173 Iowa 299 | Iowa | 1915
On the 15th day of April, 1912, appellant filed petition to set aside said order of approval. It asserts that there was no jurisdiction to make said order because no notice was given, and asks permission to file stated objections to said final report. The objections are, in effect, that the report exhibits excessive expenditures, expenditures that could have been obviated, an exorbitant claim for the services of the receiver and of his attorneys, and that the attorney’s claim should be
It appears that there is not on file, nor in the office of the clerk, proof of “the service of any notice of the hearing on the final report of R. O. Woodward as receiver'of W. A. Magner, and that the record does not show any such notice. was ever given ... to any creditor, or ever filed”. The court ruled that it would “not set aside . . . the discharge and the final report for the sole reason that no notice has been given”.
2.
Upon this ruling rests the first controversy here. The appellee contends that no statute requires such notice and that, therefore, the order at bar should not be set aside for want of such notice. The appellant says that, though no statute may, in terms, require the notice, that is the effect of the germane statute law, and that, whether or no statute commands notice, the order is, in the absence of notice, void for denying a day in court to parties interested, and thus making a judicial pronouncement by a proceeding which is not due process of law. The appellee asserts that we have settled, as have other courts, that no notice is needed because no statute requires one. We understand him to offer, no
Williams v. Trust Company, 126 Iowa 22, so far from holding that, in the absence of statute, such notice is unnecessary, goes fully into the question of what is good notice, and says that such notice is one which the trial court has inherent power to require before discharging its official, and that, if it finds that the discharge was secured without compliance with its order, it has the undoubted right to set aside an order so obtained (126 Iowa 26); and, if the court exercises this power, a notice that has no signature and is addressed to no one and which is not entered of record until service is made, exhibits an entire lack of notice, and the court is without jurisdiction to enter an order of discharge based thereon. The case does not, however, rule on the effect of want of statute requirement, because it turns on obedience to an order that notice be given. The only thing decided is that, though notice be not required by statute, the court may yet order it; and if it does, rules of court requiring the notation of court orders on a calendar or motion docket require that the receiver note said order thereon, inclusive of the time of the hearing and nature of service, and then that the notice in the case was no notice.
Kows v. Mowery, 57 Iowa 20, is authority merely for the proposition that, in the absence of fraud or mistake, the final settlement and discharge of an administrator is a binding adjudication upon those interested, subject to a provision of statute that accounts settled in the absence of any person adversely interested, and without notice to him, may be opened within three months, on his application. To the same effect is Patterson v. Bell, 25 Iowa 149.
In Arnold v. Spates, 65 Iowa 570, the administrator did publish a notice; but, notwithstanding this, we applied the rule of Kows’ case, to wit: that, under statute, the settlement could be opened arbitrarily within three months, and later than that for fraud or mistake; and that the statute time for
It is apparent that none of these settle anything for the present controversy.
O’Leary v. Brent, (Ark.) 134 S. W. 617, does not moot the question of notice. Its holding is that, if the receiver be discharged, an appeal from a judgment in his favor will be dismissed, under the/rule that, if the appellant’s right to further prosecute has ceased, the appeal will be dismissed on motion of appellee. Incidentally, there is a statement, ‘ ‘ It seems that the defense does not depend upon notice of the application for the discharge being served upon plaintiff”; and in support, among others, is cited New York & W. U. Tel. Co. v. Jewett, (N. Y.) 21 N. E., at 1037, left col. The Jewett case is a construction of Herring v. New York, L. E. & W. R. Co. (N. Y.) 12 N. E. 763. In it, there is no controversy over want of notice, and notice seems to have been given. The point involved seems to be that a receiver in an action has power to contest any claims against the estate of the corporation without consulting the creditors, and that judgments resulting are binding. The Jewett case construes the Herring case to be authority for the proposition that, where general creditors are all represented in the action between the receiver and debtors, they are not, as a matter of law or right, entitled to any personal notice of any proceedings in those actions. This language, applied to the facts involved in the Herring case, means that no notice is required that the receiver is having a lawsuit with a debtor.
