29 F. 226 | U.S. Cir. Ct. | 1886
On June 14, 1886,
On October 26, 1886, the plaintiff made application for the order of sale provided for in the decree, based on the affidavit of the defendant Eilinger, to the effect (1) that Joseph Iiolladay had not paid any part of said decree; (2) that the receiver of the property appointed by the state court in Holladay v. Holladay, namely, David P. Thompson, “had
On November 20th the application was heard by the court on the pleadings, proofs, and decree in this case, and copies, offered by the plaintiff, of a deed of trust from Ben Holladay and others to George W. Weidler, dated September 6,1886; of articles of agreement between Ben Holladay and Esther, his wife, of the one part, and Joseph Holladay and George W. Weidler, of the other part, and their counsel, dated July 10, 1886; and of the order of the circuit court, dated November 17, 1883, appointing the receiver in Holladay v. Holladay; and the affidavit of George W. Weidler, dated November 6,1886, offered by the defendant Joseph Holladay, with copies attached thereto of the final decree of the supreme court of the state in Holladay v. Holladay, of June 29, 1886; and the mandate transmitting the same to the circuit court; and the presentation of the same in said court by the attorney of Joseph Holladay, on July 12, 1886; of the order of the circuit court of the same date removing D. P. Thompson from the receivership aforesaid, and appointing Joseph Holladay and George W. Weidler thereto; and of the order of said court of September 27, 1886, approving and providing for the enforcement of the terms of the agreement aforesaid between Ben Holladay and Esther, his wife, and Joseph Holladay and George Weidler.
It appears that in January, 1873, Ben Holladay, being indebted to his brother, Joseph Holladay, in the sum of §100,000, gave him his note therefor; and that on November 1,1876, he gave him another note of §163,345, in payment of this and other indebtedness. Thereafter, and until 1878, Ben Holladay, from time to time, caused the real and personal property in Oregon,—supposed to be worth not less than §500,-000,—of which he was the equitable owner, including that mentioned in the decree herein, to be conveyed to Joseph Holladay by deeds absolute on their face. Afterwards Joseph Holladay went into possession, and remained so until the appointment of the receiver, and took the rents and profits thereof to his own use, of which much the larger portion went to his brother’s support.
In 1883 Ben Holladay commenced a suit against Joseph Holladay in the circuit court for Multnomah county, in which he stated the existence of the indebtedness to his brother, and the conveyance of his property to him as aforesaid; and alleged that the conveyances, although absolute in form, were really intended to operate as mortgages for the security of said debt, and asked to have them so declared, and to be allowed to redeem the property therefrom on the payment of what was due the mortgagee. In his answer Joseph Holladay affirmed that the conveyances were made to hinder and delay the grantor’s creditors, and
On appeal by Joseph Holladay, the supreme court determined that the conveyances were executed with intent that they should operate as mortgages, and not with intent to hinder and delay creditors; and that the grantor might redeem on the payment of the debt, and costs of suit, which former the court found then to be $315,492.46.. The decree of the court also provides (1) “that the redemption hereinbefore provided for be made by the plaintiff or his assigns within 90 days from the entry of this decree;” (2) that during said 90 days, “unless otherwise ordered by the court below,” the receiver or his “successors” shall keep the possession of the property; (3) if the plaintiff fails to redeem within the time limited, the receiver shall pay over to the defendant all money in his hands, and “turn over and deliver to the sheriffs of the respective counties where said property may be situated all of the property in their respective counties,” who shall, under the direction of the defendant, sell all or so much thereof “as upon execution,”-as may be necessary to satisfy said debt and costs, which sale shall bar the parties of all right in and to the premises, except the right of redemption provided by statute; and (4) that the cause be remanded to the court below, “and that a decree be there entered and docketed in accordance therewith.” It does not appear that this decree has been either entered or docketed in the courr below, but only that it was presented and read therein.
The giving and enforcing of a decision of the appellate court is regulated by section 536 of the Code of Civil Procedure. Subdivision 2 of the section comprehends this case,—one where “a new trial is not ordered;” and it provides that,.on the receipt of the mandate by the clerk, “a judgment or decree shall be entered in the journal, and docketed, in pursuance of the direction of the appellate court, in like manner, and with like effect, as if the same was given in the court below.” The decision of the appellate court in Holladay v. Holladay cannot, it seems, have the force and effect of a decree or judicial determination of the controversy between the parties until it is entered in the journal of the circuit court as provided by statute, and directed by mandate of the appellate court.
