fJ. ANGLO-AMERICAN MORTGAGE
(Cire-wlt Court, D. Nebraska. AprU
',., ,<ielver . " .
A'<iirouit judge' has authority to hear at chambeni iii motion· to discharge a reOil' PBESIDENT, .
AT CHAMBERS-DISCHiRGE Oil' RECEIVERS.
The president of a corporation has no power, without the authority of the directorsor siOckholders, to, consent to the· appointment of a; receiver to wind up the af.. fairs at the corporatioll.
.' The'I1l'esident, seoretary, and treasurer of a. corporation being about to be turned out ot,oftlce. by.the directors, the two ftled a bill alleging that the company was insolvent, and ll.skinll' the appointment of a receiver to wind up its affairs. The president immediately appeared in court, and consented thereto in behalf of the company. Tlle reoe,i.ver was thereupon appointed, without any consideration of thEt bill, and without the oourt's attent,ion. being oalled to the president's want of authOrity to enter oonsent.' HeW, that' the receiver would be disoharged on the ap:plication of the directors i it appearing that the bill was entirely Without merit, and that the proceeding was tnstituted for the purpose of wrecking the company, and obtaining control of its business.
In Equity. Bill by Edwin H. Walters and Joseph V. McDowell Mortgage & Trust Company for the appointagainst the mjtnt of a receiver. Heard at chambers on motion to discharge the receiver. Granted. JohnL. Webster and H. D· .Estabrook, for complainants. James Gardner Olarkapd John P. Breen, for defendant. CALDWEI,L, Circuit Judge. L. W. Tulleys was president, John V. McDowell secretary, and Edwin H. Walters treasurer, of the AngloAmerican Mortgage & 'rrust Company; The governing body of the corporationconsisted of a ,board of seven, directors, A majority of the dil1ectors; and a majority il,l :value of the stockholders, were in favor of removing Tulleys, McDowell, apd Walters 'from the offices held by them, I:t;ispectively, in the:compaUY. The board of directors.and stockholders had ren;l.Oval, or were about to do so, when McDowell and Walters filed the bill in this case,.alleging that the. company was insolvent, 8.J)dpralYing .for the appointment ofa receivel' .andthe winding up of the affairs of the cOJlporation. The bill was filed hy them as stockholders; McDowell being the owner of 12 and Walters the owner of 5 shares of the capital stock of the company, of the par value of $100 per share. The capital stock of the company is $99,250. Tulleys, the president of the company, without the authority or knowledge of the directory or the stockholders, voluntarily appeared in court the same day the bill was filed, and filed an answer in the name of the company, confessing the allegations of the bill, and consenting to the appointment of a receiver. The court, supposing that the answer was filed by the authority of the corporation, entered an order appointing a receiver, as prayed for in the bill, and consented to in the answer filed by its president, Tulleys. As soon as the board of directors of the company were advised of the filing of the bill, and of the appointment of the receiver.
WALTERS V. ANGW-AMERICAN MORTGAGE & TRUST
the action of the president in consenting to the same was disaffirmed and denounced as a fraud upon the corporation; and counsel were immediately employed by the company to defend the suit, and to procure the discharge. of the receiver. A motion was soon thereafter filed by the company, by authority of itg board of directors, to vacate the order appointing the receiver, and to discharge the receiver. The judge of the district being absent, in a foreign country, due notice was given that the motion would be heard before the circuit judge at chambers. In conformity to such notice, counsel for each side have appeared and argued the motion. The judge of the circuit court undoubtedly has jurisdiction to hear the motion at chambers; but it is a jurisdiction which I would not be inclined to exercise if the district judge was to be found in his district. For many purposes the circuit courts of the United States, as courts of equity, are always open. Equity Rules 1, 3,4. The authority of a judge at chambers is the authority of the court itself. Per TINDAI.,C. J., Doe demo Prescottv. Roe, 9 Bing. 104. The pra.eticeand the jurisdiction of the judge at chambers in chancery suits is in many instances so intimately blended and incorporated with the practice and jurisdiction of the court that it is sometimes difficult to separate the one from the other. The exercise of chambers jurisdiction in equity .cases is absolutely essential for the purpose of preventing the delay, injustice, expense, and inconvenience which must inevitably ensue if applications for relief had to be made in all cases to the court in session. A motion to discharge a receiver may be heard at chambers, upon due notice,and will be granted when it appears that he was improvidently appointed, or that there is any other sufficient reason for his discharge. Railroad Co. v. Sloan, 31 Ohio St. 1; Crav.fford v. RoBS, 39 Ga. 44; Beach, Rec. §778. The-bill on its face makes no case for the appointment of a receiver. It niaywell be doubted whether a court of chancery, in the absence of a statute authorizing it, has jurisdiction, at the suit of a stockholder, to wind up the affairs of a corporation on the ground of its insolvency. It is said courts of equity have no greater control over the affairs of a private corporation when it becomes insolvent than they have over the affairs of an individual. . They are not courts of bankruptcy. Glenn v. Liggett, 47 Fed. Rep. 472,474; Mor. Priv. Corp. §§ 281, 282. But, assuming that such jurisdiction exists, the bill in this case does not show that the eorporation is insolvent, or that it owes any debt which it has refused or is unable to pay. The stockholders and directors of the company are denounced as a body of "conspirators," and other hard adjectives applied to them. But, when critically examined, the alleged conspiracy consists only in a purpose of the stockholders and directors of the company to turn the plaintiffs out of the offices of the company which they hold; and, as the purpose of the company was to turn its president out of office also, he cheerfully made common cause with the plaintiffs, and by concerted action with them appeared in court at the instant the bill was filed, and undertook to confess for the company the allegations of the bill, and consent to the
