Opinion
No. 29885.
March 14, 1932.
1. RECEIVERS.
Where order appointing receiver is revoked because he was wrongfully appointed, bond is breached.
2. RECEIVERS.
Final decree discharging receiver because he was wrongfully appointed is "revocation of appointment" as regards breach of bond.
3. RECEIVERS.
That supreme court holding that receiver was wrongfully appointed also held court properly authorized receiver to lease plantations involved did not relieve principal and surety on receiver's bond for liability for wrongful appointment.
APPEAL from chancery court of Hinds county. HON. V.J. STRICKER, Chancellor.
Fulton Thompson and Chalmers Alexander, both of Jackson, for appellant.
Before any receiver shall be appointed without notice, the complainant who asks for the appointment must execute bond payable to the adverse party, conditioned to pay all damages that may be sustained by the appointment of such receiver in case the appointment be revoked; and the statute provides the method and jurisdiction for suit on the bond.
Sec. 437, Code 1930.
Upon decree discharging receiver, the complainant is liable on the bond for all damages sustained by appointment.
Pearson v. Kendrick, 74 Miss. 235, 21 So. 37.
Nothing can be found on the face of our bill to show that, after reversal, the bank became concluded by the subsequent proceedings had in the cause.
The dismissal of the complainant's bill shows the discharge ipso facto of the receiver; for there can continue no receiver when bill is dismissed.
Engleberg v. Tonkel, 140 Miss. 513.
The complaint is not against the proper or improper action of a court receiver, but irrespective of whether he functions better even than the ousted defendant may do, the complaint must be against the complainant who had the defendant ousted.
Pearson v. Kendricks, 74 Miss. 235, 240.
The party who resorts to the hasty ex parte proceeding to procure the appointment of a receiver, shall not escape liability as formerly, for damages inflicted upon the opposing party in case his action should be held to be unauthorized by the facts and wrong, but must guarantee indemnity by the bond there described.
Pearson v. Kendricks, 74 Miss. 240.
When a case has been reversed and remanded without final direction the decree of the supreme court operates to vacate and annul the final decree appealed from and to restore the parties to the exact position on the record that they severally occupied at the time of the rendition of the decree in the trial court.
Griffith's Chancery Practice, sec. 696; McCorkle v. Brown, 17 Miss. 179; Jackson v. Lemler, 83 Miss. 37; Ogden v. Harrison, 56 Miss. 743.
On reversal the law announced on the appeal by the appellate court is the law of the case, and must govern the litigants and the lower court in the further progress of the case, whether right or wrong, and is binding on the lower court.
State v. Woodruff, 81 Miss. 458; Smith v. Elder, 22 Miss. 100; N Y Life Ins. Co. v. McIntosh, 46 So. 401; Green v. McDonald, 21 Miss. 452; Griffith's Chancery, Sec. 698.
Where an appointment of a receiver was wrongfully done, and appeal has been taken and reversal had, the right of action has been likened to that accruing on the dissolution of an injunction bond.
23 R.C.L., p. 45, sec. 46; Ann. Cas. 1915D, 1041; Ann. Cas. 1915D, 1040.
The use of the words removal and discharge are synonymous.
Pearson v. Kendrick, 74 Miss. 240.
Franklin, Easterling Rosenthal, of Jackson, for appellees.
Taking sections 10 and 11 of the bill together, said bill shows on its face that the chancery court on remand of said cause not only declined to revoke the appointment of the receiver, but that the said receiver, under the sanction of said court, was retained until the final disposition of the cause.
While the court erred in appointing the receiver, its order so doing was not void, and until it was revoked it should have been obeyed by all parties affected thereby, so that, instead of being allowed damages because of the making of the order appointing the receiver the party should have been punished for disobeying it.
Houston v. King, 119 Miss. 347, 80 So. 779.
The rule is well settled that a judgment which is merely erroneous and voidable cannot be attacked collaterally.
Smith v. Bradley, 6 S. M. 179; Work v. Harper, 24 Miss. 517; Wall v. Wall, 28 Miss. 409; Parisot v. Green, 46 Miss. 747; Moore v. Ware, 51 Miss. 206; A. V. Ry. Co. v. Bolling, 69 Miss. 255, 13 So. 844.
Sureties are liable only in accordance with their undertaking.
Cahn v. Wright, 119 Miss. 345, 78 So. 292; Shackelford v. Smith, 61 Miss. 7.
The bill of complaint in this case, shows on its face that the order appointing the receiver without notice was never revoked by the court and this was the condition of the bond.
The reversal of the decree by the former appeal did not deprive the chancery court of power over the proceedings.
Wailes v. Johnson, 25 Miss. 421; Hansard v. Gray, 46 Miss. 75; Haines v. Haines, 54 So. 433.
There is a clear distinction between vacating the appointment of a receiver and his removal or discharge, although these words are frequently used indiscriminately by the courts as synonymous. To vacate the appointment is to set aside the order of appointment because improvidently granted. The term remove as applied to the receiver, means simply a change in the personnel of the receivership, which continues unaffected. The discharge of a receiver relates to the termination of the receivership, and is asked and ordered for the reason that, because of the state of the suit, there is no longer any necessity for continuing the receiver. The failure of plaintiffs to object to the order and, in the event the objection was overruled, to prosecute their appeal, as provided by the statute, must be held to be an acquiescence by them in it, so as to prevent their questioning its propriety upon final hearing of the cause.
