188 Iowa 1227 | Iowa | 1920
The orders of the court which have a bearing will be set out. The order appointing the receiver provides:
“That the receiver take immediate charge of all the mining property, equipment, and assets of every kind connected therewith, and preserve the same, and he is hereby authorized to employ such help as may be necessary to preserve and maintain all the said property, and to keep the said mine in reasonably good condition, and to operate the same mine, if, in his judgment, it can be so operated within the income arising from the operation thereof, and the sale and marketing of coal therefrom, and he is authorized to make such contacts for the marketing of coal therefrom as, in his judgment, will produce sufficient income to keep said mine in reasonable condition for operation, and keep the same in operation during such periods of time as, in his judgment, the business thereof will justify, * * * and conduct all said business as, in his judgment, will best preserve and maintain said property in condition to bring the largest price, in case a sale thereof shall be ordered, and all till the further orders of the court or a judge thereof in the premises.”
Soon after the appointment of the receiver, he made application to borrow money for repairs and operating expenses, in which he alleged that:
“It is necessary to keep said mine in operation to whatever extent its products can be marketed, in order to keep
The order was granted, and it provides, among other things, that, in order to prevent the property from rapidly deteriorating and decreasing in value, it is necessary to keep the same in operation to whatever extent its products can be readily sold on the market. The court seems to have refused to recognize as binding any contract that would tie up the property, or be an incumbrance on it in the future; for, in the order of sale, it is expressly provided that the property should go to the purchaser “divested of all contracts for the sale of coal made by the receiver, and which shall be held to terminate with the sale of said property by the receiver.” The receiver testifies that it was his intention to sell the property as soon as he could find a purchaser at the price the court would authorize him to sell for, and that, because he didn’t have the money to make the necessary repairs and extension work, the mine could not have continued to operate through the winter to the first of April; that, if the property had not been sold in December, he would have been compelled to shut the mine down, and there would have been nothing to the mine, — no funds to do anything with. Appellant relies upon the language of the order appointing the receiver, that he is authorized to make such contracts for the marketing of the'coal as will, in his judgment, produce sufficient income to keep the mine in operation, etc. But this would not authorize the receiver to make any improvident contracts, or contracts unlimited in number or time, nor does it specifically authorize him to make a contract to April 1, 1917; nor do we think there is any implied authority for the receiver to do so, when the language is considered in connection with other language in
Code Section 3824' provides:
“Subject to control of the court or judge, a receiver has power to bring and defend actions, to take and keep possession of property, to collect debts, to receive the rents and profits of real property, and, generally, to do such acts in respect to the property committed to him as may be authorized by law or ordered by the court.”
The receiver stands indifferent, as between the parties, though appointed on the application of one of them, and must prudently preserve and protect the property entrusted, to him as an officer of the court. The property is in eitstodia legis, and the receiver acts for the court, as its creature or officer, having no powers save those conferred upon-him by its orders, or reasonably to be implied therefrom. He is subject to the court’s directions and orders in the discharge of his official duties, and at all times is entitled to apply to the court for instructions, State Cent. Sav. Bank v. Fanning Ball-Bearing Chain Co., 118 Iowa 698; Bank of Montreal v. Chicago, C. & W. R. Co., 48 Iowa 518; 1 Clark on the Law of Receivers (1918 Ed.), Sections 15 and 18.
A business should not be continued under a receivership when it cannot be conducted except at a loss. When it becomes apparent’ that the business cannot be conducted save at the expense of the estate, and no ulterior benefit is
“The courts, however, decline to sanction the exercise of this discretion on the part of receivers in respect to large outlays or contracts extending beyond the receivership and intended to be binding upon the trust.”
“Although, as receiver, he may enter into negotiations and make such agreements as would be binding upon him as an individual, yet, in order to affect the funds in his hands, his acts must be ratified by the court. This rule Is so well established that it has been decided that all persons contracting with a receiver are chargeable with knowledge of his inability to contract, and enter into contracts with him at their peril, and that the court has unquestioned power to modify or even vacate his agreements.” Beach on Beceivers (Alderson’s Ed.), Section 270.
See, also, High on Beceivers (4th Ed.), Section 186; Chicago Deposit Vault Co. v. McNulta, 153 U. S. 554 (38 L. Ed. 819).
Appellant relies largely upon the case of Worthington v. Oak and Highland Park Impr. Co., 100 Iowa 39. They also cite Shreve v. Hankinson, 34 N. J. Eq. 413; Weeks v. Weeks, 106 N. Y. 626 (13 N. E. 96) ; Yetzer v. Applegate, 85 Iowa 121; Brown v. Winterbottom, (Ohio) 120 N. E. 292. In the Worthington case, some of the discussion might be considered favorable to appellant, but, as to the main points involved, it is readily distinguishable from the instant case. In that case, the court had made.an order which provides in part as follows:
“It is further ordered that the said receiver have authority, and he is hereby directed, to continue to operate the said college as an institution of learning, affording like facilities as heretofore, * * * and to make all contracts
Under this order and authority, the receiver employed an instructor for the school year, but, at the expiration of one month, discharged her, and attempted to terminate her contract. She asked damages for breach of the contract, and her claim was sustained. She .was discharged only because the department which she was conducting was not self-supporting. The whole college was conducted at a loss, yet it was operated under the receiver for the year for which the instructor had been employed. The order of appointment contemplated that the school should be operated by the receiver during the year. It specifically directed the receiver to employ teachers to operate the college, and authorized the receiver to adopt and recognize any outstanding contracts made by the president for the employment of professors for the ensuing year. The court found that the instructor was employed by the president and by the receiver himself. In that case, it was in contemplation of the court and all parties interested, that the college should not be sold by the receiver, but operated during the ensuing year. The receiver urged that the contract was an imprudent undertaking, and that the receiver had authority to revoke and rescind it, in the interest of the college and creditors, and the court said that, if it had been an ordinary decree in the case of the appointment of a receiver, there would, no doubt, be force in such position. In the respects mentioned, that case differs from the one at bar. Here, the appointment did not authorize the operation of
The Shreve and Weeks cases, supra, are similar. There, it was evident from the beginning that the litigation would be pending through a period of years, which fact was submitted to the court, and the court specifically ordered the receiver to make a lease for three years. This was known to and acquiesced in by all parties interested. When the three-year term expired, the litigation was still pending, with the prospect that it wTould continue for at least another three years; and the court specifically directed the receiver to extend the leases for another three-year period.
• Contrary to expectations, the litigation terminated before the last three-year period expired, and objection was made to the continuation of the leases to the end of the term. Under such circumstances, it was held that the equities were in favor of the tenants, and should- be considered in view of all the conditions. Such is not the situation in the case now before us.
Brown v. Winterbottom, supra, was a case of negligence, holding that liability for personal injury, growing out 'of the operation of property by a receiver, is a part of the expenses and liabilities of the receivership. We think it is not in point on the question being now considered. Nor does the Yetzer case apply to such a case as this.
Other and additional matters set up by receiver and plaintiffs in answer to the petition of intervention are that appellant was not entitled to recover because of liens on the property in favor of plaintiffs which had existed for a considerable time before the receiver was appointed, and that the receiver took the property subject to the payment of such prior liens, and that such incumbrances are entitled to protection; also, that the agreement between the receiver and intervener was made with the understanding that the property was for sale, and that, if sold, that would
As before stated, we deem it unnecessary to go into these matters in detail. After considering the entire record, we reach the conclusion that the judgment of the district court was right. It is, therefore, — Affirmed.