Court Opinion

ID: 6747484
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:59:15.613406+00
Date Added: 2024-06-11T16:02:06.364581
License: Public Domain

MATTHEWS, J.,
concurring in part and dissenting in part.
I concur in the judgment excepting that part which affirms the allowance of the receiver’s compensation out of the fund produced by the sale of the wheat, which the trial court found was-the exclusive property of the defendant, John Feidhaus, Sr., and upon which the trial court also found the the plaintiff had no lien by virtue of the chattel mortgage sued upon or otherwise. The effect of the court’s holding is to cast the entire cost of this receivership upon Feidhaus, notwithstanding the decision on the merits Was in his favor. This, in my judgment, is wrong, both morally and legally. The plaintiff having failed to prove its case, judgment for costs including the allowance of compensation to the receiver should have been adjudged against it.
In Crump Field v First Nat’l Bank 229 Ky. 526, 17 S. W. (2d.) 436, 68 A. L. R. 872, at 875, the court says:
“In the cases of Ephraim v Pacific Bank, 129 Cal. 589, 62 Pac. 177; German Nat. Bank v J. D. Best & Co., 32 Colo. 192, 75 Pac. 398; Frick v Fritz, 124 Iowa 529, 100 N. W. 513, supra, and in each of the 39 other cases from the courts of Oklahoma, Washington, Montana, Arkansas, Tennessee, Colorado, Iowa, New York, and Texas, cited and relied on by appellees, the court applied the rule that, where a receiver has taken property under an illegally or unauthorized appointment,- he must look for his compensation to the parties at whose instance and for whose benefit his- expenses were incurred, and, while in each of those cases the costs of the receivership were taxed against the parties at whose instance and for whose benefit the receiver was appointed, it is made plain by the opinions that this course, was pursued because the court found that the receivership was, for some reason, improper or unauthorized, as where the right of the plaintiff to subject property for which he sought to have a receiver appointed to the payment of his claim was successfully resisted; or where the plaintiff, as the result of the litigation, was found to have no right to or interest in the property; or where at his instance and on his motion the receiver had undertaken to operate or carry on the business for plaintiff’s benefit and sustained a loss. For those or similar reasons, it was held to be unjust and inequitable that the plaintiff should be allowed to have the expenses of the receivership satisfied out of the property itself to the detriment of valid lien holders.”
*74In Atlantic Trust Co. v Chapman, 208 U. S. 360, the court held that the complainant was not liable for a deficiency when property did not sell for enough to pay receiver’s fee and expenses, but the question before the court as stated by the court itself shows the distinction between that case and this:
“Is a complainant, who has in good faith procured a suit upon a good cause' of action, and upon whose application the court has properly appointed a receiver, and who obtains a decree fully establishing his rights, nevertheless personally responsible for a deficiency caused by the failure of the property which is the subject of the suit to bring enough to cover the allowances made by the court to the receiver, and his counsel, and the expenses which the receiver, without special request of the complainant in any instance, had incurred.”
It is seen from that quotation that the complainant “obtained a decree fully establishing his right”. In the case before us, it was the defendant who obtained the decree fully establishing his right.
The question presented by this. record is not whether the receiver is entitled to some compensation. I assume that he' is. The question is, upon whom .the burden of paying him shall be cast. It seems clear to me that the costs including the receiver’s fee ordinarily should follow the judgment, and, as the judgment was against the plaintiff, it should pay the costs, unless the court should find that certain services of the receiver were beneficial to the defendant. in which event, the court would be justified in adjudging that portion against him. This record does not present such a case.
Where a receiver is appointed for the benefit of general creditors, it is uniformly held that the expenses of the receivership cannot be charged against funds resulting from the sale of mortgaged property, to the detriment of the mortgagee. Only the expenses of such services as the court found were beneficial to him could be charged against him. Marsh v Marsh Co., 104 A. L. R. 891, and annotation; 34 O. Jur. 1053. In no case has a mortgagee been charged with all of his own costs in the proceedings and the costs of the receivership, and this is true even where the plaintiff was justified in applying for a receiver, which is in marked contrast to the facts in this case,'in which it was found that the plaintiff was entitled to no relief whatsoever.
Surely the absolute owner of the property does not stand before the court in a less favorable position than the holder of the conditional title created by the mortgage.
It should not be supposed that this record shows that the receiver performed any personal, manual services in harvesting and storing this wheat. The wheat was being harvested when he was appointed. The actual harvesting was done by others who had been paid therefor.
For these reasons, I dissent from that part of the judgment charging the receiver’s compensation against this fund, particularly as this amount taken from Feldhaus’ property through the wrong of the plaintiff was not adjudged against the plaintiff in favor of Feldhaus.