The cases cited in O’Leary’s case for its support are these:
McGhee v. Willis, (Ala.) 32 So. 301, which is a naked holding that the discharged receiver may plead the discharge in bar to a suit brought against him as such. Exactly this is the holding of Archambeau v. Platt, (Mass.) 53 N. E. 816.
And so of Gray v. Grand Trunk Western R. Co., (Ill.) 156 Fed. 736, which merely holds that a receiver is not liable
On the other hand, in Ruggles v. Patton (C. C. A.), (Mich.) 143 Fed. 312, at 314, Lurton, Judge, says:
“Nothing is better settled than that an allowance to a receiver by way of compensation for his services is not subject to the arbitrary determination of the court, but should be made upon a hearing at which the parties interested have an opportunity to contest the claim.”
It is said in 34 Cyc., page 473: “An order allowing compensation to a receiver should be made only after notice and a hearing, at which the parties have an opportunity to contest the claim.”
In Merchants’ Bank v. Crysler, (C. C. A.) (Mo.) 67 Fed. 388, there was an oral motion made by the receiver’s attorneys without notice to appellants and, upon this, the circuit court allowed the receiver and his attorney each $5,000 as additional compensation, and at the same time, approved certain long reports filed by the receiver. This was done on June 2, 1894. On June 11, appellants moved to have the court vacate this final allowance, • alleging as ground that the allowance was irregularly made without notice; that the interveners were interested in the amount of said allowance; and that they desired to be heard in relation thereto. The motion was denied. The question on appeal does not seem to involve whether the allowance was reasonable in amount. No testimony was offered on that point. The Circuit Court of •Appeals says:
*304 “It is obvious that the motion with which we are concerned in the case at hand was not a motion granted of course, because it involved the production of evidence and a judicial inquiry into the nature and extent of the services that had been rendered by appellees and the value thereof. The only point that admits of any controversy is whether it w^s a special motion of' the kind that can regularly be heard ex parte.
In view of cases so sustaining appellant as to the effect of the precise omission to give notice which is involved on this hearing, we see no occasion to go into the line of authorities like Pennoyer v. Neff, 95 U. S. 714, many of which are cited by appellant — cases which announce the general rule that, in strictly adversative proceedings — the ordinary lawsuit, — notice and opportunity to be heard are essential to valid judgment.
In the matter at bar, any allowance that- ought not to be made takes from creditors that much. It deprives them of a sum due them as much as would a judgment decreeing that they pay over that much. It seems they should be given opportunity to present why a claim diminishing the fund out of which payment was due them should be denied. The giving them notice can never do harm. As said in Crysler’s case, supra, the omission to give it would often be injurious. In
“In the absence of any well settled rule of practice or general order governing the subject, we entertain no doubt that applications for such orders ought to be accompanied with notice to all parties in interest or to their solicitors of record, and that such application ought not to be heard ex parte, unless the parties, when notified of the application, fail to appear. . . . The allowance of such claims depletes the trust fund and frequently lessens the amount which the parties to the suit would otherwise be entitled to receive and would receive. The parties to the suit, therefore, have an interest in the amount of such allowances and should be given an opportunity to defend. Any other practice might, and probably would, lead to great abuses.”
The implication is that, if no notice be given, it is taking creditor’s property without notice and without due process of law, and is therefore void.
Though no express statute requires such notice, we think it was error to hold that the order complained of could not be set aside, even though there was an absence of all notice.
On January 23d, the receiver wrote appellant that he (the receiver) had closed out the stock "and expect to get an order of court to make distribution within a day or two, when I will close the matter up”. Nothing is said about that a report wilFbe filed, or what it will contain; and if appellant had appeared "within a day or two”, it would have found no order on file and no application made. On January 25th, appellant answered this letter and continued to treat the affair as an open one, because it suggests, there are some book accounts due the estate, and it asks to be advised of their amount and whether they are collectable; and says that, while they understand from the letter of the receiver that he expects to pay a final dividend soon, they do not understand how this may be done, unless all the book accounts have been collected.
