Hottenstein v. Conrad

'The opinion of the court was delivered by

Brewer, J.:

Defendant in error sued plaintiff in error in -the district court for a settlement of partnership affairs. He -alleged in his amended petition a partnership, its termination, that defendant (now. plaintiff in error) had in his possession •certain assets of the partnership, that he refused to account, •excluded plaintiff from all control over the property, declined to make any division, or any disposition whereby a settlement of the partnership could be had. The petition was verified. Upon notice and motion, supported by affidavits, -a receiver was appointed. A motion to rescind and set aside •the order appointing a receiver was overruled, as was also a .similar motion made after filing of answer. This answer •denied absolutely any partnership, and was also verified. The cause was continued over one term, over the objection of the defendant, and was then referred. The referee’s report found a partnership, and made an accounting between the-partners, and division of the assets. It divided the costs.. This report was confirmed, except as to the costs, which by the district court were taxed wholly against plaintiff in error.

Five points of alleged error are presented to our notice in the brief of counsel for plaintiff in error: 1st, That it was-error to appoint a receiver upon the showing made; 2cl, That the appointment should have been set aside upon the motiop made therefor, before answer; 3d, It should have been done after answer filed denying under oath the partnership; 4th,. It was error to grant the continuance; 5th, That the court ought not to have modified the referee’s x-eport as to the-question of costs.

, . , „ 1. Appointment of receiver, I. It is objected that “the petition contains no averixxent that there was danger that the property, woxxld be wasted, ox-injured, before the answer, or before the trial of the case.” Sxxch an averment was entirely unnecessary. The showing of a necessity for a receiver need xxot be in the petition. The: appointmexxt of a receiver is a provisional rexnedy. It is an auxiliary proceeding. It is xxot the xxltimate exxd or object of a suit. The statute says, “a x-eceiver xxxay be appointed * * * * in an action,” etc. All that the pleadings xxeed disclose. is, that the action pending is one of a class in which thestatxxte says a x’eceiver xnay be appointed. A J t L < receiver may be appointed in an actioxx to foreclose. a nxortgage, if the mortgaged property be probably insufficient to discharge the mortgage-debt. In sxxch case, all that the petitioix need contain are the ordinary averments for the fox’eclosure of a xnortgage. The x-elat-ion of the value of the xnortgaged property to the-mortgage-debt may. be .shown by affidavits, oxx a motion for a receiver. The motion may succeed or fail, and yet in nowise-affect the pexxding sixit. It beax’s no closer relation to the suit-than attachment iix axx action oxx a px’omissory note does tosxxch actioxx. In this case the petitioxx disclosed axx unsettled partnership between the parties, and partnership property in the hands of defendant, and an exclusion of plaintiff from any control thereof. It presented an action therefore in which upon proper showing a receiver might be appointed. Code, § 254, clause 1, Gen. Stat., 677.

2. solvency of defendant. 3. Receivers shiprnotartnei’~ established. 4. In cases where partnership is shown. 5. where court cantaquire, deteimme. II. Upon the affidavits presented on both sides it is claimed that it appeared that the property would be safe in the hands of the defendant, and therefore the appointment of a receiver should have been set aside. It appears very plainly from the affidavits that there was a partnership; that defendant had possession of all, or nearly all, the assets, and that he was disposed to deny the' partnership and appropriate the partnership property. In regard to defendant’s financial condition we find little or no information. Three citizens of Humboldt testify that in their judgment it was good. The bulk of the partnership property consisted of cattle, and two witnesses testified that the cattle were herded at Hottenstein’s place, at the time of the appointment of the receiver, and were in good condition, and not liable to waste. We do not think this testimony justifies the conclusion daimed by counsel. It does not necessarily follow, because the partner in possession is solvent, that no receiver will be appointed. In fact, the question of solvency may or may not become material. Receivers may now be appointed (see clause sixth of section of code heretofore cited,) “in all cases where receivers have heretofore been appointed by the usages of the courts of equity.” Where the testimony leaves the existence of a partnership in doubt, and there is no proof of the insolvency of a party in possession, a court of eqnpy Ayip not interfere to take the property out of his hands and give it to a receiver: Goulding v. Bain, 4, Sandf., 716; Peacock v. Peacock, 16 Ves., 49. But the former case shows that where a partnership is established, and the defendant in possession excludes plaintiff from , any control, a receiver should be appointed, and this, without any regard to the solvency of defendant. The court say: “ When the partnership is admitted, and one partner ejects another, or assumes the exclusive control of the property, and they cannot mutually agree as to their respective rights, a court of equity will interfere and appoint an indifferent person as receiver to wind up the partnership, and pay the debts, and distribute the balance among the partners. But to authorize the appointment of a receiver there must be a partnership admitted or established.” In that case there was a large amount of testimony by affidavits, pro and con, on the question of partnership, leaving its existence a matter of great doubt, and the language of the court must be understood in reference to those facts. Obviously, there is great propriety in the rule thus laid down; for if no partnership did exist, it would be great hardship to have one’s individual property.placed in the.hands of a receiver, and individual business broken up. So that when the question of “partnership” is doubtful, the property should not be disturbed, unless it appear that defendant is insolvent, and that there is great danger of loss, removal, or injury. But on the other hand, where the partnership is clearly > x x u shown, if the partner injured and deprived of possession seeks to have the property placed in the hands of a disinterested person as receiver, the wrongdoer, in possession, and denying his partner’s rights, has little standing in court to object. “A receiver will be appointed where any of the partners seek to exclude another from taking that part in the concern which he is -entitled to have, and this applies as well to a period when the ordinary course of trade is going on, as to the time of winding up the affairs after the termination of the-partnership.” * Edwards on Receivers in Eq., 329; Wilson v. Greenwood, 1 Swanst., 481; Williamson v. Wilson, 1 Bland Ch., 418; Const v. Harris, 1 Turn. & Russ., 496; Gardner v. Trustees of Canojoharie, 2 Barb., 625. It would be opening the door to a great deal of wrong to hold, that by simply denying the existence of a partnership a party in possession of large amounts of partnership property could, hold that possession until, after the delay of a suit, the verdict of a j ui-y had established the partnership. It would often result in real victory to the wrongdoer. A court having 'the right hear testimony as to a fact, upon a motion, has a right to find as to the existence of that fact. Wherever an application for a receiver in a partnership case is ma(je, the court has to hear some testimony as to the existence of the partnership. Ordinarily, there is on this point no counter testimony; yet the court finds on the testimony ^presented on the motion that there was a partnership. Without such finding it could not appoint a receiver. Having power to make such a finding, that power is not taken away by the introduction of counter testimony. It must still find as to the fact. If there be much contradiction in the testimony, it may require proof of additional facts, such as the insolvency •of the defendant, before making any appointment.- But still its power to examine the testimony, and determine as to the fact, remains. Whatever a court may examine into on motion, it may also determine. Its determination, for the purposes of the motion, establishes the fact.

