777 F.2d 1288 | 7th Cir. | 1985
The appellant, James J. Ward, the receiver for the Woodcrest Apartments, Ltd., appeals an order of the district court denying his motion to intervene. We dismiss his appeal.
I.
In April 1977, Matthew C. Thompson purchased a limited partnership interest in Woodcrest Apartments, Ltd., (“Woodcrest Apartments”) for $10,000. Between April and September 1977, twenty-four other investors also purchased limited partnership interests in Woodcrest Apartments, bringing the limited partners’ investment to $250,000. Before purchasing their limited partnership interests, Thompson and the other investors relied on a private offering memorandum (“prospectus”) prepared by Kenneth F. Kortas and the general partners in Woodcrest Apartments, Sterling Enterprises, Inc. (“Sterling”) and John A. Meatte. The prospectus disclosed that $150,000 of the assets of Woodcrest Apartments was to be contributed to Woodcrest
After Thompson unsuccessfully attempted to obtain a report on the status of the Woodcrest Apartments, Ltd. and its assets from Sterling and Meatte, he commenced this lawsuit in October 1979 in his individual capacity, and on behalf of the class of investors who purchased limited partnership interests in Woodcrest Apartments. The complaint alleged common law fraud and violations of federal securities laws, naming Sterling, Meatte, and Kortas as defendants (the “Sterling defendants”), and requested that a receiver be appointed to prevent the defendants from dissipating the assets of Woodcrest Apartments, Ltd. The district court appointed James J. Ward as receiver to “locate, trace, maintain, and preserve any and all assets of [Woodcrest Apartments].” In response to Thompson’s oral motion at a subsequent status hearing, the district court ruled that the Sterling defendants defaulted when they failed to respond to Thompson’s complaint or file an appearance in the district court. More than a year later, in September 1981, the district court granted Thompson's motion to certify his action as a class action.
In early 1982 Thompson succumbed, and J. William Holland, the administrator of the Matthew Thompson estate, was substituted as plaintiff. Holland filed an amended complaint in April 1982 naming Leonard E. Cooper, Cooper-Glowicki, and DLJ Entities as defendants (the “Cooper defendants”).
Holland filed a motion for a default judgment against the Sterling defendants and the district court entered a default judgment against the Sterling defendants on August 23, 1982.
One year later, on the 23rd of August in 1983 the Cooper defendants filed a motion to clarify whether the suit then pending against them was a class action. The district court ruled that the class had been certified only with respect to the Sterling defendants, ordering Holland “to file an appropriate motion if he wishes to pursue an action against the Cooper defendants on
Subsequently, Holland filed a motion entitled “Notice to Issue to Class Members,” to inform them that the class action was not proceeding against the Cooper defendants. When James J. Ward, the receiver, learned at this time that Holland had commenced settlement negotiations with the Cooper defendants,
II.
The question before the court is whether the receiver, appointed to “locate, trace, maintain, and preserve any and all assets of [Woodcrest Apartments],” may appeal the district court’s order denying his motion to intervene without the prior approval and permission of the district court.
“The receiver is an officer of the court and subject to its orders in relation to the property for which he is responsible until discharged by the court.” Federal Savings & Loan Insurance Corp. v. PSL Realty Co., 630 F.2d 515, 521 (7th Cir.1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3109, 69 L.Ed.2d 971 (1981); see also United States v. Smallwood, 443 F.2d 535, 539 (8th Cir.), cert. denied, 404 U.S. 853, 92 S.Ct. 95, 30 L.Ed.2d 93 (1971); Ledbetter v. Farmer’s Bank & Trust Co., 142 F.2d 147, 150 (4th Cir.), cert. denied, 323 U.S. 813, 65 S.Ct. 112, 89 L.Ed. 647 (1944); Jamaica Savings Bank v. Florizal Realty Corp., 95 Misc.2d 654, 407 N.Y.S.2d 1016, 1018 (N.Y.Sup.Ct.1978); Interlake Co. v. Von Hake, 697 P.2d 238, 240 (Utah 1985); Krist v. Aetna Casualty & Surety, 667 P.2d 665, 669 (Wyo.1983). As an officer of the court, “[a] receiver is an indifferent person between parties, appointed by the court to receive the rents, issues, or profits of land, or other things in question ... where it does not seem reasonable to the court that either party should do it____ He is appointed on behalf of all parties, and not of the complainant or the defendant only____ It is the court itself which has the care of the property in dispute.” Booth v. Clark, 58 U.S. (17 How.) 322, 330, 15 L.Ed. 164 (1854).
