Kellogg v. Coller

LyoN, J. A summary proceeding supplementary to execution under the statute (B. S., secs. 3028 to 3038, inclusive), instituted after the return of an execution unsatisfied, is a substitute for a creditor’s bill in equity, and is governed by the [656] same rules of law in respect to the rights and priorities of parties affected by the proceeding, which control the equitable action. In creditors’ suits, the general rule was that the creditor who, after filing his bill, obtained the first, service of the subpoena upon the judgment debtor, thereby obtained a prior lien upon the equitable assets of such debtor. It was also the rule that if the creditor proceeded with due diligence, a bona fide attempt to serve the process was equivalent to actual service thereof in respect to priority of right. These propositions are abundantly supported by the cases cited in the brief of counsel for the appellants. In the present case no laches can be imputed to the appellants. They instituted their proceeding first, and prosecuted it with proper diligence before the commissioner until they obtained the appointment of a receiver. There would be no question of their right to the money in controversy, had not the sheriff failed to serve the judgment debtor with a correct copy of the order requiring him to appear before the commissioner for examination. The defect in the service was entirely accidental. Before it was discovered, the sheriff made affidavit to a proper service, and as soon as it was discovered, and before the time appointed in the order for the examination, the service was perfected, and the proceeding was thereafter diligently prosecuted to consummation. That there was a bona fide attempt to serve the order before Mrs. Coller instituted her supplementary proceedings, we cannot doubt. As in a creditor’s suit the filing of the bill and a bona fide attempt to serve the subposna give the complainant priority of right to the equitable assets of the judgment debtor, so, under the circumstances of this case, the bona fide attempt to serve the order issued by the commissioner at the instance of the appellants must be held to confer upon them like priority of right over Mrs. Coller, although the order obtained by her was served before service of the appellant’s order was perfected. [657] But it is said that tbq filing of the creditor’s bill, as well as the bona fide attempt to serve the subpoena, was essential to a lis pendens, while there was nothing on the records of the court to show the pendency of the appellants’ proceeding. The filing of the bill and the attempted service were constructive notice of lis pendens,' and bound all other creditors' of the judgment debtor, whether they had actual notice of the suit or not. Here no question of constructive notice arises, for Mrs. Coller had actual notice of all the facts, and it is immaterial that the records of the court did not show that the appellants had commenced their proceeding against the judgment debtor. Our conclusion is, that, under all of the circumstances of the case, Mrs. ('oiler’s proceeding is inoperative to give her a prior lien on the equitable assets of the judgment debtor, as against the appellants, and that the latter are entitled to the money in the hands of the receiver, the amount being less than their judgment. Although the foregoing views dispose of these appeals, we deem it our duty to indicate what we consider the correct practice in cases where different judgment creditors are prosecuting supplementary proceedings against the same debtor at the same time, whether such proceedings are pending before the same officer or different officers. The statute (sections 3030 and 3031) gives the proceeding to any judgment creditor after the return of an execution unsatisfied, or in aid of an outstanding execution, without qualification or restriction, except as provided in section 3036. Hence, such a proceeding may be commenced by a creditor, although other proceedings by other creditors may be pending. Section 3036 provides that, “ before appointing any receiver, the judge shall ascertain, if practicable, by oath of the party or otherwise, whether any other supplementary proceedings are pending against the judgment debtor; and if there be any, the plaintiff therein shall have notice to appear before him, and shall likewise have notice of all subsequent proceedings in [658] relation to such receivership, and no more than one such receiver shall be appointed.” This section also contemplates that different proceedings may be pending at the same time, the only restriction upon a junior proceeding being that creditors prosecuting prior proceedings shall be notified of the pendency thereof, and that but one receiver shall be appointed. Inasmuch as the receiver is an officer of the court, and subject at all times to the control of the court, and is required to give sufficient security for the faithful performance of his trust, it is of but little practical importance whether one is appointed in the first or subsequent proceeding. If an improper person be appointed, the court, on motion and proof of the fact, will remove him and appoint some suitable person. Tet we think it the proper practice, especially where the first proceeding is being diligently prosecuted, to suspend the appointment of a receiver in a subsequent proceeding, leaving the appointment to be made in the first. But the plaintiff in the junior proceeding should be allowed to proceed under section 3033, without regard to priorities. Should a junior proceeding be instituted before the officer who issued the prior order for the examination of the judgment debtor, such examination should be first had in the prior proceeding, especially if the same is being diligently prosecuted. The same rule should be observed although the junior proceeding be instituted before another officer. After a receiver has been appointed in the first proceeding, and has duly qualified as such, we see no objection to the appointment of the same receiver in all other proceedings against the same debtor. This is little more than a formal matter. The receiver should not be required, however, to give additional bond on such subsequent appointments, unless the court so order. All of the proceedings being reported to the court, the parties can there litigate their respective rights, summarily, on [659] motions duly served on all interested, and the court will adjudicate their rights, and determine the order in which the judgments shall be paid out of the funds in the hands of the receiver. It only remains to determine a single question. The motion that Martin, the receiver, pay over the money in controversy to the appellants, was made in their action. It is claimed that this is irregular; that the motion'should have been made in Mrs. Colter’s action. The objection is purely technical, and cannot prevail. The appellants and respondents are parties to both proceedings, and it is quite immaterial in which of them the motion is made. Martin, the custodian of the money, is under the control of the court, in respect thereto, and the money can be awarded to the party entitled to it by an order made in either case. Ve think, however, that it would have been more regular and orderly practice to have entitled the motion in both actions. By the Court. — The orders appealed from are reversed, and the circuit court is directed to grant the motion'of the appellants.