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,
Kows v. Mowery,
In Arnold v. Spates,
It is apparent that none of these settle anything for the present controversy.
O’Leary v. Brent, (Ark.)
The cases cited in O’Leary’s case for its support are these:
McGhee v. Willis, (Ala.)
And so of Gray v. Grand Trunk Western R. Co., (Ill.)
On the other hand, in Ruggles v. Patton (C. C. A.), (Mich.)
“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.)
*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,
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,
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.)
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.)
It may open an admission to probate, to correct a mistake. Brook v. Chappell,
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,
It may construe an agreement to relinquish an inheritance. Stolenburg v. Diercks,
Though it may not decree foreclosure, it may, on issue voluntarily joined, determine the validity of mortgages. Prouty v. Matheson,
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,
2.
While proceedings in probate are to be distinguished from others, the court in which they are had is the same. Tucker v. Stewart,
“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.
