Court Opinion

ID: 5168673
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:51:05.427397+00
Date Added: 2024-06-11T08:25:58.698295
License: Public Domain

QUARLES, J.,
Dissenting. — I am unable to concur in the opinion of my associates in this case. The law, as I understand it, has some respect and consideration for the rights of all parties to an action. When application is made by a receiver to sell property, or to confirm a sale that has been made, all parties interested are entitled to notice. The rule is thus stated in 17 Encyclopedia of Pleading and Practice, page 833: “All parties interested should receive notice of the application for and of the motion to confirm a sale of property in the hands of a receiver.” (See cases cited in note to the text above quoted.) Sales of property by receivers should be made, conducted, and confirmed according to the laws applicable to judicial sales generally. (See 17 Am. & Eng. Ency. of Law, 2d ed., 832.) These rules are just, protect all parties to be affected by the sale, and should be observed. Upon what process of reasoning or upon what principle sales by receivers should be exempted from these rules, or why the sale in question, made by the receiver in this case,' should be made an exception to these general rules, I am unable to understand. The sale of fifty-five shares of stock in the First National Bank of Pocatello, held by C. Bunting & Co. at the time of the appointment of C. Thum receiver, and which then passed into the possession of said receiver, was had under an order made by the district judge, at chambers, or an ex parte application made by the receiver, and upon three days’ notice posted in the town of Blackfoot, where the said sale was made. The receiver in his report says that he “caused to be posted in three of the most public places in said Bingham county three notices of the sale of said property in due form, advertising said stock for sale,” etc. The order for the sale was made on the thirteenth day of February, 1900, and was filed on February 14, 1900. 'While testifying as a witness, C. E. Thum, the receiver, among other things, testified: “After the order of sale for said stock had been made, I posted three notices, all in the town of Blackfoot, Idaho — one in front of the courthouse, one on the bulletin board at the postoffice, and one on the bulletin board of the county treasurer’s office. I gave no other notice whatever.” The receiver was in doubt whether the order reached him on *404the 13th or 14-th of February, but I think the only proper conclusion from his evidence, and from all the evidence in the case, is that the order of sale reached him on the 14th of February, and that on the same day he posted the three notices in the town of Blaekfoot, fixing February 17, 1900, at 2 o’clock P. M., as the time for sale, and at that time the sale was made. It thus appears, undisputedly, from the record before us, that the sale in question was made upon three days’ written notice posted in three places in the town of Blaekfoot, no other notice being given. More than that the plaintiff in this action, q creditor of C. Bunting & Co., the insolvent corporation for which the* receiver was appointed, was not given notice of the application of the receiver for the order to sell these fifty-five shares of stock in the plaintiff bank. Nor did said plaintiff have any notice, actual or constructive, of the proceedings to sell said stock, or of the said sale. Said plaintiff was entitled to notice of the application to sell said stock. The defendant was not notified of the application for the said order to sell, nor of the application for confirmation of the sale. Without considering the power of the judge, at chambers, to make the order directing the sale, which I am inclined to think that he has, I am of the opinion that said order was void because given without notice. And I am of the opinion that it is void for another reason— that it directed the sale to be made by either public or private sale. We have no statute that I know of which authorizes a receiver, sheriff, or other officer to sell at any judicial sale without notice, or on three days’ notice, or authorizing such sale to be made privately. All judicial sales made under authority of law in this state require notice. All sales under execution, foreclosure of mortgage, foreclosure of pledge, or in partition, where a sale is required, must be upon not less than twenty days in ease of sale of realty, and in case of personalty, perishable property alone excepted, must be upon not less than five nor more than ten days’ notice. (See Rev. Stats., secs. 3393, 3423, 4482, 4583; Act Feb. 14, 1899, Acts 1899, pp. 241, 242.) The property sold was not perishable property, within the meaning of our statutes requiring notice of sale. On the other hand, the evidence in the record before us shows that the said shares *405of stock in question were growing and increasing in value, owing to the policy of the plaintiff bank in retaining its surplus annual earnings, instead of paying same out in dividends among its stockholders. There could be, under said circumstances, no great hurry for said sale, and at least no such indecent haste a,s would prevent the usual statutory notice required in this state in case of judicial sales of personal property. A receiver’s sale. is a judicial sale, and should he, and is required by law to be, made upon notice as other judicial sales are made. The plaintiff, to protect its own interests, and to realize as much as possible upon the debt owing to it by the insolvent banking corporation of C. Bunting & Co., commenced this action, and obtained the appointment of a receiver to take charge of the assets of said insolvent bank. It was entitled, both as a creditor and as the plaintiff, an actual party to the action, to notice of every important step to be taken in the action which affected its rights or the assets of the insolvent banking corporation.