Pagett v. Brooks, 37 So. 263; Joslin v. Williams, 6 Nebr. 594, 107 N.W. 837, 112 N.W. 343; Haverly v. Elliott, 39 Nebr. 201, 57 N.W. 1010.
Under our statute the bond given for the appointment of receiver without notice must be conditioned "to pay all damages that may be sustained by the appointment of such receiver in case the appointment of the receiver be revoked, which was practically the result of the one construed in Pagett v. Brooks, 37 So. 263.
In the absence of a showing to the contrary, it will be presumed on this appeal in a collateral attack, that the chancery court was fully warranted in refusing to revoke the appointment of a receiver and in retaining the services of the receiver until the end of the litigation.
The First National Bank of Jackson filed its bill in this case against the United States Fidelity Guaranty Company, J.A. Logue, and his wife, Mrs. Julia C. Logue, and others, to recover damages on a receiver's bond given for the appointment of the receiver, without notice, in the case of J.A. Logue et al. v. J.B. Stirling and the First National Bank and others, pending at the time in the chancery court in the First district of Hinds county. Appellees demurred to the bill, which demurrer was sustained by the court and the bill dismissed. From that decree appellant prosecutes this appeal.
In the cause of J.A. Logue and wife and others v. J.B. Stirling and the First National Bank and others, above referred to, the chancery court appointed a receiver, under section 437 of the Code of 1930, without notice, and made an order authorizing the receiver to lease certain plantations involved in the cause. The defendants made a motion to have the receiver discharged, which motion was overruled by the court. From those two interlocutory decrees they prosecuted separate appeals without supersedeas, as they had the right to do under the law. The supreme court, on appeal, held that complainant's bill in that case was without merit and reversed the decree overruling the motion to discharge the receiver, but affirmed the decree authorizing the receiver to lease the plantations, and remanded the cause to the chancery court. The opinion of the court in that case will be found reported in 154 Miss. 812, 123 So. 825, styled Stirling et al. v. Logue et al. In order to properly understand the decision of the court in the present case it is necessary that the opinion in that case be read.
The bill in this case sets out the history of the litigation in that case up to and including its decision by the supreme court, and, in addition, alleges, in substance, that when the mandate of the supreme court went down the chancery court proceeded as speedily as practicable to dismiss the bill and discharge the receiver. In other words, that the chancery court proceeded to dispose of the case in accordance with the principles laid down by the supreme court. It is plainly and distinctly alleged in the bill in this case that the chancellor rendered a final decree in that case dismissing the bill and discharging the receiver.
Section 437, Code 1930, provides that, before a receiver shall be appointed, without notice, the party applying for the appointment shall execute bond payable to the adverse party in a sufficient penalty, to be fixed by the chancellor, and with sufficient sureties conditioned to pay all damages which may be sustained by the appointment of a receiver in case the appointment is revoked, and that such damages may be recovered on the bond in that suit in the same manner as damages are recoverable on an injunction bond, or the party entitled to damages may maintain an independent suit on such bond therefor.
The bond provided by the statute guarantees the rightfulness of the appointment of the receiver. If the order appointing the receiver is revoked because he was wrongfully appointed, the bond is breached, and this is true regardless of whether the revocation is by interlocutory decree or final decree, and also regardless of whether the decree denominates such action of the court a discharge or a revocation of the appointment. If the receiver is discharged on final decree because he ought not to have been appointed, such discharge is as thorough a revocation of his appointment as an interlocutory decree revoking his appointment on the same ground.
Appellees lay stress on the fact that the supreme court in Stirling et al. v. Logue et al., held that there was no error in the decree of the chancery court authorizing the receiver to lease the plantations involved in that cause. They argue that it follows that a receiver was necessary, therefore he was rightfully appointed. We do not think there is any force in this position. It is true that in order to protect the rights of the parties in that case, pending the litigation, it was necessary to authorize the receiver to lease the plantations, but it is also true that such necessity was brought about by the fact of the wrongful appointment of the receiver. The holding of the supreme court in that case, that the bill was without merit and that the receiver ought not to have been appointed, meant that the custody of the plantations involved had been wrongfully taken away from Stirling, the trustee, and turned over to the receiver. The fact that the receiver was used by the court for a necessary purpose, pending the litigation, does not mean that he was rightfully appointed. On the contrary, such use became necessary because he was wrongfully appointed. For the time being Stirling, the trustee, had been deprived of the possession and control of the plantations, and the receiver had been wrongfully put in their possession and control. The Logues and the sureties on their receiver's bond will not be permitted to take advantage of their own wrong in having the receiver appointed, and thereby escape liability on the bond.
Appellees argue that there is a gap in appellant's bill; that for aught appears therein conditions may have arisen after the case of Stirling et al. v. Logue et al., was reversed and remanded to the chancery court that made a receiver necessary and his appointment valid. We do not think there is any merit in this contention. The bill fairly interpreted alleges that when that cause went back to the chancery court nothing was done except as speedily as practicable to terminate the cause and discharge the receiver in accordance with the principles laid down by the supreme court in its opinion.
Reversed and remanded.