Searchlight Development, Inc. v. Martello

437 P.2d 86, 84 Nev. 102, 1968 Nev. LEXIS 316
CourtNevada Supreme Court
DecidedFebruary 5, 1968
DocketNo. 5276
StatusPublished
Cited by5 cases

This text of 437 P.2d 86 (Searchlight Development, Inc. v. Martello) is published on Counsel Stack Legal Research, covering Nevada Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Searchlight Development, Inc. v. Martello, 437 P.2d 86, 84 Nev. 102, 1968 Nev. LEXIS 316 (Neb. 1968).

Opinion

[104]*104OPINION

By the Court,

Batjer, J.:

This is an appeal taken by the defendants in the district court from a judgment entered and filed pursuant to NRCP 54(b).1 The case was tried to the court below without a jury. The appellants contend that the district court was without jurisdiction to hear the particular matter and enter its judgment. We agree with this contention.

On August 31, 1966, Wiliam J. Martello and Bonnie G. Canter, respondents, individually and on behalf of all other stockholders of Searchlight Development, Inc., a Nevada corporation (hereinafter referred to as “Searchlight”), and El Rey Operations, Inc., a Nevada corporation (hereinafter referred to as “El Rey”), and Searchlight brought an action against Searchlight, El Rey, Casino Operations, Inc., a Nevada corporation, Judith F. Bayley, Calvin C. Magleby and Title Insurance and Trust Company, a California corporation (hereinafter referred to as “Title Company”), to (1) declare a trust deed on Searchlight’s real property void; (2) to declare that Martello, Canter and Louis E. Cooper are the directors and officers of Searchlight; (3) to obtain damages in the amount of $1,250,000; and (4) to appoint receivers of Searchlight and El Rey. At the time that the action was commenced Martello owned 46 percent and Canter owned 4 percent of the stock in Searchlight and El Rey.

On September 7, 1966, Judge George E. Marshall granted [105]*105a continuance of the respondent’s motion for a preliminary injunction and the appointment of a receiver. The motion was heard on October 18, and 19, 1966, and at that time Judge Marshall continued a prior restraining order against Judith F. Bayley, one of the appellants, enjoining her from foreclosing a second deed of trust against Searchlight.

Trial was set for November 14, 1966. On that date Judge Marshall was out of the judicial district, and not wishing to hear any protracted cases, as his term in office was nearing an end, he transferred the case to Judge John F. Sexton of the Third Judicial District. There was no written request by Judge Marshall that Judge Sexton hear the case.

On December 19, 1966, the respondents appeared before Judge Sexton and moved for an early trial. Trial was set for December 28, 1966, and was later continued until January 5, 1967.

Meanwhile on December 8, 1966, under a court order made pursuant to NRS 79.180, in the case of D. W. Mercer, doing business as Mercer Enterprises, plaintiff, and William J. Martello, doing business as El Rey Resort, defendant, Clark County case No. 116449, which in the record is identified as defendant’s exhibit No. 1, the sheriff of Clark County was to levy upon and sell all of Martello’s right, title and interest in Searchlight and El Rey, subject to the interest therein of the Internal Revenue Service.

On December 27, 1966, after notice, the sheriff sold Martello’s interest to appellant Bayley for $2,000.

Later that same day Judge Sexton, in the case of C. W. Lynn, plaintiff, v. Judith F. Bayley, Calvin C. Magleby, D. W. Mercer, Howard Babcock, Ralph Lamb, Searchlight Development, Inc., and El Rey Operations, Inc., defendants, Clark County case No. A39354, issued a restraining order prohibiting Bayley, et al., from selling or encumbrancing the interest which she purchased at the sheriff’s sale.

The next day, December 28, 1966, respondent Lynn filed the complaint in case No. A39354, supra, alleging that on December 26, 1966, he had purchased the stock in question from Martello by an assignment separate from the certificates, and that the sheriffs sale was null and void.

On January 4, 1967, the appellants filed a motion to drop Martello as a plaintiff on the ground that all his interest in Searchlight and El Rey had been sold at the sheriff’s sale of December 27, 1966.

The motion was denied and the court added Lynn as a party-plaintiff.

[106]*106On January 13, 1967, a “Judgment Pursuant to Nevada Rules of Civil Procedure-Rule 54(b)” was filed, which judgment appointed a corporate receiver for the property of Searchlight and El Rey, and enjoined all creditors of the two corporations from bringing any action against the two corporations and specifically enjoined the appellant Title Company and one Marshall W. Sawyer, the holder of a first trust deed on some of Searchlight’s real property, from foreclosing such trust deed. Findings of Fact and Conclusions of Law were filed the same day.

Among the many assignments of error, appellants claim that the district court was without jurisdiction to appoint a receiver for Searchlight and El Rey because the respondents Martello and Canter were not the holders of one-tenth of the issued and outstanding capital stock of those corporations on the date the trial of the matter commenced as required by NRS 78.650(1).2

There is no merit in respondent Lynn’s contention that he acquired all of the stock in Searchlight and El Rey from Martello prior to the sheriff’s sale on December 27, 1966.

There was no physical delivery of the certificates by Martello to Lynn and the purported transfer did not meet the [107]*107requirements of NRS 79.050.3 All Lynn received, if anything, was a promise to transfer (see NRS 79.140),4 and Lynn’s remedy, if any, is against Martello.

The sale of Martello’s right, title and interest in his outstanding stock in Searchlight and El Rey, by the sheriff pursuant to the order of the district court, was valid, and Bayley became the legal owner of Martello’s interest subject to the rights of the Internal Revenue Service.

The district court was authorized under NRS 79.1805 (now NRS 104.837), to issue the order in Mercer v. Martello, No. 116449, supra, and being valid on its face is not subject to collateral attack in this case.

An order of a court of general jurisdiction cannot be assaEed by collateral attack unless upon the face of the record it lacks jurisdiction. In Rowe v. Blake, 44 P. 1084 (Cal. 1896), the court said: “But it must be observed that this is not a direct, but a collateral, attack upon the proceedings of the court which [108]*108resulted in such order, and in such case every intendment is to be indulged in support of the regularity of those proceedings and such determination.”

In the case of Lieberman v. Superior Court, 236 P. 570 (Cal. 1925), the court said: “The rule against collateral impeachment of judgments applies generally to all varieties of judgment, decrees, or orders made by courts of competent jurisdiction, in all kinds of judicial proceedings.”

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Bluebook (online)
437 P.2d 86, 84 Nev. 102, 1968 Nev. LEXIS 316, Counsel Stack Legal Research, https://law.counselstack.com/opinion/searchlight-development-inc-v-martello-nev-1968.