Marion v. Marion

NORVELL, Justice.

This case presents a question of procedure relating to the appointment of receivers.

On the seventh day of March, 1947, Paul C. Marion, appellee here, filed suit against his wife, Janie Amanda Marion, alleging in a verified petition that the parties were married on December 22; 1938, and continued to live together until May 15, 1946. ■That upon their separation appellant assumed complete control of all the community property which they had accumulated during the marriage, claiming the same as her separate property and denying that ap-pellee had any interest therein.

Appellee asserted a community interest in and to certain specifically described real estate as well as personal property. He alleged that he was an elderly man in a poor state of health and was unable to' sustain himself by his personal earnings and enti-tied to an accounting and the establishment of his community rights in and’to the property described in the petition/ . .

He prayed for the appointment of a receiver to take charge of the properties and collect rents therefrom, and that after deducting a sufficient amount for reserves for taxes, insurance and other charges, the receiver be directed to divide the balance between appellant and appellee.

On the day the petition was filed, and without notice to appellant, the trial court appointed the Guaranty Title and Trust Company receiver “over all the properties described in plaintiff’s original petition” and ordered said receiver to take charge of said properties and collect all rents and income therefrom and after deducting from such collections an adequate reserve to meet taxes and insurance and a monthly payment of $37.99 on the purchase price of Lot 8 in Block 39 of Del Mar, a subdivision of the City of Corpus Christi, Nueces County, Texas, to divide such rents and income equally between plaintiff and defendant pending further hearing thereon.”

The order appointing a receiver also contained a provision ordering appellant to appear on March 14, 1947, “and show, cause why this receivership * * * should not be continued in full force and effect pending trial hereof.”

On March 12, 1947, appellant filed a su-persedeas bond in pursuance of an appeal to this Court.

On March 19, 1947, the trial court entered a further order, reciting that a hearing was called on March 14th, “but the defendant, though duly served with notice and copy of plaintiff’s petition, as directed in said (show cause) order, and though present in court in person and by attorney, declined to enter an appearance but wholly made default, whereupon the Court, being unable to hear the matter,” postponed said hearing until March 19th, when the defendant again declined to make an appearance . The Guaranty Title and Trust Company was “reappointed Receiver pending final trial herein and subject to the further orders of the Court, over all the real estate described in plaintiff’s original petition.” More detailed instructions were given in this order as to the collection of rents and the distribution thereof, 'but insofar as real estate is concerned, the order is similar to that of March 7, 1947.'

Appellant again filed a supersedeas bond and appealed to this Court from the order of March 19, 1947.

In law there is a marked distinction between the appointment of a receiver with notice and the appointment of a receiver without notice. “Appointment of a receiver without notice to the adverse party is one of the most drastic remedies known to the courts and should be exercised only in extreme cases, where the right thereto is clearly shown, and then in the exercise of great caution by the court.” Shell Petroleum Corp. v. State, Tex.Civ.App., 86 S.W.2d 245, 247; Keep ’Em Eating Co. v. Hulings, Tex.Civ.App., 165 S.W.2d 211. Further, “a receiver will not be appointed without notice, if the status of the property can be maintained and the rights of the applicant protected pending a hearing by the issuance of a restraining order or temporary injunction, or by any remedy less drastic than a receivership.” 36 Tex.Jur. 108; Keep ’Em Eating Co. v. Hulings, supra.

Rule 695, Texas Rules of Civil Procedure, reads as follows:

“No Receiver of Immovable Property Appointed Without Notice. Except where otherwise provided by statute, no receiver shall b'e appointed without notice to take charge of property which is fixed and immovable. When an application for appointment of a receiver to take possession of property of this type is filed, the judge or court shall set the same down for hearing and notice of such hearing shall be given to the adverse party by serving notice thereof not less than three days prior to such hearing. If the order finds that the defendant is a non-resident or that his whereabouts is unknown, the notice may be served by affixing the same in a conspicuous manner and place upon the property or if that is impracticable it may be served in such other manner as the court or judge may require.”

Real property is here involved, and no statutory provision has been cited which would authorize the appointment of a receiver without notice notwithstanding a non-compliance with the provisions of Rule 695.

No compelling emergency is disclosed by the petition, a temporary restraining order would have been sufficient to. protect appellee’s rights. The provisions of Rule 695 were violated. We have no hesitance in saying that if the appointment of a receiver in this case be regarded as an appointment without notice, then the same must be vacated. Such appointments without notice are seldom sustained by the appellate courts. Very few fact situations justify resort to so drastic a remedy. This is apparent from the collation of cases appearing under Note 18 to Article 2293, in Vernon’s Ann.Civ.Stats.

Appellee contends that the order of March 19th constituted the appointment of a receiver with notice. This raises the question of the validity of the “show cause order” issued on March 7th, ordering the appellant to appear and show cause why the receivership should not be continued pending final disposition of the case. In our opinion this order was unauthorized and upon a direct attack such as an appeal, said order must be regarded as ineffective as notice. The notice contemplated in receivership proceedings is notice prior to the time the property is taken over by a receiver, and not a notice issued after the receiver has taken possession, calling upon the owner or claimant to the property' to show cause why the possession and control of the property by the receiver should not be continued. Rule 695 certainly does not authorize this practice and we fail to find any support therefor in the Texas Rules of Civil Procedure. Rules relating to the issuance of temporary restraining orders and injunctions are not applicable to the appointment of receivers. No case had been cited to us which supports the practice of appointing a receiver without notice and the issuance of a show cause order to the defendant. However that may be, we are of the opinion that the show cause order issued under such circumstances, can not be considered “notice” so that the order of March 19th can be regarded as an appointment of a receiver with “notice.”

In Salas v. Gonzalez, Tex.Civ.App., 181 S.W.2d 821, we held that when a receiver is appointed without notice, the person aggrieved thereby may, at his option, appeal to this Court, or make a motion to vacate the receivership in the trial court. If the latter course be taken, however, the complainant waives all questions incident to the appointment without notice.

There is no question of waiver in this case. Appellant refused to enter an appearance on March 14th, and again on March 19th. It is apparent that if the show cause order be given mandatory effect as compelling an appearance by a defendant and forcing him to show cause why the receivership should be vacated, said defendant is effectively deprived of his-option to appeal to this Court and demand the vacation of an erroneous order appointing a receiver without notice.

If the practice followed in this case be approved, and the argument advanced by appellee accepted, no case could be decided by this Court, or any other Court of Civil Appeals, involving the validity of the appointment of a receiver without notice.

Appellee says that it is now immaterial whether the appointment of a receiver without notice on March 7th was legal 'or not. A new order was entered on March 19th. A “show cause order” was issued, therefore, appellee had the opportunity to request the return of the property. Consequently, there is no question of the appointment of a receiver without notice before this Court.

We decline to approve of the use of the “show cause order” in cases such as this and thus limit or curtail our authority and jurisdiction over orders appointing a receiver without notice. If such limitation of jurisdiction be thought desirable, it may be secured by proper action of the Legislature or rule making authority.

We regard the order of March 19th as being a continuance and modification of the order of March 7th. Neither order was entered upon proper notice to the appellant. The petition will not support the appointment of a receiver without notice. The orders appealed from are accordingly reversed and the appointment or appointments of a receiver vacated.

Reversed and Rendered.