Meredith Village Savings Bank v. Simpson

| Kan. | Jan 15, 1879

The opinion of the court was delivered by

Horton, C. J.:

This action was brought in the court below to recover possession of certain personal property, consisting of United States and national bank notes of the value of $1,556.22, alleged to have been received by W. A. Simpson and J. J. Crippen, as the agents of the said savings bank, and as the property of said bank. The petition further alleged, that Simpson and Crippen received the bank notes in 1877, while copartners in business under the name of “The Simpson Bank,” of the city of Lawrence, in this state; that on December 10th, 1877, the said James S. Crew was duly appointed the receiver by the district court of Douglas county in an action brought by the said W. A. Simpson against J. J. Crippen for an accounting between the partners and a dissolution of the partnership; that said savings bank was entitled to the immediate possession of the property, and that the defendants unlawfully detained the same. The action was not in form prosecuted against the receiver as an individual, but named him as receiver appointed by the said district court, and in custody of the partnership property. At the commencement of this proceeding, the plaintiff in error presented to the court by which the receiver was appointed an application for leave to make him a party defendant to this action. The court granted the motion, the attorney of the receiver consenting, but further ordered that such permission to join the receiver as defendant should extend only to an action to be brought and tried in said district court. Afterward, the pleadings in the case were made up, and then the plaintiff in error presented its petition and bond for a removal of the cause to the circuit court of the United States for the district of Kansas. Thereupon the court revoked the permission before granted for the plaintiff to sue the receiver, and dismissed the action as to Crew, at the costs of such plaintiff.

The various assignments of error alleged in the petition in error are embraced in two inquiries: First-, Did the court below err in restricting the plaintiff in error in the prosecution of his cause of action to the court- appointing the receiver ? Second, Did the court err in revoking this order and dismiss - ing the action against Crew ?

The determination of the first question is mainly decisive of the second, because if the court had the power to designate the forum in which its receiver was to be sued, it clearly had the authority to revoke its permission when it was sought to be evaded or abused.. The proceeding instituted by the plaintiff not only questioned the title or right of the receiver to the property claimed, but sought to disturb the possession, which he held under the authority of the court. A receiver of a court of justice has been well said to be the arm of the court by which he is appointed — a part of the court itself. He is the agent of no one except the court by which he is authorized to act. One court having custody of property through its receiver, cannot admit that another court, in defiance of its orders, has power to define what are his duties with reference to such property. To admit this, is substantially to say that one coordinate court can sue another. This cannot be done. The rule stated is established by so many authorities that citation is scarcely necessary. Every consideration of economy, of the prevention of vexatious litigation and conflicts of jurisdiction would indicate the importance of protecting the exclusive possession of the receiver by an inflexible rule of law. Even the cases of Kinney v. Crocker, 18 Wis. 74" court="Wis." date_filed="1864-01-15" href="https://app.midpage.ai/document/kinney-v-crocker-6599114?utm_source=webapp" opinion_id="6599114">18 Wis. 74, and Allen v. The Cent. R. R. Co. of Iowa, 42 Iowa, 683" court="Iowa" date_filed="1876-04-06" href="https://app.midpage.ai/document/allen-v-central-railroad-7096769?utm_source=webapp" opinion_id="7096769">42 Iowa, 683, which assert the right in some actions to sue receivers without leave to prosecute being first obtained of the court appointing them, concede “that a court of equity will, on proper application, protect its own receiver, when the possession which he holds under the authority of the court is sought to be disturbed.”

The appointment of Crew as receiver of the effects and property of the partnership in the action of Simpson against Crippen, by the court below, secured to that court the power to control at its discretion all controversies which affected the property placed in his custody. It thereafter had the right to take to itself all such controversies, and compel parties to proceed nowhere else than in its own forum. (Railroad Co. v. Smith, 19 Kas. 229.)

In this case the plaintiff in error very properly asked permission of the court, before bringing the action, to join the receiver as a defendant in the case. The permission was granted; and within the principles above stated, the court, to maintain its control over its officer and the property in his charge, restricted the action to its own jurisdiction, and denied the plaintiff authority to prosecute its agent in any other court. No error was thereby committed. If it had the right to take to itself the controversy over this property, it surely had power to make' the order complained of. In fact, it adopted the practice generally pursued. In most cases the court appointing the receiver, upon motion or in any other mode it may think best, hears the complaint and defenses, and upon the issue made and the proof adduced on both sides, grants or denies the relief, as the court may upon the issues made and the proof under the rules of law deem right and proper. Of course, this court would have had the right to review on error any of the proceedings of the inferior court, if the action had been prosecuted therein under the permission granted, as this court had appellate jurisdiction, and the order of that court cannot be construed or assumed to interfere with the power granted to the supreme court.

The power of the district court to take to itself all controversies affecting the property placed in the hands of the re■ceiver, aud compel parties to proceed nowhere else than in its own forum, must necessarily include the power exercised by it in dismissing the case against Crew. It granted the permission in the first instance, and it had the right to revoke the permission when it was sought to be abused. A ■court ought never to permit its process to be improperly used, nor allow its orders obtained for one purpose to be wrongfully applied to a different and contrary purpose. The ■court granted permission to join the defendant in an action in its own forum, and the plaintiff seeks to make this order the ■basis to oust the court of its jurisdiction, or a bridge to pass over into another forum. The order was granted that the district court might- assume jurisdiction of the controversy between plaintiff and the receiver, and the plaintiff seeks to abuse the order to transfer the controversy to another jurisdiction. This is unfair to the court. If sustained, it defeats the very purpose for which the permission was given. The theory of counsel to that end is unsound. It rests upon no ■stable foundation. Even assuming that the plaintiff had the right to bring the action without any previous assent having been given, within Railroad v. Smith, supra, the district court, with all the parties before it, had the power to compel the plaintiff to proceed nowhere else. Counsel contend, however, that the court had no power to refuse the removal to the United States circuit court, and could do nothing to affect the right of the petitioner. Certainly the court had the right to look into the case when the petition and bond were presented for acceptance and see whether it came within the statute. (Goddard v. Bosson, 21 Kan. 139" court="Ark." date_filed="1878-07-15" href="https://app.midpage.ai/document/goddard-v-bosson-7884704?utm_source=webapp" opinion_id="7884704">21 Kas. 139.)

When it made this examination, it at once ascertained that the case within the practice and decisions of the federal courts, as to Crew, was not removable. It has been the frequent and uniform ruling of the federal courts, that a suit cannot be commenced against a receiver without leave being first obtained from the court appointing such receiver. At the time of the filing of the petition and bond for removal, -consent had been obtained to sue in the district court of Douglas county, but this consent was burdened with' the-limitation that the controversy with the receiver was to be-settled in that court, subject, of course, to appeal on error of the proceedings to the appellate court. The permission to sue was coupled with an imperative injunction not to go to. any other court. As the court had the power to affix to the permission the injunction, the case could not be removed, as. to the receiver, without the consent of the court granting it.. The case, under the circumstances, was not an ordinary action, and the consent of the court was absolutely essential for the prosecution of the action in the circuit court, by the-well established rules again and again announced by the federal courts.

In the absence of this consent, any action or order of this-court, even if favorable to the plaintiff in error, would avail him nothing, as the rules we have stated pertaining to suits against receivers in the federal courts are strictly observed, by them.

The judgment of the district court must therefore be affirmed.

All the Justices concurring.