Minnesota Supreme Court, 1894

Schmidt v. Gayner

Minnesota Supreme Court · Decided December 3, 1894 · Mitchell, Gilitllan

62 N.W. 265; 59 Minn. 303; 1894 Minn. LEXIS 158 (North Western Reporter)

Counsel

A. C. Middelstadt and C. A. Ebert , for appellant on reargument. Where a person collects money which in equity and good conscience belongs to another, an action for money had and received may be maintained by the rightful owner to recover it. Sibley v. County of Pine, 31 Minn. 201; Brand v. Williams , 29 Minn. 238 ; De Graff v. Thompson , 24 Minn. 452 . The plaintiff was not made a party in the action in which a receiver was appointed. One not a party nor privy to a party to an action cannot be bound by the result. Cannon River Mfg. Ass'n v. Rogers, 42 Minn. 123; Maloney v. Finnegan , 40 Minn. 281 . Defendant Gayner is simply the agent for C. A. Smith, he being the principal. Gayner admits he collected the rents, but justifies under the receivership. The clause in a mortgage that the income from the mortgaged property may be taken in case of default in payment of interest or principal, is not enforceable. De Graff v. Thompson , 24 Minn. 452 ; Pioneer Sav. L. Co. v . Farnham , 50 Minn. 315 ; Hazeltine v. Granger , 44 Mich. 503 ; White v. Rittenmeyer , 30 Ia. 268 ; Spencer v. Lovering , 8 Minn. 461 . We concede that the jurisdiction of the court appointing a receiver is exclusive and that an action at law cannot be prosecuted against him except by leave of court. This was the general rule in the absence of statute. The statute of our state has changed this rule to the extent that a receiver may now be sued in respect to any act or transaction in connection with the trust property which has come into his hands under his appointment. Laws 1893, ch. 54. The same rule obtains in the Federal courts since the act of March 3, 1887, 24 U. S. Stat. ch. 373, p. 552, as corrected by act of August 13, 1888, 25 U. S. Stat. ch. 866, p. 436. Texas P. Ry. Co. v. Cox , 145 U. S. 593 ; McNulta v. Lochridge , 141 U. S. 327 . After defending on the merits taking the chances of making a successful defense precisely as if the court had jurisdiction of the case. defendant should not be at liberty at this stage to deny the jurisdiction of the court, because no previous leave to sue had been obtained. Eddy v. Lafayette , 49 Fed. Rep. 807. In reply to defendant's claim that he should have been sued as receiver, we refer to Kenney v. Ranney , 96 Mich. 617 ; Curran v.; Beach, Receivers, p. 718, § 717. A. Ueland , for respondent on reargument. Defendant was an officer of the court and collected the money in question in that capacity. In collecting the rents he acted throughout within the terms of the order appointing him receiver. If he was not entitled to the rents, application should have been made to the court for permission to sue him as receiver, and he should thereupon have been sued as receiver. He cannot under the circumstances be held personally liable. Holcombe v. Johnson , 27 Minn. 353 ; Meara's Adm'r v. Holbrook , 20 Ohio St. 137 ; Woodruff v. Jewett , 37 HUN, 205; Commonwealth v. Rank , 26 Pa. St. 235; Farmers L. T. Co. v. Central Railroad, 7 Fed. Rep. 537. Laws 1893, ch. 54, cannot have any bearing upon this case, because defendant was not sued as receiver. The action is against him in his individual capacity. Defendant having shown conclusively that all the money he collected was collected by him as receiver, he is not personally liable. Fisher v. Hubbell , 1 Thomp. G. 97.

Opinion of the Court

Mitchell, J.

This is an action to recover money alleged to have been collected by defendant “for and on behalf” of the plaintiff, and which defendant had failed and refused to pay over. The undisputed facts are that in June, 1891, one Oren, then the owner of certain premises, executed to one' Schmidt a mortgage thereon to secure the payment of a certain promissory note; that this mortgage contained a stipulation that in case of any default in the payment of principal or interest when due the mortgagee should have the right to enter the premises, and collect the rents, and apply them on the debt; that subsequent to the execution and record of this mortgage Oren conveyed the premises to one Kryger, who in January, 1893, assigned to plaintiff all his right and interest in the rents and profits of the premises for the next eighteen months; that in March, 1893, default having been made in the conditions of the mortgage, Schmidt commenced an action to foreclose, to which Kryger was a party defendant, in which the defendant was by the court appointed *307 receiver, to lease the premises, and collect the rents, pending the action; that as such receiver he leased the premises, and collected the rents which are sought to he recovered from him in the present action. The foreclosure suit resulted in a sale of the premises for less than the amount due on the mortgage, the amount of the deficiency being more than rents collected by the receiver. The judgment of the court in that action directed the receiver to apply the rents in his hands to the payment of the deficiency.

There are probably several reasons why plaintiff cannot maintain this action, but the mention of one is sufficient. It will be observed that not only has no leave to bring this suit been obtained from the proper court, but also that the purpose of the action is to recover from the receiver money actually in his possession under the order of the court, — in other words, “a fund in court,” — and of which he has taken possession in strict conformity with the directions of the court. The possession of the fund by the receiver cannot be interfered with in that way.

Without now considering the question whether plaintiff’s proper course would have been to obtain leave from the court to sue the receiver, or to have intervened and asserted his right to the money in the foreclosure action, and without determining what the effect of a failure to obtain leave to sue would be in actions not interfering with the actual possession by the receiver of property or money which he holds under the order of the court, we hold that this action cannot be maintained. See Barton v. Barbour, 104 U. S. 126.

Judgment affirmed.

Gilitllan, C. J., absent on account of sickness; took no part.

(Opinion published 6L N. W. 333.)

On reargument. Feb. 1, 1895.

Mitchell, J.

A reargument was granted for the reason that we Avere not aware of the existence of Laws 1893, ch. 54, entitled “An act providing for suits against receivers,” etc., to which counsel failed to call our attention. But, passing the question of the applicability and effect of that statute, the same result must be reached upon another ground. This action is against the defendant person *308 ally, and not officially. He was an officer of the court, and acted under and in strict conformity to its order. This affords him full exemption from all personal responsibility. Assuming, without deciding, that upon the facts an action would lie against him at all, it would only be an action against him in his official capacity, the judgment in which would be against him as receiver, and payable and enforceable only out of funds or property held by him officially.

Judgment affirmed.

(Opinion published 6:1 R. W. 265.)

Case-law data current through September 30, 2026. Source: CourtListener bulk data.