135 Mo. 230 | Mo. | 1896
This action is original in the supreme court. The plaintiffs are the St. Louis, Ken nett & Southern railroad company, Louis Houck, and a number of other shareholders in said company.
The defendants are the learned circuit judge of the 22d circuit, and Messrs. Kerfoot and Eordyce, plaintiff and receiver in the proceeding before the judge.
The object of the action is to obtain a writ of prohibition against the enforcement of certain orders entered by the judge in vacation of the court. (Copies of those orders will be printed in the official report.)
The claim of plaintiffs here is that the orders are void, because made without jurisdiction, or, at least, that they are in excess of any jurisdiction which the circuit judge might properly exercise in the proceeding as it then stood.
In response to a preliminary rule in prohibition, defendants made separate returns, and plaintiffs replied thereto. It will not be necessary to state the terms of
The old St. Louis, Kennett and Southern railroad company (which we shall call the old Kennett road for a short name) was incorporated in 1890 to operate a railroad about 19 miles long between Campbell and Kennett in Dunklin county. A new company of the same title was formed in 1895 by an alleged consolidation of the old Kennett road and the Pemiscot railroad company, which had been organized in 1892 to extend the railroad from Kennett to Oaruthersville. The latter place is in Pemiscot county, on the Mississippi river. The validity of that consolidation is attacked in the petition filed in the case on the circuit. The ostensible public evidence of the consolidation is the certificate issued by the secretary of state of Missouri, proclaiming compliance with the statutory-requirements in regard to the union of such corporations. R. S. 1889, sec. 2567.
The property formerly owned by the two old companies was in custody of the new Kennett road which operated a line about 44 miles in length from Campbell to Oaruthersville (via Kennett) whenKerfoot’s petition was filed. For the purposes of the hearing in this court the version which that petition gives of the dealings between Kerfoot, Houck and the companies will be accepted as reliable in determining the propriety of the proceedings which followed. The statements of that petition need, not be repeated. They will be referred to as occasion requires.
An ex parte application for the appointment of a receiver was made to the circuit judge in vacation, on
The application excused the want of notice thereof on the ground “that the giving of the said notice would tend to • defeat the object sought to be obtained by the said appointment, in this, to wit: that the said Louis Houck is in exclusive charge of all of the books showing the condition of the affairs of the said companies, and has persons in charge of the various offices and property of the road who. are entirely under'his control; that the said- Louis Houck would so handle and dispose of the books and property of the said companies that the order of appointment of a receiver, if made upon notice, would not avail, and would not be obeyed, the books and movable property of the said companies would be removed from the said counties in which said property is situate and would be removed from the state, so that the said processes of the said court would not be effectual to compel the delivery thereof to the receiver which might be appointed;” “that by the removal of the said books of the said companies, the object of the appointment of such receiver would be frustrated, and his performance of his said duties would be made difficult if not impossible; that all of the said defendants, directors in the said corporations, are under the control of the said defendant, Louis Houck;” and “that if the said defendants should have notice of this application for a receiver, they would resort to various tricks and devices to delay this proceeding, and, in the meanwhile, to further wreck said property; that the said defendants now are plotting to deprive this plaintiff of his property
The circuit judge -granted the application, without notice to defendants, and made a vacation order, at Poplar Bluff, ‘in Butler county, the terms of which are set forth at large in the statement accompanying this opinion. The main features of the order are that Mr. Fordyce was appointed receiver of all the real and personal property of defendant companies; he was directed to immediately qualify by giving bond, etc., and then to take charge of all the real and personal property of said companies, “including the rolling stock, the depots, books and papers of the said companies;” to “manage the said railroad properties carefully,” and “continue to fulfill and perform all of the existing contracts of the said railroad companies until the further order of the court in the premises;” to keep accounts, make reports, etc. The order further directed defendants to deliver all said property to said receiver, and enjoined them from interfering with the possession of the latter. The defendants were further ordered to appear before the judge “at the next term of the circuit court in the county of Dunklin,” then and there to show cause why the receivership should not be continued, “pending a hearing upon the merits.”
