Fredenheim v. Rohr

Fauntleroy, J., delivered the opinion of the court. The bill charges that Margaret S. Fredenheim, being indebted to the complainants, with intent to hinder, delay, and defraud them and her other creditors, on the 27th of April, 1889, made a deed of conveyance of all her stock in trade to one H. Rosenberg, which deed was duly recorded in the clerk’s office of the chancery court of the city of Richmond, and an official copy thereof is filed as an exhibit with the bill. The prayer of the bill, after calling for answers from the defendants, is, that “ the said H. Rosenberg, trustee as aforesaid, Margaret S. Fredenheim, and A. Fredenheim, her husband, acting as agent for the said trustee, may be enjoined and restrained from managing, controlling or selling the stock of goods lately owned by the said Margaret S. Fredenheim, at her store at No. 113 East Broad street, Richmond, Va.; that a receiver may be forthwith appointed by the court to take — 766 — charge of the said stock of goods and the other property conveyed by the said deed of April 27th, 1889, and, after due advertisement, sell the same upon such terms as may be prescribed by the court, and to proceed to collect, without delay, the notes and other choses in action conveyed by the said deed; that the decree of the court may be entered declaring null and void the said deed of April 27th, 1889, and directing the payment of the debts due your orators from the proceeds realized from the sale, &c.; and that sucffisurplus as may remain may be administered under and by direction of the court, through a receiver to be appointed as before asked,” &c. This bill, charging fraud and collusion of fraud, and praying for an injunction, and to have the deed of trust of April 27th, 1889, vacated for fraud, and for the appointment of a receiver,'was presented to Judge Fitzhugh in the chancery court of Richmond city on the 7th day of May, 1889, who, on that day, granted an injunction according to the prayer of the bill, but declared in the order that he deemed it proper that the defendants should have reasonable notice of the time and place of moving for the appointment of a receiver, as prayed for in the bill, and an opportunity to move to dissolve the injunction; and this accordingly took place. After this injunction had become effectual, the defendants filed their answers, denying and putting, in issue all the material allegations of the bill. The case came on to be heard on the 14th day of May, 1889, upon the bill and answers and sundry affidavits and counter-affidavits, upon due notice and motion to dissolve, before Judge Wellford sitting in the chancery court in the absence of Judge Fitzhugh, who had left the city, and was fully heard upon the arguments of counsel upon the motion to dissolve the injunction and to appoint a receiver, and for no other purpose; whereupon a decree was entered dissolving the injunction which had been awarded by Judge Fitzhugh on the 7th of May, 1889, and expressly denying the prayer of the bill for — 767 — the appointment of a receiver; but requiring the trustee, H. Rosenberg, to execute a bond, with approved security, in the penalty of $10,000, for the security of the fund and for the faithful discharge of his trust; which bond was accordingly promptly executed by the said trustee. If the complainants in the bill were dissatisfied or aggrieved by this order of the chancellor dissolving the injunction, and denying the prayer of the bill for the appointment of a receiver, their plain remedy, as prescribed by section 3454, Code-of 1887, was by appeal, or by application to the chancellor for a rehearing and re-instatement of the injunction, upon notice to the defendants; and. if that had been denied, they could have appealed from that denial; but they neither appealed from the order of dissolution, nor did they apply for a rehearing or re-instatement; but chose to present the very same bill, without any alteration or new matter, and without notice to-the defendants, to a judge of the court of appeals; who, by his-order of the 15th of May, 1889, addressed to the clerk of the chancery court of the city of Richmond, awarded the injunction according to the prayer of the bill, which had been dissolved the day before by the chancellor of that court upon full hearing and argument on the merits; and, on the motion of the complainants, and without notice to the defendants, and in their absence, and in the absence of their counsel, appointed one S. L. Bloomberg, as “ a receiver of the chancery court of the city of Richmond, to take into his possession all of the-property mentioned in the said deed of the 27th of April, 1889, and he is directed to take an inventory as to other stock of goods at No. 113 East Broad street, and proceed to sell the same for cash, as provided by the terms of the said deed, fon and during the period of sixty days from the date of said deed.” After this order had been given and duly entered in the order-book of the chancery court of the city of Richmond, the complainants’ counsel proceeded to the county of Fauquier* — 768 — where Judge Fitzhugh, the judge of the chancery court, was sojourning with a sick family, and, without notice to the defendants or their counsel, and in the absence of their counsel, obtained from Judge Fitzhugh the following order, dated May 21st, 1889: “ It appearing to the judge of the chancery cqurt (of the city of Richmond) in vacation, that Sol. L. Bloomberg, who has been duly appointed and duly qualified as receiver in this cause, has made application to Herman Rosenberg, trustee in the deed of trust from M. S. Fredenheim to him, bearing date April 27th, 1889, for possession of the store and stock of goods therein, situated at 113 East Broad street, in the city of Richmond, and that said Rosenberg, trustee, has refused to give possession of the said store, and to turn over the said stock of goods therein to the said Bloomberg as such receiver, in accordance with the order herein entered, it is therefore ordered, by the said judge in vacation, that the sheriff of this city do forthwith proceed to put the said 8. L. Bloomberg, receiver as aforesaid, in possession of the said store and stock of goods, situated at 113 East Broad street, in the city of Richmond, and lately occupied by M. S. Fredenheim as a millinery establishment. “Edward H. Fitzhugh, “Judge of said court.” From these orders of the chancery court of the city of Richmond the case is here upon appeal. The jurisdiction of the supreme