So far, then, as appears, the proceedings and orders in the circuit court for the removal and appointment of receivers, and the sanction and enforcement of the private agreement of the parties concerning the disposition of the subject-matter of the suit, were coram, non judice, and void. But the exhibits before me do not profess to contain a full copy of the record, and, while it does not appear affirmatively that the decision was entered in the journal of the circuit court, it may have been, and therefore it will be taken for granted that it was.
According to section 1029 of the Code of Civil Procedure, a receiver may be appointed in a civil suit (1) “provisionally, before decree, on the application of either party, when his right to the property, which is the subject of the suit, and which is in the possession of the adverse party,
It may be admitted that the appointment of a receiver in Holladay v. Holladay was well calculated to coerce the defendant into a compliance with the demands of the plaintiff. But there does not appear to be any authority in this statute for so doing, at least so far as the real property is concerned; for, even on the theory and claim of the plaintiff in that suit, the defendant was the mortgagee of the property, with an unpaid debt equal in amount, to the probable value of the property at a forced sale, who had gone into possession with the consent of the plaintiff, and was therefore entitled to remain in possession until his debt was paid, and in the mean time to receive and apply thereon the rents and profits of the property. Roberts v. Sutherlin, 4 Or. 219; Witherell v. Wiberg, 4 Sawy. 232.
The property, being real, could not be lost pending the litigation or otherwhile. Nor was it likely to be injured; but, if it was, the defendant’s interest therein—the amount of his debt—was ample security therefor. And, as for the rents and profits, they could not be lost to the plaintiff; for, in effect, they belonged to the defendant, and were, in fact, as fast as received, a payment on his debt. If there was any danger of the defendant’s disposing of the property, or incumbering it, pending the litigation, as the apparent owner thereof, he might have been enjoined from so doing.
The only controversy involved in the case of Holladay v. Holladay was this: Were the conveyances from the plaintiff to the defendant, although absolute in form, mortgages in fact? and, if the latter, what sum was then due the defendant thereon? The court decided that the conveyances were mortgages, and that the plaintiff might redeem on the payment of $315,492.46 in 90 days; and this was a determination of the whole controversy before the court. If the plaintiff did not redeem within the time limited, his right of redemption was gone, and the defendant, as between the parties to the conveyances, became the absolute owner of the property. The further provision in the decree that, in case of a failure to redeem, the receiver, instead of surrendering the property to Joseph Holladay, as he ought, should turn it over to the sheriffs of the respective counties in which it was situated, to be sold as upon execution, on the order of Joseph Holladay, appears to be an extrajudicial arrangement, devised by counsel for the purpose of keeping up what may be called an unbroken possession of this property in the hands of the officers of the state courts, in the hope of thus preventing the plaintiff, who has the first lien on it, from enforcing the same by the sale thereof on the process of this court, and thus collecting his demand against Ben Holladay.
Hie agreement between the Holladays and their counsel, of July 10, 1886, divides this property into two lots, described in two memorandums, the first of which contains eleven valued parcels, situate in six different counties, amounting in the aggregate to $327,500, and includes the property mentioned in the decree heroin. It provides as follows:
(1) The debt of Joseph Holladay is increased $31,194, making it $346,686.46, drawing interest at 6 per centum; and Bon Holladay has the right to redeem the property mentioned in Memorandum 1, or any parcel thereof, within three years from the dato of the agreement, on the payment of the affixed value.
(2) The property mentioned in Memorandum 2 is released from the lien of the Holladay mortgage and decree, and vested in George W. Weidler, as trustee, to sell and dispose of the same, and pay the debts due from Beil Holladay to August Belmont, the Mutual Life Insurance Company, S. L. M. Barlow, and others, the attorneys and counsel in this litigation; which provision is carried out by the deed of trust from Ben Holladay and Esther, his wife, to said IVeidicr, of September —■, 1886, conveying said property to him in trust to pay said debts therewith, without naming the amounts, according to the terms of an agreement between said parties and Holladay, of August 31, 18(86, which arc not disclosed, and which was apparently made in fulfillment of the undertaking in this agreement that Bon Holladay would in 90 days procure said creditors to relinquish all claims to priority of security or payment over Joseph Ilolladay.
(3) Bui if sundry other named creditors of Bon Holladay’s, including this plaintiff, or any of them, shall succeed in having said mortgages adjudged fraudulent as against them, or any of them, Joseph Ilolladay shall be so far indemnified out of the proceeds of the properly in Memorandum 2, and no creditor shall be paid anything until ho assents to this agreement.