There is evidence in the record showing that the cashier of the plaintiff bank made inquiries as to when said shares of stock would be sold, and that the receiver knew that he desired to know when said shares would be sold, yet no notice is given the plaintiff or its said cashier. It further appears that one of the officers and stockholders in said plaintiff bank, who apparently, from the evidence, is ambitious to control a majority of the stock of said banking corporation, was given notice by telephone by the receiver, and who was thereby enabled to, and did, buy in said stock through another banking concern. It is attempted to justify said sale upon the theory that purchaser bought on the same day, in an entirely different transaction, at pledgee’s sale, one hundred and fifty other shares in the First National Bank of Pocatello (the plaintiff here), pledged by C. Bunting & Co. to the Omaha National Bank, and that the estate of C. Bunting & Co. has been benefited by that transaction. But the two transactions are entirely distinct. The one hundred and fifty shares held by the Omaha National Bank never were in custody of the district court, and never came to the hands of the receiver. Neither that sale nor those shares were connected with the sale complained of here. The order of sale did not *406mention said one hundred and fifty shares of pledged stock. The report of sale did not mention them. The petition for the order of sale did not mention them. The objections filed by the plaintiff to the confirmation of the sale did not mention them. The petition of the receiver for the order of sale, the order of sale, report of sale, and the plaintiffs written directions to the order of sale in fact constitute the pleadings in this proceeding, and make up the only issues to be tried by the court. But the court wandered outside these issues, and heard much irrelevant evidence, and the findings of fact are nearly all without the issues and irrelevant. The evidence that was admitted to show that the purchaser wanted the one hundred and fifty shares, with the fifty-five shares sold by the receiver, and his motives for wanting them, were irrelevant to the issues before the court in this proceeding. The only questions before the court were whether the sale had been properly ordered, and made for a fair price, and whether it should be confirmed. The evidence shows that, the order of sale having been made without notice either to the plaintiff or the defendant, and without at least five-days’ notice given as required by law, it should have been set aside, and a new sale, upon sufficient notice, ordered made. By voluntarily appearing and objecting to the confirmation of the sale, it may be said, the plaintiff waived notice of application for confirmation of the sale. Yet under no rule of practice nor upon any sound principle can it be urged, in my opinion, that the plaintiff by such appearance waived the giving of notice to it of the application for the order of sale in the first instance. The record shows that a resale will result in a higher price, that an advance of $345 over the price for which the purchaser bid it in is guaranteed, and that it will in all probability bring as much as $1,000 more than the amount for which it was formerly sold. Much of the irrelevant and incompetent evidence that was admitted by the lower court on the hearing of the application to confirm the sale in question shows an unseemly scramble between two of the stockholders and officers of the plaintiff corporation bank to obtain a majority of the stock therein, so as to control its business: that one of these officers and stockholders was favored *407by the receiver, and was thereby enabled to purchase the fifty-five shares of stock at a less price than he would have been able to do if he had not been so favored. Officers of the court should not be permitted to engage in such conduct. Judicial proceedings should be conducted with fairness to everybody. I cannot assent to a rule or decision which sanctions the sale of the assets, or any of them, by a receiver upon a private sale, or sale made publicly after three days’ notice, in an action commenced by a creditor to wind up the affiairs of an insolvent corporation, without any notice to the plaintiff creditor or to the insolvent defendant of the application for the sale, or of the sale itself. If the law requires not less than five nor more than ten days’ notice of such sale, as I think it does, less than five days’ notice is no notice at all. This court held in Cummings v. Steele, 6 Idaho, 666, 59 Pac. 15, that an order appointing a receiver, made on ex parte application, without notice to the defendant, who had appeared in the action, was made without jurisdiction and void. The rule of practice there stated applies with full force here. Without notice to either plaintiff or defendant, or any one interested, an order is made directing the .sale of over $6,000 of the assets of the insolvent corporation, the defendant in the action. That order, in my opinion, is coram non judice. And under that order a sale is made upon three days’ notice posted in the town of Blackfoot, without actual knowledge having been brought home to the parties to the action, either plaintiff or defendant, and that sale is confirmed against the objections of the plaintiff, who objected upon the ground that no notice was given it, in the face of a showing that the property can be sold at an advanced price if a resale is ordered. I am compelled to dissent. The rule followed here simply authorizes courts into whose possession property of insolvent corporations may come to dispose of that property without the knowledge of either party to the suit or any party interested. It violates all .established rules of procedure in this jurisdiction, by denying to parties in interest the right of hearing. That hearing to which they were entitled was upon the application for the order to sell. If that notice had been given in this -case, the said shares of stock would have sold for more than *408they did sell for, as parties who own stock in and are officers of the Pocatello National Bank desired to buy said stock, but were prevented by lack of notice from bidding at said sale. Said order confirming the sale should be reversed, and this proceeding remanded to the district court, with instructions to set aside the said sale, and to order a resale after first giving public notice of not less than five nor more than ten days.
(February 8, 1901.)