40 Colo. 212 | Colo. | 1907
delivered the opinion of the court:
Appellants, except John S. McMasters, receiver, as stockholders of The American Water Works Company, of New Jersey, commenced an action against The Denver Union Water Company, The Denver Water Company, The Farmers’ Loan & Trust Company, The Denver City Water Works Company, The Central Trust Company of New York, The American Water Works Company, Dennis Sullivan, William A. Underwood, The Continental Trust Company, James Y. Dexter, Charles D. MePhee, Catherine Archer, Carlos G. Greeley, James B. Grant and David H. Moffat, the purpose of which was to annul two decrees entered in suits foreclosing mortgages upon property now claimed by The Denver Union Water Company, title to which was obtained through sales of this property under these foreclosure decrees. Plaintiffs. claimed that the
(1) Failure of the court to acquire jurisdiction of the person of The American Water Works Company in the foreclosure suits;
(2) Failure of the court to acquire jurisdiction of part of the subject-matter involved in such suits;
(3) Error manifest upon the record of the foreclosure proceedings;
(4) Fraud in procuring the decrees and in the subsequent proceedings attacked.
To this action John S. McMasters, receiver, became, or was made, a party defendant. To his answer The Denver Union Water Company and The Central Trust Company filed cross-bills. The trial resulted in a judgment for the defendants, excepting' the receiver, from which the plaintiffs and the receiver appeal-
The property in question was subject to the following mortgages: One executed by The Denver City Water Company for $250,000; one executed by The Denver City Irrigation & Water Company (a previous owner of part of the property involved) for $100,000; and one executed by The Domestic Water Company (a previous owner of some of the property in controversy) for $150,000’. For convenience these mortgages will be referred to as the underlying mortgages. In January, 1890, The Denver Water Company, which had succeeded to the property covered.by these mortgages, executed its' mortgage to The Farmers’ Loan & Trust Company to secure bonds aggregating $2,500,000. This mortgage was subject to the underlying mortgages. In November, 1890, The Denver City Water Works Company was organized and secured a conveyance from The Denver Water Company of the property
On June lst,T892, The Farmers’ Loan &• Trust Company commenced an action in the district court of Arapahoe county to foreclose the mortgage to it. The American Water Works Company was made a party defendant to this suit. Summons was issued and returned, with a certificate to the effect that it had been served upon the defendant company by delivering a copy to Dennis Sullivan, president of The American Water Works Company. Mr. Sullivan was also appointed receiver in this action, and it was consolidated with the two commenced on the underlying mortgages, and a decree foreclosing the mortgages in question subsequently entered.
In October, 1892, The Central Trust Company commenced an action in the district court of Arapahoe county, to foreclose the mortgage executed to it by The Denver City Water Works Company. To this action The American Water Works Company was also made a party defendant. Summons therein was served by delivering a copy thereof to Clarence H. Venner, vice-president of the defendant company, at tile city of Denver. A decree of foreclosure was also entered in this action, and the property embraced in the several mortgages sold under the order of the court. The other facts necessary to an understanding of the questions presented will be stated in connection with the questions discussed and determined.