This order was dated, April 11th, 1896. The next term of the Dunklin circuit court, as appointed by law, will begin on the second Monday (the 13th) of July, 1896. Sess. Laws, 1892, p. 13, sec. 50.
An ordinary summons to defendants to appear and answer the petition in the cause, at the opening of the July term of the circuit court of Dunklin county, was issued on the 10th of April, 1896.
When Mr. Fordyce, in obedience to the order for his appointment, demanded possession of the Kennett road, the officers in charge of the property refused to deliver it. That demand was the first actual notification given to them of the receivership.
After the refusal to turn over the property, an application was made to the circuit judge for further action, whereupon he issued the writ or warrant, of date, April 14, 1896, to the sheriff of Dunklin county, directing him to summon the power of his county to put the receiver in possession of the property of the two railroad companies, and to dispossess every official of said companies.
The warrant is recited in full in the statement accompanying the opinion. But it may be properly noted here that the warrant was issued in Stoddard county; it directed the arrest of Louis B. Houck and that he be produced before the circuit, judge at chambers in the city of Poplar Bluff, Butler county, April
Under the last described writ, the sheriff put Mr. Eordyce, as receiver, into possession of the property of the Kennett railroad in Dunklin county and otherwise returned the order unexecuted for the reasons appearing in his return.
At that stage of the case, the application for a prohibition was presented to the supreme court, and a preliminary rule issued.
1. It is urged by defendants that prohibition is not applicable to the situation existing on the circuit in the receivership case, and that no review can occur at this time as to the propriety of the disputed orders.
But if those orders were beyond the legitimate authority of the judge, the enforcement of them may be prohibited. Morris v. Lenox (1843) 8 Mo. 252. The fact that the suit in the circuit court invokes the equity powers thereof does not preclude the use of a prohibitory writ to keep the judicial action within the the limits marked by law. A court of equity, no less than a court of law, may be called back within the boundaries of its rightful jurisdiction by the process of prohibition.
Where a court or judge assumes to exercise a judicial power not granted by law, it matters not (so far as concerns the right to a prohibition) whether the exhibition of power occurs in a case which the court is not authorized to entertain at all, or is merely an excessive and unauthorized application of judicial force in a cause otherwise properly cognizable by the court or judge in question. State ex rel. v. Walls (1892) 113 Mo. 42 (20 S. W. Rep. 833); In re Holmes (1894) 1 Q. B. [1895] 174.
Prohibition, however, will not ordinarily be granted.
The remedy of prohibition affords opportunity for a direct attack upon proceedings questioned upon the point of jurisdiction. Iff the facts shown by a record reveal an unwarranted application of judicial power, causing an immediate and wrongful invasion of rights of property, the writ of prohibition may go to check the execution of any unfinished part of the extrajuris-dictional program that may have been outlined. Sometimes the writ may be so shaped as to undo the steps that have been taken in such a program. To justify the use of the writ it is not essential that the proceedings in dispute should be so entirely void as to warrant a declaration of nullity upon a collateral inquiry. The statute governing proceedings in prohibition makes no change in the ancient law on these points. Laws, 1895, p. 95.
2. The plaintiffs in this court contend that the learned judge had no jurisdiction to appoint a receiver for the railroad company upon the showing made, and that the order of appointment is therefore null.
But in view of the other serious and sufficiently difficult questions involved in the case at bar, and the desirability of prompt announcement of the conclusion that has been reached, we shall not now stop to investigate the soundness of plaintiffs’ contention above stated.
3. A power to appoint receivers is expressly conferred upon judges of trial courts in vacation by section 2193 (R. S. 1889), which greatly broadened the terms of the old law (G. S. 1865, p. 678, sec. 52) under which State ex rel. v. Gambs (1878) 68 Mo. 289, was decided.
