Harvey v. Gartner

67 So. 197, 136 La. 411, 1914 La. LEXIS 1955
CourtSupreme Court of Louisiana
DecidedApril 27, 1914
DocketNo. 19806
StatusPublished
Cited by6 cases

This text of 67 So. 197 (Harvey v. Gartner) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harvey v. Gartner, 67 So. 197, 136 La. 411, 1914 La. LEXIS 1955 (La. 1914).

Opinions

PROVOSTY, J.

This suit is in damages for loss of property and injury to credit and reputation, alleged to have been suffered by plaintiffs as the result of proceedings in involuntary bankruptcy instituted against them by the defendants, in the course of which a receiver was appointed to take possession of the property. The plaintiffs are the firm of Martin W. Harvey & Co., and Martin W. Harvey individually; said firm being alleged to be composed of Martin W. Harvey and Howard Segrave.

An exception of want of proper parties was interposed, based upon the fact that the partner, Segrave, is not individually a party to the suit. This exception was properly overruled. The suit ■ is by the partnership and by Martin W. Harvey; both of them perfectly competent persons to stand in judgment without the assistance of Segrave. Individually, Segrave has no cause of action; he having consented to the proceedings in bankruptcy.

Pleas of res judicata and estoppel also were filed. They are founded upon the fol[415]*415lowing facts: After the termination of the proceedings in bankruptcy by the rejection •of the petition in bankruptcy, the plaintiff firm took a rule on the receiver to show cause why he should not return its property of which he had taken possession; and, when the receiver applied for his discharge -and the cancellation of his bond, the plaintiff firm filed an opposition, alleging that he had not accounted for said property. There was judgment overruling this opposition, and discharging the receiver. It is that judgment which is said to be res judicata of the present suit.

That judgment passed merely upon the liability of the receiver, and in no wise upon the liability of the present defendants. The rule upon the receiver, as well as the opposition to his discharge, was a mere calling upon that officer to give an account of his stewardship. In making his defense to them, the receiver was representing exclusively himself, and in no wise the present ■defendants. The suit in the instant case is a calling upon the defendants themselves, and it is to respond in damages for having instituted the proceedings in bankruptcy and caused a receiver to be appointed. I-Ience neither the cause of action, nor the parties, nor the thing demanded, can be said to be the same in the present suit as in these former proceedings; and, as a consequence, the judgment in these former proceedings is not res judicata of the present suit.

The estoppel is said to result from the fact that plaintiffs demanded of the receiver the return of the property. This plea is so devoid of legal foundation that one hardly knows how to get about arguing it. In the exercise of their right to recover back their property or its value, the primary x’ecourse of the plaintiffs was against the receiver who had taken possession of it, and, in legal contemplation, still had it in possession. So long as the receiver had the property in possession, these plaintiffs certainly could not have a cause of action in damages against the present defendants for the loss of it. 1-Iow, then, can the legal efforts of these plaintiffs to recover this property from the receiver operate as an estoppel to the present suit. Instead of a bar it was rather in the nature of a prerequisite.

In support of this plea of estoppel the defendants cite High on Receivers (4th Ed.) p. 319, § 270, to the effect that the. litigant, at whose instance a receiver has been appointed, is not liable for property lost, thi-ough the fault of the receiver. Grant that this is good law, the plaintiffs are not suing for any losses suffered through the fault of the receiver, but for losses suffered without the fault of the receiver — losses which he could not avoid, but for which the defendants are alleged to be liable by reason of the same having been the direct consequence of their act-in wrongfully instituting bankruptcy proceedings and causing a receiver to be appointed. If, by reason of having to be sold at forced sale for whatever was bid, at a time of great financial depression, when there was no market for that kind of property, the movables of the plaintiff firm, of which the receiver took charge, had to be sold for a mere song, and, if, by reason of its being in the hands of a receiver, the sawmill of the plaintiff firm could not be insured, these wex‘e matter’s for which the receiver was in no way at fault, and for which he was in no wise responsible, but which came about as the direct consequence of the bankruptcy proceedings instituted by these defendants, and of the appointment of a receiver made at their instance, and for which they may well be responsible, notwithstanding the blamelessness of the receiver.

On the merits, the facts are as follows: The fix’m of Martin W. Harvey & Co. was originally composed of Martin W. Harvey, L. C. Heintz, and James L. Reid. It was [417]*417formed in February, 1907. It was a sawmill concern, and owned a sawmill plant, timber . lands, oxen, and wagons. After it had been in existence some six months, and had accumulated a considerable amount of lumber on its yard, and contracted debts, Harvey, in' August, 1907, bought out the interest of Heintz and Reid, and took Se-grave as a partner. The purchase price was $2,500 — $625 cash, and $1,875 credit, for which Harvey gave his note. On October 10, 1907, the partnership, by way of security for the payment of this note, made a redeemable sale to Heintz and Reid of all its timber lands, oxen, and wagons, reserving, however, the possession and use of this property, and agreeing that payment should be made on the $1,875 note at the rate of $2.50 for every thousand feet of lumber sold. At that time the financial crisis of that year was on, and owing to the business depression resulting therefrom, the firm found itself unable to dispose readily of the lumber it was accumulating on its yard or to collect its accounts, and in consequence found itself financially embarrassed. Its largest creditor was the defendant, Oscar Gartner, who had been furnishing it money to run with. It then entered into a written agreement with Gartner, by which the latter undertook to act as trustee and take possession of all the property of the firm, and operate the mill and dispose of the lumber, in the interest of the creditors; and, under this agreement, he actually took possession. Certain of the creditors, however, would not join in this arrangement, and brought suit; and this led to an application for a respite. This application was filed on February 28, 1908. The defendant Gartner furnished $50 towards the expenses of it. On March 8, 1908, he filed the petition in involuntary bankruptcy, having induced the other defendants to join him in it, and given them, in order to induce them to do so, a written guaranty to hold them harmless against all claims for damages; they having no knowledge of the facts of the matter, and relying entirely upon his representations. The respite proceedings were still pending. They culminated in the respite being granted on April 8, 1908. On March 9th, the day after the filing of the petition in bankruptcy, the defendants filed a petition alleging that the appointment of a receiver was necessary, and asking that one be appointed. This prayer was granted, and a receiver was appointed ; and he took charge of all the property which the plaintiff firm had turned over to the defendant Gartner, as trustee, except the part included in the redemption sale. The fire insurance companies canceled their policies on the sawmill, for the reason that it had passed into the hands of a receiver, and the receiver was unable to obtain insurance. On March 24, 1909, judgment was rendered dismissing the bankruptcy proceedings.

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Bluebook (online)
67 So. 197, 136 La. 411, 1914 La. LEXIS 1955, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harvey-v-gartner-la-1914.