The first point made by counsel for plaintiffs is, that The American Water Works Company, having designated an agent for service of process, service of the summons upon any other person was not valid service upon the company. Article 15, § 10, of
There is nothing in either of these provisions indicating that the agent appointed by a foreign corporation engaged in business in this state is the only agent upon whom summons in an action can be. served. Their evident purpose was to compel foreign corporations, as a condition precedent to engaging in business in this state,” to appoint an agent upon whom process issued from our courts might be served, so that citizens of the state, in order to redress their grievances, might not be compelled to resort to a foreign forum in order to institute and maintain an action against such corporation by providing against the contingency of such corporation’s engaging in business in this state without having some official representing it therein upon whom summons issued from our courts might be served. Our code regulates proceedings in civil matters, and it is there provided, by subdivision 9, section 38:
“If the action be against a foreign corporation * * * organized under the laws of another state*222 *. * * and doing business within this state, the summons shall be served by delivering a copy to my agent of such corporation, company or association found in the county in which the action is brought. ’ ’
This clearly indicates an intention on the part of the legislature to provide that, notwithstanding another provision requiring foreign corporations engaging in business in this state to appoint -an agent upon whom process may be served, that such process may be served upon any agent embraced within the terms of the code to which we have just referred. It is clearly within the power of the state to provide, through the general assembly, what agents of corporations doing business within her limits may be served with process; provided, of course, that such provisions are reasonable, and the service provided for shall he upon such agents as may he properly deemed representatives of such foreign corporations. Our general assembly has made provision for this purpose, which embraces any agent of foreign corporations engaging in business in this state. "We therefore conclude that the provisions of the constitution and statute referred to, requiring foreign corporations who desire to engage in business in this state to appoint an agent upon whom process may be served, does not limit the service of process upon such agent, but that it may be served upon any other agent contemplated by the provisions of the civil code. Authorities supporting this conclusion are: Henrietta M. & M. Co. v. Johnson, 173 U. S. 221; Life Ins. Co. v. Spratley, 99 Tenn. 322; Lesser Cotton Co. v. Yates, 69 Ark. 396; Howard v. Prudential Ins. Co., 37 N. Y. Supp. 832; Littlejohn v. Southern Ry. Co., 22 S. E. 761; Jones v. Ins. Co., 88 N. C. 499; Bankers’ Union of the World v. Nabors, 81 S. W. 91; Mut. Res. Fund L. Assn. v. Cleveland W. M., 82 Fed. 508.
The next point made by counsel for plaintiffs is, that valid service of process cannot he made upon the president or vice-president of a foreign corporation as such; that service, to he valid, must he upon the agent of such corporation, and the return must so show. As a general proposition, it is true that in an action against a corporation the return of the summons must affirmatively show that service was made upon an officer or agent of the corporation specified in the statute as one upon whom service may he made. Our code, in specifying how service of process shall be made upon a foreign corporation, names no official, hut specifies that such service may he made upon any agent. The purpose was to employ a term so broad as to cover all who bore the relation of agent to such corporations without specifically naming the official who should he regarded as an agent. The general assembly had the power
In July, 1891, Mr. Sullivan addressed a communication to the president of The American Water Works Company, wherein he tendered his resignation as vice-president and director of that company, to take effect at once. Later in the same month the president presented this resignation to the board of diréctors of the company. No action was taken thereon. It will be observed that this resignation was tendered prior to the date of the .service of process on Mr. Sullivan, and it is now claimed by counsel for plaintiffs that no action of the board was
Whether or not a director or other officer of- a corporation has resigned, is a question of fact to be determined from the circumstances of each case, and which, to some extent, it appears may depend upon the parties who raise the question. In the present case Mr. Sullivan tendered his resignation to the proper authorities, but it was never acted upon. He continued in the control of the affairs of the company the same as though his resignation had never been offered. He attended meetings of the board, acted as a director, and was recognized by his co-directors, including Mr. Yenner, in that capacity. It does not appear that the parties who commenced the foreclosure suits in which service of summons was had upon Mr. Sullivan, as president or vice-president, of The American Water Works Company, had any knowledge that he had ever tendered his resignation to the company. In such circumstances the company will not be permitted to claim that he had resigned prior to the service of process upon him by merely tendering his resignation.
In the suits upon the underlying mortgages, summonses were served upon Sullivan on February 4,1892, and in The Farmers ’ Loan & Trust Company suit on June 25th, 1892. He was appointed receiver of the property of The American Water Works Company in the actions instituted upon the underlying mortgages on the 2nd day of February, 1892. Counsel for plaintiffs contend that his appointment as receiver severed his relationship with The American Water Works Company by operation of law, so that the service of summons in the suits mentioned was of no avail. The appointment of a receiver of the property of a corporation only deprives it of the
The fact that Mr. Sullivan was made receiver does not change this rule. He was thereby intrusted with the management of the affairs of the corporation, and therefore, above all others, should have been made acquainted with the commencement of actions against the company. This could not be brought to his attention more directly than by service of process upon him in such actions in his capacity as an official of the company.
