Roberts & Hoge v. Pipkin & McCallum

The opinion of the Court was delivered by

In general terms, the first action above stated may be said to have raised questions: (1) As to the effect of the mortgage executed on the 17th August, 1901, by and between the defendants, Pipkin & McCallum, *258 and the Marlboro Wholesale Grocery Company, two firms doing business at Bennettsville, in Marlboro County, in this State, and of the mortgages executed by Pipkin & McCallum to the Bank of McColl on the 31st March, 1899, and another between the same parties dated in January, 1901, but not recorded until the 17th September, 1901. The plaintiffs had the firm of Pipkin & McCallum to- execute a mortgage of certain real estate in Bennettsville and at McColl, both in Marlboro County, in this State, as well as a mortgage on their merchandise in their two stores in Bennettsville, and their one store in McColl. The Bank of Marlboro held a mortgage'on the lot of land of Pipkin & McCallum, in the town of Bennettsville. (2) The right of the plaintiffs to have all of said property, real and personal, mortgaged by Pipkin & McCallum to the several defendants, sold by the order of Court and the proceeds distributed amongst the holders of such mortgages according to the respective rights of said mortgagees. (3) Allegations that under the mortgage held by the Marlboro Wholesale Grocery and by collusion of the defendants, Pipkin & McCallum, with the said Marlboro Wholesale Grocery, the stock in trade-of the said Pipkin & McCallum was being sold, thereby depleting said stock in trade, to the injury of the plaintiffs.

The second action was between the assignee of Pipkin & McCallum, under a deed of assignment made on the 24th October, 1891, of the whole property by said Pipkin & McCallum for the benefit of all their creditors without any preference, and the defendants, Marlboro Wholesale Grocery, the firm of Roberts & Hoge and the Bank of McColl, wherein it was asserted that the firm of Marlboro Wholesale Grocery had under their alleged mortgages seized the stock in trade, &c., of Pipkin & McCallum in their two stores in Bennettsville and one store in McColl, and also that said mortgage was illegal and had actually been fully paid; that the second mortgage held by the Bank of McColl was in *259 valid; and that the firm of Roberts & Hoge held an invalid mortgage.

Under the complaint in the first named action and an affidavit of a Mr. Wilcox, as the agent of Roberts & Hoge, the Circuit Judge, Judge Buchanan, on the 23d day of October, 1901, at chambers, granted the following order, to wit (omitting the caption) : which, with the following quotations, are taken from the “Case:”

“Upon hearing the verified complaint in the above case and the affidavit of C. A. Wilcox, and it appearing that the summons has been duly lodged for service in the sheriff’s office for Marlboro County aforesaid; on motion of H. H. Newton, Esq., attorney for the plaintiffs, it is ordered, that the summons and complaint and affidavit of C. A. Wilcox, together with this order, be filed in the clerk’s office for said county,, and that copies of the said summons and complaint be served on all the defendants in the action; and that a copy of said affidavit of Wilcox and a certified copy of this order also be served on the defendants, Pipkin & McCallum and Marlboro Wholesale Grocery, and that the said Pipkin & McCallum and Marlboro Wholesale Grocery do show cause before me, at my chambers in Darlington, S. C., on the 30th October, A. D. 1901, át 11 o’clock A. M., or as soon thereafter as counsel can be heard, why a receiver of all and singular the goods and chattels, merchandise, &c., covered by the chattel mortgages involved in this action should not be appointed to take charge of the same and hold ‘them subject to the order of the Court. It is further ordered, that the defendants, Pipkin & McCallum and Marlboro Wholesale Grocery, their and either of their servants, agents and employees, in the meantime and till the further order of the Court, be enjoined and restrained from removing, disposing of or selling any portion of said goods, wares, merchandise and other property covered by said chattel mortgages, and from paying the proceeds thereof to any person whomsoever.

“No bond, undertaking or other security was executed or filed either before or after the granting of said order.

*260 “On the verified complaint * * * (in the second action above named), and on motion of D. D. -McColl, Esq., of the firm of McColl & McColl, attorneys for the plaintiff, for a preliminary injunction against the above named defendants, and sufficient reason appearing why the same should be granted, it is hereby ordered, that until the further order of this Court, that said defendants, Marlboro Wholesale Grocery and Roberts & Hoge, be and they are hereby enjoined and restrained from disposing of or in any manner interfering with the estate and property heretofore owned and possessed by the firm of Pipkin & McCallum, and heretofore assigned to this plaintiff, and that they be restrained from attempting to dispose of or in any manner interfering with said estate; and the defendant, Bank of McColl, is likewise restrained from interfering with said estate. Let said defendants or their attorneys show cause on the verified complaint herein, on November 2d, 1901, before this Court, at Darlington, S. C., why the foregoing order, or some order of like import, should not be continued in full force and until the final judgment in this action.

