Anderson v. Riddle

Potter, Chief Justice. This action was brought by Jennie Anderson against Heriot Riddle to recover a sum of money collected by the latter as rents from the tenants occupying certain real estate in Rock Springs, formerly owned by one Charles H. Bus289 sey. The plaintiff claimed to be entitled to the samé by virtue of an assignment from Bussey. The money had been collected by Riddle in the discharge of his duties as receiver under an appoinment by the District Judge in a foreclosure suit instituted by one Hannah Matthews, the holder of a second mortgage upon the property. In that suit the plaintiff therein made the statutory showing for a receiver; but the plaintiff in the present action bases her right to disregard the appointment upon the ground that the order was made prior to the issuance of a summons in the case, and hence, as contended, when no action was pending. The order was made January 30, 1897, and the receiver qualified by taking oath and giving bond, as required by the order, on or about February 2, 1897, and from that time until final decree in the cause continued to exercise the duties incumbent upon a receiver in such cases. A summons in the case was not issued until February 2, although the petition had been filed January 29, the day preceding the order appointing a receiver. The mortgage held by Mrs. Matthews had been executed by Charles H. Bussey and wife, as had also the first mortgage held by one John H. Anderson. Bussey and wife, Anderson and the tenants in possession of the property were made defendants in the suit brought by Mrs. Matthews. Bussey and wife did not enter any appearance, and neither did their tenants. John H. Anderson, the first mortgagee, appeared, and on June 8, 1897, filed an answer and cross-petition,’ seeking by the latter the foreclosure of his mortgage, which was due, and asking for an order that the receiver theretofore appointed pay the rents for his use and benefit; but he made no allegation showing himself entitled to a receiver in aid of his mortgage. However, in January, 1898, he filed an amended answer and' cross-petition, making a showing for a receiver, and asking that one be appointed for his benefit. He thereupon moved for the vacation of the order appointing Riddle on the ground of want of jurisdiction at the time to make the order, and also for a receiver in aid of his — 290 — mortgage. The motion being denied, he came to this court on error, and it was held by us that he' was not in a position to question the validity of Riddle’s appointment, since he had not been in possession of the property, nor shown himself entitled to the rents; but that the application for a receiver for his benefit of the rents thereafter to be collected should have been granted, leaving the rents previously collected by the receiver to be applied for the use of the second mortgagee, for whose benefit the receiver had been appointed. (Anderson v. Matthews, 8 Wyo., 513.) On December 11, 1897, the plaintiff in the present suit, Jennie Anderson, received from Bussey and wife a quitclaim deed to the premises, the same containing also an assignment of the’ rents, issues, claims and demands of the grantors against any person for the use and occupancy of the property for any term prior thereto, and of all claims and demands of whatsoever nature that said grantors, or either of them, then had against the occupants of the premises (naming them) and Heriot Riddle, or either of them. Shortly thereafter the plaintiff demanded the money previously collected by Riddle, and upon his non-compliance with such demand, this action was commenced. Early in March, 1898, Riddle presented a petition to the court, in the action wherein he had been appointed, asking for direction as to certain matters pertaining to the receivership, and for a confirmation of the order appointing him; the petition informing the court that the validity of the original order, was being denied, and that the tenants were refusing to pay rents to him, having been notified by Jennie Anderson to refrain from doing so. A copy of that petition was served upon the tenants and also upon John H. Anderson and Jennie Anderson and Hannah Matthews, together with a notice of the time when it would be brought up for hearing. The petition was accompanied by a report of the receiver, showing his receipts and disbursements. On the 8th day of March, 1898, the matter coming on to be heard, upon the petition aforesaid, before the Judge of the — 291 — District Court, the accounts of the receiver were approved, his actions confirmed, and the original order of January 30 was in all things confirmed. It was also ordered that the tenants pay all rents to such receiver. On the nth day of May, 1898, the foreclosure suit was finally heard and determined, and the premises decreed to he sold to satisfy, after the payment of costs, first the amount due to John H. Anderson, and, second, the amount due to Hannah Matthews; and a new receiver was appointed to collect rents for the benefit of said Anderson. The property was subsequently sold under the order of the court, and all the proceeds were ordered applied upon Anderson’s claim. On the 12th day of May, 1900, in pursuance of the mandate from this court in the case already referred to, the court made and entered its order to comply therewith so far as possible, in view of the fact that the cause had previously been determined. And it was ordered that the receiver, Heriot Riddle, pay to Hannah Matthews all moneys collected by him up to January 25, 1898, the date of the application of John H. Anderson for a receiver, and to the latter the rents collected after that date. The proper division of the expense of the receivership was also provided for by that order. It