(4.) The court may remove the present receiver, (D. P. Thompson,) and appoint Joseph Holladay and George W. Woidler receivers of the property in Memorandum 1, “'to take charge of, manage, soli, and dispose of the same during said three years,” or until the redemption provided for; and “the court may direct the receivers to apply the income and proceeds of such property, when sold,” as follows: First. To the payment of taxes, assessments, repairs, and insurance thereon; taxes on tl e
(5) George W. Weidler, as trustee, shall manage and dispose of the property mentioned in Memorandum 2, aiid apply the proceeds as provided in the first, second, and third subdivisions aforesaid; and the residue of the proceeds of the property in Memorandum 1 shall be applied to the creditors first mentioned herein.
(6) On the payment of Joseph Holladay, the property in Memorandum 1 not redeemed or disposed of shall be conveyed to George W. Weidler, in trust for the payment of Ben Holladay’s creditors: provided, the debts due August Belmont, the Mutual Life Insurance Company, S. L. M. Barlow, and the attorneys and counsel aforesaid, shall be a lien thereon, second only to that of Joseph Holladay.
(7) When any property is sold by said receivers or trustee, the court may direct that the same be conveyed in payment of the purchase price, and such conveyance shall have the effect to pass the said property to the purchaser in fee-simple, clear of all incumbrances.
On July 12, 1886, the court, in pursuance of the stipulation of the parties,' removed D. P. Thompson from the receivership, and appointed Joseph Holladay and George W. Weidler receivers, with directions to Thompson to turn over theperoprty to them, who are to “take, manage, and retain” the same “until discharged by the court.”
On September 27, 1886, the court, on the application of the parties and the filing of the agreement aforesaid, declared that the terms and conditions of said agreement should be enforced by the court, and ordered (1) that the time of redemption be enlarged to three years from July 10, 1886; (2) that the receivers convey to George W. Weidler, trustee, all the property in their hands mentioned in Memorandum 2, and discharge the same from the custody of the court, and the lien of the decree therein; (3) that the receivers “safely keep, hold, and manage” the rest of the property, as heretofore, until the further order of the court, and “apply the proceeds thereof in making the payments” provided for in said agreement, until the further order of this court.
I have thus, with some labor and pains, given a substantial outline of the facts and proceedings involved in' this application, and without which the question involved could not well be understood.
Counsel for Joseph Holladay and Weidler, representing all the parties to the agreement of July, contend that the property is in the possession of the receivers of the state court, and that this court cannot and will
On the other hand, counsel for the plaintiff insist that Hollad ay and Weidler are not receivers at all, but the mere agents of the Holladays and their attorneys, in a scheme devised by themselves for the purpose of appropriating this property to their own use, and that of three favored creditors, to the exclusion of the plaintiff and others having prior rights therein; and that, even if they are receivers, being in possession simply without title, a sale on the decree of this court would not interioro therewith.
On the latter question the case relied on by counsel for Holladay and Weidler is Wiswall v. Sampson, 14 How. 52. The language of the opinion by Mr. Justice Nelson is very strong and unqualified,—much more so than the case required,—to the effect that a sale of property made on the process of one court, while the same is in the possession of a receiver appointed by another, is illegal and void.
A contrary view is maintained with great force and learning in Chautauqua Co. Bank v. Risley, 19 N. Y. 369. In each of these cases the receiver was appointed in a suit by a judgment creditor to set aside a fraudulent conveyance, and subject the property to the payment of the grantor’s debts, and the ultimate purpose of the proceeding was to sell the property, and create a fund for distribution among creditors. In each ease tho sale in question was made at the instance of a j udgment creditor, whose judgment antedated the appointment of the receiver, but was subsequent. to the execution of the fraudulent conveyance. In the first ease the conveyance based on the sale was held invalid, while in the second one it was held valid. But even then the court admits that the party making the sale while tho property is in the possession of the receiver is guilty of a contempt. Indeed, it says (page 377) the question is merely one of contempt, and does not affect the legal right.
But as the title of tho judgment debtor in each case had passed to the grantee in the fraudulent conveyance before the judgment was obtained on which the sale was made, the judgment creditor had no lien on the property. Therefore nothing passed by tho sale, and on this ground, at least in this state, the sale would be held inoperative. In re Estes, 6 Sawy. 459; S. C. 3 Fed. Rep. 134. The debtor’s conveyance having been set aside as fraudulent, in the suit in equity, the property was in the hands of the receiver for the purposes thereof.