It is a well-established rule that as an officer of the court, “a receiver may not ordinarily appeal without first obtaining authority from his creator, the court appointing him.” Hatten v. Vose, 156 F.2d 464, 468 (10th Cir.1946); see also Coffey v. Gay, 191 Ala. 137, 67 So. 681, 682 (1914); Stowell v. Arizona Savings & Loan Ass’n, 93 Ariz. 310, 380 P.2d 606, 607 (1963); McKenzie v. Standard Bleachery Co., 109 N.J. 429, 157 A. 845, 847 (1931); Hill v. M.S. Alyer & Son, Inc., 106 R.I. 38, 256 A.2d 10, 14 (1969); 4 C.J.S. Appeal & Error, § 203 (1957). “To allow receivers to review rulings of the court under whose appointment they act, without first obtaining authority for that purpose would tend to [consume] the fund in the payment of costs and attorneys’ fees rather than to [conserve] the interest of those for whose benefit insolvent funds are administered.” Hatten, 156 F.2d at 468.
Courts have recognized very limited exceptions to this established rule allowing a receiver to appeal an order of the appointing court only after obtaining prior approv
“A receiver may defend, both in the court appointing him and by appeal, the estate in his possession against all claims which are antagonistic to the rights of both parties [or] ... which are antagonistic to the rights of either party to the suit, subject to the limitation that he may not in such defense question any order or decree of the court distributing burdens or apportioning rights between the parties to the suit, or any order or decree resting upon the discretion of the court appointing him.”
Id. at 186, 19 S.Ct. at 627; see also Hatten, 156 F.2d at 468; Kirkpatrick v. Eastern Milling & Export Co., 135 F. 151, 151 (C.C.N.J.1905). The court also stated that:
“[a receiver] may appeal from an order or decree which affects his personal rights, provided that it is not an order resting in the discretion of the court. Thus he may not appeal from an order discharging or removing him, or one directing him in the administration of the estate, as for instance to issue receiver’s certificates, to make improvements, or matters of that kind, all of which depend on the sound discretion of the trial court.”
Bosworth, 174 U.S. at 189, 19 S.Ct. at 628.
The receiver’s appeal in the instant case does not fall within either of the limited exceptions outlined by the Supreme Court in Bosworth. Initially, the receiver’s action in seeking to intervene is not an attempt to defend the estate in his possession against claims antagonistic to either or both parties. The only parties to the present action are Holland and the Cooper defendants. The record fails to reflect that any claim has been asserted against the receivership estate antagonistic to the interest of either Holland or the Cooper defendants requiring that the receiver be allowed to defend the estate.
Secondly, the appeal of the receiver clearly is not related to the personal rights of the receiver. A receiver may appeal an order affecting his personal rights, for example an order disallowing his commission or fees, provided the order does not rest in the discretion of the court. Bosworth, 174 U.S. at 189, 19 S.Ct. at 628. In the instant case, the receiver sought to intervene solely to protect the rights of Woodcrest Apartments and its investors and not to protect his right to his fee. Because the motion to intervene asserted no personal interest of the receiver in his fee, he cannot base his appeal on the exception permitting a receiver to appeal an order affecting his personal rights.
The appeal of the receiver thus fails to fall within either of the specific limited exceptions to the established rule barring a receiver’s appeal absent the prior approval and permission of the appointing court — to defend claims antagonistic to the rights of the parties or to protect the personal rights of the receiver. Furthermore, the order denying the motion to intervene is similar to orders that the Bosworth court stated when specifically not appealable. The court in Bosworth stated that a receiver:
*1293 “cannot question any subsequent order or decree of the court distributing the estate in his hands between the parties to the suit____ He is to stand indifferent between the parties, and may not be heard either in the court which appointed him, or in the appellate court, as to the rightfulness of any order which is a mere order of distribution between the parties.”
174 U.S. at 186, 19 S.Ct. at 627. Yet that is precisely the effect of the receiver’s attempted intervention in the instant case. The trial court, together with the parties, was approaching a resolution of the dispute, when the receiver, in an eleventh hour maneuver, sought to prevent settlement in attempting to intervene to assert the rights of non-parties. In intervening to prevent settlement, the receiver is in effect questioning the rightfulness of the court’s distribution of the receivership estate between the parties. The court in Bosworth stated that such a challenge “may not.be heard either in the court that appointed him, or in the appellate court.” Id: at 187, 19 S.Ct. at 627.
The court in Bosworth also stated that a receiver “may not appeal from an order discharging or removing him, or one directing him in the administration of the estate, as for instance to issue receiver’s certificates, to make improvements, or matters of that kind, all of which depend upon the sound discretion of the trial court.” Id. at 189, 19 S.Ct. at 628. Thus, we must determine whether the order denying the motion to intervene was an order directing the receiver in the administration of the estate committed to the discretion of the trial court.
