Gilreath v. Union Bank & Trust Co.

DOWDELL, J. — The appeal in this case is taken from the order of the chancellor appointing a receiver of the Gilreath Coal and Iron Company, without notice to said defendant corporation or any of the other defendants. ' The appointment was made upon the bill. [207] which was sworn to by one of the solicitors for the complainant. No other affidavit was submitted1 in-support of the application for a receiver. The bill was filed by the Union Bank and Trust Company as a judgment creditor of Belton Gilreath,- one of the respondents. The manifest purpose of the bill is to have vacated and annulled the conveyance by said Bel-1 ton Gilreath to his said wife, Julia M. Gilreath, who1 is also a defendant to the bill, and the conveyance by said Julia M. Gilreath to the Gilreath Coal and Iron Company, made by her in payment of her subscription to the capital stock in said company and to subject the property therein conveyed to the payment of complainant’s judgment, and pending the litigation to have a receiver to take the custody, control and management of the property. Under the averments of the bill, both Julia M. Gilreath and the Gilreath Coal and Iron Company occupy the attiude of fraudulent grantees. It is a well settled proposition of lav, that a fraudulent grantee may, upon bill filed for that purpose, be held to an accounting for the property fraudulently conveyed and disposed of by such grantee and a personal judgment or decree may be rendered against him. Such being true, it could hardly be said that in any case, upon a bill filed to annul and vacate a fraudulent conveyance where the grantee- is solvent and able to respond to a personal judgment rendered against him, that a necessity could exist for the appointment of a receiver to ’take charge of the property. The bill does not aver the insolvency of either Julia M. Gilreath or the Gilreath Coal and Iron Company. So far as the allegations of the bill are concerned} these parties are amply able to respond to any decree that might be obtained against them On an order to account for the property fraudulently received or held by them. The appointment of a receiver calls for the exercise of an extraordinary jurisdiction and an extreme and harsh remedy. Mr. High in his work on Receivers says: “Courts of equity are exceedingly averse to the exercise of their extraordinary jurisdiction by the apointment of receivers upon ew parte applications, and this practice is never tolerated except in cases' of the gravest emergency, demanding the immediate in [208] terference of the court for the prevention of irreparable injury, or in cases where defendant has absconded and wilfully put himself beyond the jurisdiction of the court. And it may be stated as the settled practice, both in England and America, to require the moving party to give due notice of the application to defendant, over whose effects he seeks the appointment of a receiver, in order that he may have, an opportunity of being heard in defense, and that his property may not be summarily wrested from him upon an ex parte application. Even in exceptional cases of great emergency, when the relief is demanded for the prevention of irremediable injury, the courts are extremely averse to interference ex parte, and will ordinarily entertain the application only after notice to defendant or a rule to show cause.” — High on Receivers, § 111, citing among many other cases, Verplanck v. Mercantile Ins. Co., 2 Paige, 438; Crowder v. Moone, 52 Ala. 220. The same author says, “To warrant a court in entertaining an application for a receiver without notice, it must be clearly shown that the delay which would result from giving notice would defeat the rights of plaintiff, or would result in great injury to him. And when the relief is sought upon an ex parte application upon the ground of extreme necessity, the particular facts and circumstances rendering such summary proceedings necessary should be set forth in the application, and a mere statement of opinion as to such necessity, even though made under oath, will not justify a departure from the established rule requiring notice of the application,” — High on Receivers, § 113. The bill fails to aver the respective values of the real and personal property contained in the conveyances. For aught that appears from the averments of the bill, the lands in question may be more than sufficient to satisfy the demand of the complainant. Certainly this species of property could not be spirited away or put beyond the reach of the complaining creditor, nor do the averments of the bill sufficiently show that the manner in which it is being used would so rapidly depreciate the same in value as to afford an excuse or reason for not giving to the defendants notice of the application for receiver. It is a familiar principle that the power to [209] appoint a receiver is one that must be exercised with, great caution, and that it requires a strong case to dispense with notice. The bill shows that the individual respondents were residents of the city of Birmingham, where the bill was filed, and the G-ilreath Goal and Iron Company had its principal place of business in the same city. With all the defendants residing in the same place where the hill ivas filed, considering the nature and description of the property in question, it is hardly reasonable to conclude that any serious injury could result from the delay in giving notice of the intended application for a receiver. Nor do we think that the reason stated in the bill is sufficient to warrant the appointment of the receiver without notice. At most, it is but the averments of an apprehension, a mere opinion or conclusion of the pleader. It matters not how honest may he the belief of a party as to the apprehended danger of loss of property, such is not sufficient without a full and clear statement of the facts, clearly and satisfactorily showing such belief to be well grounded. As said by Brickell, C. J., in the case of the Bank of Florence v. United States Savings & Loan Co., 104 Ala. 297, “It is not on such vague and indefinite allegations, the opinions or conclusions of the pleader, not accompanied by a statement of the facts on which they are founded that notice of the judicial proceeding can be dispensed with, and parties deprived of the possession or control of property.” The following cases are in point and sustain the views we have expressed: Crowder v. Moone, supra; Moritz v. Miller, 87 Ala. 331; Thompson v. Tower Manufacturing Co., 87 Ala. 733; Dollins v. Lindsay, 89 Ala. 217; Lindsay v. American Mortgage Co., 97 Ala. 411. In each of the following cases cited in brief of ap-pellee’s counsel, to-wit: Micou v. Moses Brothers., 72 Ala. 439; Maxwell v. Peters Shoe Co., 109 Ala. 371; Ashurst v. Lehman, Durr & Co., 86 Ala. 370; Hendrix v. Am. L. & F. Co., 95 Ala. 313; Heard v. Murray, 93 Ala. 127; Sims v. Adams, 78 Ala. 395, it will, be found that there was a distinct averment in the hill of the insolvency of both the defendant debtor and his fraudulent grantee, and that the property in question was of such a nature and character as to be readily spirited [210] away, and that tlie same was being disposed of and that irreparable loss and injury would result from the delay that would follow in giving notice. For the reasons given above we think the chancellor erred in the order appointing a receiver, and the order must be vacated and set aside. Reversed and remanded.