Anderson v. Hultberg

Mr. Justice Brown

delivered the opinion of the court.

To our mind the most serious objection made to this interlocutory order is that it was entered without notice to the appellants, especially that it was so entered without notice to the appellant Frideborg A. Anderson. Chapter 69 of the Revised Statutes of Illinois, section 3, provides that “ No court, judge or master shall grant an injunction without previous notice of the time and place of the application having been given to the defendants to be affected thereby, or such of them as can conveniently be served, unless it shall appear, from the bill or affidavit accompanying the same, that the rights of the complainant will be unduly prejudiced if the injunction is not issued immediately and without notice.” Although this statute by its terms recognizes the right and propriety of a chancellor in some cases and under some conditions granting injunctions without notice, it is equally plain from its terms that the legislature intended by it to safeguard defendants in litigation from what it deemed a power of courts of chancery often dangerous and liable to grave abuse. It may well be doubted whether the cases are not much fewer than the general practice of such courts would seem to indicate, where notice can be properly dispensed with before the injunctional order is issued. And it is very probable that in many cases, also, where immediate action seems necessary in an emergency to preserve existing conditions, a temporary stay or restraining order, expiring at some definite time set for the hearing of the application for the formal injunction pendente lite, might serve the purpose equally with the granting of such an indefinite injunction in the first instance. Even more is extreme caution necessary in determining an emergency sufficient to warrant the appointment of a receiver without notice. Only in cases of exceptional occurrence and emergency is this proper or justifiable. To this doctrine this court is fully committed in numerous cases, and from it we have no disposition to recede. ISTor do we minimize its importance. Consolidated Stanley M. & M. Co. v. Loeber, 96 Ill. App. 128; Larson v. West, 110 Ill. App. 150. But whether or not any particular case so falls within the proper application of it as to make the action of the trial court such an abuse of the undoubted discretion with'which such court is invested in this regard, as to be erroneous, is a question necessarily often of much difficulty and dependent on the facts of that particular case. That the discretion does exist and may be used without being abused, there can be no doubt. To this proposition this court is as fully committed as it is to the proposition that such discretion should only be used with great caution. Chicago Exhibition Co. v. Ill. State Board of Agriculture, 77 Ill. App. 340; Hancock v. American Bonding & Trust Co., 86 Ill. App. 630, 633.

In the case at bar the allegations of the bill must be taken on this appeal as true. They have been summarized so far as they affect this question and these appellants in the statement prefixed to this opinion, and need not be repeated at length. .It is enough to say that they are sufficient, so taken as true, to raise the presumption that the decree which it is sought to collect by this bill, was for money belonging to the complainants and fraudulently converted by the principal defendant, Peter H. Anderson, to his own use in 1899 and subsequently; that in 1899 he married -the defendant Frideborg A. Anderson, and that shortly afterward he bought with this money, but put into his wife’s name, the real estate over which the receivership was created, and which he and his wife are enjoined from conveying or encumbering; that Frideborg A. Anderson never gave any consideration of any kind for this property to him or otherwise, and had no means of her own at any time with which to furnish any such consideration, and never acquired any means except by her husband’s bestowal on her of the proceeds of this fraudulent conversion; that subsequently said Peter H. Anderson paid large but unascertained sums to Frideborg as gifts, without consideration, out of these funds; that at all times since making the conversion aforesaid, Peter H. Anderson has been insolvent; that almost immediately after an award of arbitrators had been made against him in favor of complainant in this bill for the amount for which the decree that is the basis of this bill was rendered, Frideborg A. Anderson and said Peter H. Anderson encumbered the real estate in question, made the subject of the receivership, for a very large sum; tending to show, or at least to cause reasonable fear, either that they were converting it into a form which could be more easily concealed, or, as the bill alleges, were executing instruments placing an apparent lien on said land for the purpose of hindering and delaying the creditors of Peter H. Anderson, and that Peter H. Anderson had also, before said award, arranged for .certain dispositions in relation to his mining property, by means of certain corporations and the defendants Johnson and Bernard, for the purpose of concealing his assets from, and hindering, delaying and defrauding his creditors, particularly the complainants, this purpose being known to said corporations and said Johnson and Bernard; that on the 13th day of June, 1904, the Circuit Court, in a suit in which P. H. Anderson was both defendant and cross-complainant, entered a decree finding'that the award of the arbitrators was legal, valid, binding and conclusive, and ordering the payment of the $232,200 and interest to Hultberg, and that execution issue therefor; that on the next day Peter H. Anderson, for the purpose of preventing the service upon him of such writ of execution as might issue on said decree, left the state and had not returned when the bill was filed and the first amendment to it made.

