State ex rel. Manhattan Trust Co. v. Superior Court , 17 Wash. 380 ( 1897 )

The opinion of the court was delivered by

Reavis, J.

Application for a writ of prohibition against the superior court of Bing county. Pending proceedings to foreclose a mortgage and trust deed by plaintiff, a receiver was appointed by the superior court, and, after taking possession of the property embraced in the trust deed, an issue arose between certain unsecured creditors of the mortgagor and the plaintiff trustee. The superior court heard and determined such controversy and adjudged the mortgage lien superior, from which the unsecured creditors, Murphy, Grant & Co. and others, appealed to this court.

The cause is found reported in 16 Wash. 499 (48 Pac. 333), entitled “Manhattan Trust Co. of New York v. Seattle Coal & Iron Co. et al.” Before the decision of the cause here, plaintiff procured a decree of foreclosure and sale in the superior court, and the property was sold subject to confirmation; but before the confirmation, the remittitur from this court went down. The superior court thereupon in effect vacated the order of sale and proceeded in accordance with the mandate of this court to adjudge the superiority of the claims of Murphy, Grant & Co. and other appealing creditors over the mortgage and all claims of plaintiff, and also proceeded further and directed that other general creditors of the insolvent corporation, Seattle Coal & Iron Co., should file their claims to priorities over the mortgage and over plaintiff’s claim, if priorities were asserted, within a specified time, for hearing ánd determination by the superior court; and that court also directed a sale of all the property embraced in the mortgage and in the custody of the receiver, at public sale, by the receiver at a sum of not less than $130,000.

The relator maintains that the superior court had no power to disturb its decree entered pending the appeal of Murphy, Grant & Co. and other creditors, in this cotirt, and that it could go no further when the remittitur was filed than direct priority of payment of the claims of Murphy, Grant & Co. and other creditors who had joined in the appeal. But the order of sale did not provide funds for the payment of these creditors. Such order only provided for the payment of counsel fees and expenses and compensation of the receiver, and the remainder of the purchase price could he paid in bonds of the defendant corporation held by the plaintiff trustee. It is not necessary here to determine whether the pending appeal of Murphy, Grant & Co. and other creditors stayed a final decree and sale of the mortgaged property, for in any view the plaintiff, pending the appeal from an interlocutory order, proceeded at its peril. On the appeal from the interlocutory order in Manhattan Trust Co. v. Seattle Coal & Iron Co. et al., it was said:

“ In this case no question has been raised or considered as to the whole property of this corporation being a trust fund now in the possession of the court for the benefit of the creditors of the corporation alike.”

The foreclosure suit of plaintiff trustee against the Seat-Coal & Iron Co. was begun in February, 1894, and from that time until the present the entire property of the defendant corporation has been in the custody of the receiver. The receiver, it now appears from the record in this proceeding, by order of the court entered October 12, 1895, was directed to publish notice to all creditors of the Seattle Coal & Iron Oo. notifying them to present all claims against the company, duly verified, to him within forty days after date of publication. A great many creditors then presented their claims duly verified, which were approved by the receiver. All this was done with the consent of the plaintiff trustee. The plaintiff trustee, in a supplemental complaint filed in 1894, asked that the receiver take into bis custody all tbe property of tbe coal company, and tbe mortgage by its terms specifically embraced all tbe property of tbe defendant coal company, and, under tbe notice given by tbe receiver to tbe creditors to file claims, tbe plaintiff trustee filed an individual account for $37,000. Wben tbe remittitur from tbis court was filed in tbe superior court, tbe question was presented to that court upon tbe petitions of various creditors, wbetber tbe pending receivership was a special and limited one under a foreclosure proceeding, or bad become by tbe action of tbe plaintiff trustee and receiver a general receivership of an insolvent corporation. Tbe superior court seems to have assumed that it could properly determine tbe priorities between tbe general creditors of tbe defendant coal company and tbe plaintiff trustee as representative of tbe bondholders. Tbe question of general or special receivership is, however, more of form than substance, as all parties were before tbe court, and all tbe property in its custody. Upon issues properly framed it ordered a sale by tbe receiver of all tbe property of tbe insolvent corporation, and directed certain appropriations of tbe proceeds wben paid into tbe registry of tbe court. It reserved tbe question of priorities among certain creditors until further bearing and final distribution.

Tbe superior court has proceeded in conformity to tbe opinion of tbis court in tbe case heretofore mentioned, and so far as tbe mandate ordered, and seems to have proceeded properly in tbe further administration of its trust with tbe property of tbe defendant coal company in its custody. We find no reason for interference with its order and decree. Tbe writ is, therefore, denied.

Soott, O. J., and Gordon and Dunbar, JJ., concur.