Opinion
December 31, 1928.
1. PROHIBITION: Discretionary. A writ of prohibition is not a writ of right, and before it is granted it must appear that the law sanctions it and that a sound judicial discretion commands it.
2. ____: ____: Conclusiveness of Preliminary Rule. In determining whether on the facts presented the writ of prohibition will lie, this court is not concluded or controlled by the fact that its preliminary rule has already been issued. A correct application of the law and the exercise of a sound judicial discretion are essential and efficacious on a final consideration of the whole matter.
3. ____: Discharge: Adequate Remedy at Law. It clearly appearing from the pleadings filed before and after the preliminary rule in prohibition was issued that the relators are not without an adequate and speedy remedy at law, the preliminary rule will be discharged and the proceeding dismissed.
4. ____: General Creditors of Bankrupt: No Action at Law: Speedy Statutory Remedy. A corporation, a general creditor of another corporation, filed a petition in the circuit court, seeking to recover from the latter company the purchase price of certain goods sold to it and asking for the appointment of a receiver pendente lite; and the receiver was appointed. Relators, two other corporations, were likewise unsecured general creditors of the same company, but they did nothing to establish their claims at law, except that one of them filed a motion to be made a defendant in that case, and when the motion was denied took no appeal; and no other effort was made by either relator to become a party to that proceeding and challenge the appointment of the receiver, or to sue independently on their claims. Had they availed themselves of an action at law to establish their claims and been unsuccessful they could have been speedily heard on appeal, under the statute (Sec. 1469, R.S. 1919). Held, that prohibition, attacking the jurisdiction of the circuit court to appoint a receiver for their debtor, the said corporation, is not, under such circumstances, available to them.
5. PROHIBITION: Moot Question: Proceedings in Federal Court. The purpose of this prohibition proceeding being to stop the administration by the respondent circuit judge of the property and assets of a corporation which was and is indebted to relators, and relators' right to prosecute the writ being based on an alleged interference with their right to pursue the ordinary legal remedies available to general creditors, and it appearing that the Federal court appointed a receiver for the same debtor corporation a few days after the appointment of a receiver by the respondent judge whose jurisdiction to appoint a receiver the relators here challenge, and if further appearing from relators' participation in the bankruptcy proceedings in the Federal court that they now seek to establish and recover their claims against said debtor corporation in that jurisdiction, and have to all practical intents and purposes abandoned the instant prohibition case as a means to that end, the matters originally presented and the issues now here become moot, and the preliminary rule must be discharged. Under such circumstances no adjudication this court could make in the present prohibition proceeding would affect relators' claims in the jurisdiction to which they are now committed.
Corpus Juris-Cyc. References: Prohibition, 32 Cyc, p. 600, n. 5, 8; p. 613, n. 99.
PRELIMINARY RULE DISCHARGED AND PROCEEDING DISMISSED.
Edwards, Kramer Edwards and Hackney Welch for relators.
(1) The Circuit Court of Jackson County acquired no jurisdiction to appoint a receiver at the instance of the plaintiff below, who was a general creditor having only a claim at law and who had a full, adequate and complete remedy at law for the recovery of its debt. (a) The petition for a receiver disclosing no lien on, or legal or equitable right or interest of the plaintiff in, the property of the defendant company, there was and could be, under the allegations of the petition, no controversy between the plaintiff and the defendant as to the right to the possession of the defendant's property; nor as to the subjection of any specific property to the payment of plaintiff's claim. Therefore, the petition did not state facts sufficient to bring the property of the defendant corporation within the jurisdiction of the circuit court so as to justify the appointment of a receiver. Miller Bros. v. Perkins, 154 Mo. 629; State ex rel. v. Ross, 122 Mo. 435; Price v. Bankers Trust Co., 178 S.W. 745; State ex rel. v. Reynolds, 289 Mo. 506; State ex rel. v. Calhoun, 207 Mo. App. 149; Sedberry v. Gwynn, 282 Mo. 648. (b) The plaintiff's petition in the receivership case disclosed that the plaintiff had a full, adequate and complete remedy at law for the recovery of its debt, and the petition stated no ground for invoking the equitable jurisdiction of the court. (2) The A.J. Stephens Company, defendant in the action below, had no right to have the court appoint a receiver for it on its application averring the facts alleged in the plaintiff's petition as ground for the receivership. Jones v. Schafer Bros. Co., 187 Mo. App. 597; State ex rel. v. Ross, 122 Mo. 435; State ex rel. v. Calhoun, 207 Mo. App. 149; State ex rel. v. Reynolds, 289 Mo. 506. While the answer of the defendant corporation filed on the same day the petition for receiver was filed, denied the allegations of the plaintiff's petition, yet the alacrity with which the defendant entered its appearance and filed this answer, and the failure of the defendant to take any steps seeking to revoke the order appointing a receiver, all show conclusively that the petition was filed by plaintiff not to conserve any of its rights, but for the purpose of trying to benefit the defendant by having a receiver appointed to hold its property for an indefinite length of time from the reach of creditors. (3) The amended petition filed on January 17, 1928, did not validate the appointment of the receiver on January 4th, nor did it furnish any additional grounds for such appointment. The allegations of this amended petition were wholly insufficient to make out a case for the appointment of a receiver under Secs. 10169, 10170 and 10171, R.S. 1919. (4) The bankruptcy proceedings set up in the return show no justification for the appointment much less the continuation of the state receivership in question.
