Court Opinion

ID: 6808662
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:50:43.743363+00
Date Added: 2024-06-11T16:03:33.911254
License: Public Domain

Lacy, J.,
dissenting, said:
This is an appeal from an order of the chancery court of the city of Richmond, entered on the 15th day of 'May, 1889, and the order of the judge of that court entered on the 21st day of May, 1889. The order of 15th day of May supra, was entered in the said chancery court by myself as one of the judges of this court in pursuance of sec. 3438 of the Code of Virginia, which is as follows:
“When a circuit or corporation court or a judge thereof shall refuse to award an injunction, a copy of the proceedings in court, and the original papers presented to the judge in vacation, with his order of refusal, may be presented to a judge of the court of appeals, who may thereupon award the injunction.”
• The order of 21st of May, supra, was an order entered by the judge of the chancery court, directing the sheriff to enforce the said order of the 15th of May.
The said orders, and the order of the chancery court, of date May 14th, 1889, are all the orders copied in the record presented to one of the judges for an appeal in this case; but there was one other of date May 7th, which will be hereafter referred to, and which is made to play an important part in the .opinion of the majority of the court.
This order of May 7th, 1889, was rendered upon the filing of the bill for an injunction, and for the appointment of a receiver.
The bill was filed by the appellees, creditors of the appellant, M. S. Fredenheim, and all other creditors who should come in and contribute their share of the expenses; alleging that the appellant, Margaret S. Fredenheim, who was conducting a millinery business in the city of Richmond as a sole *773trader, was indebted to the said plaintiffs in large sums of money contracted as late as March 21st, 1889—to one, March 15th, 1889, and to another, March 1st, 1889, and that being thus so indebted by debts contracted about thirty days before, on the 27th of April, 1889, she made a deed by which all of her stock of goods was conveyed to a trustee, for the benefit of pretended debts, and creditors, with interest, to defraud them and her other creditors.
(1) That the said Margaret S. Fredenheim was largely indebted at the time of making the said assignment.
(2) That the fraudulent alienee, the trustee, was a hopelessly insolvent, broken merchant.
(8) That this fraudulent alienee was the brother of the only preferred creditor of first-class—in any amount—one Fannie Bottigheimer.
(4) That the said fraudulent alienee -had actually participated in, and procured the said assignment with fraudulent intent.
(5) That the deed provided by an agreement beforehand that the grantor and her husband should continue the business by her trustee for sixty days, and remain in possession for that period.
(6) That after an assignment had been determined, and its terms arranged, and preferences provided for by said deed agreed on, she made large purchases of goods, and inflated her stock to an unreasonable degree.
(7) That she sold in Norfolk, and other cities not named, by her husband representing himself as a traveling salesman, large bills of goods for cash, at prices far below the market value, and cost of said goods, when such goods are usually sold on credit, and were so bought by her on credit.
(8) That in order to procure this credit for herself, this fraudulent grantor had made false statements, and estimates of assets.
That it was of the utmost importance to the said plaintiffs *774that this fraudulent grantee and trustee should be removed, and be enjoined, and restrained from acting as trustee, and that a receiver be appointed to take charge of and sell the said goods under the order of the court, and praying for the appointment of-the said receiver, and an injunction, &c.
Soon after the filing of this bill, his honor, Judge Edward H. Fitzhugh, on the 7th of May, entered the order of the court as follows:
“Upon reading the bill in this cause, the court is of opinion that the plaintiffs should give reasonable notice to the defendants, Margaret S. Fredenheim and A. Fredenheim, her husband, and to H. Rosenberg, trustee, of the time and place of moving for the injunction, and the appointment of a receiver, and the court doth so order and direct.
“And the court doth further order and direct, that in the meantime and until the said motion can be heard and determined (what motion was this to be heard and determined hereafter? obviously, the motion for an injunction, and the appointment of a receiver), the above-named defendants are enjoined and restrained from removing, selling, or in any way disposing of the stock of goods in the store No. 113 East Broad Street, Richmond, Va., in the bill and proceedings mentioned (and bond required in the penalty of five hundred dollars).”
