McIntosh v. Perkins , 13 Mont. 143 ( 1893 )

Harwood, J.

The grounds upon which appellants contend the injunction should be dissolved are: 1. That the complaint does not state facts sufficient to warrant the granting of an injunction; 2. That the complaint does not show that plaintiff would suffer great or irreparable injury, or that defendant Perkins is insolvent, or is about to dispose of his property for the purpose of defrauding the plaintiff, or that, unless the injunction was granted, plaintiff would be unable to enforce any judgment he might obtain. The facts alleged, we think, show a pooling of interests in the property, on the conditions stated, for the purpose of development and sale for the best price obtainable, and division of the proceeds according to the respective interests of the parties.. To that end, and for their mutual benefits, plaintiff conveyed to defendant Perkins an undivided one-third interest, in order to procure the necessary development of the property by defendant Perkins, and to engage his efforts in negotiating a sale; for which one-third interest defendant Perkins agreed to cause said development, and use his best endeavors to consummate a sale at the highest price obtainable after development, for the mutual advantage of plaintiff and said defendant, under the express agreement that defendant Perkins would bear all expense of development and of negotiating the sale, in consideration of the right to retain two-thirds of the proceeds derived from such sale; and that he would account and pay over to plaintiff one-third of the gross proceeds derived from said sale. These facts, in our opinion, show a partnership relation in respect to the property, and the enterprise of which it was the subject. (Parsons on Partnership, 6.) This is clearly an action wherein plaintiff seeks equitable relief, as contradistinguished from an action at law. He sets up the facts showing a fiduciary relation existing between himself and defendant Perkins respecting said property and transactions. On the face of the deeds whereby plaintiff conveyed certain interests in said mining property to defendant Perkins, it appears from a purely legal view that plaintiff sold and conveyed such interests for a stated consideration received. Plaintiff seeks to go back of this apparent legal phase of the transaction, and show that said interests were in fact conveyed to defendant Perkins in trust — one-third interest to procure the necessary development of said mining property by defendant, and another third last conveyed as a convenience, in effecting the sale and passing title to the vendee, to carry out their mutual undertakings; and that all was done with reference to the prior agreement as to what each should do in respect to said property, and receive out of the proceeds resulting therefrom.

Upon such a state of facts growing out of partnership relations, plaintiff would, ou the denial of his rights and refusal of defendaut to account and pay over plaintiff’s part of the proceeds obtained by such sale accordiug to the joint compact, be entitled to prosecute his action in equity for such an accounting and payment. The court having jurisdiction of the whole subject would in the same action compel such adjustment of differences arising from one partner having borne more than his share of the common expense, or from one having prosecuted development work for which the other had specially agreed to pay, as would enable the court to do complete justice in the divisions of the partnership funds or property. We do not concur in the proposition urged by appellant’s counsel that plaintiff has a plain, speedy, and adequate remedy at law. The question to be determined on this appeal is whether the preliminary proceedings had in this case were warranted by the showing made. Appellants insist that the facts alleged do not warrant the issuance of an injunction. The injunction appears to have been issued to require the defendant bank to hold funds alleged to be in its custody derived from the sale of said property; and also to require defendant Miller to withhold payment to the defendant of the balance owing on the purchase price of said property, and pay the same into court to await the determination of the action. We regard this proceeding as irregular. If the facts set up warranted the court in ordering said joint or partnership fund to be placed in custodia legis, that should have been effectuated through the appointment of a receiver. (Code Civ. Proc., § 229.)

The court did not get custody of said fund alleged to be in the bank by enjoining the detention thereof by the bank; for the bank may have been detaining said fund on other grounds or claims. Nor would the injunction requiring defendant Miller to withhold from defendant Perkins said balance owing on said contract of sale, and that the balance be paid into court, be a proper proceeding to accomplish the object aimed at by the court, unless the order for payment was voluntarily complied with; for Miller might be delinquent in payment, or claim some defense thereto; aud in either event other proceedings would be necessary to accomplish the object sought by the court. A receiver would be in a position, and possesses power under the direction of the court, to invoke remedies for such difficulties. (Code Civ. Proc., § 233.) Again, the procedure of enjoining the retention of funds in the possession of a party simply in custody thereof, until the determination of the action, would be in effect making such custodian a receiver, without sureties, to guaranty the safety of the funds. This would not in general be a safe practice (Code Civ. Proc., § 232), although in the present case the custodian, being a national bank, may have lessened the necessity for such security. If, therefore, the plaintiff was entitled to have the court take into control the fund in dispute, this should have been accomplished through the instrumentality of a receiver, clothed with power to get possession of the property, and hold the same, under bond, to insure its safety, awaiting the determination of the action. Incidentally thereto an injunction may have been proper to restrain defendant Perkins from interference with said property, or the lawful action of the receiver.

This leads to the question whether the facts set forth would warrant the appointment of a receiver. If it appeared from the verified allegations of the complaint that defendant Perkins was insolvent, or said fund was in danger of being lost, squandered, or removed from the jurisdiction, we should unhesitatingly hold it a proper case for a receiver, on the execution and delivery of the undertaking mentioned in section 231 of the Code of Civil Procedure; but no such facts are alleged. The statute on this subject provides: “ A receiver may be appointed by the court in which an action is pending, or by the judge thereof — First, in an action by a vendor to vacate a fraudulent purchase of property; or by a creditor to subject any property or fund to his claim; or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff; or of any party whose right to, or interest in, the property or fund, or the proceeds thereof, is probable; and where it is shown that the property or fund is in danger of being lost, removed, or materially injured.” (Code Civ. Proc., § 229.) This statute declares the general doctrine on this subject long prevailing in courts of equity. We regard the case at bar as clearly standing within the category of cases mentioned in the first subdivision of this section of the statute. It should be observed that in the present case all the joint operations and transactions in respect to said property and business have been consummated, and there appears to be no unsettled affairs concerning those transactions, except the collection of a balance owing on the price for which the property was sold. There remains simply a dispute as to the proper apportionment of the fund arising from said transaction, between the joint owners. Herein this case is distinguished from those cases arising out of partnership relations, where, during the progress of a copartnership business, one partner is wrongfully excluded from possession and participation in the management of the property and affairs of the firm, in violation of his rights under the compact; and upon such showing a receiver is appointed to take possession of the partnership property, and wind up its affairs. (2 Lindley on Partnership, 551.) Inasmuch as plaintiff has sought to get sufficient of said fund into the custody of the court to answer his claims, and the court, in taking jurisdiction thereof, although through somewhat irregular proceedings, has required bond to guaranty defendant such damages as he might sustain by reason of withholding said [fund from his control, we will not order dissolution of said injunction instanter; but direct that unless plaintiff promptly, upon return of remittitur, make such proper showing as will warrant the appointment of a receiver, according to the practice in such cases, as suggested above, under such order as the trial court may make, allowing amendment or supplemental pleading, then the court shall dissolve said injunction, and release the parties from the effect thereof; but if a sufficient showing be made to warrant the appointment of a receiver, then such remedy may be granted.

Order modified.

Pemberton, C. J., and De Witt, J., concur.