State ex rel. Calhoun v. Superior Court

86 Wash. 492
CourtWashington Supreme Court
DecidedAugust 4, 1915
DocketNo. 12735
StatusPublished
Cited by8 cases

This text of 86 Wash. 492 (State ex rel. Calhoun v. Superior Court) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Calhoun v. Superior Court, 86 Wash. 492 (Wash. 1915).

Opinion

Fullerton, J.

On May 1, 1908, the Seattle, Renton & Southern Railway Company owned and operated a street and suburban railway between a certain point in the city of Seattle and the city of Renton, all in King county. On the [493]*493day named, it made a trust deed of all of its property to Augustus S. Peabody and the First Trust and Savings Bank of Chicago, to secure the payment of one million dollars in bonds which it proposed to issue and which the brokerage firm of Peabody, Houghteling & Company agreed, upon certain conditions, to float. The bonds were subsequently issued in part, and were floated pursuant to the agreement, and became outstanding obligations of the company to the amount of some $850,000. The railway company continued thereafter as a going concern, under the management of trustees elected by its stockholders, until May 1, 1911, when, again finding itself unable to meet its obligations, it entered into another agreement with the firm of Peabody, Houghteling & Company. Under the terms of this latter agreement, the stockholders of the railway company conveyed to the trustees named in the original agreement all of the capital stock of the railway company except five shares, as security for the issuance by the railway company of some $300,000 “collateral trust notes,” which the firm of Peabody, Houghteling & Company agreed to purchase. The agreement further provided for the resignation of three of the then five trustees, and for the filling of their places by persons selected by Peabody, Houghteling & Company, giving to that company the management and control of the railway company’s business. Prior to this sale in pledge, one William R. Crawford was the principal stockholder of the railway company’s stock, owning some 250,000 of the 300,000 into which the capital stock was divided.

On April 30, 1912, Crawford brought an action against the trustees named in the trust deed and collateral trust agreement, making the railway corporation and the firm of Peabody, Houghteling & Company parties thereto, alleging mismanagement of the railway company’s business on the part of the trustees selected by Peabody, Houghteling & Company, and that the railway company was in imminent danger of insolvency because of a conspiracy existing between [494]*494the trustees named in the trust agreements and the firm of Peabody, Houghteling & Company to precipitate that event; one ground of the contention being that the trustees were about to suffer certain maturing obligations of the railway company to default, although sufficient funds were in the treasury of the company to meet them.' He asked for the appointment of a receiver pendente lite, that the purposes of defendants might not be accomplished. The defendants in the action appeared, made answer to the allegation of the complaint, and successfully resisted the appointment of the temporary receiver. Subsequently the railway company made default in its maturing obligations, whereupon the trustees •in the trust agreements began an action in the Federal court against the railway company, alleging its insolvency, its default in the payment of its matured obligations, and asking for the appointment of receivers. The railway company appeared in the action and admitted its insolvency, and receivers were appointed, who took possession of the railway property and proceeded with its operation.

After the confession of insolvency made by the railway company in the suit in the Federal court, Crawford filed a supplemental complaint in the state court, alleging the insolvency of the corporation, and procured from that court the appointment of permanent receivers for the railway company. A showing was made in the Federal court of this appointment, whereupon that court set aside its original order for want of jurisdiction, and directed its receivers to turn the railway property over to the receivers appointed by the state court. While in possession of the railway property, the receivers appointed by the Federal court received large sums of money as the earnings of the road and expended large sums in its operation. The receivers, pursuant to the order of the Federal court to turn over to the receivers of the state court the property of the railway company, tendered to such receivers the difference between these two sums. The receivers of the state court conceived that the Federal re[495]*495ceivers should not be allowed the deductions made by them, and applied to the state court for an order requiring them to pay over the full sum collected by them while in possession of the railway property without regard to expenditures. Issue was taken on the allegations of fact contained in the application and affirmative matter alleged, to which the state receivers made reply. In the meantime, the issues in the main action were completed, and the cause stood ready for trial on such issues, and also on the collateral issues raised between the receivers.

The cause was then pending in the department of the superior court of King county presided over by Judge Frater. In January, 1913, Judge Kauffman of Kittitas county was a visiting judge in King county, called in to aid in the disposition of causes then pending. This cause was among the causes assigned to Judge Kauffman for trial. Judge Kauffman assumed that the entire issue was submitted to him for determination, and on January 15, 1913, consolidated the receiver proceedings with the main action and, without objection on the part of any one, entered upon the trial of the consolidated cause, concluding the trial on March 15, 1913. On April 1, 1913, he filed a written opinion on the issues presented in both the main case and the receiver proceedings, in which he announced the conclusions reached by him therein. Subsequently, and on May 17, 1913, he signed findings of fact and conclusions of law, proposed by counsel for the defendants on the issues presented in the main case, which were filed with the other proceedings in the cause in King county. The matter was then suffered to rest, in so far as proceedings before Judge Kauffman were concerned, until March 13, 1915. In the meantime, however, Judge Frater made repeated orders in the cause relative to the conduct of the receivers, and heard and settled a large number of claims of creditors against the railway company presented to the receivers.

On the date last mentioned, the counsel for the defendants in the main issue, and counsel for the Federal receivers in the [496]*496receivership proceedings, served notice on the appellant and the state receivers that they would, on April 3, 1915, apply to Judge Kauffman, at Ellensburg, Washington, for a judgment in the main action, in accordance with his findings and conclusions made shortly after the trial of the action, and for findings, conclusions and judgment in the receivers’ ancillary action tried therewith, in accordance with the opinion of the court filed as before stated, copies of the proposed judgments and findings being attached to the notice. When this notice was served upon the state receivers, they applied to this court for the issuance of an alternative writ of prohibition against Judge Kauffman, prohibiting him from taking further proceedings in the cause until the further order of this court. The writ was issued, and Judge Kauffman directed to appear and show cause on a day certain why he should not be permanently restrained from proceeding further in the cause.

The first contention made on the part of the receivers is that Judge Kauffman is now without jurisdiction to enter a judgment in the cause.

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Cite This Page — Counsel Stack

Bluebook (online)
86 Wash. 492, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-calhoun-v-superior-court-wash-1915.