In the opinion of the majority, this order is ^referred to in the following language:
“ This bill (charging, &c., and praying, &c,), was presented to Judge Fitzhugh in the chancery court of Richmond city, on the 7th day of May, 1889. Who on that day granted an injunction according to the prayer of the bill, but declared in the order that he deemed it proper that the defendants should have reasonable notice of the time and place of moving for the appointment of a receiver as prayed for in the bill, and an opportunity to move to dissolve the injunction, and this accordingly took place after this injunction had become effectual.” This is the *775language of the majority referring to the order of May 7th, 1889.
The order itself says “ the court is of opinion that the plaintiffs should give reasonable notice to the defendánts (naming them) of the time and place of moving for the injunction prayed for in the bill, and for the appointment of a receiver, and the court doth so order mid direct.”
But the opinion of the majority says “that the court that day granted an injunction in accordance with the prayer of the bill,” and “ declared that it was proper to give notice of the time and place of moving for the appointment of a receiver.” I do not see in the order of May 7th, 1889, above inserted in full, any justification for this construction by the opinion. It evidently does not grant an injunction in accordance with the prayer of the bill, but expressly declines to do so in words unmistakable, until notice has been given to the other side.
I find, however, in the brief of the appellant, on page two, the following language:
“Bill was presented to Judge Fitzhugh in court, on the 7th of May, 1889, and the judge of the chancery court had granted an injunction according to the prayer of the bill, hut had directed that reasonable notice should be given to the defendants of the time and place of moving for the appointment of a receiver -prayed for in the bill.” This may be a mere coincidence, as great minds often run in the same channel; but obviously brief of counsel is not the record of the court under review.
This is the fundamental error of the opinion, and prepared the way for the others which culminated in what I regard as the erroneous conclusion.
This order of May 7th was followed by the order of May 14th. When, notice having been given as required by the court, the order of -that day was entered, as follows: “ This day came the plaintiffs, Nathan Rohr and others, by counsel, and upon their motion for the appointment of a receiver made in open court, due notice of the time and place having been *776given the defendants in this cause, according to the requirement of the preliminary injunction awarded herein, and on the like motion of the defendants, by counsel to dissolve said injunction, and was argued by counsel. On consideration whereof, and upon the reading of the bill, and the petition heretofore filed in this cause, exhibits filed therein and affidavits filed in behalf of the plaintiffs in support of said motion, to-wit:»S. Trautman, S. W. Gerhardt, John L. Bake, and Edgar W. Carrington, and the letter of M. S. Fredenheim addressed to Messrs. Goldsmith, Bachrach & Co., and the certificates of the clerk of the circuit court of the city of Richmond, and the chancery court, city of Richmond (these certificates of these clerks were certifications of unsatisfied judgments .and decrees against the insolvent trustee, showing his insolvency for many thousands of dollars of long standing), the answers of the defendants treated as affidavits, and the paper marked ‘ I ’ signed by Thos. Potts and others, to the reading of which paper and affidavit objection is made.” (This paper signed by Thos. Potts and others, is relied on in the opinion and referred to as follows: “And a large number of the leading merchants of the city of Richmond certified that the trustee named in the deed was peculiarly qualified for the trust in question),” “and the affidavit of M. S. Fredenheim and H. Rosenberg, trustee, the court doth refuse the injunction prayed for in the bill, and the appointment of a receiver, and doth dissolve the preliminary injunction awarded in this cause on the 7th day of May, 1889 ” (which let us remember by its terms ‘was expressly limited to the time when the motion to award an injunction and for the appointment of a receiver could be heard “ in the meantime, and until the said motion can be heard and determined.”) “But the court being of opinion that upon the application of any party in interest, a bond in the penalty of ten thousand dollars with approved security* may be required of the trustee, H. Rosenberg, for the faithful discharge as such trustee, and the performance of his duties, *777which bond was then tendered in open court by the said H. Rosenberg, trustee, with Thomas Potts and Fannie Bottigheimer as his sureties thereon, to which security no objection was offered, but in consequence of the absence of said securities at the moment, leave is given to said Rosenberg, trustee, to execute said bond in open court, to-morrow morning, at ten •o’clock A. M., along with his said sureties, and the court doth accordingly direct that said bond be executed at said hour accordingly.”