a receiver t<ii wind; up 'its affairs. !,This, of course, he do. As president oMhe company, be'had nO authority the. bill, and consen1l to', thl:l appointment of the' receiver to wind'up-,the affairs M the corporation.' This WIlS, 'in effect, to consent to tbe.dblsolution, of the corpomtion:of wlHch he was president. He could give no such consent'withoutrtheauthority of the stockholders Or .ofthe:icorporation.';;Afhe ''Order aprJoihting the receiver was therefor80btained withoutllnyLnotioeto the corporation, or its nnce by any: one'havingauth61'ity 'tbspeak for it. It is alleged 'in the bill thilit sOD'Je$40,OOO, coming into the possession of has not been :invested or:appropriated as it should have been,., ButaS this money came into the hands of the very cers who are now making this complaint, and was used and ated in the'manner that .itwus by them, it comes with exceeding ill grace fromtnem to complain. of their own action. From tfie:billand the affidavits ill case, it appears that the plaintiffs and the president of the company. who is acting in concert with them, at one, time cOQlPosed a firm'cahyblgon the same kind of business which thedefendantcotpQration'isndw o<>nducting. The corporation succeeded to the business of that firm,and the members of that firm became stock.. holders and officers in the corporation. Finding that they were about to be displaced as officers of the corporation, of which they had had the chief management and c(!lDtrol, they conceived the idea of wrecking it, by filing th'e bill in this case, and procuring, without the knowledge of the corporation, the appointment of a receiver. Coincident with this action, thaytook steps to r69rganizethe oldfirmi and resume the busi;ness by thempre\tious to the organization of the corporation. It was evidently their expectation that the proceeding instituted for the appointment of a receiver would discredit the corporation with its patrons, and enable them to secure ,the business of the company. This, and, nothirig, else, was the real purpose of the bill. The bill is utterly wjthout merit. The appointment of the receiver was procured without notice to the company, and without bringing to the attention of the court the fact that the officer assuming to speak for the company had no thority to do so. The judgment of the court was 110t invoked on the sufficiency of tbe case made by the bill, because it was understood the company was o<>nsenting to the order made. This was an error of fact, which misled' the court. Butfor this error, there is no reason to suppOse the order appointing therecei'Ver would have been made. The receiver must be discharged; and all the costs,of the receivership, including the fees and expenses ofthereceiver, taxed against the plaintiffs.
GRAMES 17. HAWLEY.
Kamaa. Februu,., 1888.)
After the end of the a court has no power, upon motion, to set asIde its order dismissing a caustlln pursuance of a compromlse,'even though fraud be in the compromise.
CLIEK.T-CONTINUANCjJ Oll' RELA!I0N-PRBSUMPTIONS.
Al!'TBR END Oll'
no presumption of law that the relation of attorney and client continues 'afterthe'tefmination of the litigation and the-end of the term at which final judgmlilnt is, relJdered, except for the purpose of receiving service of citation,· or other "process i1tthe nature of error or appeal; and notice to the attorney.of a motion to set aside tbe judgment is not notice totbe former went, unless the continuance of , ,the be affirmatively shawn. ' , ,
ActiCi>n at .law ,upon transcript of a judgment in favor of ,plaintiff and against defendant for $3,835.29 and costs, rendered September 22,1878, by the supreme court of New York in and. for the county of Steuben. The deiense.isthat the jqdgr,pent is void 'because the court by which it was rendered hadllo jurisdiction of the defendant. The facts upon which this,delEmse is are as foUows:Plaintiff is a citizen of New York, and, ,defendant a citizen of Kansas. In 1873, while defendant was temporarily in York, the plaintiff sued him to recover damages for an alleged fraud in the sale ,of. tertain lands. Process was served on and ,he was also, at the instance of plaintiff, arrested, and collfined in prison. ,While defendant was so and pending the suit, 'a written agreement of cqIPpromise and settlement was entered into, whereby defendant agreed to and did execute to plaintiff a mortg/l.ge on his homestead in Kansas for $2,000, and the plaintiff agreed to and did dis.miss the suit. ' Prior to this settlement one W. W. Oxx had appeared as for defendant in the cause. After the settle.ment, ap.d the samebeipg. shown to the court, ap order of <,lismissal, dated January 8, 1876, was entered of record in the case. Thereupon the defendant paid off his counsel, Mr. Oxx, discharged him from bis service, and returned tp Kansas. On th.e 29th day of August, 1878,-more th.an two years 'after the order of dismissal, and aner the close of the term at which that order ha,\l been,entered,-plaintiff filed a motion to set the same aside on the ground that it had been procured by fraud, and to restore the case to the calendar of the court for trial. Notice of this motion upon Oxx, as counsel for defendant, but he refused to appear. " The court the no one appearing to resist it, orderec,i the case to be restored to the calendar, proceeded to try it, and relJdered judgment as above stated.' It is upon this judg. ment that suit is now brought. ' William Littlefield and S. a.Thacher, for plaintifl'. Joh,,!, W. Dliford and A. W.Ben80Jt, for defendant. MCCRARY, ,Circuit Judge. 1. The order of discontinuance made by the court in pursuance of the agreement of com promise and settlement in, the nature of a final order disposing of the case. Whatever power