Opinion
No. 29,750.
Filed May 1, 1959.
1. CONSTITUTIONAL LAW — Elements of Due Process — Notice. — Notice, giving a defendant opportunity to be informed regarding the nature of the action and reasonable opportunity to make a defense, is an essential element of due process. p. 385.
2. RECEIVERS — Statutes — Constitutional Law — Appointment Without Notice. — The Indiana statutes which specifically limit the authority of the court to appoint receivers without notice is an implementation of the constitutional guarantee of due process. p. 385.
3. COURTS — Appointment of Receivers Without Notice — Jurisdiction — Sufficient Cause Shown By Affidavit — Statutes. — Although courts have general statutory and inherent authority to appoint receivers with notice, they have no authority to appoint receivers without notice except upon sufficient cause shown by affidavit as now provided by statute. p. 385.
4. RECEIVERS — Appointment Without Notice — Necessary Allegations of Verified Complaint — Emergency — Availability of Other Remedy — Insufficient Time To Give Notice. — In order to justify the appointment of a receiver without notice, the verified complaint must not only allege facts which support the plaintiff's right to the appointment of a receiver after notice, it must also state specific facts which establish the following ultimate facts: (1) That an emergency exists which renders interference necessary before there is time to give notice in order to prevent waste, destruction or loss; (2) That protection cannot be afforded in any other way, as by temporary restraining order; (3) That plaintiff could not reasonably have anticipated the injury in time to give notice. p. 386.
5. RECEIVERS — Allegations of Verified Complaint — Sufficiency of Allegations — Appointment of Receiver Without Notice — Mandamus and Prohibition. — The verified complaint alleges "That the defendant is insolvent and owes a large amount of indebtedness and claims which it is unable to pay." and it is held that this allegation is not a statement of facts sufficient to authorize the court to appoint a receiver without notice or, in the face of the statutory prohibition of sec. 3-2602, Burns' 1946 Replacement, to exercise any discretion regarding such an appointment. p. 387.
Original action by State of Indiana on relation of Red Dragon Diner, Inc., relator, which seeks a writ of prohibition directed against Superior Court of Marion County, Room No. 1, M. Walter Bell, Judge thereof and another, respondents. A temporary writ of prohibition was issued preventing respondents from taking any further action in a proceeding wherein the court had already appointed a receiver without notice.
Writ of prohibition made permanent.
John D. Raikos, of Indianapolis, for relator.
Joseph F. Quill and John G. McNutt, both of Indianapolis, for respondents.
Merle H. Miller, Donald F. Elliott, Jr., Ross, McCord, Ice Miller, of counsel, all of Indianapolis and William R. Hunter, of Winchester, Amicus Curiae. Buschmann, Krieg, DeVault Alexander, of Indianapolis, for General Grain, Inc., Amicus Curiae.
In this case the court appointed a receiver without notice, and relator has asked for a writ prohibiting respondents from taking any further action in said proceeding. A temporary writ has issued. Relator asserts among other things that the respondent court was without jurisdiction to appoint a receiver without notice for the reason that the complaint did not state facts which authorized the court to exercise this very extraordinary remedy.
Notice, giving a defendant opportunity to be informed regarding the nature of the action and reasonable opportunity to make a defense, is an essential element of due process. Our 1-3. statutes which specifically limit the authority of the court to appoint receivers without notice is in implementation of the above constitutional guarantee. Therefore, although courts have general statutory and inherent authority to appoint receivers with notice, they now clearly have no authority to appoint receivers without notice, "except upon sufficient cause shown by affidavit," as now provided by statute.
Art. 1, § 12 Constitution of Indiana; Amend. 14, § 1 Constitution of the United States. Nottebaum v. Leckie (1929), 31 F.2d 556; Noxon Chemical Products Co., Inc. v. Keckie (1930), 39 F.2d 318; certiorari denied 282 U.S. 841, 51 S.Ct. 22, 75 L.Ed. 747; Town of Walkerton v. N.Y.C. St. L.R.R. Co. (1939), 215 Ind. 206, 214, 18 N.E.2d 799, certiorari denied 308 U.S. 556, 60 S.Ct. 75, 84 L.Ed. 467, 5 I.L.E., Constitutional Law, § 216, p. 524.
"Receivers shall not be appointed, either in term or vacation, in any case, until the adverse party shall have appeared, or shall have had reasonable notice of the application for such appointment, except upon sufficient cause shown by affidavit." § 3-2602, Burns' 1946 Repl. [Acts 1881 (Spec. Sess.), ch. 38, § 253, p. 240.]
§ 3-2601, Burns' 1946 Repl.
West v. Reeves (1934), 207 Ind. 404, 190 N.E. 431; The Goshen Woolen Mills et al. v. The City Nat'l Bank of Goshen (1898), 150 Ind. 279, 49 N.E. 154; McElwaine v. Hosey (1893), 135 Ind. 481, 35 N.E. 272.
§ 3-2602, Burns' 1946 Repl.
This court has heretofore spelled out in specific terms the facts which must be stated and supported by affidavit in order to justify the appointment of a receiver without notice. 4. And since the court looks only to the facts stated in the verified complaint in determining the necessity of dispensing with the giving of notice, the complaint must not only allege facts which support the plaintiff's right to the appointment of a receiver after notice, it must also state specific facts which establish the following ultimate facts: (1) That an emergency exists which renders interference necessary before there is time to give notice in order to prevent waste, destruction or loss. Johann Sons Company v. Berges (1958), 238 Ind. 265, 150 N.E.2d 568; Fagan v. Clark (1958), 238 Ind. 22, 148 N.E.2d 407; Tormohlen v. Tormohlen (1936), 210 Ind. 328, 1 N.E.2d 596; Bookout v. Foreman (1926), 198 Ind. 543, 154 N.E. 387. (2) That protection cannot be afforded in any other way, as by temporary restraining order. Morris et al. v. Nixon (1945), 223 Ind. 530, 62 N.E.2d 772; Largura Const. Co. v. Super-Steel Products Co. (1939), 216 Ind. 58, 22 N.E.2d 990; Hawkins v. Aldridge (1937), 211 Ind. 332, 7 N.E.2d 34, 109 A.L.R. 1205; Tormohlen v. Tormohlen, supra. (3) That plaintiff could not reasonably have anticipated the injury in time to give notice. Johann Sons Company v. Berges, supra; Fagan v. Clark, supra.
Section 3-2602, Burns' 1946 Replacement, clearly and positively states that a receiver without notice ". . . shall not be appointed, . . . except upon sufficient cause shown by 5. affidavit." In the case before us the complaint merely alleged "That the defendant is insolvent and owes a large amount of indebtedness and claims which it is unable to pay." The allegation is not a statement of facts sufficient to authorize the court to appoint a receiver without notice or, in the face of the above statutory prohibition, to exercise any discretion regarding such an appointment.
Therefore the writ of prohibition heretofore issued is made permanent.
Landis, C.J., Arterburn, Bobbitt and Jackson, JJ., concur.
NOTE. — Reported in 158 N.E.2d 164.