Cowden v. Wild Goose Mining & Trading Co.

199 F. 561 | 9th Cir. | 1912

ROSS, Circuit Judge

(after stating the facts as above).

The intervener holds a receiver’s certificate, similar to that Lfid by the plaintiff Cowden, and seeks similar relief, and upon the same grounds. They therefore occupy precisely the same position.

The plaintiffs contend that the judgments in cases numbered 1,570, 1,571, and 1,573 are void, on the ground of fraud in the indebtedness upon which they were founded, and because of lack of service of process therein upon an accredited agent of the Campion Mining & Trading Company. The service, as has been seen, was made upon one William A. Gilmore, who pretended to be the agent and representative of the company, and who filed general appearances and pleadings for it in those cases. The complaint shows that service was made on Gilmore on the 18th of August, 1906, and that he appeared and pleaded in due time, and that it was not until July 2, 1907 — nearly one year thereafter — that the judgments were entered. Not only is there no allegation in the complaint that the Campion Mining & Trading Company did not know of the bringing of those actions and of the proceedings therein, but this allegation in the complaint affirmatively shows that that company did have such knowledge: “Plaintiff further alleges that said properties so levied upon, as hereinafter alleged, had been attached by the marshal at or about the time of the bringing of said actions, by force of writs of attachment issued in said actions respectively to him, and said alias executions were levied upon the same properties so previously attached.”

Notwithstanding such knowledge, neither the company nor the receiver of its property made any application to the court in which the actions were pending to set aside the service, or in any way question Gilmore’s authority. Moreover, neither the company nor the receiver, in their cross-complaint, questioned the fact or the good faith of the stipulation entered into by them with the plaintiffs in actions 1,570, 1,571, and .1,573, referred to in the above statement of the case, whereby they agreed that no action-would be taken to set aside those judgments for defective service of summons or for any other cause, and- in effect ratifying and confirming them. On the contrary, in their answer to the complaint they expressly — “admit that the stipulation therein set forth was made and entered into on their part as therein alleged; but they allege that said stipulation was never intended to bar and did not bar these defendants from contesting the legality of such execution sales as might be made under alias executions to be issued for the satisfaction of said judgments, upon the ground of any irregularity in such sales. And these defendants further allege that at the time when said stipulations were entered into on their part this defendant corporation was without any moneys or other valuable resources whatever, wherewith to satisfy or compromise said judgments, or to contest the validity thereof, and this defendant receiver was without any moneys or other resources available for that purpose, and that, being so situated, they entered into said stipulation under compulsion of circumstances, and that the same was the best and only accommodation or arrangement which was offered to them on the part of the judgment creditors in said judgments respectively.”

Under such circumstances, neither the company nor its receiver should be heard to say in a court of equity that Gilmore did not have the authority claimed. Denton v. Baker, 93 F. 46, 35 C.C.A. 187; Mass. Benefit Life Ass’n v. Lohmiller et al., 74 F. 23, 20 C.C.A. 274, and cases there cited. Besides, while the complaint alleges that the receiver was not authorized to enter into the stipulation, it contains no allegation that the Campion Mining & Trading Company was itself unauthorized to enter into it, but, on the contrary, expressly alleges that it did do so.

Both the plaintiffs anfi cross-complainants by their pleadings concede the fact that under and by virtue of the stipulation the Campion Mining & Trading Company and the receiver of its property received a valuable consideration. Both are therefore estopped to deny the validity of the judgments. There is no allegation that they did not have actual knowledge of the sale of the property of the company under the executions; and that they had at least constructive notice is shown by the fact that by the statutes of Alaska a writ of attachment can only be levied upon real property by posting notice on the ground and recording in the office of the recorder of the district in which the property is situated a certificate to the effect that the property, describing it, has been attached in the action in which the writ issued, which proceedings may be followed by execution sale under prescribed notice.