This is the full text of this order. Now let us see what reference there is to it in the opinion of the majority. Speaking of the 7th of May order, requiring notice of the motion to award an injunction, and for the appointment of a receiver, it says: “After this injunction had become effectual (!) (which by its terms was in the meantime and until the said motion could be heard) the case came on to be heard on the 14th day of May, 1889, upon the bill, &c, &c., and wpon due notice and motion to dissolve,'and was fully heard upon the arguments of counsel, upon the motion to dissolve the injunction, and appoint a receiver, and for no other purpose. Whereupon a decree was entered dissolving the injunction which had been awarded by Judge Fitzhugh on the 7th of May, 1889, * * * denying the prayer of the bill for. the appointment of a receiver, but requiring the trustee, H. Rosenberg, to execute a bond with approved security in the penalty of $10,000, ***** ■which bond was accordingly promptly executed by the said trustee.”
We see that in the opinion of the majority that it is said that the cause came on on the 14th day of May on the motion to dissolve the injunction, and for the appointment of a receiver, and for no other purpose, and a decree was rendered, dissolving the injunction, and refusing to appoint a receiver, but the order entered on that day, as appears on the seventh page of the printed transcript, says “ the court doth refuse the injunction prayed for in the bill, and the appointment of a receiver, and doth dissolve (not the injunction prayed for in the bill, *778but) the preliminary injunction awarded in this cause on the 7th of May, 1889” (that is the injunction awarded by the court upon its own motion, in the meantime and until the motion to atvard the injunction prayed for in the hill could be heard upon notice.)
And again, the opinion states that the bond of the trustee referred to ‘’’was accordingly promptly executed.”
The decree of the court, on the other hand, as appears by the record, wras not that the bond was promptly executed, but here is the very different language used by the record upon this subject, “which bond was then tendered in open court by the said H. Rosenberg, trustee, with Thomas Potts and Fannie Bottigheimer, as his sureties thereon, to which security no objection was offered, but in consequence of the absence of said securities at the moment, leave is given to said Rosenberg, trustee, to execute said bond in open court to-morrow morning, along with his said securities,” so that said bond with said securities was not promptly executed ; but so far as this record discloses, such bond never was executed, the security, Thomas Potts, was not only absent at the moment, but remained perpetually absent, and the. bond subsequently filed and copied in the record, and containing his name, recited as one of the obligors, was never executed by him, although he is the same Thomas Potts no doubt who heads the list, of the “ large number of business men of Richmond,” referred to above, who knew H. Rosenberg for many years, &c. .
Does the record justify the statement in the opinion, that the case came on and was fully heard upon the arguments of counsel upon due notice and motion to dissolve the injunction, and for the appointment of a receiver? On the contrary, it shows that the motion refused was one to grant an injunction ■ and to appoint a receiver. But another inspection of the brief of counsel for tJie appellant, will show, on page two, how this misapprehension of the record came about. It is then said :
“After said injunction had been aivarded by Judge Fitzhugh, and *779had become effectual, the defendants filed their answers * * * * and'thet case being fully heard upon the arguments of counsel, and the decree upon its face showing that the case was brought on upon a;■ motion to dissolve the injunction and appoint a receiver, and for no other purpose, the injunction which had been thus awarded by Judge Fitzhugh ow the 7th of May, 1889, was dissolved and the receivership ashed for was denied, but the trustee, H. Rosenberg, was required to execute q, bond in the penalty of $10,000 with approved security for the faithful discharge of his duties as such trustee, which bond was accordingly executed.” When this language was in the brief of counsel it was simply executed, but when transplanted to the opinion, it was, in the exuberance of the writer, “promptly executed;” whereas the bond offered in court on the 14th of May, witb sureties to whom no objection was made, was never executed at all. The only bond filed was executed by the Bottigheimer, who is the preferred creditor, and chiefly interested in maintaining the alleged fraudulent deed.