Nothing is alleged in the bill as amended of the whereabouts of Frideborg A. Anderson on July 1, and it is not necessary for us to hold that in any one of these allegations separately, or in them all taken together, there is that which shows conclusively to the mind of this court that the rights of the complainants would have been unduly prejudiced had an attempt at least been made to find and serve Frideborg A. Anderson with notice of the application for the injunctions and for the receiver. The complainant, however, swore, in the language required by the statute, that such would be the result' if action was deferred, and the court below, with these allegations and affidavit before it, evidently considered that the affidavit was justified by the sworn allegations. We cannot sajr that it was an abuse of his discretion amounting to error.

This was not such a matter as the taking of a going business concern out of the hands of its managers and turning it over to an officer of the court might be. No great change in the management or condition or character of the property, against the transfer of which the injunctions are issued, can be anticipated because of them or even because of the receivership created in relation to a portion of it. By the operation of the injunctions and the receivership, nothing more than temporary inconvenience to any defendant can be reasonably expected to result if the outcome of the full final, investigation of the cause should be in his or her favor. In the meantime such injunctions and receivership preserve the property in statu quo, and accumulate its income in a fund, for the benefit of whomever it shall be finally adjudged is entitled to them. In view of the sworn allegations of the bill and the state of the whole litigation, this seems a desirable result, and although we look with great disfavor on the appointment of receivers without notice, and in the case at bar are inclined to think it would have been better to have provided for such notice of the application if the parties most nearly affected by it could' be' found, we are not disposed, recognizing the necessary element of discretion vested in the trial court in that regard, to reverse an interlocutory order so plainly preservative of the status quo as this at bar, solely on account of this feeling.

Another reason insisted on by appellants for the reversal they ask, is that the bill under discussion is a creditor’s bill and that the judgment creditor has not exhausted his remedy at law, so as to enable him under this statute to maintain this bill. To the rule which they insist is applicable in this cause in this regard, they cite many cases in the Supreme Court and this court. But that rule we understand to be only this—that in a creditor’s bill under section 49 of the Chancery Act (Revised Statutes, chapter 22) merely to discover equitable assets, the provisions of the statute authorizing such a bill after execution shall have been returned unsatisfied in whole or in part, are not fulfilled by a return made by order of plaintiff’s attorney without any reasonable effort by the sheriff to collect the execution from the legal assets of the defendant.

It is certain that it does not go to the extent of requiring the sheriff to hold the execution for the full term of its life after proper but unavailing efforts have been made to collect it, and the defendant has left the state to evade a demand. That these things happened in this case are the sworn allegations of the amended bill. Bowen v. Parlchurst, 24 Ill. 258; First Nat’l Bank v. Gage, 79 Ill. 207; Huntington v. Metzger, 158 Ill. 272, 283-5; Russell v. Chicago Trust & Savings Bank, 139 Ill. 538; Howe v. Babcock, 72 Ill. App. 68; Illinois Malleable Iron Co. v. Graham, 55 Ill. App. 266.

Hor do we think that it can be said, in view of the allegations of the bill concerning the action of the sheriff and his return on the execution, that the bill itself shows that such return was collusive or improper, because it also alleges the ownership of fifty shares of the capital stock of the State Bank of Chicago, which might have been levied on. Passing by the obvious difficulty of securing a satisfactory return from any levy of an execution on shares of stock in a corporation, inasmuch as they can only be sold subject to the rights of any undiscovered and undiscoverable prior pledgee or vendee, the allegation falls short of a positive assertion that the shares stood in the appellant’s name, and were therefore subject to the statutory method of levy against him. He might be “ the owner ” of shares standing in the name of another. Hor is the prayer in the bill that an injunction may issue against the State Bank, restraining it from permitting any transfer of shares of its capital stock standing in the name of P. H. Anderson, tantamount to an assertion that there are such shares standing in his name.