On February 2, 1912, after the report had been approved, the receiver wrote appellant, stating that he enclosed a receipt for their share of the funds in his hands as receiver, and that, if the enclosed receipt were signed and returned to a stated bank, that share would be paid. There was enclosed a statement of the total of the receipts, a lump total of the expendi
On February 9th, the attorney' for the receiver wrote appellant that their said letter to the receiver had been shown to the attorney, and that, therefore, he enclosed a copy “of the itemized statement of the expenses of the receivership, as shown by the receiver’s report”. There is an explanation added, in effect that there are no book accounts, or, if any, that they are not worth collecting. This seems to be the first reference to a report, and it, too, says nothing about its being final or approved by the court.
In answer to the petition to set aside, the receiver states that different claims were filed aggregating $9,812.41, and that “your receiver has paid out, under the order of court, the pro rata dividend coming to each of said claims, except the following claims ’ ’. There is then enumerated the claim of Forey, who instituted the receiver’s proceedings, which is listed as $3,101.63, and the claim of appellant, in amount of $2,034.45. This answer is not verified, and the receiver, though called as a witness, did not speak to this point. Neither does it appear when such distribution as is here detailed was made, with reference to the approval of the final report. That is to say, it appears that payments were made under order of court, but not that they were made under the order of distribution involved in the final report and its approval. For aught that appears, these payments, other than these two large claims, may have been made before the final report was filed.
We are of opinion that, whatever the effect of actual notice might be in the premises, that which was done here is not the equivalent of notifying this appellant that it may be present at the hearing of the application made; that same will be made at a stated time and place, or at least not earlier than at the stated time, and as soon thereafter as the matter may
2..
We are of opinion that, even if what here was done may
3.
It appears that the total of claims aggregates $9,812.41. The total collections fell short, roughly, something like $2,700.00. Out of the $7,100.00, roughly, that was collected, the final report claimed $2,300.00 for expenditures for collecting the $7,100.00. The two creditors who had not accepted their composition at the time the report' was approved
So far as the record shows, no vouchers or receipts of any kind are attached to the final report. Nothing'appears that makes it unreasonable for creditors to make inquiry into the propriety of allowing all that the final report claimed. In the objections proposed, it is claimed that, sincfe the report shows only lump payments in various ways, the creditors are thereby not enabled to determine whether anything that belongs to them is being taken from them wrongfully. It is charged that the fees paid the receiver are excessive, and that the fees paid his attorney are; that the attorney for the receiver was also attorney for some of the creditors and collected a eon
The unverified answer to the application proceeds, mostly, along general lines. It denies that there were payments of excessive salaries to clerks, and asserts that only ordinary and necessary salaries, proper in carrying on the business, were paid. As to the specific charge that the attorney for the receiver got fees from others which should reduce the amount finally allowed him, the reply is that he got nothing but statutory fees for securing judgment on notes sued on by the receiver, .and has not collected any attorney’s fee from any creditor. It is further said, generally, that his fees are not in excess of the usual and ordinary fees for such services. No attention seems to have been paid to the fact that these statutory attorney’s fees .should be considered on how much more the attorney should have, nor to the fact that there was some ground for claiming that the final allowance made is too large, in view of other fees received by the attorney.
The answer concludes with a general statement that all the acts and doings of the receiver have been in accordance with the order and direction of the court, and, in so far as he was able, for the best interests of all persons interested.
The application is made by one whose claim is more than a fourth of all claims, and at a time when those whose claims were more than half of all claims refused to accept what the receiver tendered. Appellant’s tendered objections were not frivolous; and while, as will presently appear, we are able to infer why hearing was refused, we shall attempt, later, to make clear why the reasons for the refusal are not valid.
Now, though a court of equity may' open the 'settlement and administer upon omitted property (Tucker’s case, 121 Iowa 716, 717), such power is concurrent, but not exclusive, in cases where a settled account omits property by mistake, or such property is in any way withheld from the accounting. As to omitted property, the receiver makes no question of forum, but asserts, rather, that he has omitted none. His position is, in effect, that, the order of appointment not having directed the receiver to take book accounts, he was’ justified in not doing anything as to such accounts; and that, in his opinion, there were no accounts worth attention; that, therefore, nothing was omitted from the final report, even if the creditor could show that’ the accounts did exist and were of value. It is this reasoning which the court seems to have sustained. There seems to us to be no answer to the complaint of this, unless it be necessary, in order to charge an omission to take and administer assets, to show that the,order appointing the receiver in terms directed that such assets be taken and administered upon.
