Court Opinion

ID: 8767239
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:30:38.246608+00
Date Added: 2024-06-11T17:01:58.116740
License: Public Domain

BURNS, District Judge
(dissenting). The writer, with great deference to the view announced by the majority in sustaining the action of the lower court in the appointment of a receiver of the Memphis & Charleston Railroad to appear and defend cases pending on the law side of the docket in the Northern district of Alabama, is unable to concur, and the reasons therefor should be briefly stated.
The record proceedings are fully given in the statement of the case, from which it appears that plaintiff, Townsend, was injured December 8, 1896, while in the service of McGhee and Fink, receivers; that he filed suit against the said receivers on March 16, 1897; that the said receivers were finally discharged February 26, 1898, and thereafter, by order dated March 15, 1898, claimants were allowed six months in which to present claims growing out of the receivership to the special master, and claims not so presented were to be deemed barred. The case of Townsend appears to have continued upon the law side of the docket without progress until entry of order of date October 14, 1903 (based on petition of that date), appointing Greenleaf receiver. The situation obtains that 11 years after institution of the action at law, and 10 years after the final discharge of the receivers, it is deemed equitable that a receiver should appear and defend in order that a presumed or possible trust might be the more fully and equitably administered. There is no suggestion, or contention, that the purchaser, the Southern Railway Company, is at fault, or that it dissents from the terms and conditions imposed by the final decree of foreclosure. The plaintiff, Townsend, had more than 14 months after injury in which to prosecute his action against the original receivers, and his suit continued upon the docket more than 11 months before the receivership was closed. After the discharge of the receivers, a plea in abatement was filed setting up their discharge, and the record discloses that the plea has not been determined.
If it should appear that the plaintiff, notwithstanding the discharge of the receivers, had a clear, positive, and adequate remedy at law, it is difficult to understand why a court of equity should reach out its arm and by process of development employ other and unusual facilities in behalf of this sleeping litigant. It may be pertinent to depart from a statement of the general rule that equity will never grant relief where the complainant has an adequate remedy at law, to point out the legal remedy available to the plaintiff upon the discharge of the receivers. By amending his petition, setting up the discharge of the receivers, making the purchaser, the Southern Railway Company, a party defend*317ant, under the terms of the decree fixing the liability for the acts of the receivers, the plaintiff upon verdict, would have been entitled to his execution. This is the proper and usual course, not attended with difficulty, and doubtless familiar to practitioners in the state and federal courts. This statement should be conclusive'of the proposition that plaintiff had and has an adequate remedy at law, and, more, lie' could have instituted and maintained his suit against the receivers, and upon their discharge, against the purchaser, in any state court of Alabama. Act Cong. March 3, 1887, c. 373, 24 Stat. 552, as amended by Act Aug. 13, 1888, c. 629, 25 Stat. 433 (U. S. Comp. St. 1901, p. 508).
In the case of Cahn v. Johnson, 12 Tex. Civ. App. 304, 33 S. W 1002, the court uses this language:
“The first question arising from the record, and presented by appellant's assignment of error, is: Will a court of equity grant its aid by appointing a receiver in favor of mere general creditors, whose rights rest only in contract and are not reduced to judgment, and who have acquired no lien upon the property of the debtor? Upon the great weight of authority, we answer this question in the negative.” High, Rec’r (3d Ed.) § 406, and authorities cited in note 1, page 430; Wiggins v. Armstrong, 2 Johns. Ch. (N. Y.; Lawyers’ Ed.) 144, and authorities cited in note; 3 Pom. Eq. Jur. § 1415; 20 Am. & Eng. Enc. Law, p. 30; Carter v. Hightower, 79 Tex. 135, 15 S. W. 223.
The existence of an adequate remedy at law is always a bar to the aid of equity granting a receivership. High on Receivers, par. 741. A receiver will not be appointed if any other remedy will afford ample protection. Etowah Min. & Mfg. Co. v. Wills Valley Min. & Mfg. Co. 106 Ala. 492, 17 South. 522. To justify the appointment it must appear that the possession of defendant was obtained by fraud, or that the income is in danger of loss from neglect, waste, or misconduct. Gilbert v. Block, 51 Ill. App. 516. The power to appoint a receiver will never be exercised except upon a very grave necessity and upon a clear showing that the applicant has otherwise no adequate remedy, and is in danger of suffering irreparable loss. People’s Investment Co. v. Crawford (Tex. Civ. App.) 45 S. W. 738; Cahn v. Johnson, 12 Tex. Civ. App. 304, 33 S. W. 1000; Bank v. Dunham, 18 Tex. Civ. App. 184, 44 S. W. 605; Laud Co. v. Blevens, 12 Tex. Civ. App. 410, 34 S. W 832; High on Receivers, Par. 3, 288, 289, 292; 20 Am. & Eng. Ency. Law, pp. 18 — 21; Bank v. Gage, 79 Ill. 207; Weatherly v. Water Co., 115 Ala. 156, 22 South. 142; Darragh v. Manufacturing Co., 78 Fed. 15, 23 C. C. A. 609.
The opinion in People’s Investment Company v. Crawford, supra, concludes with this statement:
“The appellees’ remedy without the aid of a receiver being adequate, it follows that the trial court erred in making the appointment, for which error the order of the court "below appointing the receiver in this case is reversed, set aside, and the receivership vacated.”
Before appointment is made, the court must be satisfied that a receiver is necessary to preserve the property, and thus adequately to protect the rights of the parties interested therein. Clark v. Ridgely, 1 Md. Ch. 70; Orphan Asylum Soc. v. McCartee, Hopk. Ch. (N. Y.) 429; Chase’s Case, 1 Bland (Md.) 213, 17 Am. Dec. 277; Blondheim *318v. Moore, 11 Md. 365; Walker v. House, 4 Md. Ch. 39; Bloodgood v. Clark, 4 Paige (N. Y.) 574; Lloyd v. Passingham, 16 Ves. Jr. 59-70.
If the plaintiff has an adequate remedy at law, then a receiver will not be appointed. This principle is but the application in receivership matters of a general principle in equity jurisprudence. Smith on Receivership, § 5, p. 14; Wooden v. Wooden, 3 N. J. Eq. 429; Mullen v. Jennings, 9 N. J. Eq. 192; Speights v. Peters, 9 Gill (Md.) 473; Rice v. Ry., 24 Minn. 464; Corey v. Long, 43 How. Prac. (N. Y.) 497; Parmly v. Bank, 3 Edw. Ch. (N. Y.) 395; Winkler v. Winkler, 40 Ill. 179; Coughron v. Swift, 18 Ill. 414.
The mere fact that the pursuit of the legal remedy is difficult, or that the remedy at law has been lost by the laches of the party entitled thereto, will not be sufficient to justify the appointment of a receiver. Alder-son on Receivers, § 7, p. 11; Brown v. Chase, Walk. Ch. (Mich.) 43; Kean v. Colt, 5 N. J. Eq. 365; Fogarty v. Burke, 2 Dru. & War. 580 ; Gray v. Chaplin, 2 Russ. 126; Skinners Company v. Irish Society, 1 Myl. & Cr. 162; Drewry v. Barnes, 3 Russ. 94; Municipal Com’rs v. Lockhart, Ir. 3 Eq. 515.
It may be observed that the order of the court appointing Greenleaf receiver will defeat the very object which the plaintiff has in mind, in that the plaintiff and the receiver, being resident citizens of the state of Alabama, the Circuit Court will be without jurisdiction of the parties, and, aside from this, the statute of limitation will be as available to the receiver as to the purchaser.