The record in this case shows that a bill was filed by creditors of a defaulting debtor, who having greatly inflated a stock of merchandize a fews days before, had sold large quantities of the goods purchased recently and not paid for, not in the usual course of business upon credit or for cash upon a profit, but below cost price and for cash by sending her husband out to make these secret sacrifices in distant cities, and then conveyed the unpaid for goods, not to secure the purchase price for the same, but. first to pay a large debt to the sister of the trustee, and promised that the defaulting debtor, the husband, should practically continue to manage and run the business lor sixty days, and the affidavits filed show that the alleged trustee was not to be found about the premises, but that the alleged fraudulent grantor and her husband were actually in charge, and when anxious inquiries were made for this trustee, lie could not be seen, but the husband was there declaring that he could attend to anything, and said that his wife proposed *780to pay twenty-five cents on the dollar as a compromise. That the object of the bill was to set aside the said deed as actually fraudulent, and charged fraud upon the grantor and upon the .grantee, and asked for an injunction to stop the sacrifice of the property in question, and to place the same in the bonded hands of a receiver of the court, charging and showing by judgments ■and decrees unsatisfied against him to the amount of thousands of dollars of long standing, that the trustee was insolvent, which insolvency the trustee admitted in his answer, and irresponsible; that the hearing of this motion for an injunction and the appointment of a receiver was adjourned for a few days to allow notice to the defendants, and in the meantime and until this motion could be heard, an injunction was temporarily awarded until the motion to award an injunction ■and appoint a receiver could be heard upon notice; that upon notice being given, and the motion heard, the injunction was refused, but the trustee required to give a bond.
That upon this refusal of the chancery court judge in open •court to award an injunction, an application was made to one •of the judges of this court, as is expressly authorized by section 3438, which says, “ When a circuit or corporation court, ■or a judge thereof, shall refuse to award an injunction, a copy of the proceedings in court, and the original papers presented to a judge in vacation, with his order of refusal, may be presented to a judge of a court of appeals who may thereupon award the injunctionand the same was awarded accordingly.
It is idle to say that such an act was ultra vires, as is said in the opinion of the majority. The next section of the Code directs that such order shall be certified to and become an order of the court below, and this was so ordered accordingly.
Without moving to dissolve this injunction in the court belowq and without a transcript of the record, except the bill, the order of May 14th, 1889, and the order of the judge of this court awarding the injunction, and the order of the judge of the chancery court enforcing the same, an appeal was ap*781plied for and obtained. The petition for an appeal sets forth that the judge of the chancery court, Judge Wellford, sitting-for Judge Fitzhugh, “entered an order dissolving a preliminary order entered by Judge Fitzhugh and refusing to appoint a receiver, and also refusing to award an injunction prayed, for in the bill, and yet the opinion states that this order dissolved the injunction which had been awarded according to the prayer of the bill, upon full hearing and argument wpon the merits. And the opinion of the majority further sa}^: “If the complainants in the bill were dissatisfied or aggrieved by this order of the chancellor, their plain remedy as prescribed by section 3454, Code of 1887, was by appeal.”
Upon turning to section 3454 of the Code of Virginia, we-see that it prescribes that “ any person who is a party to any case in chancery wherein there is a decree or order dissolving-an injunction, or to any case requiring money to be paid, or the possession or title to property to be changed, or adjudicating the principles of a cause, or in any case in which there-is a final judgment, decree or order, may present a petition,” &c.
Now, under this section, where could the plaintiffs in this case lawfully find authority to present a petition for appeal?' The decree of the court says that it refuses to award an injunction, how was the case heard and decided upon its merits?
