Court Opinion

ID: 8821610
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:34:49.29512+00
Date Added: 2024-06-11T17:04:39.245304
License: Public Domain

Mr. Justice Scanlan delivered the opinion of the court. The defendant contends, and argues at some length, ■ that the order in this case is an appealable one, but as the complainant appears to concede the correctness of this contention, we have not deemed it necessary to pass upon the question. The next contention of the defendant can, perhaps, be best stated by a quotation from his brief: “There was a controversy here which should go to a hearing. The court should obtain jurisdiction of the parties, issues should be formed upon the pleadings and a trial should be conducted in the regular and orderly course of procedure. Instead, the regular and orderly course of procedure was suddenly and ruthlessly wiped out. * * * Here in this finding and on the decree based thereon we have every essential of an ultimate finding and decree. Nothing to be determined by an ultimate hearing was not determined here, and it was determined without jurisdiction, without pleadings, and without a defense or opportunity for a defense by the defendant. * * * The issues should be formed, a final reference to a master should be made upon the ultimate issues of the case, the two sides should marshal their forces and produce their witnesses and testimony. The case should he heard. * * * We have not insisted that this question is one strictly of jurisdiction. That may be a point of terminology. It is entirely satisfactory to us to have it considered merely as a question of common sense in practice, procedure and substantive law. The purpose of a receivership and the preliminary reference is to main-: tain the status quo, not to alter it. But behold, before . the facts can be developed a decree is entered, upon which execution against the property, or attachment against the body of ■ this defendant can be issued. * * * We believe the question is jurisdictional. But we say, in any event it is error.” The defendant further contends, in support of his present proposition, that, even if it be conceded that there was evidence introduced before the master tending to establish the charges made by the complainant against him, still, in view of the fact that the defendant testified before the master and denied the truth of the charges, the order complained of could not properly be entered against him, until after the final hearing of the case; that the chancellor, upon the report of the master, at most, might perhaps have properly issued an injunction against the defendant to restrain him from disposing of any moneys or property belonging to Ehman & Company. The power of the court to appoint a receiver and to place in his custody the property in controversy, before the defendant has answered, has become a well established practice in this country, in cases where the complainant can satisfy the chancellor that he has an equitable claim to the property in controversy, and that a receiver is necessary to preserve it from loss, or where a clear case of fraud is shown, or of imminent danger to the property, unless the relief is granted. “If the emergency shown is such as to render it essential to justice that a receiver should be immediately appointed, it may be done before answer, since to delay the relief might entirely defeat the object sought by the application. The practice is especially salutary in cases of creditors’ bills in aid of the enforcement of judgments, and in this class of cases receivers are almost uniformly granted before answer. While the practice of appointing receivers before answer, in cases of emergency, is thus shown to be well established and generally followed by courts of equity in this country, yet the grounds which will induce the court to interfere at this stage of a cause must be very strong, and there must be clear proof of fraud, or of immediate danger to the property unless it is taken into the custody of the court.” High on Receivers, secs. 105, 106. The practice of appointing receivers pendente lite is well established in this State,- and the courts are not required to wait until the defendant to the bill has gone through the process of pleading before the appointment may be made. Railton v. People, 83 Ill. App. 396; Railton v. People, 85 Ill. App. 384; Chicago Title & Trust Co. v. Chapman, 132 Ill. App. 55; Baker v. Backus’ Adm’r, 32 Ill. 79; Daley v. Nelson, 119 Ill. App. 627. “The power of appointment (pendente lite) is usually invoked either for the prevention of fraud, to save the subject of litigation from material injury, or to rescue it from threatened destruction.” High on Receivers, sec. 11; Baker v. Backus’ Adm’r, supra. “The great object is to secure the property or thing in controversy, so that it may be subjected to such order or decree as the court may make in the particular case.” Mays v. Rose, Freem. (Miss.) 718. Where a defendant is in the possession and enjoyment of the property in controversy, equity always proceeds with extreme caution in taking possession of the property by its receiver, but in all such cases a large discretion must be vested in the chancellor, and the question as to whether or not this discretion has been properly exercised must be determined by the particular facts of each case. Before answer there must be clear proof of fraud, or of imminent danger to the property, before the court through its receiver will take custody of the same. High on Receivers, secs. 191-198. “Courts of equity have the power upon appointing receivers, to order them to take possession of the property which is involved in the controversy, and when such possession is withheld by persons who are parties to the suit, or by others who are claiming under such parties, with notice of the appointment of the receiver, the court may interfere in a summary way and order the delivery of the property, and may* enforce its order by writ of assistance, or attachment.” 34 Cyc. of Law and Procedure, p. 204. “Where the assets are openly visible, the receiver can at once take actual possession, but where their character, amount and whereabouts are unknown, the power of the court is necessarily invoked to aid the receiver in the discovery and obtaining such possession. This is done by an order requiring ■the defendant and others to appear before the master and submit to an examination touching the location, amount and character of the property and effects to the possession of which the receiver is entitled.” Henderson on Chancery Practice, p. 360. A court of chancery may, of course, require a defendant to appear before it and submit to a like examination. The defendant strenuously contends that the decretal order in this case is not in any way preliminary in its nature; that it, by its very wording, “makes an .ultimate disposition of the controversy between the corporation, through its receiver, on the one hand, and Fred C. Ehman on the other hand, on the question whether Fred C. Ehman received any of the company’s money which he failed to disburse. * * * In other words, the only controversy in which Fred C. Ehman is interested, viz., Has he the company’s money? they believe to be preliminary, and expect to dispose of preliminarily, without according him the rights of a party litigant, or the benefit of the system of pleading, practice, procedure or evidence to which every litigant is .entitled.” We think the defendant misconceives the effect of the interlocutory decretal order entered in this case. “A receiver is defined to be an indifferent person between the parties, appointed by the court, and on behalf of all parties, and not of the complainant or one defendant only, to receive the thing or property in■ litigation, pending the suit.” Baker v. Backus’ Adm’r, supra; St. Louis & S. Coal & Mining Co. v. Sandoval Coal & Mining Co., 111 Ill. 32; Railton v. People, supra. The possession of the property in question by the receiver is the possession of the court, held equally for the greater safety of all the parties concerned. High on Receivers, p. 19; see also sec. 15. The receiver acquires no title to the property by the appointment, but only the right of possession as the officer of the court. He is a. mere custodian pending the litigation. The parties who have the title at the time of the appointment retain it. “The object of the appointment is to secure the property pending the litigation, so that it may be' appropriated in accordance with the rights of the parties as they may be determined by the judgment in the action.” Heffron v. Gage, 149 Ill. 182. To the same effect is Nevitt v. Woodburn, 190 Ill. 283. The defendant strenuously contends that the master’s findings of fact are not justified by the proof, and that the order in question was not warranted on the merits of the case. We have examined with care the evidence heard before the" master, and wp are satisfied that there is no merit in the defendant’s present contention. In our judgment, the master’s findings are fully warranted by the proof. There is no force in the defendant’s contention that because he appeared before the master as a witness and, in answers to certain questions, specifically denied the truth of the charges made by the complainant against him, that this fact alone precluded the master from making findings of fact against him, and the chancellor from entering the order in question. After a consideration of the entire evidence heard before the master and of the law governing the case, we are satisfied that the chancellor acted justly and properly in entering the order in question in this case. The order of the Superior Court of Cook county will be affirmed. Affirmed.