Grand Rapids Electrotype Co. v. Powers-Tyson Corp.

The parties hereto were before this court in Grand RapidsElectrotype Co. v. Powers-Tyson Corp., 245 Mich. 669. This case comes before us on objection to the allowance of the receiver's final account. Appellant raises four questions. It contends that the opinion of the court in Grand Rapids Electrotype Co. v. Power-Tyson Corp., supra, properly construed, holds the trial court had no jurisdiction to appoint a receiver; that, independent or the holding of the court in the above entitled cause, there was in fact and in law no jurisdiction vested in the trial court to appoint a receiver; that the receiver appointed for a Delaware corporation may not seize the chattels of a Michigan corporation sold by it and secured by an unrecorded chattel mortgage and sell them without notice to the mortgagee and use the proceeds of its own wrongful sale in the payment of the receiver's and solicitors' fees; and that the parties and their solicitors may not fraudulently and collusively prearrange a receivership and charge the estate of the party for whom a receiver is appointed fees therefor.

When this case was before this court in the case above cited, the question was decided whether appellant had a right under an unrecorded chattel mortgage to the possession of property as against a receiver appointed by the circuit court of Kent county. It was held that by reason of such chattel mortgage not being recorded the appellant could not recover. In making such holding the court necessarily held there was a receiver of the company to which the appellant had sold its property, which had given the chattel mortgage in question; and the title of such receiver was good as against appellant. This necessarily presupposed there was a valid receivership and jurisdiction in the court to appoint such receiver. This holding definitely and finally concluded the parties upon the question of the jurisdiction of the trial court to appoint a receiver, and this question may not now be inquired into.

The prior case held the receiver's title was good as against appellant's who intervened in the receivership proceedings and litigated its claim and is bound by the result of such litigation. The recognition of the receivership and effort to obtain benefits thereunder estops the party so conducting itself from attacking the validity of the receivership.Manhattan Trust Co. v. Seattle Coal Iron Co., 16 Wn. 499 (48 P. 333, 737). Appellant herein by its conduct is so estopped.

Objection is made to the solicitors' fees charged to the receiver. Until a receiver was appointed he could not employ counsel and could not become liable to attorneys or counsel subsequently employed by him. All solicitors' fees for services rendered to the receiver, prior to the appointment of a receiver, are improperly charged and the decree herein will be modified as to such fees, which are disallowed, and, as so modified, will be affirmed, without costs.

BUTZEL, C.J., and WIEST, CLARK, McDONALD, SHARPE, and NORTH, JJ., concurred with POTTER, J.