Court Opinion

ID: 3423497
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:51:11.177188+00
Date Added: 2024-06-11T13:54:15.676519
License: Public Domain

DISSENTING OPINION
I dissent for the reason that, as I see it, the principal opinion is inconsistent with important and well established principles affecting the jurisdiction of courts in receivership proceedings.
There is no contention concerning the facts. The judgments in question are a lien upon the property purchased by the Indiana Railroad from the receiver of the Madison Circuit Court and now in the hands of and under the control of the Marion Superior Court. The principal opinion concedes that the Madison Circuit Court has no power to wrest the property from the possession of the Marion Superior Court, and that it cannot get jurisdiction of the latter court's receiver so as to bind the receivership by any judgment entered in the Madison Circuit Court. When the property was sold by the receiver of the Madison Circuit Court to the Indiana Railroad, and delivered to the purchaser, there could be no power reserved in the Madison Circuit Court to lay hands again upon the property and sell it, without notice to the Indiana Railroad, by which it would get jurisdiction of the railroad. If the property was now in the hands of the Indiana Railroad, and not in the hands of the Marion Superior Court, upon notice to the Indiana Railroad, it might come into the Madison Circuit Court and answer the petition to have the property sold in satisfaction of the liens. It might set up payment of the liens as a defense, or the statute of limitations, or perhaps other defense. If, upon the facts involved in these defenses, there was judgment against the Indiana Railroad, it might then elect to pay the liens rather than suffer the property to be sold. When a receiver was appointed for the Indiana Railroad, the Superior Court of *Page 19 
Marion County, through its receiver, became vested with all of the rights of the Indiana Railroad in the property in question. Among those rights was the right to make defenses and the right to pay the judgments, if its defenses were not sustained, rather than have the property sold. These rights cannot be adjudicated and stricken down by a court that has no jurisdiction to enter a judgment binding the receiver and that does not have possession of, and that cannot get possession of, the property in order to sell it. The principal opinion recognizes that, if the Madison Circuit Court undertakes to sell the property in question, it cannot require the receiver to deliver the property, and that the purchaser must go to the Marion Superior Court and file its petition asking that the Marion Superior Court deliver the property. It is said in the principal opinion that, while the Madison Circuit Court cannot command the receiver of the Marion Superior Court, some informal notice should be given the receiver "to enable the Marion Superior Court to decide whether it would be feasible to authorize its receiver to make the payment and to continue the operation of Indiana Railroad. In case of failure of the receiver of Indiana Railroad to make payment at the specified time (I assume a time fixed by the Madison Circuit Court), or to make arrangements with the receiver of Union Traction Company, which would be satisfactory to the Madison Circuit Court and the Marion Superior Court, the Madison Circuit Court has the power to sell the property which is subject to the lien; and to transfer to the purchaser such right, title and interest therein as to entitle him to possession of the property as against the receiver of Indiana Railroad. In case of any further uncertainty as to the limits of the respective jurisdictions of the Madison Circuit Court and the Marion Superior Court we assume that recourse will be had to this court rather than to *Page 20 
`unseemly conflict' between the two courts." That there well may be uncertainty is thus recognized in the principal opinion. If the purchaser at the sale of the property by the Madison Circuit Court is entitled to possession as against the receiver of the Indiana Railroad, where will the right to possession be asserted, and what court will command the delivery of the property? Clearly not the Madison Circuit Court, since it has no jurisdiction to command the Superior Court of Marion county, and if, upon petition, the Superior Court of Marion County, having jurisdiction to decide the question, finds that the liens were paid, what is the result? Or if the purchaser at the sale by the Madison Circuit Court files his petition for possession of the property in the Marion Superior Court, and the Marion Superior Court orders its receiver to pay the amount of the liens, can the purchaser still insist upon the property rather than the money? If not, the Madison Circuit Court did not sell the property, but only the rights of the judgment lien holders, which it has no jurisdiction to do. It cannot act as agent of the judgment lien holders in selling their property, and if the Marion Superior Court may not order the money paid, rather than submit to a sale of the property, then the right which the Indiana Railroad had, and which the Superior Court of Marion County, through its receiver, had, to pay when called to account, rather than have the property sold, has been stricken down, presumably by the judgment of the Madison Circuit Court. This is a valuable right, which vested in the Indiana Railroad through the conveyance of the property to it, which could not be stricken down by any court without jurisdiction of the person of the owner of the property. That vested right is in the Superior Court of Marion County, through its receiver, and it cannot be divested by the judgment of any court that has not jurisdiction to enter judgment against the receiver, *Page 21 
unless that court has possession of the property. If the property had consisted entirely of chattels, and it had been sold to a resident of another state, and taken out of the state, it would hardly be contended that in an ex parte proceeding without jurisdiction of the person of the owner, and without possession of the property, the Madison Circuit Court could sell the property and vest title in the purchaser so that he might go to the foreign jurisdiction and claim the property and deny the owner the privilege of paying the judgments rather than give up the property. The Marion Superior Court, and its receiver, and the property in their possession are as far from the jurisdiction of the Madison Circuit Court as though they were in another state.
It is universally recognized that a court cannot affect the title to property without having acquired jurisdiction of the person of the owner, or one having title to the property, or jurisdiction of the property itself by having it in possession. There is another universally-established rule concerning receiverships. In Buck v. Colbath (1865), 70 U.S. (3 Wall.) 334, 341, it is stated thus: "That principle is, that whenever property has been seized by an officer of the court, by virtue of its process, the property is to be considered as in the custody of the court, and under its control for the time being; and that no other court has a right to interfere with that possession."