We shall not be obliged to consider whether the judge might not appoint a receiver in vacation by virtue of inherent power in the circuit court to make such an order. For, in the instance under review, the
The inherent (as well as the express) powers of a court must be exercised within the territorial jurisdiction of that court, unless positive law enlarges the field of their use. But where a judicial power is given by statute to a judge in vacation he may exert that power (at least within his circuit) out of, as well as in, the county where the cause is pending, unless there is something in the statutory authority to forbid such action.
It may be conceded for the present (without examining the proposition closely) that the power given to the judge to appoint a receiver carries with it, as a necessary incident, a power in his court (if not in the judge personally) to enforce obedience to orders made within the ambit of that power and in accordance with established principles of law governing the exertion of such a power. (As to the mode of applying that power we shall have more to say in the next section of this opinion.)
But the judicial authority to deal with property by means of a receivership is not unlimited, or absolute. Harris v. Beauchamp [1894] 1 Q. B. 801.
By a very late statute of Missouri an appeal may be taken from any order “refusing to revoke, modify or change an interlocutory order appointing a receiver or receivers.” The same statute further provides for a very summary determination of such appeals, and' for that reason directs that they shall, on motion, be advanced on the appellate docket. Laws, 1895, p. 91, amending sec. 2246.
The purpose of this enactment is to moderate the hardships resulting from the long continuance of receiverships granted on insufficient grounds, when no review of interlocutory appointments was permissible.
The right to a summary review of an interlocutory order maintaining a receivership is clearly given by the statute cited. It is a valuable and substantial right. The administration of the law must conform to the intent of the legislature in regard to it. Andrews v. Nat. Foundry (1894) 18 U. S. App. 458 (10 C. C. A. 60).
It is noticeable that a prompt review is allowed by the act of 1895 only where the order continues, not where it dissolves, the receivership. Thus the statute is plainly aimed at the possible abuse of maintaining a receivership (without just grounds) beyond a period required for an investigation of its correctness.
If the purpose of the new law is kept in view and effectuated, the procedure in such cases must be shaped so as to permit a speedy review of interlocutory orders appointing receivers in vacation, as well as in term. Otherwise such orders, in many parts of Missouri, might stand for nearly half a year without the possibility of even a first review, under the existing law in regard to terms of court. Laws, 1892, p. 10, sections 30 and following.
In other states where statutes allow appeals from interlocutory injunction orders, appointments of receivers, etc., it has been held that the appeals may be taken in vacation as well as in term. Griffin v. Bank (1846) 9 Ala. 201; Montana, etc., R’y Co. v. Helena, etc., R’y Co. (1887) 6 Mont. 416; Wabash Railroad v. Dykeman (1892) 133 Ind. 56 (32 N. E. Rep. 823).
Such rulings appear necessary to conform to the plain design of the legislation on that subject. The
Keeping the purpose of the new statute in mind, how must we regard the orders of the learned circuit judge in the Kerfoot suit?
The appointment of the receiver was made without notice to, or any hearing of, the defendants. They had no opportunity to offer the facts which they assert, tending to prove that the demand for any sort of receivership was without foundation. The learned judge’s order fixed a time three months distant at which they might show cause why the receivership “should not be continued and the property kept by the said receiver pending a hearing upon the merits.” The details of the order plainly contemplate that, meanwhile, the railroad was to be operated and managed by the receiver; at least until the next term of court, then three months off.
The receiver was directed, for instance, to perform existing contracts “until the further order of the court.” The whole framework of the order suggests that the receivership was established for at least a three months’ term.
The facts which justify the appointment of a receiver (without notice to the party whose possession is disturbed) are exceptional, at best. Nothing but the plainest showing of an imperative necessity for such an order to prevent a failure of justice should move a court to grant a motion to that end; though there is no hard and fast rule that we can give, prescribing when the discretionary power to make such an order may or may not be used. But of this proposition we feel sure: that, under our existing law, no temporary receivership
The right to appoint a temporary receiver in vacation is limited by the necessity from which alone the right to make such appointment springs. Larsen v. Winder (1896) 14 Wash. 109 (44 Pac. Rep. 123).