6. Answer denying partnership. III. After answer Ayas filed denying under oath the partnership, a motion Ayas again made to set aside the order appointing a reeei\rer. This Avas OAmrruled, and properly so. Verification of the ansAver Avas necessary, under the code of 1868, to put in issue the question of partnership. It gaAre to the ansiver no greater force than an unverified denial Avould have had prior to that code. It is still to be regarded only as a pleading, a pleading-in the only form in Avhich an issue as to partnership could be raised. But as Ave have seen, the pleadings simply determine the character of the action. ' The shoAving for a receiArer is made aliunde. True, the verified ansAver may be used as an affidavit, but then it is to be treated only as an affidavit. It Avere strange if the effect of a fact demonstrated by abundant testimony could be obviated by simply tendering an issue as to its existence. Our code is not obnoxious to such fault.

7. Granting continuances. IV. “It Aras error to grant a continuance,” say the counsel; but hoAv counsel imagined Ave Ayere to determine this question, is beyond our conjecture. The grounds for a continuance, to Avit, the absence of material Avitnesses, and a misunderstanding between counsel, are set forth in the record, No one would for a moment question the suffieiency of one at least of these grounds. What showing was made in support of them we are not informed. It appears that one affidavit, that of J. B. F. Cates, was to-be presented. But whether it was in fact presented, or whether other testimony was produced, we are nowhere informed. How then can we say the court erred in granting this continuance? We cannot presume that he granted it-without any showing, nor without sufficient showing. We-might as well presume that the verdict of a jury was against the weight of evidence, -when none of the testimony was before us. Matters of continuance are largely within the discretion of the trial court, and unless that discretion is shown to have been abused, error will not be affirmed.

8. Referee’s recouk;Pcosts.° V. A similar criticism must be passed upon the next and last alleged error. Whether the costs ought to have been apportioned between the parties, or taxed wholly against the-defendant, is a question which can be determined only by an examination of the testimony. In cases like the-present, the court “may award and tax costs, and * as in its discretion it may think Code, § 591. None of the testimony apportion the same, * * right and equitable, before the referee is preserved in the record. How then can we say there was error in taxing all the costs against the defendant ? The finding and report of the referee is not conclusive in this matter. It is subject to examination and review by the court. The referee is but an officer of the court, and the court has supervision and control of all its officers, and their proceedings. It can set aside, or confirm, or modify the report of a referee. Plere it affirmed the report, except as to1 the costs, which is a matter entirely separate from the issues in the case, though to a great extent dependent on them. Indeed, it may well be doubted whether the question of costs was passed to the referee under the terms of - the reference,, which was “the hearing of this cause upon all the issues.” But whether within the terms of the reference or not, it was not so far passed to the referee as to be beyond the reviewing: and revising power of the court. No error appearing in this- or the other points made by the plaintiff in ei’ror, the judgment must be affirmed.

All the Justices concurring.

Case Details

Case Name: Hottenstein v. Conrad

Court Name: Supreme Court of Kansas

Date Published: Jan 15, 1872

Citation: 9 Kan. 435

Court Abbreviation: Kan.