The suit of The Central Trust Company to foreclose the mortgage executed to it by The Denver City Water Works Company was commenced October 1st, 1892. Summons in. that action was served upon Mr. Venner, vice-president of The American Water Works Company, on November 5,1892. This service was made in Denver. At that time Mr. Yenner’s residence was in New York City. When served with summons it is claimed he was temporarily in Colorado, not in his official capacity as vice-president of The American Water Works Company, nor in the interests of that company. It is urged by
Rust v. United Water Works Co., 70 Fed. 129, does not conflict with our conclusion that service of summons upon Mr. Yenner was valid. It was there held that in a personal action against The American Water Works Company the service upon Mr. Yenner was not legal, but that conclusion was based upon the fact that the company, at the time of the service, was not doing business in this state.
There is another matter which might become pertinent in determining the validity of the service upon Mr. Yenner. We think it is fairly deducible from the testimony that it was at his instance that he was served with summons in The Central Trust Company suit.
On the 8th of April, 1892, there was exhibited to the court of chancery of New Jersey a bill by The Denver City Water Works Company and others, praying for an injunction against The American Water Works Company, and for the appointment of a receiver for that company. On that date an ex parte order was entered, whereby the defendant, its officers, directors, agents and attorneys, were enjoined from receiving any debts due it, and from paying and transferring any of its money and effects, and from in any manner continuing its business or exercising any of the privileges or franchises under its charter. Such proceedings were thereafter had that on the 20th day of July, following, a receiver of the defendant company was appointed, with full power to sue for, collect, receive and take into his possession the property and effects of the defendant. It will be recalled that the suits on the underlying mortgages were commenced in the district court of Arapahoe county in February, 1893,
/‘The injunction proceeding in the New Jersey chancery court .abrogated the corporate powers of The American "Water "Works Company. Thereafter it could not sue or be sued. Jurisdiction could not be acquired by service of process upon, or appearance by, any officer, agent, or attorney, and no valid judgment in rent or in personam could be rendered against it by any court of this state. ’ ’
It is again urged that the action commenced in the New Jersey court and proceedings had thereunder, severed the relations of Sullivan and Venner with The American "Water "Works Company. This question has been considered and determined in passing upon the effect of the appointment of a receiver by the district court of Arapahoe county, and it is not necessary to re-discuss it. The question now is, what effect, if any, the proceedings in the chancery court of New Jersey had upon those instituted to foreclose the underlying mortgages, and whether or not the orders of the New Jersey court had the effect of inhibiting the actions commenced by The Farmers’ Loan & Trust Company and The Central Trust‘Company.
The appointment of a receiver for The American Water Works Company by the chancery court of New Jersey did not abate the actions theretofore commenced in the district court of Arapahoe county, nor affect them in any manner. — Beach on Receivers
Cases pending against a corporation at the time a receiver therefor is appointed may be likened to bankruptcy proceedings, wherein it has been held that the assignee of a bankrupt appointed after suits commenced against the assignor affecting specific property, has rights no different therein from any other person who may become interested in the subject-matter of litigation pendente lite. He may, on proper application, be made a party, but if he does not apply, such suits may proceed to judgment, and he will be bound by the decree. — Eyster v. Gaff, 91 U. S. 521; Mount v. Manhattan Co., 43 N. J. Eq. 25; Young v. Cardwell, 74 Tenn. (6 Lea) 168; Merchants Bank v. Campbell, 75 Va. 455.
The proceedings in the chancery court of New Jersey did not dissolve the corporation, and hence it could be sued the same as before the ex parte interlocutory order of April, 1892, or the appointment of the receiver in July following. — Beach on Receivers (Alderson’s ed.), §433; 23 Am. & Eng. Enc. Law (2d ed.) 1047.
Perhaps in suits commenced after the appointment of the receiver by the New Jersey court, it would have been proper to have made him a party, and had he applied to be made a party, he should have been admitted to defend; but the fact that he was not made a party, either by service of process or upon his application, did not make the judgments rendered a nullity. It will be borne in mind that the suit instituted by plaintiffs is to annul the judgments against The American Water Works Company, because of want of jurisdiction in the court rendering them'; but as they are valid as to that company, they cannot be annulled as to it at the instance of third parties.