No court in Missouri may, without notice, declare a receivership (pending suit) for a longer time than is fairly and reasonably requisite to allow the defendant, whose possession is invaded, to show cause against a further continuance of the receivership. What is such reasonable time will depend on the circumstances of each case. But we have no doubt that three months is beyond (and very far beyond) any reasonable day for the showing of cause.
The statute allowing appeals from interlocutory receivership orders must be given due force. It contemplates that an early opportunity shall be allowed to combat (and, if desired, to review) the appointment. The courts must yield to that obvious purpose, and permit no receivership to stand without a summary opportunity to review the equity of it.
When a judge in vacation deems the exigency sufficiently great to warrant an ex parte order for a receivership of property, such as that in question here, he should by the same order appoint a very early day for the showing of cause against the order by defendants,
Our law confers, indeed, power to appoint a receiver in vacation; but it also allows an appeal from an order refusing to vacate an interlocutory appointment. A reasonable construction of this law would appear to permit in vacation a motion to revoke the appointment in vacation; otherwise one of the chief remedial objects of the appeal statute on this subject would be frustrated.
It has been held by some courts that a power to do a certain judicial act out of term implies a power to undo that act, if justice appears to require that move. Cincinnati, etc., R. R. Co. v. Sloan (1877) 31 Ohio St. 1; Walters v. Trust Co. (1892) 50 Fed. Rep. 316.
We hold that the learned judge’s order in the case on the circuit was in excess of the limitations on the power of appointment without notice, which we think the law imposes by the clearest implication.
4. But another patent infirmity is noticeable in the proceedings in question. Had the first order fixed a reasonable date to show cause against it, the question of the jurisdictional validity of the second order (the order to the sheriff) would demand serious attention.
That order was made after the refusal of the superintendent of the new Kennett road to surrender possession to the receiver. The petition itself gave notice that the property over which the receivership was sought to be established was in possession of the new company by virtue'of the alleged consolidation. The old Ken-nett company and its directors were parties defendant in the petition. The new company was not a party to it, for the list of directors shows that only the old company was pointed out as defendant. The receivership asked of, and granted by, the judge reached for the property of the old Kennett company and of the Rem-
The summary writ (issued from another county) to seize the property and deliver it to the receiver was beyond the jurisdiction of the learned judge, so far as it concerned or affected the rights of the new Kennett company; and as to the latter company, the effect of the writ should be checked by the prohibition now invoked.
5. The fact that no objection was made on the circuit to the want of jurisdiction is no barrier to a prohibition, where the order complained of was entered in vacation, ex parte, and the defect of jurisdiction appears on the face of the papers. Nor can the want of an exception to the objectionable order have any weight where no opportunity to except at the time was had by reason of the ex parte nature of the order.
7. It is insisted by the plaintiffs in this court that the action of the learned circuit judge was void because the appointee named as custodian of the property could not lawfully be appointed receiver of their railway line.
The constitution declares that:
“No railroad or other corporation, or the lessees, purchasers or managers of any railroad corporation, shall” * * * “in any way control, any railroad corporation owning or having under its control a parallel or competing line; nor shall any officer of such railroad corporation act as an officer of any other railroad corporation owning or having the control of a parallel or competing line. The question whether railroads are parallel or competing lines shall, when demanded, be decided by a jury, as in other civil issues.” Const. 1875, art. 12, sec. 17.
Two sections of the statute law, in furtherance of the purpose of the organic law quoted, are as follows:
“It shall be unlawful for any railroad company, corporation or individual owning, operating or manag*266 ing any railroad in the state of Missouri, to enter into any contract, combination or association,” * '* * “or in any way whatever to any degree exercise control over, any railroad company, corporation or individual owning or having under his or their control or management a parallel or competing line in this state, but each and every such railroad, whether owned, operated or managed by a company, corporation or individual, shall be run, operated and managed separately by its own officers and agents, and be dependent for its support on its own earnings from its local and through business in connection with other roads, and the facilities and accommodations it shall afford the public for travel and transportation under fair and open competition.” R. S. 1889, sec. 2569.
