Silverman, Lindauer & Co. v. Kuhn

5 N.W. 523, 53 Iowa 436

• Court: Supreme Court of Iowa
• Decided: April 22, 1880
• Status: Published

Opinion

Day, J.

i bbobiveb • offsiwwhíg requisite. J. Counsel have argued elaborately the questions as to whether the plaintiffs, not being judgment creditors, are im(Jer any circumstances entitled -to a receiver; and whether- they have such lien upon, or interest ^ the mortgaged properly as to entitle them to a receiver. In the view which we take of the case we do not deem it necessary to determine these questions. As before stated, the application for appointment of a receiver was based solely upon the petition and answers, and the record in the law action against Isaac Kuhn. The answers deny in positive terms every allegation of fraud and bad faith, and allege that the mortgage was executed bona fide for the securing of actual and just debts. The petition alleges that B. O. Hanger, summoned as garnishee, is financially irresponsible. This allegation is denied inthe answers. The only facts which counsel for the plaintiffs claim are shown without contradiction are the following:

- 1. That On the 22d day of April, 1879, Isaac Kuhn executed the coveyance referred to in the petition, purporting to be a chattel mortgage.

2. That by virtue of said instrument, and- on behalf of said mortgagees, defendant B. O. Hanger took possession of the stock of merchandise therein described, and was selling therefrom for the purposes set forth in said mortgage.

3. That the indebtedness secured by said mortgage doe's not, in any event, exceed the sum of $18,001.78.'

4. That the property conveyed by said mortgage was of the value of $21,700.

5. That being so in possession, the defendant B: O. Hanger was garnished upon a writ of attachment, sued out by the plaintiff against the property of said Isaac Kuhn.

The record does not sustain the existence of any other facts. Do these facts warrant the appointment of á receiver of the mortgaged property? Appellees insist that they are entitled to the appointment of a receiver under section 2903 of the Code. If the applicability of this section to the matter in controversy should be conceded, what must appear in order to justify the appointment of a receiver? It must be shown that the “ property, or its rents or profits, are in danger of being lost,- or materially injured or impaired.” Appellees’ counsel concede the correctness of this position, for they say in their argument: “To entitle the plaintiffs to a receiver under section 2903, above quoted, it must appear * * * that it is in danger of being lost or materially injured or impaired.” How does such fact appear in this case? Counsel for apjiellees dispose of this question in the following manner: “Is the property in danger of being lost or materially injured or impaired? Upon this point there need be no argument; it appears that it is a stock of merchandise, and is being sold by the garnishee in the usual way of merchants.” But if the property were placed in the hands of a receiver it would be disposed of in the same way. The sale of a stock of merchandise in the usual way of merchants does not injure or impair, or endanger the loss of the property. That is the mode of preserving the property and deriving a profit from it. The plaintiffs, by their garnishment, did not'acquire a right to the possession of the stock of goods. They acquired simply a right to have the surplus of the fund arising from the sale of the mortgaged property, existing after satisfying the mortgage, applied to the satisfaction of their debt. This right can be as well secured by leaving the property in the hands of B. O. Hanger as by placing it in the hands of a receiver of the court. Hanger, through the garnishment proceeding, can be called upon to account faithfully for the disposition of the property. If he were an improper person to be intrusted with the property, or were insolvent, a different question might arise. But no such facts appear.' The ease is simply that a party, having a claim of a little less than eight hundred dollars, asks to have property valued at more than twenty-one thousand dollars, in the rightful possession of mortgagees under claims of more than eighteen thousand dollars, taken from the possession of the mortgagees and placed in the hands of a receiver, without showing that the property in its present custody will not be properly cared for and accounted for, or that his interest in the proceeds of the property will suffer any impairment. We are fully satisfied that the facts appearing do not warrant the appointment of a receiver under section 2903 of the Code.

____ attachment. II. It is urged, however, by appellees, that the garnishment of B. O. Hanger is in effect an attachment of the property, and that the'receiver was properly appointed urL(jer section 2970 of the Code. ’Without determining the effect of the garnishment proceéding, we aré satisfied that this case discloses no facts authorizing the appointment of a receiver under section 2970. It is urged by the appellees that this section authorizes the appointment of a receiver without showing the existence of any fact other than the levy of the attachment. This position, we think, is not correct. The section simply confers upon the court or judge, in a law action, jurisdiction and power to appoint a receiver of attached property. In order to justify the exercise of the power some facts must exist, and be shown, rendering the exercise of the power necessary or'proper. As we have already seen, no such fact has been shown. Appellees rely upon Hughes v. Cory, 20 Iowa, 399 (407). The language used in that opinion, which is relied upon by the appellees, was employed merely arguendo. This point was not in’that case, and could not have been there determined.

III. Appellees further claim that they are entitled to a receiver under section 3317 of the Code. This section authorizes an injunction, but has no reference to the appointment of a receiver. We think that a receiver should not have been appointed under the facts disclosed in this case.

Bevebsed.