construction depends upon whether, under Bates v. International Co. (C. C.), 84 Fed. 518, these supplementary statutes may be construed together; and, if so, said section 4509 empowers the judge or referee to order the sale of the property, if he finds the property to be subject to the payment of the debt. That said sections must be construed together in the case at bar we have no doubt, and that the judge or referee may order any money or property of the judgment debtor, not exempt from execution, in the hands of such debtor, or in the hands of any other person, to be ap*648plied toward the satisfaction of the judgment, where there is no adverse claim to said money or property. But section 4510 must be construed with section 4509 and the other sections of that chapter, Said section provides that if, in the proceedings provided by said sections 4507, 4508 and 4509, it appears to the court or judge that a person or corporation alleged to have property or money of the judgment debtor, or to be indebted to him, claims an interest in the money, or property adverse to the judgment debtor, or denies the debt, the judge may authorize an action against such person or corporation. The judge is not empowered in that proceeding to hear and determine the rights of the parties to the property or money under that state of facts, but may order an action t-o be brought for that purpose. Counsel for petitioner contends that the judge in tsaid proceeding sat as a chancellor, and had all of the powers of one, and as the court sat as his own chancellor, no report was necessary before making the order determining the priority of liens. The provisions of said section 4510 will not sustain that view, for the reason that the judge’s powers in such matters are limited, by the provisions of said section, to making an order to bring an action to determine the rights of the respective parties to the property or money in question. He cannot proceed and try that question sitting as a judge at chambers. The petition for a rehearing is denied.
Huston, C. J., and Quarles, J., concur.