Court Opinion

ID: 3237086
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:11:23.067332+00
Date Added: 2024-06-11T07:40:25.389034
License: Public Domain

The statement in the original opinion of the court in this case, in substance, that agents and others holding for and under parties to the suit should surrender the property to a receiver on demand after knowledge of his appointment, is certainly well sustained. It is also well understood as stated in Musgrove v. Gray, 123 Ala. 376, 26 So. 643, 82 Am. St. Rep. 124, in effect that a summary remedy in favor of a receiver for assistance to recover property does not extend to persons not parties to the suit who are in possession and in good faith deny the receiver's right to the possession by reason of an adverse claim made by them. Ex parte Wadsworth, 217 Ala. 567,117 So. 178. Neither proposition is controverted by any one. We have here a combination of those two principles as applicable to one person, that is, an agent or attorney of a party to the suit, but who is in possession of the papers constituting the evidence of the debt which is the res of the controversy, but who asserts a lien on it and to that extent has an adverse claim and in good faith denies the receiver's right to the possession. *Page 535 
In the original opinion controlling effect was given to the fact that if the two situations be united in one person, the former principle would control, and the latter would yield to it, and be lost in its effect. This was upon the idea that the agent was still such and stood for and instead of the principal, though he had an interest which he had acquired from his principal. But is that correct? Has not the agent in possession with an asserted lien, though derived from the principal, but prior to the receivership, an adverse claim with the right to protection as a party to the suit? Does the mere fact that the contract, from which such adverse claim is created by law, also fixes the relation of attorney and client, deny the adverse claimant protection as such? These questions must be analyzed to arrive at the correct conclusion. Such adverse claimant under the circumstances is in a dual relation to the cause, one as agent of the principal, and the other as one personally interested. If he had no personal adverse interest, the answer would be simple. But if he has such interest, he should have the privilege of protecting it. His client cannot destroy or impair his rights, though the amount of the fee is contingent. Alabama Fuel, etc., Co. v. Denson,208 Ala. 337, 94 So. 311. His lien is enforceable in equity. Owens v. Bolt, 218 Ala. 344, 118 So. 590.
It is said that a "receiver merely stands in the place of, and has no greater rights than, the party over whose property he has been appointed receiver." 23 R. C. L. p. 61. The client himself could not obtain his policy of insurance from his attorney contrary to the lien rights of the attorney. Section 6262, Code; Hale v. Tyson, 202 Ala. 107, 79 So. 499. Then can a receiver do so, summarily? Though there is conflict in the authorities on the question, the view is well sustained that when officers of a corporation in receivership assert an adverse claim to property in their possession, they cannot, by summary proceedings, be required to deliver it to the receiver, unless they are made parties. Ex parte Hollis, 59 Cal. 405; State v. Ball, 5 Wn. 387, 31 P. 975, 34 Am. St. Rep. 866; 23 R. C. L. p. 62; State ex rel. Parsons Min. Co. v. McClure,17 N.M. 694, 133 P. 1063, 47 L.R.A. (N.S.) 751, Ann. Cas. 1915B, 1110. The same is true as to stockholders of a corporation under such circumstances. Havemeyer v. Superior Court, 84 Cal. 327, 24 P. 131, 10 L.R.A. 627, 18 Am. St. Rep. 192. It is well known that the fact that the adverse claimant derives his claim from the party to the suit does not affect the question. Musgrove v. Gray, supra.
The rule in equity is "that all persons who are interested, legally or beneficially, in the subject-matter of the suit, whose rights or interests are affected, or sought to be concluded by the decree, are necessary parties to the bill" (Perkins v. Brierfield, 77 Ala. 403), and that in a suit to foreclose a mortgage a subsequent incumbrancer is a proper but not an indispensable party (Cullum v. Batre, 2 Ala. 415; Lyon v. Powell, 78 Ala. 351; Bolling v. Pace, 99 Ala. 607,12 So. 796), unless his rights are to be affected, and then he must be made a party (Thomas v. Barnes, 219 Ala. 652, 123 So. 18).
If the property in question is in the peaceable possession of a second mortgagee, in a suit to foreclose the first and for the appointment of a receiver, it would seem logical that the court ought not in a summary manner to take it from the possession of the second mortgagee and put it in the possession of the receiver without making the second mortgagee a party. The same doctrine should ordinarily apply in such a suit to any adverse lienee in possession, including a common-law mechanic's lien or that of a bailee, or a person with a lien expressed in any nature of contract though subordinate to, but dependent upon, the title of respondent and subsisting at the time of the institution of the suit. Such person in possession with a lien, though it may be an inferior one, may have the right to redeem the prior claim, or contest the amount or even the existence of it. If the property is not in his possession, he is not a necessary party in a receivership suit, though in such event he has the privilege of an intervention on a proper showing as declared by statute and on general equitable principles. Section 9485, Code; Awbrey v. Estes, 216 Ala. 66, 112 So. 529.
The mere fact that he is also the agent or attorney of a party ought not to deprive him of his nature as a lienholder any more than would be so if he were an officer of a corporation having an individual claim. Being such, his possession is not only that of his client, but for his own interest as well. If it were only that of his client, he should deliver the property to the receiver. But he has a claim which is adverse to the complainant's and, to a certain extent, adverse to his client, though dependent upon his client's title. The client may allow the matter to go by default, or he may collude with complainant against the claim of his attorney.
It may be said that this argument applies to any nature of litigation in which an attorney has a lien, and that the orderly method of protecting his lien is by an intervention, and then only when the facts require his presence in court as a party to protect himself. Such is true, but in such cases no effort is made to extract from his possession property to which his lien extends, as is the situation in the instant case. Though complainants claim that their rights are superior to those of the client, so that the contract between client and attorney would be subordinate to it, there is none *Page 536 
the less reason that the attorney in possession should be made a party to enable him to contest that claim for his own benefit as well as that of his client, or that he be allowed to redeem it, if such right exists. Still it would not be necessary to make him a party unless there is an effort to take out of his possession that on which he claims a lien.
Our judgment is that this result does not conflict with any authority cited in the original opinion. In Steele v. Walker,115 Ala. 485, 21 So. 942, 67 Am. St. Rep. 62, it is stated that if the subject of the receivership be in possession of any stranger to the suit, the court should have ordered an amendment making him a party. While the attorney here is not a stranger in the sense that he is only an attorney or agent, he is a stranger in the sense that he asserts a lien in his own right, though it may grow out of contract with his client. Any such contractual claimant is a stranger in the sense here involved. So, we repeat, if he were merely an agent or attorney for his client, he should surrender the property to the receiver, but he, as a lien claimant, not a party to the suit, is not bound to do so. If he is not on that or any other account bound to do so, the duty ceases and a summary proceeding is without the jurisdiction of the court. Ex parte Wadsworth, supra.
For the reasons here stated, it is our judgment that the rehearing should be and is granted, and that the writ of prohibition is ordered to issue as prayed for.
ANDERSON, C. J., and GARDNER, THOMAS, and BROWN, JJ., concur.
SAYRE and BOULDIN, JJ., dissent.