“It shall be unlawful for any officer of any railroad company or corporation, or any individual owning, operating or managing any railroad in this state as a common carrier, to act as an officer of any other railroad company or corporation owning, operating or managing, or having the control of a parallel or competing line, and the question whether railroads are parallel or competing lines shall be decided by a jury, when so demanded.” R. S. 1889, sec. 2570.
At various points in the statutes concerning railroads, receivers are mentioned among other managing operators of such lines. R. S. 1889, secs. 2631, 2644, 2645. So that it is obvious that the president of a parallel or competing railroad, however high his business qualifications, is not eligible to appointment as receiver of the competing railway line in Missouri.
The fact is alleged in this court that Mr. Pordyce is the president of the “Cotton Belt” route, and that it is a railway in competition with the new Kennett road. The fact stands admitted by the pleadings here
8. The summary order for the seizure of the property in possession of the new Kennett road was, we think, in excess of the rightful power of the learned circuit judge in vacation. We hence consider that the rule in prohibition should be made absolute, and direct that judgment for a peremptory writ be entered, prohibiting the circuit judge from enforcing any order heretofore made in the Kerfoot case under which said receiver has taken possession (or is attempting to take possession) of some part of the railway or other property of the St. Louis, Kennett and Southern railroad company, or of the Pemiscot railroad company; and prohibiting him from making any order (upon the pending petition of said Kerfoot in said cause) directing or permitting any receiver to take possession of any property of said companies without first allowing the present St. Louis, Kennett and Southern railroad Company an opportunity to be duly heard; and by the writ the said receiver will be prohibited from attempting to take or hold possession of any property of said railroad companies by virtue of said order; and the receiver will further be ordered to restore forthwith any and all property of the new Kennett road that may be in his possession by reason of his said receivership.
In the receiver’s return to the peremptory writ it is stated that he has delivered to the plaintiff company all the property in his hands as receiver, except about $1,455 which he holds subject to the order of the court, and he asks whether he may be allowed therefrom his costs, and a reasonable attorney’s fee, for the reason that he has no personal interest in the controversy, was only an appointee of the-circuit court, and was not, as he is advised, a necessary party to this action.
1. A receiver’s right to compensation and allowances for expenses does not depend upon the correctness of the order of appointment, where the appointment has been made by a court having general jurisdiction to take such action. But if the appointment is merely in excess of the power of the court because the facts and circumstances do not authorize the appointment as made, and the enforcement of the order is therefore subjected to the check of a writ of prohibition, the receiver is not entitled .to retain possession of any part of the property coming to his hands by virtue of the order. The order of appointment having been adjudged to be unauthorized, he can not claim compensation for his services out of the fund or property received by him under the order. His claim for allowances, etc., must be otherwise made, in an accounting with the court in the suit wherein he was appointed.
The prohibition in this case does not interfere with the general course of Mr. Kerfoot’s suit in Dunklin county. It forbids action upon the original orders for the receivership, and annuls what was done under those orders. But it leaves the action pending as before.
Meanwhile the receiver, in pursuance of the final judgment in prohibition, should forthwith deliver to the plaintiff company any and all funds and property remaining in his hands as receiver, and make return of full compliance with the judgment within five days after service of this order.
2. Whether the receiver was a necessary party to the present action we need not inquire, at this stage of it. Proceedings in prohibition are governed by the code of civil practice except as otherwise provided in the act regulating that writ. Laws, 1895, p. 95, sec. 3. Hence any such objection as is now suggested should have been interposed much earlier to be available. It must now be considered waived. R. S. 1889, secs. 2043, 2047; Soeding v. Bartlett (1864) 35 Mo. 90.