Again, no testimony was offered on the fees due the receiver. Upon such an allowance, the court should not act without evidence, although it may take into consideration its own personal knowledge. 34 Cyc. 473-474. And on objection to the allowance to the receiver and his expenses, the burden of showing reasonableness of the allowance is on him. Commonwealth v. Monongahela Valley Bank, (Pa.) 86 Atl. 719.
If there be a reason apparent in this record for the action taken, it is the claim that petitioner was entitled to no relief upon proving what they asserted; that the court to whom application was made would not interfere” even though omissions were proven, or though improvident allowance to the receiver were shown to have been made without evidence; and that applicant must go hence to some other forum to obtain the relief sought.
III. We think petitioner was always entitled to have the court that created the receivership act upon a claim of omission or improvident allowance to the receiver made without notice, even if equity had concurrent jurisdiction; that, at any rate, such court has such power in the present state of the law. The court applied to had, of course, plenary jurisdiction to deal effectively with this receivership. If, to effectuate this power, it became necessary to deal with some emergent issue or situation in a way that courts of equity deal, the general power carried the power thus to deal, even if the
It may go so far in determining the rights of creditors in the funds of an insolvent debtor as to recognize and enforce a trust. Wilson v. Coburn, (Neb.) 53 N. W. 466.
It may open an admission to probate, to correct a mistake. Brook v. Chappell, 34 Wis. 405; Williams’ case, (Neb.) 89 N. W. 452; Campbell v. Logan, 2 Bradf. Sur. 90.
It may order a new guardian’s deed, though equitable considerations are involved, and though the order is made on finding that, the original deed is defective and that a new one is needed to accomplish what was intended by the first. Mock v. Chalstrom, 121 Iowa 411, 416, 417.
It may construe an agreement to relinquish an inheritance. Stolenburg v. Diercks, 117 Iowa 25.
Though it may not decree foreclosure, it may, on issue voluntarily joined, determine the validity of mortgages. Prouty v. Matheson, 107 Iowa 259, 262, 263.
Where, forms of action are abolished, the probate court gives any relief proven, even though this involves doing what
We said in Covert v. Sebern, 73 Iowa 564, 569, 570, that, while a court of chancery has jurisdiction of cases brought for the sole purpose of construing and interpreting wills, it is not so far exclusive as to forbid other courts in which are cases involving rights under wills to interpret their language. Hence, in an action brought to require an executor to distribute according to the terms of a will, the probate court must, necessarily, and has power to, interpret the will to determine, how distribution shall be made. Authority to interpret is possessed by all courts called upon to enforce rights under a will. Indeed, the probate court could not make an order affecting rights based on a will unless it may interpret the will to discover what these rights are.
2.
While proceedings in probate are to be distinguished from others, the court in which they are had is the same. Tucker v. Stewart, 121 Iowa at 715. Iowa no longer has either a law, equity or a probate court. All three are part of the district court. Therefore, plaintiff may, at least in opposition to matter proved, make proof in the same action of that which he formerly would be obliged to avail himself of by suit in equity. Mandeville v. Reynolds, 68 N. Y. 545. Wherefore, says the same case, the probate court may try the validity of a judgment, if that be an emergent issue. It says further:
“It was always theoretically unreasonable that, in one branch of the judiciary, the court should hold that the party prosecuted had no defense, and in another, that plaintiff had no right to recover. Now, when the action is prosecuted, we inquire whether, taking into consideration all the principles of law and equity bearing upon the case, the plaintiff ought io recover.”
Assuming, for the sake of argument, that the relief sought by petitioner was equitable, we see no good reason why the district court, with power to deal with the receivership, with power to give equitable relief, refused to act and remitted petitioner to some other court and time. The judgment and order appealed from is reversed and the cause remanded, with direction to proceed to a hearing upon the petition and the objections filed and made. — Reversed and Remanded.