should be stated that Jennie Anderson subsequently brought a second action to recover the rents collected after the commencement of the one already mentioned, and the two actions brought by her were consolidated for the purposes of trial. In both actions the defendant Riddle set up in his answer the proceedings of the court relative to his appointment stated above, and relied thereon as a defense to the action; but he also contested the fact of the assignment to the plaintiff, and denied that she was the real party in interest. It was averred, and insisted upon at the trial, that Jennie Anderson had taken whatever assignment had been made to her, for the benefit of John H. Anderson, and that the transaction was the result of a conspiracy or attempt to deprive Hannah Matthews of the benefits of the receiv — 292 — ership. The case at bar was tried to the court in September, 1900, without a jury, and the court found generally for the defendant and judgment was rendered in his favor. Motion for new trial was overruled and plaintiff brings the case here on error. It is clear that by the confirmatory order of March, 1898, the court assumed control of the fund then in the hands of Riddle as receiver. It was shown that since the commencement of the suit Riddle had collected a certain amount as rents from the tenants occupying the property; and the effect of the confirmatory order, even if it be conceded that the original appointment was invalid, was to appropriate the money held by the receiver for the purposes of the case. At the hearing on the petition of Riddle the judge bad jurisdiction to appoint a receiver; and the confirmation of the order appointing him amounted, at least, to an appointment as of that date. That order was effectual and conclusive upon the parties and all others in privity with them. There can be no question but that John Anderson was bound by the order, and failing to take any steps to vacate it, he is concluded by it. As to him, the order of March, 1898, operated as a complete protection to the receiver; and had Anderson previously, but pending the suit, secured to himself an assignment from Bussey of the rents and of a supposed claim against Riddle, it would not have availed him in-a suit to recover from Riddle the money collected by him, for the reason already suggested, that he became bound by the order confirming the receiver’s appointment and also confirming his actions in the matter. (Burnham v. Dillon, 100 Mich., 352; id., 359; Hellebush v. Blake, 119 Ind., 349; Guy v. Doak, 47 Kan., 236; 27 Pac., 968; Greeley v. Provident Sav. Bank, 103 Mo., 212.) Bussey was also bound by that order. He was a party, and, moreover, publication to obtain constructive service upon him had then been made or was in progress; and it appears that at the time of the assignment he had actual knowledge of the pendency of the suit, and of the fact that a receiver had been appointed and was collecting the rents. — 293 — John Anderson had not only appeared in the action, but he moved the vacation of the original appointment of a receiver, on the very ground insisted upon in the present suit, and his fnotion was denied. On error, the order of the court in that respect was not disturbed, as Anderson had not shown himself to be in a position to question the legality of the order. It did not appear in that proceeding that he had become entitled to either posession of the property or the rents thereof. It did appear that Jennie Anderson had received a deed to the property and claimed to have succeeded to Bussey’s interest in the rents and the money in the receiver’s hands, if any. But the manner in which she had acquired that deed and interest was not disclosed. Upon the record in the proceeding to discharge the receiver Jennie Anderson appeared to stand as an entire stranger. In the suit at bar her position is revealed; and we will proceed to inquire into the matter, to ascertain whether she was in a situation to be bound by the orders in the foreclosure suit respecting the appointment of the receiver, and the distribution of the fund in his hands. It is contended by her counsel that no order confirming or validating the appointment of Riddle as receiver made subsequent to the assignment to her can be held to interfere with her rights; that as the receiver, at the date of the assignment from Bussey to the plaintiff, was acting under a void order, the money theretofore received by him belonged to Bussey, who, for value, assigned them to the plaintiff, and that the relative right of the parties could not be altered by an order made afterwards in the foreclosure action to which she was nót a party. We have stated that the court had jurisdiction to make the order of March, 1898, confirming the original appointment. In that connection we should explain and dispose of one proposition insisted upon by counsel for plaintiff in error. It is argued that Riddle, being a mere officer of the court, and not a party to the foreclosure suit, had no right to independently ask a confirmation of the order under which he was acting. Should that point be conceded, it would not — 294 — affect the question of jurisdiction. It would only go to show that the petition'in that respect might have been successfully opposed by a party to the suit, or an intervenor; but the action of the court in granting the prayer of the petition would be merely irregular and not void. The court doubtless had jurisdiction to confirm the original order upon it own motion. It possessed jurisdiction over the subject matter and the parties. (Robinson v. Dickey (Ind.), 42 N. E., 638.) It is shown by the testimony of Jennie Anderson, the plaintiff herein, that at the time of the assignment to her she was cognizant of the pendency of the foreclosure