■ We shall next consider the questions argued by counsel for plaintiffs in support of the proposition that the court did not acquire jurisdiction of part of the subject-matter involved. It is urged that in the decree rendered in the foreclosure suit of The Fanners’ Loan & Trust Company, property was included which was not described either in the mortgage or in the complaint. It is also urged that the decree in The Central Trust Company case improperly included the Grant trust property, because it was not included in the mortgage executed by The Denver City Water Works Company. These contentions are equivalent to saying that the complaints in the respective foreclosure cases did not state facts from which it appears that the plaintiffs were entitled to decrees subjecting certain property to the lien of the respective mortgages, or that the testimony considered by the court was not sufficient to justify a decree including this property. The district court had jurisdiction of the foreclosure proceedings ; it had jurisdiction- to determine from the complaints what property, according to the averments thereof, in so far as the parties before it are concerned, was subject to the respective mortgages being foreclosed, and it likewise had jurisdiction to determine froiti the testimony introduced what property, as to these parties, should be embraced in the
Under the head of error manifest upon the record, counsel complain of amendments to the decree in The Farmers’ Loan & Trust Company case, made after the adjournment of the term at which the foreclosure decree was entered. As a general rule, after the expiration of the term at which a judgment is rendered, the court rendering it is without power to amend it in any matter of substance or going to the merits of the cause, but this rule only applies to final judgments, and not to a judgment which does not put an end to the proceedings, but leaves them in fieri. — 17 Am. & Eng. Enc. Law f2d ed.) 817; 23 Cyc. 861.
The decree attacked in the case at bar belongs to the latter class. The foreclosure proceedings were not thereby terminated. The decree provided for the appointment of a commissioner, a. sale of the premises and a report of the commissioner of his doings undei the order appointing; so that, the proceedings could not be said to be terminated until the report of the sale by the commissioner was approved by the court. In such circumstances the court had the power to make the amendments complained-of.
The'final general proposition urged by counsel for appellants who were plaintiffs below,-is, that fraud was practiced in procuring the decrees, and in all subsequent proceedings. In support of this contention it is claimed that fraud charged in the complaint is admitted by the answer of The Denver Union lYater Company, because the denials thereto were insufficient. This claim is based upon the ground that the formula prescribed by the code, § 56, which relates to denials upon information and belief, was not followed. It appears from the record that plaintiffs treated the allegations of the complaint which they now say were not denied, as though they were controverted, by introducing evidence to prove them; and it is too late now to raise the specific point for the first time, that there was no issue to try. By proceeding as though the allegations of the complaint were put in issue the objection that the answer was not sufficient to raise one has been waived. — Quimby v. Boyd, 8 Colo. 194; Jerome v. Bohm, 21 Colo. 322.
As a further evidence of fraud it is also charged that counsel appearing for the company made no defense to the foreclosure suits. It appears to be conceded that the bonds secured by the several mortgages foreclosed were valid in all particulars, and nowhere is it suggested that the company had any defense to interpose to the foreclosure suits. In view of the fact that the company had no defense against these actions, plaintiffs cannot successfully complain-that none was made.
Reference is also made to other counsel connected with the case in some capacity, or engaged in proceedings growing out of the foreclosure suits. It does no.t appear that their action was prejudicial to the company, in so far as its legal rights were involved; neither does it appear that they were guilty of any fraud, actual or constructive, .or yiola
It is also urged that the receiver appointed by the chancery court of New Jersey was in collusion with the adversaries of the company. In support of this claim our attention is directed to the fact that he took no steps whatever to defend the foreclosure suits, nor was any attention given to them by him. A sufficient answer to this suggestion is, that it does not appear that the company had any defense to interpose to these actions, and as it does not appear that the action of the receiver with respect to other matters mentioned in the briefs of counsel for plaintiffs prevented the company from fully protecting its rights in the foreclosure suits, it is not in a position to successfully complain of his action in the premises.