Further, the order of the district court denying the receiver’s motion to intervene was clearly a decision left to the discretion of the trial court. Rule 24 of the Federal Rules of Civil Procedure provides the standards governing a motion to intervene. Rule 24(a) states that "upon timely application anyone shall be permitted to intervene in an action ... when the applicant claims an interest relating to the property or transaction which is the subject of the action____” Fed.R.Civ.P. 24(a). Rule 24(b) states that “upon timely application anyone may be permitted to intervene in an action ... when that applicant’s claim or defense and the main action have a question of law or fact in common.” Fed.R. Civ.P. 24(b). Both subsections of Rule 24 require that an application to intervene be timely. Whether a motion to intervene should be denied because it was not made in a timely fashion is a decision committed to the discretion of the district court. See NAACP v. New York Aircraft Corp., 413 U.S. 345, 366, 93 S.Ct. 2591, 2603, 37 L.Ed.2d 648 (1973); 7A C. Wright & A. Miller, Federal Practice and Procedure, § 1916 at 572 (1972). In the instant case, the district court denied the receiver’s motion to intervene, stating, “Intervention is clearly inappropriate at the point we are now.” The receiver’s motion for intervention came some four and a half years after the commencement of the lawsuit, merely days before Holland accepted the Sterling
We conclude that the receiver’s appeal fails to fall within a recognized exception to the rule that a receiver cannot appeal without the permission of the court appointing him. We further conclude that the order denying the receiver’s motion to intervene is an administrative order within the discretion of the district court which the Supreme Court in Bosworth specifically stated was not appealable. Accordingly, we hold the receiver cannot appeal the district court’s order denying his motion to intervene without first obtaining the permission of the district court.
The receiver’s appeal is Dismissed.
. Leonard E. Cooper was a partner in both the Cooper-Glowicki Partnership and DLJ Entities.
. The judgment order provided, in part:
“It is the finding and order of this Court that this Judgment Order is to be taken solely against the defaulted Defendants, Sterling Enterprises, Inc., John A. Meatte and Kenneth F. Kortas, and that nothing herein contained shall stand as a finding of fact or ruling of law affecting the right of the remaining Defendants Leonard E. Cooper, Cooper-Glowicki Partnership and DLJ Entities. This Judgment Order shall not be taken as establishing the law of the case, collateral estoppel, or res judicata to said remaining defendants____ All such issues, whether questions of law, determinations of class, or factual determinations, as they concern the remaining defendants are to be determined by such order and further orders this Court may enter in futuro.”
. Ward apparently learned of the settlement negotiations through his counsel, who also represented Holland.
. An example of a claim antagonistic to both parties would be a suit filed by the State of Illinois against Woodcrest Apartments for real estate taxes due and owing the State. See Bosworth, 174 U.S. at 186, 19 S.Ct. at 627. In such an instance, the receiver would be entitled to defend the receivership estate and appeal rulings adverse to the receivership estate in order that he might preserve, to the greatest extent possible, the assets of the estate for distribution among the parties of the receivership action as the court determines.
. We note that the receiver would have no right to appeal if the district court had discharged or removed the receiver instead of merely denying the receiver's motion to intervene.
. The receiver’s motion to intervene cited both Rule 24(a) and 24(b) as authority for its attempted intervention. An order granting or denying a motion for permissive intervention pursuant to Rule 24(b), even if it is timely filed, is committed to the sound discretion of the trial court. Allen Calculators, Inc. v. National Cash Register Co., 322 U.S. 137, 142, 64 S.Ct. 905, 908, 88 L.Ed. 1188 (1944); see also 7A C. Wright & A. Miller, Federal Practice and Procedure, § 1923 at 630 (1972).
. The receiver contends that Piambino v. Bailey, 610 F.2d 1306 (5th Cir.), cert.d enied, 449 U.S. 1011, 101 S.Ct. 568, 66 L.Ed.2d 469 (1980), supports his position that a receiver need not have the permission of the court to appeal from an order denying intervention. Piambino is clearly distinguishable on several grounds. First, in addition to his position as receiver, the intervenor in Piambino was also the Compliance Officer of the California Restitutionary Fund, and as such was a "trustee of an express trust" within the meaning of California law and "a real party in interest for purposes of [the] litigation.” 610 F.2d at 1323. Because of his position as Compliance Officer, the court concluded, "we have no occasion to address the separate question of whether his appointment as receiver ... by the Superior Court ... was sufficient to warrant intervention of right." Id. at n. 21. Second, since the court in Piambino focused on the intervenor as Compliance Officer rather than as receiver, the court never discussed his right as a receiver to appeal the order denying intervention. Third, the receiver in Piambino was appointed by the California Superior Court, and thus when he appealed the order of the United States District Court denying intervention, he was not appealing from an order of the court that appointed him. In view of the significant differences between the facts in Piambino and the instant case and the fact that the Piambino opinion never addressed the issue of a receiver’s right to appeal, Piambino cannot be read to support the receiver’s argument before this court.