But, in addition to all this, we think that this bill is not merely a creditor’s bill under section 49 of the Chancery Act. It is perhaps that, but it is also something more. Its allegations bring it within the class of bills described in Miller v. Davidson, 3 Gilman, 518, “allied to creditors’ bills,” where the complainant seeks to remove fraudulent obstructions out of the way of the collection of his judgment. In many cases since, the Supreme Court of Illinois has recognized the distinction and held that in such bills it is not necessary to allege, nor, to sustain them, necessary to prove, that the legal remedy on the judgment has been exhausted. Greenway v. Thomas, 14 Ill. 271; Weightman v. Hatch, 17 Ill. 281; Wisconsin Granite Co. v. Gerrity, 144 Ill. 77. The Appellate Court of the Fourth District has clearly expressed this distinction. In Quinn v. The People, 45 Ill. App. 547, that court says, speaking of this latter class of bills: “ The right to file a bill immediately upon obtaining judgment in such cases is based upon the fraud practiced, and lies at the foundation of equity jurisprudence; it is not based upon the statute.”

We see no reason for distinction between a case in which land has been fraudulently conveyed by the judgment debtor before judgment, and one in which, when insolvent, he has with his funds purchased land and taken the conveyance in the name of another. In both cases the fraud is the basis of the suit and the cause for the relief prayed and the reasons “ lying at the foundation of equity jurisprudence,” which would justify the suit in one case before exhaustion of legal remedies would do so in the other. Nothing to the contrary of this is decided in McDowell v. Cochran, 11 Ill. 31, cited by appellant in his reply brief, although a pure dictum therein might be so construed.

It is further urged that even if the matter of want of notice before the entering of the order is overlooked, the allegations of the bill are not sufficient to justify the order granting the injunctions and appointing the receiver, and that it is therefore erroneous. It is said that all the allegations on which the order is based are vague allegations of fear on the part of the complainants, and not of specific facts from which the court can see that danger to the complainants’ rights existed. We do not so read the record, as appears from our discussion of these allegations when treating of the question of notice. They are positively sworn to, and we think are sufficient, taken as true, to justify both the interlocutory injunctions and the receivership as “ modes by which the court preserves the property in dispute with the least injury to all parties until it can finally determine their respective rights,” and that in considering “ the comparative injury which might result from granting or withholding the injunction,” the trial court could hardly have decided otherwise. See Chicago Exhibition Co. v. Illinois State Board, 77 Ill. App. 340, and citations therein from Daniell’s Chancery Pleading and Practice.

Complaint is made of the drastic character of the injunction in that it forbids Erideborg A. Anderson to withdraw any money from any bank in this state or elsewhere, by check or otherwise, in which bank there may be any money on deposit to her credit or subject to her order. Among the allegations of the bill on which the order was granted, is one in effect that aside from personal effects of a trifling nature, Erideborg A. Anderson never had any means of her own otherwise than through her husband’s wrongful use of the complainants’ money, and property transferred to her as a gift, without consideration, by him. It is not to be doubted that if, on application for dissolution or modification to the court below, it is shown by Erideborg A. Anderson that she has money deposited in bank, not in fact given to her by her husband without consideration and while insolvent, it will modify the injunction to the extent rendered proper by such showing.

• The remaining objections made to the order by the appellants amount to this: first, that the order by which the receiver was appointed was entered before the complainants executed and filed the statutory bond required by the Act of May 15,1903, concerning the appointment and discharge of receivers; and, secondly, that the bond given in accordance with that order of appointment is insufficient in amount and defective in form. We do notconsider these objections tenable. It is not necessary to pass upon the question whether such an appointment, without a contemporaneous provision or condition that it should be on the filing of a statutory bond by the complainant, would have been reversible or not. We do not feel disposed to place such a narrow construction on the statute as to say that where the order, as in this case, provides that the appointee “ be and is hereby appointed receiver,” etc., “upon the complainants’ executing a bond in the sum of,” etc., “ conditioned to pay,” etc., it is erroneous because such order is made before such bond is actually executed and filed. The receiver is but the officer and arm of the court which appoints him, and will not be allowed under such an order to assume the duties of his office or appointment until the contemporaneous order concerning the bond is fulfilled. The statute by such an order is complied with in letter and spirit.

As to the amount of the bond, that is for the court below, in its discretion, to fix, and, on proper representation, to change, if it can be shown to be insufficient. It is to be noted that the complainants’ bond is not to take the place of or secure the receiver’s responsibility and liability on his bond, or otherwise, for property coming into his hands; but is for the damages resulting and attorney’s fees rendered necessary by the appointment and acts of the receiver if the appointment is revoked or set aside.

If, as is claimed, the condition of the bond does not comply substantially with the statute (on which we express no opinion), it is plain that the remedy is not in an appeal from the order, which provides for the proper condition, but in a representation to the court below concerning the insufficiency of the bond, and the consequent non-compliance with the terms on which the receiver was to be vested with his powers.

The' interlocutory order appealed from is affirmed.

Affirmed.