Orr v. Dade Developers, Inc.

Per Curiam. — This case is here on appeal from a final decree permanently enjoining the sale of designated real estate on the part of the defendants below under writs of execution and- confirming the title thereto in the plaintiff below, the appellee here. The record shows that on March 19, 1926, the Tampa Publishing Company filed suit in the Civil Court of Record of Hillsborough County, Florida, against Florida Cities Finance Corporation, and on the 18th day of May, 1926, a judgment was entered for the plaintiff in the sum of $2,142.41, and on the 24th day of May, 1926, a copy of the judgment so obtained was duly filed in the office of the Clerk of the Circuit Court of Dade County, Florida.. On March 13, 1926, the Miami Supply Company filed suit in the Civil Court of Record of Dade County, Florida, against Florida Cities Finance Corporation and on the 16th day of June, 1926, 'a judgment was entered for the plaintiff in the sum of $1,836.31 and a copy of the judgment was filed for record in the office of the Clerk of the Circuit Court of Dade County, Florida, on the 18th day of June, *124 1926, and said judgment was assigned and transferred to O. W. Reinders. On the 19th day of April, 1926, John Orr filed suit in the Circuit Court of Dade County, Florida, against Florida Cities Finance Corporation for the foreclosure of a mortgage, and on September 2, 1926, a final decree was entered and the mortgaged property sold, and on the 5th day of October, 1926, a decree confirming the sale was entered and a deficiency judgment was allowed against the Florida Cities Finance Corporation in favor of' John Orr in the sum of $7,307.07. On May 21, 1926, E. K. Dahlman filed a stockholder’s suit in the form of a bill in equity against the Florida Cities Finance Corporation, prayed for the appointment of a Receiver, the liquidation of the corporation, and the winding up of the business thereof, and Fred W. Vanderpool, on said date, was by the court appointed Receiver, with directions to take charge of the property of the corporation and hold it subject to the orders and decrees of the court, and the Receiver so appointed qualified and otherwise discharged his duties as Receiver under orders and decrees of the court -after date of appointment until August 13, 1928, when a sale of the company’s property was confirmed by a court order. ■ On May 31st and July 5th, 1928, final decrees were entered in the Dahlman case, supra, and the provisions thereof directed the Receiver to advertise and sell the assets of the corporation and apply the proceeds: (a) to the liquidation of the expense of the receiver suit; (b) to the payment of the creditors and stockholders, as the court should order, and the sale would be free and clear of any liens, except such as were in existence and appeared of record on May 21, 1926. The entire assets of the corporation were sold pursuant to the final decree to the-Dade *125 Developers, Inc., but no money was paid therefor, but a credit of the allowances for compensation made by the Court to the Receiver and his attorneys for the management of the property during the receivership and these credits were assigned to the Dade Developers, Inc. ' The sale was confirmed on August 13, 1928, and all persons were enjoined from claiming or attempting to assert any claim, right, title or interest in the property, so conveyed, to the Dade Developers, Inc., since the date of the appointment of the Receiver on May 21, 1926. The designated real estate, being assets of the corporation, was levied on under writs of execution issued on each of the three judgments, supra, and the properties against which the writs of execution were levied were those of the Florida Cities Finance Corporation, and the properties so levied upon were 'advertised for sale on the rule day in April, 1937, and the final decree appealed from permanently enjoining the sale thereunder was made and entered by the Circuit Court of Dade County, Florida, on March 9, 1938, and the same is assigned as error in this Court. The theory of the plaintiff’s case in the lower court was that the Dahlman suit was brought for the benefit of all the cx-editors of Florida Cities Finance Corporation, and the defend mts below and appellants here were made parties to that suit under a publication order of court requiring all creditors h> present their claims and that upon their failure so to do the creditors and each of them would be barred from the right of- recovery, and all the legal rights of appellants hud been fully adjudicated in the case'of Orr v. Dade Developers, Inc. The defendant’s theory of the case in the lower court was that the defendants were in no manner bound by the orders of the Dahlman case, because they were not parties thereto and in no manner bound by the *126 orders or judgment and that the Dade Developers, Inc., acquired title or ownership in the designated real estate levied upon under writs of execution in the three cases subject to the judgment liens supra of appellant. It is shown that the sale of the assets of the Florida Cities Finance Corporation was confirmed on the 13th day o'f August, 1928, and the judgment liens supra had been of record approximately two years prior thereto and as shown by the records supra in the office