The same principles here involved were considered by the court in Premier Steel Co. et al. v. McElwaine-Richards Co. (1896),144 Ind. 614, 621, 622, 623, 43 N.E. 876, 878, 879. In that case, permission of the court, which had appointed a receiver over property, to make him a party defendant in another court, in an action to foreclose a mechanic's lien upon the property which existed at the time of his appointment, was obtained, and a judgment was had foreclosing the lien. The granting *Page 22 
of permission to sue the receiver was held not to be a relinquishment of control of the property which authorized the other court to order its sale. The court said: "This question rests upon the proposition that by the receivership the property was in custodia legis, and that a court, other than that in which the receivership is pending, has no authority to deprive the court having custody of its possession. That this proposition is correct there can be no doubt whatever, but counsel have been unable to find authority on either side of the question as to whether the court in custody surrenders its possession and submits to a decree and sale by granting the lienor permission to sue the receiver. The reason that permission is required doubtless is that the court's officer may not be involved in constant and expensive litigation, and that the court's possession may not be placed in peril by the exercise of conflicting jurisdictions. The end sought by the rule is not only the avoidance of conflict in the jurisdiction of the courts, but the preservation of the interests of creditors and debtors. These interests have been entrusted to the court of equity, which affords a more comprehensive and perfect system of justice than the court of law, in order that all may be guarded and protected, each with reference to every other. If the property in question should be sold upon the judgment in this case, the sale would be by public outcry, a method often not attended by results so satisfactory, and upon the wisdom and discretion of the sheriff rather than of the chancellor, who may approve or disapprove the receiver's sale. If the right of the lower court was to direct the sale, by its own officer and upon execution as in other instances, that right would be in utter disregard of the condition of the estate as to the ability of the receiver to realize by certificates, rentals or other means, permitted by the court in possession, sums sufficient to pay the appellee's claim *Page 23 
and extinguish the lien. Any possible right of the receiver to redeem would be embarrassed by additional costs and ultimate losses to the general creditors and a redemption by any creditor would not only meet the same embarrassment, but it would result either in giving such redeeming creditor an advantage over other creditors or of redeeming to his own inconvenience that all creditors might be protected. If the whole subject were within the control of the court appointing the receiver, the lien-holder's interest could be protected by his right of priority to the proceeds of any sale; the opportunity for competition in selling at private sale would be afforded; the wisdom of the chancellor could be taken upon the prudence and fairness of the sale and the adequacy of the consideration; costs would be spared and redemption complications avoided. There are probably other illustrations of the value and necessity of the rule which would enable the court in custody of the property to control its sale and the distribution of the proceeds, but these will suffice to make clear the impropriety of permitting another court to absorb the functions of the court in possession and possibly strip it of all property and all opportunity to serve the beneficial ends for which it was given jurisdiction. . . . `And while the appointment of a receiver does not destroy existing liens upon the property, it prevents their enforcement by the ordinary legal process, and compels the persons asserting such liens to seek their remedy in the cause in which the receiver is appointed.' . . . `The proper remedy for a judgment creditor who desires to question the receiver's right to the property, is to apply to the court appointing him, to have the property released from the receiver's custody, in order that he may proceed against it under his judgment'."
It will be seen that, in this case, the only interest of the Madison Circuit Court would be to serve the interest *Page 24 
of the lien holders, while the Marion Superior Court is charged with the duty of protecting the interest of the lien holders, and also preserving the interests of general creditors.
The quotation from Henry, Rec. v. Claffey (1920),189 Ind. 609, 127 N.E. 193, 128 N.E. 694, printed as a footnote to the principal opinion, is pure obiter dictum. The purchaser of the railroad property was not a party to the action. But the facts in the case were quite different. There the contract of sale provided that the purchaser would submit to the jurisdiction of the court, and in this case, if the property was still held by the Indiana Railroad, the property being located in Madison County, the Madison Circuit Court could have obtained jurisdiction over the Indiana Railroad by notice, and could have bound it by its judgment. Under such circumstances the dictum in the case referred to may have been in point, but here a receiver has been appointed for the property; and, notwithstanding the property may be located in Madison County, the Madison Circuit Court has no jurisdiction to lay hands upon the property, and it cannot, by notice, get jurisdiction of the receiver, in whom the title is vested.
It must be presumed that all courts of equal jurisdiction will do equal and like justice to all parties, and that any court to which rights are submitted will decide the questions presented correctly. If this is not done, the remedy is by appeal.
Any rule of procedure that departs from the basic principles above referred to will necessarily give rise to doubts and conflicts concerning title and jurisdiction.
In the present case it may fairly be assumed from the facts disclosed in the record that the judgment liens have not been paid; that the statute of limitations has not run against them; and that there are no defenses. It would seem that the property is probably worth more *Page 25 
than the liens, and that probably the best interests of the receivership would be served by paying the liens if funds are available. But it may be that some of the property is more useful to the receivership in the operation of the railroad than other parts, and that it might be advantageous to sell part of the property and pay part of the liens in cash. These are matters which can only be determined by the Marion Superior Court; perhaps after bids are received upon separate and different parcels of property. No reason is suggested why the Marion Superior Court should be deprived of the opportunity to exercise a sound discretion in respect to these matters in the interest of general creditors, who are not protected by a lien, and who are in a court of equity as much entitled to protection as the lienholders. The well-settled principles, which are based upon the universal rule that the protection of lien holders is left to the court having the administration of the receivership which has possession of the property, are based in sound reason. The lien holders will be fully protected. They are entitled to no more. Those who must take what is left after the liens are satisfied are entitled to protection. No court has jurisdiction to protect them, or know what their rights are, except the court in which the receivership is pending.
I see no reason for the establishment of a new rule of jurisdiction and procedure, full of uncertainty, when the sound. and established rule furnishes ample protection for the rights of all. *Page 26