Betts v. Bisher

213 F. 581, 130 C.C.A. 161, 1914 U.S. App. LEXIS 1914
CourtCourt of Appeals for the Ninth Circuit
DecidedMay 4, 1914
DocketNo. 2359
StatusPublished
Cited by5 cases

This text of 213 F. 581 (Betts v. Bisher) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Betts v. Bisher, 213 F. 581, 130 C.C.A. 161, 1914 U.S. App. LEXIS 1914 (9th Cir. 1914).

Opinion

GILBERT, Circuit Judge.

On July 29, 1912, the defendant in error, while engaged in insulating certain electric wires of the electric power plant of the Cornucopia Mines Company, a corporation, sustained serious personal injuries, for which he recovered damages in the court below, against the receiver of such corporation. The parties to the action will be designated herein plaintiff and defendant, as in the court below.

[1] The objection is made that the trial court had no jurisdiction of the action; that the fact that the cause of action was against a receiver appointed by the court below, and was based upon the alleged negligence of the receiver in managing the property of 'the receivership, was not sufficient to confer jurisdiction where there was no diversity of citizenship and no federal question involved. In White v. Ewing, 159 U. S. 36, 39, 15 Sup. Ct. 1019 (40 L. Ed. 67), the court said that a suit against a receiver—

“in the course of the winding up of such corporation, whether for the collection of its assets or for the defense of its property rights, must be regarded as ancillary to the main suit, and as cognizable in the Circuit Court, regardless either of the citizenship of the parties, or of the amount in controversy.”

By this, it was not meant that the jurisdiction of actions against the receiver in the court in which he was appointed is confined to actions for the recovery of debts which existed at the time when he was appointed, and as incidental to the distribution of the property in the hands of the receiver, for in McNulta v. Lochridge, 141 U. S. 327, 332, 12 Sup. Ct. 13 (35 L. Ed. 796), the court said:

“Actions against the receiver are in law actions against the. receivership, or the funds in the hands of the receiver, and his contracts, misfeasances, negligences, and liabilities are official and not personal, and judgments against him as receiver are payable only from the funds in his hands.”

The doctrine of these decisions was applied in Gray v. Grand Trunk Western Ry. Co., 156 Fed. 736, 84 C. C. A. 392; Hanlon v. Smith (C. C.) 175 Fed. 192, and Smith v. Jones Lumber & Mercantile Co. (D. C.) 200 Fed. 647. The rule established by those and other decisions is that, while actions against receivers may be brought in the state courts, they may also be brought in the court in which the receiver was appointed, and that, notwithstanding that no federal question is involved, and there is no diversity of citizenship, those courts have [583]*583jurisdiction upon the ground that the actions are ancillary to the original suit, and that the judgments recoverable therein are payable from the property or funds in the course of administration. Gableman v. Peoria, etc.. Ry. Co., 179 U. S. 335-342, 21 Sup. Ct. 171, 45 L. Ed. 22.

[2] One of the defenses pleaded in the answer was that at the time of the accident the property upon which the plaintiff was working when he was injured was operated by the defendant, not as receiver, but as lessee, and that it was as a lessee that he employed the plaintiff. On November 9, 1911, the Cornucopia Mines Company executed to Betts a lease of all its mining properties, including the electric power plant upon which the plaintiff was working when he was injured. The term of the lease was one year, and the lessor was to receive as rental 90 per cent, of the net returns of .all ore extracted from the mining property. On December 5, 1911, while Betts was in possession ■under the lease, a suit was brought by the Hamilton Trust Company to foreclose a mortgage on the mining property. In that suit Betts was, on January 2, 1912, appointed receiver, and in the order under which he qualified he was directed to take immediate possession of the property of the mining company—

“and to continue the operation of said mining property, and every part and portion thereof, as heretofore operated, and to preserve the said property in proper condition and keep the same in repair and to employ such persons and make such payments and disbursements as may be needful and proper in doing so.”

Betts was not made a party deféndant to the suit, nor was the fact of his lease mentioned in the bill, but in the affidavit upon which the receiver was appointed, the lease was referred to, and it was stated that Betts was in possession and was operating and developing the mining properties under that lease. The electric power plant was a part of the property covered by the lease and by the mortgage, and it was being used in the operation of the mining property at the time when the plaintiff was injured. The defendant testified that at that time he was operating the mine and the power plant as lessee and not as receiver. But there was evidence tending to indicate that he was operating the property as receiver. In his monthly reports as receiver he made return of all moneys received by him in the operation of the mine during the time of his receivership, the total amount of which was $71,681.27, which was less than his total disbursements by $781.-81. His reports showed that during that period, as part of the expenses, he paid himself a salary of $350 a month as receiver; that he paid for legal services $100 a month, and that out of the sums received he expended $12,714.26 for betterments and improvements of the property, one item of which was a cyanide plant, costing $3,000. The lease gave him no authority to make those expenditures.

The defendant assigns as error the refusal of the court to instruct the jury that upon the evidence the defendant was operating the mine as lessee, and to the denial of the defendant’s motion for an instructed verdict in its favor, upon the ground, among other grounds stated, that the defendant as lessee was operating the mine at the time of the acci[584]*584dent. In view of the evidence, we think the court committed no error in refusing the requested instruction, and.in submitting to the jury, as it did, the question whether the defendant was operating the mining property as receiver or as lessee. The court instructed.the jury that the defendant might have been the receiver and the lessee at the same time; that he could act as lessee and also as receiver without one duty being inconsistent with the other; that if appointed receiver, he could take charge of the mine as receiver, the same to be' operated subject to the leasehold interest in the premises. Certain features of the record tend to show that Betts accepted the appointment of receiver in lieu of his rights as lessee, and that the lease was, by all'parties, deemed set aside during the receivership. One of his attorneys, who appears in this action, made the affidavit for-the complainant in the bill on which the receiver' was appointed, and therein set forth that it was necessary that the mines should continue in operation; that if they were closed down, great injury and loss would result, and the stamp mill and electric power plant and other machinery would deteriorate in value. The order appointing the receiver and directing his action as such is in its terms inconsistent with the continuation of the lease.

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172 P.2d 763 (California Court of Appeal, 1946)
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Matarazzo v. Hustis
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Hamilton Trust Co. v. Cornucopia Mines Co.
223 F. 494 (Ninth Circuit, 1915)

Cite This Page — Counsel Stack

Bluebook (online)
213 F. 581, 130 C.C.A. 161, 1914 U.S. App. LEXIS 1914, Counsel Stack Legal Research, https://law.counselstack.com/opinion/betts-v-bisher-ca9-1914.