It may be admitted that when a court takes possession of property by means of a receiver, at the suit of creditors, for the purpose oi' disposing of tho same, and distributing the proceeds thereof according to the respective rights of said creditors, a sale or an attempt to sell such property on the process of another court is, in effect, an interference with suoh possession. And this is so because the -possession of the receiver in sucli case is not a mere provisional custody, pending the litigation in which he is appointed, for the benefit of the party who shall be found entitled thereto, but it is a possession taken and held with a view to a final disposition of the property, by converting it into money, and dis
And such is this case. The relief sought in Holladay v. Holladay in no way involved the sale or distribution of the property, but only the right of the plaintiff to redeem the same from what he alleged were mortgages given thereon to the defendant, and thus be restored to his original right and possession. By the order of November 17, 1883, appointing the receiver, he was simply directed to take the property included in the alleged mortgages into his possession, manage the same,—care for it,— until discharged by the court. And the order of July 12, 1886, does no more. By it, Holladay and Weidler are only directed to take and manage the property until discharged by the court.
The receiver has no title to the property, (High, Rec. § 5,) and that is all that is affected or changed by a sale. If’it becomes necessary to resort to legal proceedings to obtain possession under such sale, the party must wait until the receiver is discharged, or obtain permission from the court appointing him; and this present right to sell may be a valuable one. By the exercise of it in this case, a creditor of Ben Holladay,— the confessed owner of the property,—having an established claim against him, and the first lien on the property, is enabled to realize on his.security at once, without awaiting the result of the contentions or contrivances for delay of the parties to a suit in which he has no interest, and whose interests in the property are altogether subordinate to his. But considering the unqualified language or dicta of Mr. Justice Nelson in Wiswall v. Sampson, supra, I do not feel at liberty, sitting in this subordinate tribunal, to follow my own judgment, and direct a sale of property in the hands of a receiver for any purpose; and particularly a court of another jurisdiction.
And this brings me to the consideration of the question, is this property now in the hands of a receiver at all? Or is there now any receiver in Holladay v. Holladay? After a careful examination of the subject, I am constrained to answer this question in the negative. The functions of a receiver usually terminate with the termination of the litigation in which he was appointed, (High, Rec. § 833;) and although he may not be beyond the power of the court until ho accounts for his trust, and is formally discharged, yet his general functions and powers, including the custody and management of the property, terminate with the final decree, unless and only so far as it may provide some act or duty- to be performed by him, concerning the disposition of the property, other than the mere surrender of it to the party thereby entitled to receive it. ■' When it was determined in this case by the decree of the supreme
I make no .account of the further direction concerning the custody of the property until ihe levies are made by the sheriffs of the various comities in which the property is situated, under Joseph Holladay’s direction. The provision is ambiguous, and if it is intended, as suggested on the argument, to give ihe circuit court power to control the custody of this property, so as to prevent the plaintiff from enforcing his lien thereon by a sale thereof sufficient to satisfy his debt, not only during the term appointed for redemption, but as long thereafter as Joseph Holladay shall please to extend it, by delaying the levy, then I think the court has undertaken to provide a perpetuity in favor of a fraudulent debtor and his grantee that no one is bound to regard. Therefore I prdfer to think that the reference to the levy, as a point of time to which the custody of the
In my judgment the functions and authority of the receivers over this real property terminated at the end of the 90 days, and the jurisdiction of the court was gone, except to call the receiver to an account for his trust, and, it may be, to compel the mortgagee to reconvey, if the tender of his debt had been duly made. The consent of the parties, so far, at least, as third persons are concerned, does not give a court jurisdiction to appoint a receiver, (Whelpley v. Erie Ry. Co., 6 Blatchf. 274;) and in Louisiana it has been decided that a receiver of partnership funds, appointed by consent of both partners pending a suit for the dissolution of the firm, is not an officer of the court, but merely an agent of the parties. Kellar v. Williams, 3 Rob. 321; so cited in note to section 1, in High on Receivers.
The presumption is that the order for the enforcement of this scheme having been made on the joint application and consent of the parties, the court did not consider or consciously consent to its operation, so far as the rights of third persons are concerned; and I doubt not that, on the matter being brought to its attention, it will so declare. The respect which I am bound to entertain for this tribunal will not allow me to believe that it would give its deliberate sanction to a scheme which, so far
My conclusion therefore is that Holladay and Weidler are not receivers of this property, and that there is nothing to prevent this court from directing a sale of so much of the same as will satisfy the decree herein.
The orders of the court will be that the master sell the property as on execution, and that, on the coming in of his report, the court will consider and determine whether, if possession is withheld, to'direct the issue of a writ of possession in favor of the purchaser, or leave Mm to his action of ejectment.
Hickox v. Elliott, (The Holladay Case,) 27 Fed. Rep. 830.
Holladay v. Holladay, (Or.) 11 Pac. Rep. 260.