Court Opinion

ID: 6926380
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:22:45.52447+00
Date Added: 2024-06-11T16:06:56.539683
License: Public Domain

THORNTON, J.,
dissenting.
Based upon the authorities set forth below, it is my conclusion that the majority is in error in holding that the mortgage foreclosure court, namely, the Circuit Court for Lincoln County, had jurisdiction to determine the priority and validity of the receiver’s lien. These authorities hold that this jurisdiction is vested solely in the receivership court, here the Marion County Circuit Court. Bank v. Bryan, 76 W Va 481, 86 SE2d 8 (1915). See, 1 R. Clark on Receivers 413-14, 461-62, §§ 269, 289(a) (3d ed 1959).
The assets of the insolvent corporation, on appointment of the receiver, are in custodia legis. City of Enterprise v. State, 156 Or 623, 69 P2d 953 (1937). Having obtained control of all the assets of defendant *204Paradise Ventures, Inc., of whatever kind and character and wherever situated, by the appointment of its receiver, the Circuit Court of Marion County was entitled to retain such control to the end of the litigation, to the exclusion of interference by any other courts of concurrent jurisdiction. Bank v. Bryan, supra; J. High on Receivers 161-70, §§ 139-142 (4th Ed 1910); Railway Co. v. Love, 61 Kan 433, 59 P 1072 (1900).
A similar question was involved in Ahlstrom v. Lyon et al., 169 Or 629, 131 P2d 219 (1942). There the Circuit Court of Harney County had appointed a receiver for certain personal property located in that county. Subsequently plaintiff obtained a judgment against the judgment debtor in the Circuit Court of Lake County and levied execution on his interest in the property. Plaintiff was the purchaser at the execution sale. The judgment debtor thereafter moved to quash and set aside the execution sale on several grounds. In setting aside the sale and upholding the superior right of the receivership court, our Supreme Court observed:
"There was no error in setting aside the sale. The property sold under execution was at such time in the possession of a receiver appointed in a suit pending wherein the purchaser was a defendant. To sustain the sale would create a conflict of jurisdiction between the circuit court of Harney county and the circuit court of Lake county. Obviously, both could not have jurisdiction over the same property at the same time. * * *” 169 Or at 634.
The receivership court itself, in administering the assets, will protect all prior rights, including those of plaintiff. 66 Am Jur2d 163, Receivers § 343 (1973). Therefore, while the Lincoln County Circuit Court did have jurisdiction to foreclose the mortgage, it had no jurisdiction to assign priorities and determine equities between the parties with regard to property in receivership. For this reason the order of the Lincoln County Circuit Court should be set aside insofar as it purports *205to assign the receiver’s lien a ninth priority place rather than a first priority.
Receiver’s liens are usually preferred claims, taking precedence over all preexisting liens. See, for example, Parks v. Central Door & Lbr. Co., 164 Or 363, 102 P2d 706, 128 ALR 375 (1940); Stacy v. McNicholas, 76 Or 167, 144 P 96, 148 P 67 (1915).
Receiver’s liens for the essential preservation and protection of the property of the debtor may have priority over preexisting liens of mortgagees. 2 R. Clark on Receivers 1050, 1052 et seq, § 637 et seq (3d ed 1959). However, the receiver must establish that such was the case. 2 R. Clark at 1078. See, Marsh v. Arthur C. Marsh Co., 153 Or 134, 55 P2d 1111 (1936); Annotations, 104 ALR 990 (1936).
For the above reasons I respectfully dissent.