Nourse Bell and W.H.H. Piatt for respondent.
This is an original proceeding in prohibition attacking the jurisdiction of respondent as judge of the Jackson County Circuit Court to appoint Walter H. Maloney as receiver for the A.J. Stephens Company at the instance of the Firestone Tire Rubber Company. Our preliminary rule was issued, respondent filed return, and relators thereupon filed motion for judgment on the pleadings.
It appears from the above pleadings that on January 4, 1928, Firestone Tire Rubber Company, a general unsecured creditor of the A.J. Stephens Company, filed a petition in the Circuit Court of Jackson County seeking to recover from the latter company the purchase price of certain goods, wares and merchandise alleged to have been sold to said company, and asking for the appointment of a receiver pendente lite; that defendant, A J. Stephens Company, filed answer admitting its incorporation, denying all other allegations, and reserving the right to answer further; that on the same day the said court made an order appointing Walter H. Maloney as receiver, who thereupon duly qualified and took charge of the property of said company; that on the same day said court made an order allowing plaintiff in said cause to file its amended petition to conform with the proof which had been presented on the hearing that day had, and said amended petition was thereafter on January 17, 1928, duly filed; that defendant filed answer admitting its incorporation, that its assets far exceeded its liabilities and that the rumors of bankruptcy threatened and carried out were true, but denying each and every other allegation; that on January 4, 1928, there was filed in the District Court of the United States for the Western Division of the Western District of Missouri, a petition in involuntary bankruptcy against the said A.J. Stephens Company, and thereafter, on January 5, 1928, J.F. Charlesworth was appointed receiver in said bankruptcy proceedings; that on January 11, 1928, the Molded Wood Products, Incorporated, one of the relators herein, together with other creditors of said company, filed an intervening petition in bankruptcy and thereafter requested that J.F. Charlesworth be ousted; that on January 16, 1928, H.H. McCluer was appointed co-receiver to serve and act with J.F. Charlesworth theretofore appointed; that pursuant to order of the Federal court said co-receivers filed with and presented to respondent herein their suggestions that they were entitled to the possession of the property and assets of the said A.J. Stephens Company, which suggestions were argued and taken under advisement; that on January 11, 1928. Molded Wood Products, Incorporated, one of the relators herein, filed its motion to be made a party defendant in said suit in the State court, which motion was on January 17, 1928, heard and overruled by respondent herein; that on February 28, 1928, at a duly called meeting of the alleged bankrupt's creditors said alleged bankrupt was examined by and through its officers, and on March 3, 1928, said alleged bankrupt filed its offer of composition to its creditors in said Federal court; that on March 8, 1928, said Federal court directed that a meeting of creditors be held to consider said offer of composition before adjudication; that relators duly participated in said bankruptcy proceedings, appearing and filing their respective claims before the referee in charge thereof and as special master on March 20, 1928; that on March 26, 1928, Fred S. Hudson, referee in said bankruptcy proceedings, filed his report as special master stating that the alleged bankrupt had duly submitted an offer of composition which had been accepted by the creditors, and recommending that the composition be approved; that on February 18, 1928, relators, who were unsecured general creditors of the A.J. Stephens Company, filed their petition herein, and on March 11, 1928, our preliminary rule was issued commanding respondent to show cause on April 16, 1928, why a final judgment in prohibition should not be entered as prayed and in the meanwhile to refrain from all action in the premises until further order; service thereof was duly waived and respondent filed his return April 16, 1928, and thereafter relators filed motion for judgment on the pleadings. It further appears from respondent's supplemental return filed October 20, 1928, that on May 14, 1928, said Federal court confirmed said composition with the creditors; that on the application of relators herein and some other creditors said order of confirmation was set aside on May 23, 1928, and the matter was again referred to the referee as special master to hear evidence in support of and in opposition to the objections made; that said referee duly heard said evidence and made his report, again recommending that said offer of composition be confirmed, and on October 18, 1928, said report of the referee was approved and said composition was confirmed.
