Hoover-Bond Co. v. Sun-Glow Indus., Inc., 57 Ohio App. 246 (Ohio 1936)

Guernsey, J.

This is- an error proceeding from the Court of Common Pleas of Allen county, Ohio. In that court the plaintiff in error, The Hoover-Bond Company, was plaintiff, and the defendants in error, Sun-Glow Industries, Inc., a corporation, Clare G. Stout, and L. E. Ludwig, were defendants, and the parties here will be referred to in the relation in which they appeared in the Common Pleas Court.

On September 23, 1935, plaintiff filed its petition in the Court of Common Pleas' against the defendants, to which petition the defendants thereafter interposed a demurrer. On hearing, the court sustained the demurrer, and the plaintiff not desiring to plead further the court entered final judgment in favor of the defendants. This proceeding in error is brought to reverse said judgment.

The petition in-the case, omitting the formal parts, is in the words and figures following:

on or about the 6th day of May, 1935, and continued thereafter; that the said defendants offered said furniture store and accounts of the said plaintiff for sale under the pretense of a receivership procured when said defendants without any right in law and based upon the judgment of the defendant Sun-Glow Industries, Inc., of five hundred and eight dollars procured in the Municipal Court of the city of Lima, Ohio; that without causing any execution or other process to be issued upon said judgment the said defendants, Sun-Glow Industries, Inc., through and by L. E. Ludwig, its agent, procured the appointment of the defendant, Clare G. Stout as a receiver in the said pretended receivership matter; that at the time the said property of the said plaintiff consisted of merchandise located in said store of the plaintiff free and unencumbered and of the value of $6109.93, and also three automobiles and trucks of the value of $730 and also office furniture and fixtures of the value of $1716.60 and also accounts for goods sold amounting to $26,173.65 and the good will, name and business of said plaintiff of the value of ‡2000.

the various' bidders had had an opportunity of conference with each other, the said defendants commenced receiving bids again; that many of the former bidders did not make any further bids and did not further join in any competitive bidding but permitted one person to offer a bid, received by said defendants, whose highest bid was $8,400.

negligence in conducting said sale but also created an unnecessary expense on account of the said alleged receivership between May 6,1935, and August 31,1935, by taking out of the proceeds arising from the operation of said store and sale of said property together with the additional expense of insurance bond, court costs, attorneys’ fees, in the amount of $3500 taken out of the property of said plaintiff, whereas the said defendant, Sun-Glow Industries, Inc., upon its judgment by execution, had a full and ample means for the collection of its account in full.

The demurrer to the petition, omitting the formal parts, is as follows:

That plaintiff has no legal capacity to sue. That said petition does not state a cause of action against said defendants either individually or jointly.

Sun-Glow Industries, Inc., is plaintiff, and said The Hoover-Bond Company, defendant.

We will consider two grounds of the demurrer, as these grounds in effect incorporate all other grounds, and the error proceeding may he determined by a consideration of these two grounds. The grounds referred to are: First. Plaintiff has no legal capacity to sue. Second. The petition does not state a cause of action against said defendants either individually or jointly. These grounds will be considered in the order mentioned.

1. While in several allegations in the petition the receivership of the assets of the plaintiff company is referred to as a pretended receivership, other allegations of the petition, including the allegation that at the time of the public sale under the receivership therein referred to there was pending in the Court of Appeals of Allen county, Ohio, an action for the dismissal of such receivership, show that the receivership was an actual receivership in a court having jurisdiction of receiverships, and that Clare G. Stout, one of the defendants, was appointed receiver of and took possession of the assets of the plaintiff company, and that the various acts of the defendants complained of occurred in connection with and as incident to' such receivership and in connection with the property taken possession of by such receiver.

Under the rule announced by this court in the case of The Hoover-Bond Co. v. Samuel G. Blattner et al., No. 684, decided March 5, 1936, the plaintiff under such state of facts is without capacity to sue unles's there are averments in the petition showing that the receivership had terminated at the time the petition was filed. The only allegation in the petition as to the termination

of such receivership is contained in the first paragraph of the petition, and is as follows:

This allegation is only the pleading of a legal conclusion that the receivership was terminated, based solely on the fact of the filing of the final account.

It will be noted that there is no allegation as to any action taken or order made by the court exercising jurisdiction in such receivership proceeding on or in connection with the filing of such account, or of the making of any order by the court terminating the receivership and discharging the receiver.

Receiverships can not, as a matter of law, be terminated by the filing of the final account of such receivership, but in order to terminate the same it is essential that the court having jurisdiction over such receivership make an order terminating the receivership and discharging the receiver.

Consequently under the decision in the case last above mentioned the receivership is' presumed to have continued in existence and not to have been terminated at the time the petition was filed.

The allegations of the petition are therefore insufficient to show that the plaintiff has legal capacity to sue, and the demurrer on that ground was properly sustained by the lower court.

2. In addition to the facts above mentioned, the petition alleges certain specific acts of the defendants with reference to taking possession of the property under receivership, and sets forth certain facts in connection with the judgment upon which the receivership proceedings were based; and certain damages sustained by plaintiff by reason of the acts of the defendants in taking possession of said property under the receivership, and in their manner of conducting sale

of the- property under the receivership, and that there were increased expenses on account of such receivership and by reason thereof the plaintiff sustained further damages. •

No facts are alleged showing fraud or collusion on the part of any of the defendants' in connection with such receivership proceeding or in connection with the various acts alleged to have been done by them.

No facts are alleged showing that the court in which the receiver was appointed did not have jurisdiction over the receivership proceeding or the appointment of the receiver, and in the absence of such allegation it is presumed that the court exercising jurisdiction over such receivership proceeding and the appointment of the receiver had such jurisdiction.

As the court in which such receivership proceeding was had is presumed to have had jurisdiction of the subject-matter of such proceeding and the appointment of the receiver, if there was any irregularity or error in exercising jurisdiction over such receivership proceeding, or in the appointment of the receiver, or in the receiver’s taking possession of and selling the property of the plaintiff in the manner in which the property is alleged to have been sold, the exclusive remedy of plaintiff therefor was by invoking, during the course of the receivership proceeding, the jurisdiction of the court exercising jurisdiction in the receivership to remedy the same; and in the event such court, its jurisdiction being invoked for that purpose, failed to remedy the same, by way of appeal or error proceeding from the orders made by such court in such receivership proceeding.

The manner of conducting the sale was also a matter for the jurisdiction of the court in which the receivership proceeding was pending, and in such receivership proceeding any of the irregularities or errors complained of were subject to correction in the same manner.

As the remedy for all the matters complained of was solely within the jurisdiction of the court in which such receivership proceeding was pending, and as in such proceeding the facts stated do not constitute a cause of action against said defendants, either individually or jointly, the demurrer on that ground was properly sustained.

For the reasons mentioned, the judgment of the Court of Common Pleas will he affirmed at costs of plaintiff in error.

Klinger, P. J., concurs.

Crow, J.,

concurring. The reasoning of the opinion in relation to the ground of demurrer, that the petition does not state a cause of action, is, in my opinion, sound.

Whether the receivership was terminated subsequent to the acts' complained of is unimportant inasmuch as plaintiff was party to the receivership at all times when the alleged wrongful steps were taken, and it could have sought a review of them in the Court of Appeals.

It is therefore unnecessary for this court to determine the effect of the allegation that the receivership was terminated by filing the final account.

However, I incline to the opinion that the allegation, apart from the related averments, does state a termination of the receivership, the erroneous reason having been also subject to review in the Court of Appeals.