As evidence of bad faith on the part of Mr. Rust, counsel for plaintiffs refer to the fact that the writ of error sued out by The American Water Works Company against The Farmers’ Loan & Trust Company at the instance of Mr. Venner, as an officer of the company, was dismissed at the instance of the receiver, a report of which case is found in 20 Colo, at 203. This court held in that ease that an officer of a corporation for which a receiver had been appointed with full power to control and manage its affairs, and where such corporation and its officers had been absolutely enjoined from attempting to use its name for any purpose whatever, could not use its name to procure a writ of error against the objection of the receiver; but it does not appear that Mr. Rust, in procuring the dismissal of the ease, was guilty of any fraud or acted in bad faith. He merely asserted his right to control the affairs of the company by virtue of his appointment as receiver
Attention is next directed to the resignation of officials of The American Water Works Company, who, it is asserted, subsequently assumed a hostile attitude towards the company; that a suit was instituted in the court of chancery of New Jersey, and a receiver appointed for the company; that a suit was.brought in the supreme court of New York against the company, which resulted in restraining its directors from holding meetings and tying up its business for a considerable period; that C. IT. Yenner & Company, of which Mr. Yenner, one of the plaintiffs in the suit at bar, was a member, were the financial agents of The American Water Works Company, through whom the company expected to dispose of the bonds secured by the mortgage to The Central Trust Company, and who'were largely interested as holders of such bonds; that a suit was commenced against this firm, alleging insolvency and thereby causing its suspension from business; that other suits were brought, all of' which, it is said, were instigated by the former president of the company, Mr. Underwood, and Mr. Sullivan, the receiver appointed by the district court in this state. It is also claimed that the suits on the underlying mortgages were commenced at the suggestion of Mr. Sullivan. Later, the action of The Farmers’ Loan & Trust Company was commenced. The inference which is evidently intended to be’ drawn from these matters is, that the various suits were instigated in pursuance of a plan to harass The American Water Works Company, and Mr. Venner and his firm, by litigation, and embarrass financially the company and Mr. Yenner and the firm of which he was a member. It does not appear that any of these parties or others who may have been asso
To entitle a party to relief against a decree on . the ground of fraud, it must appear that he had a . defense on the merits to the case in which the decree • was rendered, and that he was prevented from inter- , posing such defense by the fraud of the prevailing •party without fault on his part. — Ward v. Durham, 134 Ill. 195.
In an action to set aside a decree for fraud, it .must appear that the prevailing party in the suit in which such decree was rendered contrived by fraud to keep the complainant and the court in ignorance of the real facts, whereby a wrong conclusion was reached and positive injury done to the party complaining, without neglect or inattention on his part. —McDowell v. Morrell, 73 Tenn. (5 Lea) 278.
The creditors most concerned in the foreclosure proceedings were the bondholders represented in the foreclosure suits of The Farmers’ Loan & Trust Company and The Central Trust Company. Their rights were, in a great measure, at least, subordinate to those holding the bonds secured by the underlying-mortgages. Each set of bondholders interested in The Farmers’ Loan & Trust Company and The Central Trust Company suits appointed a committee to devise ways and means to protect the interests of these bondholders. It appears from the statements in the briefs of counsel that thereafter these committees combined and formed what is termed a ‘‘Reorganization Committee,” the purpose of which was to purchase the property at the foreclosure sale for the benefit of the two- sets of bondholders mentioned, and thereafter did purchase for this purpose. It is also asserted that prior to the sale an arrangement was made by the reorganization committee with The Citizens’ Water Company, a rival of The American Water Works Company, to the effect that, in the event the committee became the purchaser of the property, a consolidation of the properties belonging to the two companies should he effected. ' It is urged that the object and effect of these combina
The respective sets of bondholders were interested in the property by virtue of the indebtedness held by them and secured thereon. Their rights were subordinate to the indebtedness secured by the underlying mortgages. It was necessary to discharge that before they would he entitled to anything. This indebtedness amounted to a large sum, several hundred thousand dollars. The property was of a character that it could not be advantageously sold in parcels. Its value in a great measure depended upon preserving it as a whole, thereby rendering it valuable for the purpose for which it was
As we understand their brief, counsel for plaintiffs also contend that the foreclosure proceedings were conducted in the interest of a few favored stockholders, and that the arrangement made by the reorganization committee and the agreement to sell to The Citizens’ Water Company were also in the interest of such favored stockholders. Therefore, they say, the case falls within the decision of Louisville Trust Co. v. Louisville, etc., Ry. Co., 174 U. S. 674, and that the sale should be set aside. The foreclosure proceedings were fair and open. There was no attempt to fasten any debt upon the property to which it was not subject. The indebtedness represented by the several mortgages foreclosed was due and valid. It does not appear that any stockholder of The American Water Works Company was denied the privilege of becoming a party to the arrangement formulated by the reorganization committee, and sharing the benefits which that arrangement contemplated. In such circumstances the facts do not bring the case within the rule announced in the case above referred to, and it is immaterial, therefore, what disposition the parties for whose benefit'the purchase was made by the reorganization committee may have made of the property, or what they received for it.
