State ex rel. Hunt v. Superior Court

The opinion of the court was delivered by Hoyt, J. — Only one substantial question is presented by the return of the respondents to the alternative writ of prohibition heretofore issued in this cause, and that is as to the respective rights of the relators, as attaching creditors of a certain corporation, and a duly appointed receiver for said corporation. The relators obtained a lien upon the property in question by virtue of attachment proceedings, and have maintained such liens by causing the sheriff to retain the actual possession of the property in question from the date of the initiation of such lien. The receiver was appointed in a suit instituted by a stockholder of the corporation, for the purpose of winding up its affairs. Such suit was commenced long after the lien of the relators to the specific personal property had attached, and they were not made parties thereto. Under this state of facts the relators contend that their right to have the sheriff retain possession — 211 — of the property and subject it to the payment of their judgment is not affected by the appointment of the receiver. This question was before this court in the case of State, ex rel. Machinery Co., v. Superior Court, 7 Wash. 77 (34 Pac. 430), and, after able argument and careful consideration, a decision in accordance with such contention was reached. The question having been once decided in this court should not be re-opened until it is made affirmatively to appear that such decision was not in accordance with correct legal principles. We have carefully investigated all the authorities cited by the respondents, and the result of such examination has made it unnecessary that we should bring to the aid of our former decision any of the numerous authorities cited in the able brief of the attorney for the relators. The respondents contend that the authorities cited by them establish the doctrine that whenever a receiver is appointed he is entitled to the possession of all the property of the corporation for which he is appointed, regardless of the question as to whether the actual possession of such property is in such corporation or in that of a third person, a stranger to the suit in which such receiver had been appointed. We are unable to find anything in any of the cases so cited which warrants this contention. The general proposition is laid down in Gluck and Becker on Receivers, Beach on Receivers, High on Receivers, and in the Am. & Eng. Ency. of Law, that a receiver only takes such rights in the property of the corporation as it had at the date of his appointment, or, at most, at the date of the commencement of the action in which the appointment is made; and the author of each of these works cites abundant authority to sustain such general proposition. Among the numerous cases cited by respondents we have been unable to find a single one which goes to the extent of holding that a receiver, without other authority than that of the order ap — 212 — pointing Mm, had the right to interfere with personal property in the actual possession of third persons under claim of right. There are some cases which hold that by making such persons parties to the suit in which the receiver was appointed they may be compelled to surrender the property to him and adjudicate their rights in that action; and in some cases the order appointing the receiver has directed him to take possession of certain specifically designated property, and in such cases it has been held that the person holding such property could not question the authority of the receiver under such order. But none of these cases aid the contention of the respondents. The order in this case, in general terms, directed the receiver to take the property of the corporation, and required such corporation to surrender possession thereof, but said nothing as to any specific articles or as to the rights or duties of those not parties to the action; hence, under the general rule referred to, the receiver only took such rights as the corporation had; and as the corporation had no right to interfere with the property in question, it must follow that the receiver could not rightfully assert any claim thereto not subject to the lien of relators and the right of the sheriff to retain possession and proceed in the enforcement of the process in his hands. There are many cases which hold that a receiver once in possession of property cannot be disturbed in such possession, even by one who has a superior lien thereon. Not only are there many cases which establish this doctrine, but, so far as we know, there is an unbroken line of authority going to that extent. The reason why the possession of a receiver must not be disturbed is, that it is the possession of the court, and its dignity will not allow any one, without its permission, to interfere with that of which it has possession. — 213 — But the research which we have been able to give to the subject has not brought to our notice a case in which it has been held that property in the actual possession of a third person, under claim of right, came into possession of the court upon the appointment of a receiver in a suit to which the person in possession of the property was not a party. The case most relied upon by respondents, and which comes nearer to sustaining their contention than any other that has been brought to our attention, is that of Wiswall v. Sampson, 14 How. 52. An examination of that case and of the briefs of counsel will show that it went no farther than to establish the well recognized doctrine that a court will brook no interference with property in the actual possession of its receiver. It is contended on the part of respondents that, in the case just cited, the possession of which the court speaks in its decision was simply the constructive possession in the receiver growing out of the fact of his appointment. But it appears clearly from the briefs of counsel that the property was in the actual possession of the receiver. This also appears from the opinion of the court, as the following quotation will show: “The receiver was appointed on the 27th June, 1845, and on the same day Ticknor, who was in possession of the premises, attorned to him, who held possession until the sale was made in pursuance of the decree. At the time, therefore, of this sale, the receiver was in the possession of the premises, under the decree of the court of chancery.” Such being the status of the property as to which the court was speaking in deciding that case, it has little weight in support of the contention of respondents. Besides, there was another reason given by the court for its decision, aside from that growing out of the actual possession of the property by the receiver, and that was that the parties attempting to assert a legal right as against his — 214 — title had been brought into the action. And from what is said by the court, it is probable that the case would have been decided differently if the one claiming the adverse title had not been made a party to the suit in which the receiver had been appointed. Upon that subject the court speaks as follows: “We agree, that the person holding the prior legal lien or incumbrance, must have notice, and an opportunity to come in and claim his pi’ior right to the property or interest in the fund before his legal right can be affected; and the proper way is by summons or notice upon the order or direction of the court. ’ ’ In a similar manner, every case cited by respondents can be analyzed and abundant reasons for the decisions found without invoking the harsh rule contended for by respondents, that one in the actual possession of property under claim of legal right may be deprived of such possession without any opportunity to be heard in defense of his rights. That the affairs of a corporation can be so changed, by the appointment of a receiver at the instance of one of its own stockholders, as to take a legal right from one claiming property adversely to it, without his being brought into court for the purpose of having his right thereto adjudicated, is so contrary to our understanding of what constitutes due process of law that we cannot yield assent to such a doctrine. It is laid down by the text writers to whom we have referred, that under such circumstances a receiver must resort to an action at law to obtain possession. The corporation could only assert its rights to the possession of property thus situated in an action at law, and except when aided by statute the receiver can do no more. In many states there are express statutory provisions which require all those claiming property of a corporation to yield the same to a receiver or assignee when proceed — 215 — ings for the appointment of such receiver or assignee have been instituted by or on behalf of such corporation. But we have no such statutory provision in this state, and without some aid of this kind we are unable to see any sufficient reason for holding that the appointment of a receiver should authorize him to take possession, without legal process, of property in the adverse possession of another under claim of right. We are satisfied with what we held in the former case, and, applying it to the facts in this one, it follows that the receiver was not justified in interfering with the possession of the property in controversy, nor with the right of the sheriff to proceed against the same as required by the process in his hands. The alternative writ must be made perpetual. Anders, Scott and Stiles, JJ., concur.