Court Opinion

ID: 9827003
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:03:04.082839+00
Date Added: 2024-06-11T07:42:21.016414
License: Public Domain

On Motion for Rehearing.
[16] Appellee urgently insists that chapter 134 of the Acts of 1905, discussed in the original opinion, provides for the taking of property without due process of law, and is therefore in violation of the Constitution of the state and of the United States. This criticism is addressed to the entire act, including the first section, which provides for the appointment of a receiver. Stress is laid upon the failure of the first section, which is article 1080, Vernon’s Sayles’ Tex. Civ. St., to fix the period of time for the posting of prior notices of the time when and the place where an application for the appointment of a receiver would be heard. The following announcement in 8 Cyc. 1097, seems well supported by the authorities:
“As the fourteenth amendment was not intended to control procedure in the states, they may, except so far as specially limited by local Constitutions or other provisions of local law, dispense with jury trials in civil cases; and may prescribe such rules of procedure as they see fit, the only constitutional limitation, upon the power being that fundamental and established rights must be preserved.”
In 10 Encyclopedia of United States Supreme Court Reports, p. 545, occurs the following:
“Even though the grounds set forth in the bill were not sufficient to justify the appointment of a receiver, yet if they were ample to give , the court jurisdiction to do so, its order making the appointment is not wholly void” (citing Sage v. Memphis, etc., R. R. Co., 125 U. S. 361, 8 Sup. Ct. 887, 31 L. Ed. 694).
In 5 Encyclopedia of United States Supreme Court Reports, the following statements are well supported by the decisions of that court:
“A statute conferring special jurisdiction upon a court to pass upon a given matter is not necessarily void because of its failure to make provision for notice as to time of hearing; the court, having jurisdiction to hear and determine, has the power to regulate the time of hearing and to provide by rule for reasonable notice; and when this is done, the due process requirement is satisfied” (citing Guthrie Natl. Bank v. Guthrie, 173 U. S. 528, 19 Sup. Ct. 513, 43 L. Ed. 796). Page 644.
“Due process is afforded litigants if they have an opportunity to be heard at any time before the final judgment is entered” (citing among other decisions, Gallup v. Schmidt, 183 U. S. 300, 22 Sup. Ct. 162, 46 L. Ed. 207). Page 657.
“A hearing before judgment, with full opportunity to present all the evidence and the arguments which the party deems important, is all that can be adjudged vital. Rehearings, new trials, are. not essential to due process of law, either in judicial or administrative proceedings. One hearing, if ample, before judgment satisfies the demand of the Constitution in this respect” (citing, among other decisions, Mich. Cen. R. R. Co. v. Powers, 201 U. S. 245, 26 Sup. Ct. 459, 50 L. Ed. 744). Page 662.
It is clear that the foregoing announcements have reference to hearings of causes of action, and not to mere incidental questions of procedure.
In Church v. Kelsey, 121 U. S. 282, 7 Sup. Ct. 897, 30 L. Ed. 960, it was held that the constitutional provisions against the deprivation of life, liberty, or property without due process of law does not prevent a state from prescribing an equitable proceeding for cases demanding equitable relief.
In Scott v. Cox, 30 Tex. Civ. App. 190, 70 S. W. 802, it was held, even upon a direct appeal, that the appointment of a receiver without notice and before filing of a petition was no ground for reversing the judgment, no motion to vacate the receivership having been made, and it appearing that the property placed in the hands of a receiver *996was subject to the lien asserted by the plaintiff and was applied by the court to its satisfaction. It is a further familiar rule of equity practice that in cases of urgent necessity therefor, a receiver may be appointed without prior notice of application. Cotton v. Rand, 92 8. W. 266.
The appointment of a receiver in Wm. I-I. Young against the dissolved city of Colorado was an ancillary proceeding only. The real causes of action asserted were the debts alleged by the plaintiffs in that case against the dissolved city, which they sought to be established as judgments, and the appointment of a receiver in no manner affected the rights of any of the taxpayers of the dissolved city to file a protest against the claims. Even though it could be said that the application for the appointment of a receiver was a part of the causes of action asserted, then as the statute expressly required pri- or notice of the hearing of that application, it could not be said that the appointment denied the taxpayers of the dissolved city due process of law, if it be true, as recited in the order of appointment that due notice was given of such hearing.
[17] By article 1082 of Vernon’s Sayles’ Tex. Civ. Stat., which is one of the sections of the act now under discussion, it is expressly provided that before the receiver shall approve any claim against the 'dissolved city, notice of the presentation of such claim, including the date and amount of same and for what purpose incurred, together with the location of the residence of the creditor, shall be published in a newspaper, or posted at the courthouse door of the county for four weeks prior to an allowance of the same by the receiver. As shown in the original opinion, ■ this notice was given, and no protest or objection was made to Young’s claim. The provision of the statute that, in the absence of some contest, the court should enter a judgment establishing as valid debts against the dissolved city claims presented and approved by the receiver, after publication of such notices, is but a provision for a judgment by default, after ample opportunity given to the parties affected by such judgment to answer the demands asserted by the plaintiff, and cannot be said to be a judgment without due process of law, any more so than article 1936 of Vernon’s Sayles’ Tex. Civ. St., providing for default judgments after appearance day of court.
