Opinion
November 4, 1963 —
November 21, 1963.
MOTION to dismiss an appeal from a judgment of the circuit court for Dane county: EDWIN M. WILKIE, Circuit Judge. Motion granted.
Richard R. Rynders of Madison, for the appellants.
Beckwith Hollern of Madison, for the respondents.
The defendant-respondent Stephen Lighter moves to dismiss this appeal on the grounds that neither appellant, Wisconsin Brick Company nor Main Appliance Company, Inc., is a "party aggrieved" and under ch. 128, Stats., a creditor is not authorized to prosecute an appeal of an action started and carried through to judgment by the receiver of an insolvent debtor.
Glenn E. Miller made an assignment for the benefit of creditors on December 1, 1955. Subsequently on December 15, 1955, in a proceeding under ch. 128, Stats., Vernon L. Peterson was appointed the receiver. In the course of this proceeding the receiver was authorized to commence this action in the circuit court of Dane county against Stephen Lighter and other defendants on the claim that Miller and Lighter were partners and the interest of Miller should be recovered for the benefit of creditors. An extensive trial was had in which it was determined Lighter had an offset to the claim of Miller and as a result the receiver recovered a judgment of $186.68 on January 17, 1963. The receiver decided not to appeal and proceeded to close the creditor proceeding and make a final distribution. There were insufficient assets to pay any of the common creditors. The appellants Wisconsin Brick Company and Main Appliance Company, Inc., were creditors in the ch. 128 proceeding and took this appeal from the judgment allowing the offset to Lighter. No authority for substitution of parties or for taking this appeal was given by the court in the ch. 128 proceeding or by the trial court in this action now before us.
The question presented is whether appellants are properly before this court. A person may be a "party aggrieved" by a judgment or order and entitled to appeal under sec. 274.10, Stats., even though he is not a named party in the suit. Paradise v. Ridenour (1933), 211 Wis. 42, 247 N.W. 472. Generally where the aggrieved party is not a named party to the action he nevertheless has a substantial interest adverse to the judgment either directly or by privity created by succeeding to the rights of the person against whom the judgment was rendered. We recognized in Gumz v. Chickering (1963), 19 Wis.2d 625, 121 N.W.2d 279, that the highest bidder at a foreclosure sale has the standing of an appellant to appeal the trial court's order refusing to confirm the sale which thus adversely affected the bidder's right to confirmation.
A creditor in the ch. 128, Stats., proceeding may be an aggrieved party for the purposes of appealing from orders entered in that proceeding directly affecting his rights. See Lamont v. Hibbard, Spencer, Bartlett Co. (1894), 88 Wis. 109, 59 N.W. 456. Likewise, a creditor may be an aggrieved party in actions by the receiver to recover assets for the benefit of creditors. However, in the latter case his rights and those of other creditors are represented by the receiver and when a creditor attempts to substitute himself in such collateral or independent suit on appeal, more is necessary to succeed to the rights of the receiver than the assertion that his interests are adversely affected. The cause of action of Miller was vested in the receiver for the benefit of Miller's creditors. A creditor cannot continue this lawsuit except by succeeding to the rights of the receiver.
Without the authority of the court in the ch. 128, Stats., proceeding a creditor cannot sue in a representative capacity in place of the receiver. If the receiver decides not to sue or to appeal, the creditor who demands the suit or appeal be presented must obtain authority to take the place of the receiver for the benefit of all the creditors in such suit. Here, the appellants allowed the ch. 128 proceeding to be closed without making any application for authority to continue this suit by being substituted for the receiver. Likewise, in this suit there is no authorization of the appellants to continue the suit on appeal in a representative capacity in place of the receiver. This is not a case where the person seeking to appeal is entitled to keep for his own benefit the entire fruits of the recovery but must sue, if at all, for the common benefit of others and himself. We hold, therefore, in the absence of any substitution of record the appellants are not properly before this court in this appeal and the motion to dismiss should be granted. No costs are allowed.