The object of the suit was to annul an alleged fraudulent deed. Was this deed annulled? or did ihe court refuse to annul the same ? l^fot by' any of the decrees in this record.
The bill sought to subject the property conveyed in the deed to the payment of the debts of the plaintiffs, was this-prayer granted or denied? It certainly was not granted. Did the court below do anything else than refuse to award an-injunction, and refuse to appoint a receiver, and require the-trustee to give a bond ? This was all, and yet we are gravely told that if the plaintiffs were aggrieved by this order, deciding nothing, and refusing to do any thing except to require-the trustee to give a bond at the suit of creditors who had *782brought their suit to that end, their remedj' was by appeal. There is no authority for this position in the § 3454 of the Code of Virginia. This authority must be sought for somewhere else than the Code, or in any previous decision of this court.
In a paper copied in the record, signed by the appellant’s counsel, this supposed law is set forth as follows:
“ This decree of the 14th of May, 1889, was rendered upon the bill, answers and depositions of witnesses, and arguments of counsel upon a full hearing of the case, upon the questions raised upon due notice.”
“ If the decree of the chancery court was erroneous, the plaintiff’s remedy was by appeal from that decree.” * * * *
The jurisdiction of the supreme court of appeals, and of the judges thereof, is fixed by the constitution and statute law of the State. A judge of said court may award an appeal or writ of error upon a petition and copy of a record in a proper case. An order dissolving an injunction, or appointing a receiver by the express terms of the statute, and made subjects of appeal in a proper case. See Code ’87, § 3454.
If there are any such express terms in this statute, they do not appear to be embodied in any of its words.
No such construction had ever before been placed upon section 3454, and it was not easy to anticipate such a construction. So the plaintiffs having been refused an injunction by the chancery court in accordance with the prayer of the bill, as the order itself says, and not being by any law then in force entitled to an appeal, under section 3438 of the Code of Virginia, applied to a judge of this court for an injunction. That section provides, as we have said, that “ when a circuit (which includes chancery court, of Richmond) or corporation court, or judge thereof, shall refuse to award an injunction, a copy of the proceedings in court, and the original papers presented to the judge in vacation, with his order of refusal, may be presented to a judge of the court of appeals, who may thereupon award an *783injunction.” Here is the authority iu the law under which the judge of this court acted, when the injunction was awarded. Yet that action is characterized as ultra vires.
This rather high-sounding phrase, used a good deal in the brief of counsel, has no rightful place in the opinion of the majority, if everything there urged were correct. It has no application, as seems to be supposed, to a case where a court or judge has proceeded in excess of his jurisdiction, but is a phrase which refers to the exercise by corporations of powers not granted in the act of their creation? It is agreed that corporations cannot exercise their powers for purposes foreign to their creation. This is a question of no interest in this discussion, yet for the benefit of enthusiastic counsel I refer them, and the learned writer of the opinion in this case, to Mr. Bouvier’s Dictionary, Vol. 2, p. 760, Ultra Vires. Dillon Mun. Corp , § 381, Vol. 1; Id. Vol. 2, § § 749, 766 ; 13 Amer. L. Rev., 632; Min. Inst., Vol. 2, p, 549; Ang. & A. Corp., 117. These text writers fully explain the legitimate use of the phrase in question.
The opinion contains the following:
“This statute (§ 3454) confers no original jurisdiction upon one of the judges of this court to award an injunction, except in the case where the application has been made first to a judge of an inferior court, either in term time, or vacation,” and cites cases.
It is hard to realize that this language was seriously used with reference to this case, in the light of the decrees already recited from the record (and there are no others in it). We have been helped to an explanation of the startling statements in the opinion several times in this discussion, by turning to read the strange things to be found in the appellant’s brief. On the first page of this brief we find the following: “No original jurisdiction was conferred upon any (judges) of the court of appeals to award an injunction, except in those cases in which the application has been first made to a judge of the *784inferior court, either in term time, or vacation, and been refused,” citing the same cases.