As noted already, the statute gives to any taxpayer of the dissolved city the right to have any claim presented against the dissolved city contested, upon the one condition that he give bond for costs of suit. The statute further provides that, in the event such bond is filed by a taxpayer, the court shall refuse to approve the claim until it is established by judgment in some court of competent jurisdiction. In the event of such a suit, it is made the duty of the receiver to urge all legal defenses against the claim, except the plea of limitation. In ordinary equitable receiverships the receiver alone has the right to defend actions accruing against the defendant company before the appointment of a receiver, and under advice of the court appointing him, to determine the expediency of making a defense against such demands. The right thus given in the statute now under discussion to any taxpayer to force the receiver to defend against the collection of any claim presented against the dissolved city is an extraordinary right, not conferred upon any other person interested in property in other receivership proceedings. The fact that the taxpayer is not given the further right of appeal from a judgment that may be rendered against a receiver upon a claim against which the taxpayer has filed a protest is not a denial of due process of law, since the receiver represents all the taxpayers, and has a right to appeal from such a judgment, and it is his duty to do so, if he has a reasonable basis for such an appeal. See, also, Happy v. Mosher, 48 N. Y. 313.
In Campbell v. Holt, 115 U. S. 620, 6 Sup. Ct. 209, 29 L. Ed. 483, it was held that a debtor has no vested right in the bar of a statute of limitation, and that the Legislature may constitutionally remove the bar of the statute and thus revive his liability to suit on the previously barred claim. Hence if it could be said that Young’s claim was already barred by the statute of limitation at the time the act of 1905 was passed, then the passage of that act removed the bar.
[18] Neither can it be said that the portion of the act that a receiver could not plead the statute of limitation against demands asserted against a dissolved city was a special privilege granted to such creditor and a denial to such a city of equal protection of the law, within the meaning of the constitutional provisions of the state and the United States, prohibiting the enactment of statutes granting special privileges, and denying to any person the equal protection of the law, since the act is applicable to all creditors and debtors of the same class. In the seventh section of the act the reason recited for an emergency requiring the act to take immediate effect was:
“There being no adequate law in force whereby creditors of defunct corporations can collect the just debts due therefrom.”
Aside from that recital, the enactment itself indicates that such was the legislative interpretation of the laws then in force, and the fact recited was a reasonable basis for exempting all claims of that class from the operation of the general statutes of limitation without violating the constitutional provisions last mentioned. Supreme Lodge U. B. A, v. Johnson, 98 Tex. 5, 87 S. W. 18; Ins. Co. v. Chowning, 86 Tex. 655, 26 S. W. 982, 24 L. R. A. 504; Campbell v. Cook, 86 Tex. 630, 26 S. W. 486, 40 Am. St. Rep. 878; Beaumont Trac. Co. v. State, 57 Tex. Civ. App. 605, 122 S. W. 615; St. L., S. F. & T. R. Co *997v. Taylor, 134 S. W. 819; Ins. Co. v. Mettler, 185 U. S. 325, 22 Sup. Ct. 662, 46 L. Ed. 922.
[19] The act of 1905 had been in effect for more than a year prior to the ineorpqration of the present city of Colorado, and if, as contended by appellee, it denied appellee any right to contest the claims of Young and his eoplaintiffs in the former suit, nevertheless appellee is in no position to complain, since that statute became a part of its charter and is binding upon it. House of Mercy v. Davidson, 90 Tex. 529, 39 S. W. 924; Chicago, etc., R. R. Co. v. Zernecke, 183 U. S. 582, 22 Sup. Ct. 229, 46 L. Ed. 339; Corry v. Baltimore, 196 U. S. 466, 25 Sup. Ct. 297, 49 L. Ed. 556.
[20] Ifurthermore, even if that provision of the statute precluding a plea of limitation is unconstitutional, it would not follow necessarily that all other provisions of the statute are void, since there is nothing to indicate that such other provisions would not have been enacted at all events. On the contrary, we are of opinion that the provision last referred to should be considered as an incident only to the main purposes of the act, to wit, to give creditors of dissolved cities a remedy for the collection of their debts. Sutherland on Statutory Construction, § 170.
Appellee insists that:
“The relator himself pleaded that: (1) The creditors gave the only notice attempted to be given of the intention to apply for the receiver; (2) that the notice, instead of stating when and before whom the application would be heard, recited that on a certain day, or as soon thereafter as could be heard, the petitioners would apply for the appointing of a receiver; and (3) that this day named was June 30, 1906.”
While a copy of the order dated January 4, 1908, was attached to the plaintiff’s petition as an exhibit, and which order contained a copy of the notices posted by the plaintiffs in that suit, yet we do not construe plaintiff’s petition in this suit as committing him to the proposition that that was the only notice given prior to the appointment of the receiver.
[21] In appellee’s motion for rehearing the following occurs:
“Right here wo wish to call attention to the misapprehension of this court that the bonds in suit are not claimed by the appellee to be an invalid debt. The claim that the whole indebtedness was, and is yet, an invalid debt was vigorously made by the appellee, both in the trial court and here. On January 4, 1907, the principal and interest on these bonds had been past due for 13 years 3 months and 3 days. When this mandamus was filed, the principal and interest had been past due for 19 years 8 months and 17 days. They never did represent any obligations of the city, and were issued by an absolutely void municipal corporation.”
Presumably this criticism is addressed to the following statement contained in our original opinion:
“There is no claim by the appellee that the bonds held by the plaintiff Young were not a valid debt against the city which issued them.”
Appellee’s pleadings in the trial court, and its brief filed here, presented the contention shown in the language quoted above, but we did not interpret the same as a claim that the bonds were invalid as against the city which- issued them and which received the money paid to the city therefor, especially in view of the familiar rule that a de facto municipal corporation cannot urge the invalidity of its incorporation as a defense in a suit to collect a debt which it has contracted. 1 Mc-Quillin’s Municipal Corporations, § 2354.
The motion for rehearing is overruled.