3 Wash. Terr. 117 | Wash. Terr. | 1887
delivered the opinion of the court.
On the eighth of August, 1884, one M. W. Willis filed his petition in insolvency in the District Court of the second judicial district at Olympia. The appellant was a creditor of said insolvent in the sum of about two thousand dollars secured by mortgage on a large amount of personal property, which at the time of the commencement of the insolvency proceeding was in the possession of the insolvent. About the same time numerous attachment suits were commenced by unsecured creditors against the insolvent, and this personal property was attached and taken possession of by the sheriff. At this juncture the insolvent applied to the court for the appointment of a receiver to take possession of his property, including that attached by the sheriff, to hold and manage the same and apply it as the court in the insolvency proceeding should direct, which application the court granted. Ezekial Giles, the appellee, was appointed such receiver. The receiver went into possession of the property about August 19, 1884, and continued to hold
A rule to show cause why such an order should not be made was served on the appellant, and on the return day he made sworn return setting forth the matters hereinbefore stated, and in addition denied that he had ever consented to the appointment of the receiver, or to-the delivery of the property to him. At the hearing on the petition and return, the judge made an order that the appellant pay into court within ten days the sum of $375 out of the proceeds of sale of the mortgaged property, and that the same he applied to the payment of the receiver's claim. The appeal is prosecuted from this order. The statement of facts shows that leave was given the petitioner by the court at the time of making the order to file affidavits denying the matter set forth in Lammon’s return, “for the purpose of better protecting his interests, should the rulings of the court ordering Lammon to pay in said sum he taken to the Supreme Court.'' Under this leave, affidavits were subsequently filed by the appellee controverting the return of the appellant, to the effect that he had never consented to the appointment of the receiver. The appellant, then, without leave (the judge of the court being absent), filed reply affidavits sustaining his return in the particular mentioned. The position is taken by the appellant that the appointment of a receiver in the insolvency proceeding, at the instance of the insolvent, was null and void, and would not confer on the receiver under any circumstances a right to the payment of fees out of the property or fund in his custody.
Another objection to the order of the court below is, that the procedure there adopted, and as the result of which the order complained of was made, was one unknown to the law, and gave the court no jurisdiction to make such order. We do not consider this objection of greater force than the one last mentioned. If the court had power to conserve the property of the insolvent, it had power in a proper case to make the cost of its preservation a first lien thereon. And this lien would not be lost by any transmutation of the property from ■one form to another, nor would the surrender of the property before the declaration of the lien to a third person at his instance deprive the court of power to require said person, by a proceeding in the original suit, such as
The remaining question relates to the correctness of the order made charging the fund in the hands of the mortgagee with the expense of the receivership. An order appointing a receiver for mortgaged property at the instance of a person other than the mortgagee should be made in any kind of a proceeding without prejudice to the rights of the mortgagee. In such a case, a receiver should not be appointed at all without indisputable evidence that the security is so ample that the costs and charges of the receiver can be paid from the property without diminishing the security, or without provision being made for the payment of such costs and charges from some other source. A court should not direct the performance of services which it may be powerless to compensate, and it is not correct to assume that in all cases a fund in the possession of a receiver can or ought to be charged with the payment of his compensation. A mortgagee of personal property not more than sufficient to pay his debt is the only one who needs to borrow trouble about its preservation. If one interfere with it ■officiously under the plea that he has rights therein, but inferior to those of the mortgagee, which require the sequestration of the property, he ought to pay all the expenses of such interference if it turns out that the property is insufficient after satisfying the mortgage to' do so. Hence the necessity for extreme caution in granting a receiver at the instance of any one other than the mortgagee. Upon the showing offered at the time the
The judgment of the Court below is reversed, and the cause remanded for a further hearing.
Greene, C. J., and Langford, J., concurred.