Jones v. Strayhorn

321 S.W.2d 290, 159 Tex. 421, 2 Tex. Sup. Ct. J. 193, 1959 Tex. LEXIS 557

• Court: Texas Supreme Court
• Decided: February 18, 1959
• Docket: A-6890
• Status: Published

Opinions

Mr. Justice Norvell

delivered the opinion of the Court.

We are here concerned with the allocation of receivership expenses as costs of suit. For convenience we shall refer to the numerous petitioners as the Jones plaintiffs and the respondents (except the State) as the Strayhorn defendants. The State of Texas was an intervening party in the District Court and is alligned with the Strayhorn defendants. When necessary, the State will be referred to by name. Upon intervening the State successfully sought the appointment of a receiver and a number of the defendants joined in the application. See, Jones v. Springer, Texas Civ. App., 256 S.W. 2d 1016, wherein the trial court’s appointment of a receiver was upheld.

The primary action involved land in Kent County and the title issue was ultimately decided by this Court in favor of the Jones plaintiffs. Jones v. Strayhorn, 157 Texas 136, 300 S.W. 2d 623. Following such decision, the Honorable Lewis M. Williams, sitting for the Honorable Ben Charles Chapman, the regular judge of the District Court of Kent County, held a hearing and on June 17, 1957, entered an order which among other things discharged the receiver and approved previous orders directing the payment of certain monies as compensation for the receiver and his attorney. These items, together with other charges incurred in the course of the receivership, aggregated the sum of $39,052.01. As to this item the following finding and order was made by the trial judge:

“It further appearing to the Court * * * that it is just and equitable that the parties for whose benefit the receivership was ordered should be required to pay the costs of receivership and that neither the receivership nor any act of the Receiver in any manner benefited the property placed in receivership or the parties adjudged to be the owners thereof, or made such property more valuable than it was at the time of his appointment; and resulted in no benefit to the parties adjudged to be the owners thereof and who at all times resisted the appointment of the receiver,

“It is, therefore, Ordered, Adjudged and Decreed that the aforesaid costs of the Receiver and the Receivers expenses in the total sum of $39,052.01, be, and they are hereby taxed as costs, and are taxed one-half (%), jointly and severally, against the Defendants herein, to-wit: J. R. Strayhorn, R. L. Stringer, C. E. Leon, W. E. (Mike) Barron, W. W. Barron, E. B. Sullivan, Marvin O’Brien, Charles H. Reimers, the Livestock National Bank of Chicago, and one-half (%) against the State of Texas.”

The Court of Civil Appeals reversed the order taxing the receivership expenses against the State and the Strayhorn defendants as costs of suit and held there was no evidence supporting the finding of the trial court above set out. Strayhorn v. Jones, 312 S.W. 2d 582. In so doing the lower appellate court erred.

Judging from the authorities cited in its opinion the Court of Civil Appeals has seemingly confused the rules applicable to the right of the receiver to have his compensation and the expenses incurred by him paid out of the receivership funds with the rules governing the allocation of costs as between the parties. From time to time the receiver, under proper orders of the court, retained certain sums from the receivership fund which he transferred to himself or to his attorney by check duly listed in his final report. No one questions these payments. No one seeks to recover them from the receiver who incidently is not a party to this proceeding, nor affected thereby. The Court of Civil Appeals quotes the following from Taylor v. Taylor, Texas Civ. App., 91 S.W. 2d 394, 398, no writ history:

“The general rule is that the receiver is entitled to reasonable compensation to be taxed as costs against the property and funds in receivership, and that without regard to the result of litigation, and irrespective of the right of either party to recover cost of suit against his adversary.”