Many errors are assigned on the rulings of the trial court relating, to the incompetency of evidence admitted, the action of the trial court in refusing an amendment to the complaint, and other matters
By leave of the chancery court of New Jersey, the receiver of The American Water Works Company appointed by that court was- made a party defendant to the action commenced by plaintiffs. Mr. Rust, the receiver, filed an answer, wherein it appears he merely asked the protection of the court for the interests under his charge, and such relief in the premises as should seem proper to the court under the circumstances. Mr. Rust died,' and Mr. Mo-Master, having been appointed receiver to succeed him, filed an answer attacking the decrees sought to be set aside by the plaintiffs upon practically the same grounds set out in the complaint. To the answer filed by Mr. McMaster as receiver, The Denver Union Water Company and The- Continental Trust Company filed cross-bills, the purpose of which was to quiet the title of The Denver Union Water Company to the property in controversy as against The American Water Works Company and the receiver. The trial court granted this relief, and error is assigned on this action by the receiver, based upon the ground that leave to make the receiver a party defendant to the action commenced by plaintiffs did not carry with it the right to malee him a defendant to an action by The Denver Union Water Company and The Continental Trust Company by way of cross-bills in that action, having for their purpose an entirely different object from that sought to be accomplished by the original suit.
In support of this contention the rule is invoked
Our code, § 222, specially provides that judgment may be given for or against one or more of several defendants, and when the justice of the case requires it, the ultimate rights of the parties on each side,, as between themselves, may be determined. It was eminently proper, when the receiver was a party to the action, for the trial court to determine the ultimate rights of all the parties to the action in the subject-matter of controversy, and thus put an
It is next urged on behalf of the receiver that the cross-bills were not filed in apt time. The time within which a cross-bill may be filed is within the sound discretion of the court, and unless it appears affirmatively that the party against whom the cross-bill was filed was prejudiced by reason of its being filed at the time it was, the discretion of the court will not be disturbed. Counsel for McMaster fail to point out where he was in any manner prejudiced by reason of the fact that the cross-bills were permitted to be filed after the cause had been set for trial.
The sales by the commissioner, Mr. Sullivan, are attacked upon the ground that he was interested in the purchase of the property disposed of by him under the foreclosure decrees. A sufficient answer to this contention is, that neither the original bill filed by the plaintiffs, nor the answers of the receivers, tender an issue raising this question.
The next point made on behalf of the receiver is, that The Denver Union Water Company and The Continental Trust Company, having, asked affirmative relief by their cross-bills, should have been required to do equity before any relief was granted to them. In support of this claim it is argued that the record discloses an arrangement entered into between the reorganization committee and The Citizens’ Water Company, the purpose of which wás to prevent competitive bidding at the sale, and secure the property sold for a much less sum than it was actually worth; and, as it appears that the parties represented by the reorganization committee obtained a sum much in excess of that bid for the property at the sale, that The Denver Union Water Company should have been required to account to the
Other questions argued by counsel for the receiver have either been disposed of in considering questions raised by counsel for the plaintiffs, in their brief, or relate to matters which in our opinion do not in any manner affect the questions which are decisive of this case, in so far as the receiver is concerned.
We conclude that in the actions in which the several mortgages were foreclosed, the court had jurisdiction of The American Water Works Company; that it had jurisdiction of all the property involved; that there is no error in the record of those proceedings affecting the jurisdiction of the court either as to the person of The American Waterworks Company or the subject-matter of controversy; that there was no fraud practiced in securing these decrees, or in the proceedings subsequent thereto attacked by the original bill or the answers of the re
The judgment of the district court will stand affirmed. Affirmed.
Decision en bam.
Mr. Justice Campbell and Mr. Justice Goddard not participating. _