54 Iowa 200 | Iowa | 1880
The intervenor further shows that on the 8 th day of March, 1877, in pursuance of the order, and in the construction of the uncompleted portion of the road, the receiver issued a large amount of certificates of indebtedness, a portion of which became the property of the South St. Louis Iron Co., which company filed a petition in the action in which the receiver was appointed, praying for the foreclosure of the certificates of indebtedness; that the court found the amount due the South St. Louis Iron Co., and decreed that the lien of the certificates be paramount to the liens of all other parties, and that the road be sold upon execution to satisfy the same; that the road was sold at execution sale, and the intervenor, Winslow, as trustee of the Burlington, Cedar Rapids & Northern Railway Co., became the owner of the sheriff’s certificate.
The plaintiff insists that the intervenor did not, by reason of the facts above stated, acquire any interest in the road paramount to his lien, which attached prior to the time when the indebtedness accrued under which the execution sale was made.
It does not appear that the plaintiff was made a party to the action in which the receiver was appointed, and in which action the order was made for the completion of the road and the issue of the certificates of indebtedness. Nor was he a party to the foreclosure of the certificates.
Section 2903 of the Code provides that “on the petition of either party to a civil action, wherein he shows that he has a probable right to or interest in the property which is the subject of controversy, and that such property, or its rents and profits, are in danger of being lost or materially injured, or impaired, and on such notice to tbe adverse party as the court or judge shall prescribe, the court, or in vacation the judge thereof, if satisfied that the interest of one or both
As between the parties before the court 'the appointment was doubtless valid. It was not necessary, we think, to itk, validity that Snow, the plaintiff in the ease at bar, should be made a party. He was a mere lienholder. Had he been in possession of the property it would doubtless have been necessary to make him a party, because the very object of the appointment would have been to deprive him of possession. But in this case the object of the appointment was to deprive the company of possession. The rights of Snow were not affected. A receiver’s possession is subject to all valid and existing liens upon the property at the time of his appointment. Gere v. Dibble, 17 How. Pr., 31. The receiver might have proceeded to sell the property without Snow’s being made a party, but in such case, we think, he could have sold only subject to Snow’s lien. That a lien cannot be divested by any judicial proceeding to which the lienholder is not a party is well settled. This rule is not denied by the appellee. But he contends that Snow was represented by the receiver. In our opinion this position cannot be maintained. General creditors, in their character as such, may, perhaps, be regarded as represented by the receiver in certain classes of judicial proceedings to which he is a party. Their claims are to be realized simply through the receiver. Snow had a lien. In his character as a lienholder the receiver did not represent him. • Had the object of the receiver’s appointment been to sell the property, divested of Snow’s lien, Snow should have been made a party to the appointment. Possibly, if Snow had been made a party afterward, the receiver might properly
The plaintiff can maintain his action to enforce his lien. Whether his lien is to be deemed paramount to that of the appellee is a question of more difficulty. The general rule is that he who is first in time is first in right. Appellee admits this, but claims that the rule is not aj>plicable to tin's case. Tie claims that Snow’s lien was displaced by the order of the court, whereby the expense of building the portion of the road then remaining to be built was charged as a first lien upon the entire road.
What expenses a receiver may properly incur becomes a question sometimes of great doubt and difficulty.
The fundamental idea is that he must preserve the property and hold the same to be disposed of under the orders of the court. To that end he may, under the direction of the court, make repairs. Blunt v. Clitherow, 6 Ves., 799; Attorney Gen. v. Vigor, 11 Id., 563; Thornhill v. Thornhill, 14 Sim., 600. A receiver of a railroad may operate'it and pay the expenses incident thereto, because this is deemed necessary for its proper preservation. Ellis v. Boston, Hartford & Erie R. R. Co., 1 Mass., 107. That he may even
It is said, however, in High on Eeceivers, section 390, that “ the receiver is seldom authorized to enlarge the operations of the company or extend its line of road, his functions being usually limited to the management of the property in its existing condition.”
It appears to us that a receiver can be properly empowered to extend the line of a road only wlaere, by reason of some peculiar exigency, it is necessary in order to protect the rights of the parties in interest. What, precisely, would justify the exercise of such extraordinary power we need not undertake to determine. If a court makes an order for an extension, with all the parties in interest before it, such order probably should be regarded as valid until reversed upon appeal. We are inclined to think that the subject matter would not be beyond the jurisdiction of the court, so that its action could be treated as void in a collateral proceeding. Such, we conclude, is the doctrine of the decisions. But we are asked to go much further than any court has gone yet, so far as we are able to discover. We are asked to hold that a lien may be
In our opinion the petition for intervention does not show that the plaintiff’s lien has been displaced, and the judgment of the District Court must be
Reversed.
Being unable to concur in the foregoing opinion, I desire to briefly state the grounds upon which my dissent is based.
The receiver, I think, is the representative or trustee for all parties in interest, or at least of all creditors who do not have an established lien. His appointment is made for the equal benefit of all persons who may establish rights in the cause. Delaney v. Mansfield, 1 Hogan, 234. The better doctrine is that the “ receiver stands as the representative of both the creditors of the corporation and its shareholders. High on Receivers, Sec. 314.
In Kaiser v. Kellar, 21 Iowa, 95, it is said, “ The receiver was appointed not for the benefit of the plaintiff, or for one party in interest, but for all.” The court may order the receiver to sell the property, and it matters not how improvident it may have been, it cannot be assailed in a collateral proceeding. Libby v. Rosekrans, 55 Barb., 219.
One of two things must, I think, be true. One is that the plaintiff was represented by the receiver, and in contemplation of law before the court at the time the order was made, whereby the plaintiff was deprived of his lien, or, if that is not true, he cannot in a collateral proceeding assail the action of the court in making the order, but if any remedy he had it should have been applied for in the court, and in the cause,' in which the receiver was appointed and the order made. The result is that the judgment of the court below should be affirmed.