No one questions this rule. It is simply beside the point. It may be conceded at the outset that the Strayhorn defendants had a good faith yet invalid claim to the property involved in this litigation. It may likewise be conceded it was not improper for a receiver to be appointed to take charge of the property pending the final outcome of the suit. However, this circumstance does not in itself determine the issue of the allocation of costs as between the parties. In the nature of things, the appointment of a receiver must be based upon a preliminary estimate of the situation and while in this case we may assume that the parties who sought the appointment of a receiver were actuated by worthy motives, it nevertheless requires small “prophetic ken” to invision a case in which an adequate showing for a receivership could be made upon the preliminary application; yet, upon final hearing and thorough investigation the whole scheme might be exposed as a clever device to use our judicial tribunals as a means of depriving a rightful owner of his property through a studied program of harassment and oppression. While the bona fides of the unsuccessful claimant may be an item to be considered by the trial judge in taxing costs it is by no means controlling.

The matter with us is governed by Rules Nos. 131 and 141 of the Texas Rules of Civil Procedure which read as follows:

Rule 131. “The successful party to a suit shall recover of his adversary all costs issued therein, except where otherwise provided.

Rule 141. “The court may, for good cause, to be stated on the record adjudge the costs otherwise than as provided by law or these rules.”

These provisions seem to be a statement in rule form of the general practice. It is stated in Corpus Juris Secundum that:

“In the absence of statute, the receivership expenses may be adjudged against one or the other of the parties or apportioned between them in the discretion of the court.” 75 C.J.S. 981, Receivers, Sec. 303(a).

The same authority points out that the apportionment of costs should be controlled by equitable principles and recognizes that while the ultimate success or failure of the party who requests the appointment of a receiver is not in itself controlling, it is nevertheless a prime factor in determining who shall ultimately pay the costs of the receivership. 75 C.J.S. 982, Receivers, Sec. 303(b).

The distinction between the receiver’s right to compensation and the allocation of costs was pointed out in the early case of Espuella Land & Cattle Company v. Bindle, Texas Civ. App., 32 S.W. 582, no writ history. The Court said:

“We think the receiver’s fees must be considered a part of the court costs, within the meaning of this statute, and, as such, are entitled to be paid out of the moneys that came into his hands. Ellis v. Water Co., 86 Texas 113, 23 S.W. 858; Id., 4 Texas Civ. App., 66, 23 S.W. 856. We see no reason why this statute* ¹ does not apply to a case in which the plaintiff recovers. We do not however, hold that it would prevent the court from making a proper equitable adjudgment of these costs, as between the parties to the suit, nor that a defendant is in any manner deprived of such remedies as he might otherwise have had, such a reconvention or separate suit for damages, to protect himself against loss occasioned by wrongfully taking his property from his possession, and having it squandered by an expensive receivership.”

1. Of all court costs of suit. * * * ”

While the trial judge was authorized to vary the general rule as to taxing costs, if in his opinion the equities of the case required it, he did not choose to do so in the present case and set forth in his order the reasons which prompted him to tax costs against the unsuccessful parties to the litigation in accordance with Rule No. 131. There is something to be said in favor of such action. Receivership is one of the harshest remedies known to the law. When it is used to deprive an owner of the use of his property, injury invariably results. He who invoked the remedy must be prepared to assume some risk, for it cannot be said the final outcome of the lawsuit is a matter which should be disregarded in taxing costs, and we cannot rest the matter entirely upon the preliminary estimate of the need for a receivership.

While it was finally adjudged that the Jones plaintiffs were the owners of the real property involved, the effect of the decision of the Court of Civil Appeals was to saddle such parties with all the costs and expenses of the receivership and to deny to them a recovery over against the unsuccessful claimants who procured the receiver’s appointment over their protests and objections.

As the trial judge undoubtedly had the discretionary authority to adjudge costs, the controlling question in this case is, did he abuse his discretion in failing to adjudge such costs against the Jones plaintiffs?

The cases which have held that a trial judge has abused his discretion in adjudging costs, including receivership expenses against the successful party, are those in which it appeared without dispute that such party has derived some “benefit” as a result of the receivership. It is not sufficient to establish an abuse of discretion simply to show that the receivership would have benefited the parties who applied for the receivership had they been successful in litigation.