suit, and that her brother, John H. Anderson, had a mortgage upon the property; and we think the trial court would have been justified in finding that her knowledge extended to the fact that the foreclosure of her brother’s mortgage was sought in the suit. Upon that particular question her answers were perhaps rather indirect and unsatisfactory; but in*view of her whole examination, and the circumstances attending the transaction, we think it fairly appears that she clearly understood the situation. She stated positively that she knew her brother had a case in court. Moreover, she testified that the transfer of the property and the claim against Riddle was brought about through the agency of her brother and his attorney. She stated in substance that she let her brother attend to the business, because he knew more about it than she did, and that he and the lawyers arranged the matter. Her testimony is fairly to. be understood also as indicating that the proposition that she should take an assignment came to her from her brother. She could not have been more than twenty or twenty-one years old at the time — December, 1897 — as on the trial in September, 1900, she gave her age as twenty-three. The money consideration for the assignment was not in her possession and had never been. It was under the control of her brother. And, although it is testified that the sum mentioned as consideration, one thousand dollars, had been — 295 — given to her by her father, through her brother, John, it clearly appears that, until the assignment, nothing had been done toward legally transferring to her either the money or any evidence or equivalent thereof. Jennie Anderson was called as a witness by the defense, and on cross-examination the consideration for the assignment, and the manner in which she acquired it was brought out as follows: “Q. I will ask you whether it isn’t a fact that this thousand dollars came this way; that thousand dollars was included in the original mortgage'of John, your brother? A. Yes, sir. Q. And this thousand dollars was originally given to John and was part of the consideration of his mortgage? A. Yes, sir. Q. And that subsequently, at the time this deed was made, I will ask if it isn’t a fact the deal was made through one of your attorneys, Mr. Reavill, and this thousand dollars your father had, went to you, through his direction to John? A. Yes, sir. Q. And was the consideration in this deed ? A. Yes, sir. Q. I will ask you whether or not it is true if John gave Mr. Bussey credit on his note for a thousand dollars ? A. Yes, sir. Q. That is the way the deal was made? A. Yes, sir. Q. That John owed your father a thousand dollars, which was part of the loan to Bussey, and that subsequently your father directed that thousand dollars to go to you ? A. Yes, sir/- Q. And John gave it to you by giving credit on his note and having Bussey transfer this property to you, including back rents? A. Yes, sir. Q. You understood that at the trial, didn’t you, in consultation with your attorney, Mr. Reavill? A. Yes, sir.” — 296 — John Anderson testified, as a witness in rebuttal for plaintiff, that the thousand dollars was in the Bussey note held by him; that he loaned Bussey four thousand dollars, of which amount his father furnished one thousand, and he owed his father that amount; that the note came due, and his father told him to give Jennie the money, and he did so by crediting the amount on the Bussey note, and having the transfer of the property and rents made to her, the credit being entered at the time of the transfer. He testified that the direction to give Jennie the money was made about the time the note fell due, about July in either 1895 or 1896. In his cross-petition, filed in June, 1897, he claimed the entire face of the note and mortgage, but in his amended pleading of January, 1898, it was alleged that one thousand dollars had been paid. It is to he understood from the testimony, we think, that the father of John and Jennie Anderson knew that the money sent by him to John had gone into the Bussey loan. John states that when the Bussey note came due his father expected the money, and that he wrote and told him just how it was. Upon these facts we do not see how the conclusion can reasonably be avoided that the plaintiff in error was in privity with her brother, and concluded by the orders in the foreclosure suit to the same extent that he was concluded. We are of the opinion that this result follows from whatever view may be taken of the assignment from Bussey to plaintiff in error. The trial court found generally for the defendant, and nothing in the record discloses the particular theory upon which the finding was based. If the court regarded the transaction as one entirely for the benefit of John Anderson, and the taking of the deed to Jennie as a mere subterfuge, we would not be prepared to sa}r that it was error. The explanation of the manner in which the deal was brought about is hardly satisfactory on the theory that Jennie Anderson was alone the interested party. Admitting that she was to receive one thousand dollars that was owing by her brother to her — 297 — father, it seems rather unreasonable that the obligation to her should have been fulfilled by the transfer of a claim to be made good, and recovered, if at all, only by litigation in the courts. But it is not necessary that we rest our decision upon that consideration, nor are we inclined to do so. If it be conceded that the assignment was taken by plaintiff in error in good faith in lieu of the money directed to be given to her, the determination must nevertheless be adverse to her right to recover. Whatever she received was acquired from her brother out of the note and mortgage involved, at the time, in the