A good deal of complaint is found in the appellant’s brief, that the order complained of was made without notice, and Underwood v. McVeigh is cited as a case in point, and all this to the extent of whole pages of printed matter is transferred solidly to the opinion.
But an inspection of the record shows that it has not the remotest application to this case; the fullest notice was everywhere required and given, and the fullest hearing accorded; the chancery court, as all have seen, did not take the first, step without notice, and every order entered in the case before the order granting the appeal, was an order in that court. What has Underwood v. McVeigh to do with this case?
The next question raised and urged by counsel, and taken up and adopted by the opinion, is that a judge of this court,, in awarding an injunction when it has been refused by the court below, is without authority to appoint a receiver. These are inconsistent positions taken by counsel, it being contended at one time that the court below did not refuse to award an injunction. But as the opinion adopts them, I will remark that the question as to whether a judge of this court, when awarding an injunction to go as an order in the court below,, must, in some cases, necessarily appoint a receiver, as in this case, or destroy the rights of property involved, by leaving the-property without a hand to hold or to protect and guard; and that the grant of the authority to award the injunction, carries, with it as a necessary incident the authority to appoint a receiver.
But, equally true, is it that that question is not worth discussing in a dissenting opinion, as it is no longer an open question in this court, except so far as it is disturbed by this, case, which is not at all, as the opinion makes this out to be, a. case where an injunction was granted, and dissolved upon the merits. In the case of Graeme v. Cullen, 23 Gratt., 282, 285, *785Judge Joynes, of this court, so acted, awarded an injunction, and appointed a receiver, as did Judge Burks in the case of Richardson v. Wilcox, from the circuit court of Charles City, while I was the judge of that circuit. Beverly v. Brooke, 4 Gratt., 189, 212; Pearce v. Whitehead, 12 Gratt., 83. Upon the merits enough has been said already for the purpose I have in view, to put myself right upon the record, and for that purpose I have quoted largely from the record.
One word as to the propriety of the order granting the appeal. The order refusing to award the injunction was rendered on the 14th May. The order made by one of the judges of this court was made on the 15th of May. The defendants defied this order, denouncing it as ultra vires, as the opinion has done. Application was made to me to supplement it, and enforce it; this I declined to do, as that was the province of the chancellor below; this the chancellor did by decree entered on the 22d of May.
On the 23rd of May, the next day, one of the judges of this court, the writer of the opinion, granted an appeal, which was interpreted to reverse and nullify the order awarding the injunction, without any consultation with the judge who had awarded the injunction whatever, and this, as I have shown from the record already, without obtaining a transcript of the record, as is required by section 3457, Code of Virginia, one of the decrees relied on not being copied ; only eleven pages being brought up, whereas it was necessary subsequently to bring up one hundred and eighteen pages in addition, consisting chiefly of the petitions of numerous creditors seeking to set aside the deed as fraudulent. Affidavits flatly contradicting one the other, not a deposition taken in the case, no principle in the cause settled, the possession of the property unchanged, because in this case the trustee was in court, and the receiver was in court as soon as he qualified, which he did do, and the possession of the property was in the hands of the court in either case, and there had been no order dissolving the injunc*786tion, and no final decree in the cause, and no motion had been made in the lower court to dissolve the decree awarding the injunction; clearly there was no order in the case to which by law, and according to the unbroken decisions of this court, up to this time, to which an appeal would.lie. See the case of Jameson v. Jameson, 86th Va. Rep., 54; and cases cited.
I think the appeal was unauthorized by law, was improvidently awarded, and should have been dismissed without move, as was moved by the appellees.
And for the foregoing reasons I dissent from the opinion of' the majority on all points.
No appeal lies in this State from an order awarding an injunction and appointing a receiver; certainly not in a case like this, where the property was in the hands of the court’s officer, where there was no motion made in the lower court to dissolve this injunction, and no proofs taken, and no decision on the merits.
Richardson, J., also dissented from the opinion of the court.
Decree reversed.