“No bond, undertaking or other security was filed or executed at the time of granting above order, and none has since been filed or executed. The order was granted solely upon the verified complaint, and the affidavits hereinafter incorporated were submitted in reply to the return made by the defendants, the Marlboro Wholesale Grocery.

“To these two orders returns were duly made and many affidavits on each side to the two actions, and the same came on to be heard before his Honor, Judge Buchanan, * * * (who on November 20, 1901, made) the following order:

“ ‘The rule to show cause in each of the above stated cases and the returns thereto were, by consent of counsel engaged therein, heard before me, at chambers, together. After hearing thesé rules and the returns thereto and argument of counsel in each case, for and against said rules, it is ordered, that the injunction orders heretofore granted in the said two *261 cases be continued of force until the further orders of this Court.

“ ‘It is further ordered, that the property which is the subject matter of the litigation in the said two cases, to wit: the property, real and personal, of the firm of Pipkin & McCallum, be turned over by the parties claiming to be in possession thereof to the receiver herein appointed, who is hereby ordered to take into his custody all and singular the said property, real and personal, and keep the same subject to the further order of this Court.

■ “ ‘It is further ordered, that the receiver be and is hereby invested with all the powers usually appertaining to the office of receivers appointed by this Court. It is further ordered, that the defendants in each of said cases, and the plaintiffs as well and the agents and servants and employees of each of them, be restrained from selling, assigning, transferring or in any manner receiving, incumbering or interfering with any of the said property set forth in either or both of said actions, to wit: all and singular the personal and real property of the said firm of Pipkin & McCallum, contained and set forth either in the deed of assignment or in the mortgages of the plaintiffs, Roberts & Hoge, and of the defendants, the Marlboro Wholesale Grocery Company and Bank of Marlboro and Bank of McColl.

“ ‘It is further ordered, that Walter S. Rowe is hereby appointed receiver of all and singular the said property, both real and personal, of the said firm of Pipkin & McCallum, and is hereby authorized and directed to take charge thereof, and to preserve and hold the same subject to the order of this Court, and to administer the same under its direction; and that he be and hereby is invested with the powers, duties and responsibilities usually appertaining to the office of receiver, upon his entering into bond, with good and sufficient sureties, before the clerk of this Court, and to be approved by said clerk in the penal sum of $15,000, conditioned for the faithful discharge of his duties, which said bond must be entered into before the said W. S. Rowe takes *262 charge of the said property and enters upon his said duties. It is further ordered, that Hugh B. McIntyre, as assignee, and the Marlboro Wholesale Grocery Company, do turn over and deliver to said W. S. 'Rowe, receiver herein, all the books and dioses in action belonging to the said firm of Pip-kin & McCallum and all other property covered by the deed of assignment, and that said receiver be and hereby is, authorized, empowered and directed to collect the outstanding indebtedness of the concern, and if necessary to institute suit therefor, when advisable or expedient in his judgment so to do. It is further ordered, that the parties to the said two actions, any or either of them, may apply at the foot of this order, whenever so advised by this Court, for further orders in the premises pertaining to the administration of the said estate by the said receiver or to the exercise of his said duties. The compensation of said receiver may be fixed by any future order of this Court, upon application and due notice thereof either in open Court or at chambers, according to the election of those interested therein. It is further ordered, that the property covered by the chattel mortgages involved in this case be valued at $4,000, and that all of the other property of the said Pipkin & McCallum be valued at $3,500. This order is not to be considered as passing upon the status of the assignee of Pipkin & McCallum to bring this action. This remains to be determined.’ ”

“Upon the foregoing order being granted and filed with the ■clerk of Court, the defendants, Matheson and Exum, forthwith executed a bond, in accordance with the provisions of the act of the General Assembly of the State of South Carolina, ‘To regulate the appointment of receivers,’ &c., approved March 5, 1897, which said bond was approved, both as to form and sufficiency, by said clerk, and moved the Court to grant an order to vacate the appointment of said receiver, in accordance with the provisions of the act aforesaid. His Honor refused to sign the proposed order, or one of like purport, simply indorsing upon the one presented the *263 following: T cannot sign the within order. O. W. Buchanan, Judge presiding. November 22, 1901.’

“The defendants, Matheson and Exum, then executed an undertaking, in accordance with section 350 of the Code of Civil Procedure, which as to form and sufficiency was also approved by the clerk of said Court, and a copy of which, together with the notice and grounds of appeal, was served on plaintiffs attorneys in each of said cases November 22, 1901. An application was then made to his Honor to stay the execution of the order appointing said receiver, requiring the delivery of. said property, &c., but this he also refused."