The only way a “benefit” can be read into this case is to view the situation solely from the standpoint of the losing parties. Had the Strayhorn defendants and the State actually owned the lands in dispute it would have been beneficial to them to have oil wells drilled thereon in order to prevent such lands from being drained by wells located on adjacent lands owned by the Jones plaintiffs. However the Jones plaintiffs were the owners of the disputed lands and if property ownership means anything, it means that the fruits and income from property belongs to the owner thereof and he is entitled to receive and control the same. This lawsuit and the receivership ancillary thereto were of no benefit to the Jones plaintiffs. They needed no additional oil wells. Ordinarily it is not necessary for one to protect himself from drainage from his own wells. However, there were no drilling operations carried out upon the disputed acreage and at the conclusion of this litigation the receiver did not turn over to the Jones plaintiffs a developed or more fully exploited land area. By agreement of the parties the drilling of additional wells was obviated, but a proportionate part of the proceeds derived from the entire Salt Creek Field was paid over to the receiver who simply held this money as a stakeholder pending the outcome of the litigation. The portion paid to the receiver was determined by the acreage proportion which the disputed area bore to the leasehold working interest of the entire Salt Creek Field.

The contract provided that:

“Upon the discharge of such Receiver, he shall pay over and distribute all money and property paid and delivered to him hereunder, (less the reasonable expenses of receivership allowed by the court, and the operating and development costs hereinafter mentioned), to the persons entitled thereto.”

The quoted contractual provision set forth within the parenthesis does not relate to the allocation of costs as between the parties. This agreement has been carried out and the receiver has been paid his fees and expenses out of the fund which he collcted as a stakeholder.

The only “benefit,” if such it can be called, that the Jones plaintiffs received from the receivership proceedings was one which they obviously did not desire, but sought to prevent, namely, having the receiver collect their money, hold it a certain length of time and eventually turn it over to them as the rightful owners, less $39,052.01, receiver’s costs.

This is not the type of “benefit” which will justify an appellate court in saying, as a matter of law, that a trial judge has abused his discretion in adjudging costs against the losing parties in litigation.

The case of Moore v. Birdwell, Texas Civ. App., 110 S.W. 2d 196, no writ history, does not support the holding of the Court of Civil Appeals. In that case it was held that the trial court abused its discretion in adjudging costs against the appellants who merely filed a suit for title and possession of an eight-acre tract but did not request that a Receiver be appointed but on the contrary resisted said appointment.

The true basis of the holding of Moore v. Birdwell was that the appellee — the owner of the property — received benefits from the receivership. The Court said, “At the conclusion of this suit in the lower court, the Receiver turned over to him [the appellee] two producing oil wells fully equipped.” Here the Receiver drilled no wells, improved no property, but simply took charge of a portion of the income produced from wells previously drilled by the Jones plaintiffs upon land owned by them.

We do not wish to be understood as holding that a trial judge upon sufficient equitable grounds may not adjudge receivership costs either in whole or in part against the prevailing party even where no benefit from the receivership accrues to such party. This is a matter which, under the rules, lies within the discretion of the trial court. The mere fact or circumstance that a trial judge may decide a matter within his discretionary authority in a manner different from what an appellate judge would decide if placed in a similar circumstance does not demonstrate that an abuse of discretion has occurred. When it is once decided that a trial judge exercising a “discretionary” authority has but one course to follow and one way to decide then the discretionary power is effectually destroyed and the rule which purports to grant such power is effectively repealed. What we do say is that the trial judge’s recited finding set out in the forepart of this opinion has support in the evidence and that such judge did not abuse his discretion in adjudging the receivership costs in accordance with Rule No. 131.

The judgment of the Court of Civil Appeals is reversed and that of the trial court affirmed.

Opinion delivered February 18, 1959.

1 . — Acts 1889, Supp. Sayles’ Civ. St. art. 1466, now article 2299, Vernon’s Ann. Texas Stats, which provides that, “All moneys that come into the hands of a receiver as such receiver shall be applied as follows to the payment: