Court Opinion

ID: 5580153
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:36:42.044426+00
Date Added: 2024-06-11T08:36:03.985993
License: Public Domain

Hill, J.
(After stating the foregoing facts.)
1. One of the contentions of the defendants is that the refusal to enjoin Hunter, Pearce & Battey was necessarily right, for the reason that the court had no jurisdiction over them. In their brief they say: “The only parties against whom any substantial relief was prayed were the plaintiffs in fi. fa., Hunter, Pearce & Battey; the other parties were merely nominal parties.” The action was brought in the county of the residence of the debtor defendant, W. A. Thomas. One of its chief purposes was to obtain a receivership over all of his property, and to have it sold by an order of court, divesting the various liens and conflicting claims against it, and transferring them to the funds, and to settle in one suit the rights of all creditors. Substantial relief was certainly sought against the debtor himself. Also, Smith Brothers & Co. were residents of the county where the suit was filed, and as to them substantial relief was sought. It was alleged that under a collusive arrangement with the debtor they were operating all of his farming properties, and were being allowed to appropriate to claims against the debtor, inferior to the special lien of petitioner, the rents and profits from these properties, which should in equity be applied pro tanto to the extinguishment of the lien of the deed to secure a debt held by them and embracing the property on which petitioner’s lien rested; and they were called on to make an accounting for the purpose of having the profits thus applied. The property on which petitioner claimed a special lien consisted of what was known as the Holland and Josey places, and these two places were included in *221tlie mortgages of Hunter, Pearce & Battey which they were proceeding to foreclose, and from which action it was sought to enjoin them. The priority of these mortgages over the lien of petitioner was attacked, as well as the validity of the foreclosure. Thus it will be seen that substantial equitable relief was sought against at least two of the resident defendants, involving the land which Hunter, Pearce & Battey were seeking to sell under judicial process. The question of whether the attacks made on the priority of their lien, or the validity of their foreclosure proceedings, were such that they could be successfully asserted is not the proper criterion by which to determine whether they could be brought in as parties defendant to a general bill seeking to have adjudicated in one action the various rights of creditors of an insolvent debtor. The nature of the attacks, and their sufficiency in law, might be reasons why the court should deny the relief sought by the creditor, but would not prevent the court from obtaining jurisdiction over them for the purpose of passing on these matters, in a suit like this, where it is sought to put in the hands of a receiver the property they are seeking to sell, and to adjudicate the relative rights of other creditors with respect thereto. Substantial relief being asked against resident defendants, involving the lands upon which their levy and sale was proceeding, they could properly be made parties defendant to a suit of the nature with which we are dealing.
2. The bill of exceptions recites that the court, acting upon the pleadings only, “ denied the injunction and appointed a receiver.” A restraining order was in force against Hunter, Pearce & Battey, and the order with respect to them was “that the injunction, so far as the same relates to the defendants Hunter, Pearce & Battey, be and the same is dissolved.” The order appointing a permanent receiver provided: “Said receiver is hereby authorized and required to sell all of the property of the said defendant, W. A. Thomas, such sale or sales to be confirmed and made subject to the confirmation of the court.' The said receiver shall keep a separate account of the fund arising from the sale of each piece of property; and all liens of every kind, including security deeds, and claims of every kind shall be transferred to the fund, said property to be sold free from all incumbrances, and the purchasers thereof to take title freed from all liens or claims against W. A. Thomas.” It further provided: “Said receiver shall sell *222all lands situated in Washington county before the court-house door in said county, after four weeks advertisement in the legal organ of Washington county.” It will therefore be seen that the court, in passing the receivership order, was acting in the same case and on the same state of facts, and was dealing with the same lands the sale of which at the instance of Hunter, Pearce & Battey it was sought to enjoin. The record shows that when issuing a rule nisi on the petition, the judge had appointed a temporary receiver of all the property of the defendant and issued a restraining order as prayed against Hunter, Pearce & Battey. At the time of the interlocutory hearing, these lands were already in possession of the court, through its temporary receiver; and the court, by appointing a permanent receiver, made that possession permanent, and specially directed the manner of their sale, providing that all claims of liens should be divested by the sale and transferred to the proceeds arising therefrom. This order was not excepted to by any one, and is of full force. It was inconsistent to release Hunter, Pearce & Battey (they being under the jurisdiction of the court) from restraint as to a levy and sale by them of property already in charge of a receiver appointed by the court, and also to grant an order giving the receiver permanent possession and control of the property, and directing its sale by him in a specific manner. Thus dealing with the property excludes the propriety of leaving Hunter, Pearce & Battey to proceed further 'against it independent of the present suit. The court, having them before it as parties, and having full control and disposition of the res involved in the injunction sought against them, should not have granted an order which apparently left them free to proceed against the property by independent levy and sale; but should have passed such protective order as would leave no doubt that they were prohibited from interfering with property over which the receiver was given full power of control'and disposition. As stated, the orders are wholly inconsistent; and regardless of what effect the receivership order would have to prevent any attempted interference with the property on the part of Hunter, Pearce & Battey, the order purporting to release them from restraint should not be allowed to stand. To do so might give rise hereafter to disputes as to its legal effect on the rights of the parties, all of which, under the uncontested order of receivership, are' to be determined in the present proceedings. The judgment of the *223court below is therefore reversed, direction being given that the court enter an appropriate order protecting the property in charge of the receiver from being interfered with by Hunter, Pearce & Battey.

Judgment reversed, with direction.

All the Justices concur, except Fish, G. J., absent, and Fvans, P. J., disqualified.