Quite a number of exceptions were taken to these orders of the Circuit Judge. The report of this case should contain all the exceptions. In the view we take of this matter, •we are almost forced to the conclusion that the power of the Circuit Judge to issue the two preliminary orders of injunction lie at the threshold of this investigation. If the.statutes of this State negative the power of the Circuit Judge to pass his order of the 23d of Octdber, 1901, it seems to us that the discussion is narrowed down to a small limit. However, if the Circuit Judge had the power to issue these preliminary injunctions, did he have the power to appoint a receiver under the laws of this State regulating the same? Under the views we entertain of this appeal, we will decline to discuss any other question than these two just stated.

1 1. Did the Circuit Judge have power to grant the two preliminary orders of injunction? The act entitled “An act to regulate the appointment of receivers by the Courts in causes therein,” approved the 5th day of March, A. D. 1897, see 22d Statutes at Barge, 510 and 511, in its 2d section uses this language: “The Court or Judge may by temporary injunction, without notice, pending the hearing of such application, restrain the delivery of the property or any part thereof sought to be put in the hands of a receiver to any other person whomsoever, and the Court shall be deemed to have taken jurisdiction over such property from the time of the issuance of such tern *264 por ary injunction: Provided, That no such temporary injunction shall issue so as to interfere with the use and disposition of such property by any person or corporation in the usual and customary mode and course of business and use of the same, without the Court or Judge first requiring from the party applying for such injunction a bond, with security, in1 a sufficient sum not less than $250, to pay all damages arising from said temporary injunction, should no receiver be appointed on the hearing of the application.” It is obvious from the terms of this act that the power in a Circuit Judge, either during term time or at chambers, to pass an order for a temporary injunction, in an action looking to the appointment of a receiver, is bottomed upon a bond to be made by the person applying for such temporary injunction for not less than $250, as a condition precedent to the lawful use of such power to issue such injunction. The act so specifically provides. For the Circuit Judge to acquire such jurisdiction on an ex parte application, without notice to any one, so that the Court shall be deemed to have taken jurisdiction over such property from the time of the issuance of such temporary injunction, it is a condition precedent thereto that a bond from the party applying for such injunction in the amount of not less than $250 shall have been executed. It is admitted in1 the case for appeal, that no such bond was executed in any manner or form whatsoever. The effect of such failure to execute such a bond is that the Circuit Judge had no power to issue such a temporary injunction, and that such Circuit Judge did not, in the case at bar, acquire jurisdiction over the property of Pipkin & McCallum on the 23d day of October, 1901; hence, so far as the order for temporary injunction issued by^ him on that day is concerned, Pipkin & McCallum and the Marlboro Wholesale Grocery were not controlled by such order of preliminary injunction. If such order of Judge Buchanan had been in force from the 23d of October, 1901, Pipkin & McCallum could not have made an assignment of their property at any hour on the 24th day of October, 1901, nor could the defend *265 ants, the Marlboro Wholesale Grocery, have taken possession under their mortgage of the stock of goods, wares and merchandise of the firm of Pipkin & McCallum.

2 2. Did the Circuit Judge have the power to appoint a receiver of the property of Pipkin & McCallum by his order passed on the 20th day of November, 1901? We answer that he did not, so far as Pipkin & McCallum are concerned, because sec. 3 of the act of 1897, heretofore cited, expressly provides: “No receiver of the property of any person or corporation shall, be hereafter appointed before final judgment in the cause, if the party claiming the property so sought to be placed in the hands of a receiver or the party in possession thereof shall offer a bond in the penalty of double the value of the property, with sufficient security, approved by the clerk of the Court of Common Pleas or of the Courts in which the action is brought, to fully account for and deliver over whenever thereafter required by any final adjudication in the cause, the property sought to be placed in the hands of a receiver, and to meet and satisfy any decree of judgment or order that may be made in the cause.” In the case at bar, a bond according to the requirements of this act was presented to the Circuit Judge by the Marlboro Wholesale Grocery, one of the defendants. When this was done, the order of the Circuit Judge appointing a receiver was without any legal force. It will be observed at the close of the act, the usual form of revocation of all former acts or parts of acts inconsistent with the act of 1897 was inserted.

Such being the conclusions of this Court, thereby denying validity to all the orders passed in the two actions herein, we have concluded that it would be not only inexpedient but unlawful for us to consider any other questions presented by the appellants. Both causes must, therefore, be recommitted to the Circuit Court, for such action as may be necessary, untrammeled by the orders of Judge Buchanan arid all the proceedings before him.

It is the judgment of this Court, that the judgment or *266 orders appealed from be reversed and the two actions remanded to the Circuit Court.