Relators contend that respondent acquired no jurisdiction to appoint a receiver either under the original petition or under the amended petition of the Firestone Tire Rubber Company, and that our provisional rule in prohibition should be made absolute. Our first concern, however, is whether or not on the facts now presented prohibition will lie. A writ of prohibition is not a writ of right and before such is granted it must appear, "first, that the law sanctions it, and second, that a sound judicial discretion commends it." [Davison v. Hough, 165 Mo. 561, 575; State ex rel. v. Sale, 188 Mo. 493, 496.] Nor are we concluded or controlled at this stage of the proceeding by the fact that our preliminary rule has already been issued, for a sound application of the law and the exercise of a sound discretion are just as essential and efficacious on a final consideration of the whole matter.
A careful study of the pleadings filed herein leads us to the conclusion that our preliminary rule should be discharged and this proceeding dismissed because it now clearly appears that relators were not without an adequate and speedy remedy at law. They, like the plaintiff Firestone Tire Rubber Company, were general unsecured creditors of the A.J. Stephens Company, but they did nothing to establish their claims at law except one of them filed a motion to be made a party defendant in the Firestone Tire Rubber Company suit, and when this motion was denied it took no appeal from the court's action thereon. No other effort was made to become a party to this proceeding and challenge the appointment of the receiver therein, or to sue independently on their claims. Had they tried and been unsuccessful below their contentions could have been speedily heard on appeal, for Section 1469, Revised Statutes 1919, provides that "the supreme court shall summarily hear and determine all appeals from orders refusing to revoke, modify or change an interlocutory order appointing a receiver or receivers, and for that purpose shall, on motion, advance the same on its docket." In such case prohibition does not lie. [High on Extraordinary Legal Remedies, sec. 765; State ex rel. v. Stobie, 194 Mo. 14, 52; Schubach v. McDonald, 179 Mo. 163, 182; Wand v. Ryan, 166 Mo. 646, 648; State ex rel. v. Scarritt, 128 Mo. 331, 339.]
Furthermore, it appears from relators' participation in the bankruptcy proceedings in the Federal court that they now seek to establish and recover their claims against the A.J. Stephens Company in that jurisdiction, and have to all practical intents and purposes abandoned the instant case as a means to that end. Hence, the issues here presented become moot. Relators insist that such is not the result of their course because they intend to appeal from the order of the Federal court approving the alleged bankrupt's com-creditors in this jurisdiction. We think the matters originally of their appeal, even if taken, would change the situation. It is evident that all claims against the alleged bankrupt must eventually be settled or adjudicated in the Federal court whatever may be the result of relators' appeal. No adjudication that we could make in the proceeding now before us would affect relators' claims in the jurisdiction to which they are now committed. The purpose of this proceeding was to stop the administration of the property and assets of the A.J. Stephens Company by respondent and relators' right to prosecute the same was based on an alleged interference with their right to pursue the ordinary legal remedies available to general creditors in this jurisdiction. We think the matters originally presented are now clearly moot and the only appropriate action we can take is to discharge our preliminary rule and dismiss the proceeding. [State ex rel. Winkelman v. Westhues, 269 S.W. (Mo. Sup.) 379.]
Preliminary rule discharged and proceeding dismissed. All concur.