foreclosure suit. It is true the paper evidence of her right was executed by Bussey, but the consideration was paid by John Anderson, and doubtless Bussey would have named any other grantee, had Anderson suggested it. The transfer was arranged by the latter as a method of turning over to his sister the money that, according to his statement, he owed their father; and the effect is not different than if the transfer had first been made to him, and he had then executed an assignment to plaintiff in error. The latter took the assignment from a party to the foreclosure suit, with actual notice of the pendency of that suit, and that the plaintiff therein, the holder of a junior mortgage, had asked for a receiver of the rents, and that an appointment was not only attempted, but that the receiver appointed had assumed control of the property and was collecting the rents. Not only that, but she parted with no new consideration. The money had before that been paid to Bussey. He received it when he took the loan; and upon the testimony of both plaintiff and her brother, she had become -beneficially interested "in the first mortgage to the extent of her father’s interest therein. As against that mortgage, as well as against the mortgagor, the receiver was sought, and attempted to be appointed, if that appointment was void as claimed, and the appointment at a later time confirmed, and the rents in the receiver’s hands administered by the court when it had ample jurisdiction in the premises. She made .no opposition to the subse — 298 — quent orders, and did not offer to intervene to show her right. Owing to the interest in the mortgage to which she succeeded, as well as her interest in the property and rent under the deed to her, she was directly interested in the suit, and refused or neglected to appear and avail herself of her right, if she had any. It would seem, therefore, that she ought to be concluded by the proceedings as effectually as if she had been a party named on the record. (Williams v. Snebly, 92 Md., 9.) Indeed, on the petition of Riddle for confirmation of his appointment, she was named as a defendant, and was duly notified thereof. The court had jurisdiction in March, 1898, to empower the receiver to collect and hold rents already due, as well as such as might thereafter accrue; that was the practical effect of the order, as to the rents already in his hands, if the invalidity of the original appointment should be conceded. We are unable to assent to the proposition that pending the foreclosure suit, the first mortgagee, who was a party, and had appeared, could, pending the suit, transfer a partial interest in his mortgage to another having knowledge of the facts, so as to enable the transferee to avoid the effect of the adjudications in that suit, and recover the money in the receiver's hands that were appropriated by the court when it had jurisdiction to do so. The plaintiff’s interest in the mortgage was represented by her brother in the suit, who was the legal holder, and it is not perceived how she can escape the conclusive effect of the orders therein made respecting the receivership. Had she not been connected in any way with the first mortgage, and been an absolute stranger to the proceedings, a different question, possibly, might have been presented. But her interest in the rents, whatever they may have been, was derived by virtue of the note and mortgage held by her brother. Technically, an interest in the mortgage was not assigned, but she had an interest therein equitably under the gift from her father. The assignment of the rents with a deed of the property was substituted for a part of the amount represented by the mortgage. It would not be con — 299 — tended, we think, that by her deed to the property she acquired any interest in it which would not be concluded by the decree in the suit pending for the foreclosure of the mortgages upon it, when she accepted the deed, even had she been without actual knowledge of the proceedings. The transfer of the rents and claim against Riddle was associated with the conveyance of the property, and embraced in the same instrument. Upon the showing made by the junior mortgagee, the latter was entitled to have the rents applied to her debt pendente lite, or until prior mortgagee made a showing entitling him to have them appropriated for his benefit. There can be no doubt that, had no assignment of the claim against the person alleged to have been illegally acting as receiver been made, the mortgagees would have been bound by the subsequent orders appropriating the income of the property in the receiver’s hands, and would have been precluded from recovering them in any other suit, on the ground of lack of jurisdiction in the original appointment. In view of the manner in which plaintiff acquired the assignment, the consideration therefor, and her relationship, in matter of interest, to the first mortgage, and her actual knowledge of the facts and proceedings, we are unable to perceive that she is in any better position, or is entitled to any greater privileges. As to the moneys collected after the date of the deed to plaintiff, she showed no possible right, since the claims assigned were those then held by her grantors. But for the reasons stated we are of the opinion that she should not prevail in the suit against the receiver. The disposition to be made of the fund in his hands had, before the trial of the case at bar, been determined by a court with jurisdiction, and the position occupied by plaintiff was such as to render the de■termination conclusive.upon her. She should have sought her relief, if entitled to any, in the other suit. The judgment of the District Court will be affirmed. Affirmed. Corn, J., concurs. Knight, J7, did not sit.