court of appeals, and of the judges thereof, is fixed by the constitution and statute law of Virginia. The 2nd section of the 6th article of the constitution of the State provides that the supreme court of appeals shall have appellate jurisdiction, only, except in cases of habeas corpus, mandamus, and prohibition; and the statute, section 3438, Code of 1887, under which the order of May 15th, 1889, — 769 — awarding the injunction and appointing a receiver, according to the prayer of the bill in this case, was-confessedly made, is as follows: “ When a circuit or corporation court, or a judge thereof, shall refuse to award an injunction, a copy of the proceedings in court, and the original papers presented to the judge in vacation, with his order of refusal, may be presented to a judge of the court of appeals, who may thereupon award an injunction.” This statute confers no original jurisdiction upon one of the judges of this court to award an injunction, except in the case where the application has been made, first to a judge of an inferior court, either in term or in vacation, and has been refused. Mayo v. Haines & Couts, 2 Munford, p. 423; Randolph v. Randolph, 6 Randolph, 215; 1 Randolph, 415. In these cases, this court has held that the court of appeals itself, sitting in bane, has no power to award an injunction that has been refused by a judge or court below, although a single judge of the court of appeals might, under the statute, exercise the power; but that, where an injunction had been awarded by a court below, and had been- (as in the case under review) dissolved upon the merits, neither this court, nor any one judge thereof, could grant a new injunction or re-instate the dissolved injunction, upon the case made by the bill. In the case under review, we have the order of May 15th, 1889, awarding an injunction and appointing a receiver, made by a judge of the court of appeals, and directed by law to be entered as the order of the same chancellor, who had, the day before, dissolved the very same injunction and denied the prayer of the same bill for the appointment of a receiver, upon a full hearing of the whole case presented by the bill, answers, proofs, arguments, and notice of all the parties to the cause. This action of the chancery court, in dissolving the injunc — 770 — tion and denying the prayer of the bill for the appointment of a receiver, was reviewable by appeal under section 3454 of the Oodb of 1887; but, on the case presented, there was no power in this court, or in one of its judges, to appoint a receiver for the chancery court of the city of Richmond; and especially, as in this case, without any notice to the defendants. It is of the very essence of a motion for the appointment of a receiver, even by the court below, that notice shall be given to the defendants of the time and place of the application ; and it is only in an extreme case, such that the exigency of the danger would be fatal, that a receiver can be justly appointed, even in and by the court in which the cause is pending,'without reasonable notice to the defendants. (See High on Receivers, p. 75, section 111, and pp. 24 and 25, and Kerr on Receivers, p, 147 to 149; and the cases of Bissom v. Curry, 35 Iowa; French v. Gifford, 30 Iowa, p. 148; Rogers v. Doherty, 20 Georgia, 271; People v. Norton, 1 Paige, N. Y., 17 ; Triebert v. Burgess, 11 Maryland, 452; Vorhell v. Heaton, 26 Maryland, 83; Gibbon v. Morris, 8 Paige, N. Y., 481; Sanford v. St. Clair, 8 Paige, N. Y., 303; Thompson v. Dieffendorfer, 1st Maryland Ch. Dec., p. 489-90; Verplank v. Mercantile Ins. Co., 2 Paige, 455.) In the case of Berry v. Briggs, 22 Mich., Campbell, C. J., says: “ The effect of this order (appointing a receiver) is to divest the entire legal estate of the defendant in property over which he had the exclusive control and exclusive title. ' * * * The order divests the whole body of the property, and puts its management as well as ownership in other hands. * * An adjudication which produces such important effects, and which actually transfers the entire estate from the defendant, is, to all intents and purposes, a decree, as far as it goes. * * * It would he a very singular thing if a court could, by anticipating the date of a decree which would be appealable, produce all the consequences of a decree, and yet deprive the party of — 771 — his right to recover. The statute regulating appeals has regard to the rights of parties, and not to senseless formalities.” This court has been emphatic in denunciation of decrees or orders entered ex parte and without hearing the parties affected and interested by such decrees or orders. (See Underwood v. McVeigh, 23 Gratt., 418.) The facts of this case furnish a notable illustration of the wisdom of the well-settled policy of the law, which sets its face, sternly and constantly, against all orders, judgments, or decrees, pronounced ex parte and without opportunity of defence ; and, even had the power to make the orders appealed from obtained under the constitution and law of the State, no case is made by the pleadings and the proofs in the cause for the appointment of a receiver. A bond, with approved security in the penalty of $10,000 (the same amount required of the receiver appointed) was required to be given, and was instantly given, by the trustee, and accepted by the court, for the preservation of the fund; and a large number of the leading merchants of the city of Richmond certified, that the trustee named in the deed was, from his knowledge of the business, and his character, peculiarly qualified to execute the trust for which he had been specially selected. The orders appealed from, that of May 15th, 1889, awarding the injunction and appointing a receiver for the chancery court of the city of Richmond, is ultra vires and void; and the order of May 21st, 1889, ordering the sheriff of Richmond city to put the receiver, S. L. Bloomberg, in possession of the store and stock of goods of the defendant, at No. 113 East Broad street, is erroneous, without authority of law, and void ; and the judgment of this court is, to reverse and annul both of the aforesaid orders, and to remand the case, with directions to the chancery court of the city of Richmond to restore the trustee, Rosenberg, to the possession of the store and stock of goods to which he was entitled under the' deed of trust of April 27th, 1889, — 772 — and to the administration of the trust; and for such further proceedings as shall be necessary in the premises.