The irregularities which occurred in the making of the sales in question under the executions which are complained of were cured by the confirmation of the sales by the court. In Heid v. Ebner, 133 F. 156, 66 C.C.A. 222, this court said: “It is the general rule in the United States that the confirmation of a judicial sale by a court of competent jurisdiction cures all irregularities in the proceedings leading up to or in the conduct of the sale, and that while such a sale will be set aside where fraud, mistake, or surprise is shown, mere irregularities in the preliminary proceedings do not render the sale invalid, and will not suffice to set it aside after confirmation. Wills v. Chandler (C.C.) 2 F. 273; Cooper v. Reynolds, 10 Wall. 308, 19 L.Ed. 931; Ludlow v. Ramsey, 11 Wall. 581, 20 L.Ed. 216; Stockmeyer v. Tobin, 139 U.S. 176, 11 S.Ct. 504, 35 L.Ed. 123. The laws of Alaska are in accord with this general rule. Section 283 of Carter’s Codes of Alaska, pt. 4, provides, in subdivision 4 (Act June 6, 1900, c. 786, 31 Stat. 379) thereof: ‘An order confirming a sale shall be a conclusive determination of the regularity of the proceedings concerning such sale, as to all persons, in any other action or proceeding whatever.’ ”

The laws of Alaska also provide that: “From the date of the attachment until it be discharged or the writ executed, the plaintiff, as against third persons, shall be deemed a purchaser in good faith and for a valuable consideration of the property, real and personal, attached.” Carter’s Alaska Codes, p. 174.

As has been stated, the property sold under the executions in question was attached August 18, 1906, and the receiver was not appointed until August 13, 1907, and then in an action to which the plaintiffs in the attachment cases were not parties. The mere appointment of the receiver, therefore, did not divest the liens acquired by the attach-merits. High on Receivers, § 440; People v. Finch, 19 Colo.App. 512, 76 P. 1120; Pease, Sheriff, v. Smith, Receiver, 63 Ill.App. 411.

The contention on the part of the appellants that the holders of the receiver’s certificates have a paraniount lien upon all of the assets of the Campion Mining & Trading Company is endeavored to be supported by a citation of the cases of Wallace v. Loomis, 97 U.S. 146, 24 L.Ed. 895, Miltonberger v. Railroad Co., 106 U.S. 286, 1 S.Ct. 140, 27 L.Ed. 117, Union Trust Co. v. Illinois M. Railway Co., 117 U.S. 434, 6 S.Ct. 809, 29 L.Ed. 963, and Kneeland v. Luce & Co., 141 U.S. 491, 12 S.Ct. 32, 35 L.Ed. 830. All of those are cases of certificates issued by receivers of railroads, which, for special reasons many times stated and covering a limited period only, the courts sometimes prefer over other liens. The inapplicability of such cases to the present one is made manifest by the Supreme Court in Union Trust Co. v. Ill. M. R. Co., 117 U.S. at pages 455, 456, 6 S.Ct. at pages 820, 821, 29 L.Ed. 963, where it is said: “Property subject to liens and claims and debts, of various characters and ranks, which is brought within the cognizance of a court of equity for administration, and conversion into money, and distribution, is a trust fund. It is to be preserved for those entitled to it. This must be done by the hands of the court, through officers. The character of the property gives character to the particular species of preservation which it requires. Unimproved land may lie idle, with only payment of taxes. Improved property should be rented. Movable property that is not perishable may be locked up and kept; but, if perishable, it must be sold, by way of preservation. A railroad, and its appurtenances, is a peculiar species of property. Not only will its structures deteriorate and decay and perish, if not cared for and kept up, but. its business and good will will pass away if it is not run and kept in good order. Moreover, a railroad is a matter of public concern. The franchises and rights of the corporation which constructed it were given, not merely for private gain to’ the corporators, but to furnish a public highway; and all persons who deal with the corporation as creditors or holders of its obligations must necessarily be held to do so in the view that if it falls into insolvency, and its affairs come into a court of equity for adjustment, involving the transfer of its franchises and property, by a sale, into other hands, to have the purposes of its creation still carried out, the court, while in charge of the property, has the power, and, under some circumstances, it may be its duty, to make such repairs as are necessary to keep the road and its structures in a safé and proper condition to serve the public. Its power to do this does not depend on consent, nor on prior notice. Consent is desirable, but is seldom practicable, where the debts exceed the value of the property. Though prior notice to persons interested, by notifying them as parties, first requiring them to be made parties if they are not, is generally the better way, yet many circumstances may be judicially equivalent to prior notice. A full opportunity, as in this case, to be heard, on evidence, as to the propriety of the expenditures and of making them a first lien, is judicially equivalent. The receiver, and those lending money to him on certificates issued on orders made without prior notice to parties interested, take the risk of the final action of the court, in regard to the loans. The court always retains control of the matter, its records are accessible to lenders and subsequent holders, and the certificates are not negotiable instruments.”

We are of the opinion that the demurrers were properly sustained by the court below, and its judgment is affirmed.