of the Clerk of the Circuit Court of Dade County, Florida. Counsel for appellants submit that the question to be decided by this Court is, viz.: “Where suits were filed by A, B and C prior to May 21, 1926, against a given defendant, and in a suit, filed in Dade County by X, a stockholder, against the same defendant on May 21, 1926, a Receiver was immediately appointed and the suits filed by A. B. and C ripened into judgments which were duly recorded in the office of the Clerk of the Circuit Court of Dade County-on May 24, 1926, June 18, 1926, and October 6, 1926, respectively, and thereafter under order of the Court the Receiver in the suit filed by X to which A, B and C were never parties, sold the assets of the defendant and the sale was confirmed on August 13, 1928, do the judgments of A, B and C constitute liens superior to the claims of the purchaser at the Receiver’s sale?” Likewise that the answer thereto is found in State, ex rel., Eppes v. Lehman, Sheriff, 109 Fla. 331, 147 So. 907; Eppes v. Dade Developers, Inc., 126 Fla. 353, 170 So. 875. While counsel for appellee distinguish between the cases, supra, and the one at bar, viz.: "1. In the Eppes case, Dade Developers, Inc.,, rested its claim simply on legal title; while in the case at bar, it rests its claim on a charge or lien allowed to the receiver and his attorneys for preserving the assets. *127 “2. In the Eppes case, the Court rested its decision on the fact that he was not made a party to the receivership suit; while in the case at bar, the appellants were made parties; and they participated in the receivership proceedings. • “3. In the Eppes case, the Court held that the receiver took charge of the custody of the property for the purpose of preserving it for the beneficial owners rather than to disburse its proceeds among the creditors; while in the case at bar, it is shown that the receiver, under the amended bill of complaint which made the proceedings essentially a creditors’ bill, preserved the property for the benefit of the creditors. “4. In the Eppes case, it is found that the receiver acted at all time for the benefit of stockholders; while in the case at bar, it is shown that the receiver was in constant touch with the creditors, was acting for them, and that his efforts were expended in preserving the property for the benefit of the creditors and looking toward their payment in full. “5. In the Eppes case, there was np question of subrogation; while in the case at bar, the appellee has spent large sums of money in preserving the property, and claims that the appellants should not now be heard to question its title. “In the case at bar, the appellants were made parties defendant at an early stage of the proceeding and notice was served on them. They appeared in the proceeding and participated therein. “It is shown by the pleadings and proof' that three days after the filing of the original bill, an amended bill w'as filed, making the proceedings essentially a creditors’ suit. In the amended bill it was prayed that the property be marshaled, and that the creditors be paid off. The amended *128 bill was brought in behalf not only of the original plaintiff but also of all creditors. “It is further shown by the pleadings and proof in the case at bar, that the administration of the estate was essentially for the payment of creditors; that a' creditor’s committee was appointed; that the receiver was in close touch with this committee; that the receiver procured an offer for sale of the property with a view of paying up in full the creditors; that creditors were served with notice by publication to file their claim, and that this was done under order of the Court. “It is further shown that the receiver was not acting for the benefit of stockholders, but that he was acting solely and primarily for the protection of the creditors.” We have given careful, consideration to the contention of counsel for the appellee in their efforts to distinguish the case at bar from the authorities supra. The evidence offered in the lower court detailed the services rendered the Florida Cities Finance Corporation in the Fraud Order proceeding held in Washington, and resisting the application of creditors to throw it in bankruptcy, 'and other labor or service in its behalf. It cannot be overlooked that the appellee took title to the property on the sale of August 6, 1928, in a suit on the part of a stockholder of the corporation rather than as a creditor. The appointment of a receiver to protect and preserve the corpus of the property pending litigation does not affect the status of then existing liens on the propeiiy. While the Receiver is entitled to reasonable compensation for his services, the legal effect of affirming and enforcing the same should not extinguish liens existing at the time the Receiver is appointed. See Knickerbocker Trust Co. v. Green Bay Phosphate Co. 62 Fla. 519, 56 So. 699. We think the case at bar is controlled or ruled by State, ex rel., *129 Eppes v. Lehman, Sheriff, and Eppes v. Dade Developers, Inc., supra. The decree appealed from is reversed for further proceedings in the lower court not inconsistent with this opinion. It is so ordered. Terrell, C. J., and AVhitfíeld, Buford and Chapman, J. J., concur. Brown and Thomas, J. J., dissent.