Opinion
17324.
FEBRUARY 12, 1951.
REHEARING DENIED MARCH 14, 1951.
Equitable petition. Before Judge Pharr. Fulton Superior Court. September 9, 1950.
T. B. Higdon, for plaintiff in error.
John Kirby, Marvin G. Russell, Smith, Kilpatrick, Cody, Rogers McClatchey, A. G. Cleveland Jr., Louis D. Yancey Jr., Arnall, Golden Gregory, Stanley P. Meyerson, and Nall Sterne, contra.
Robert L. O'Neil, in propria persona.
1. Where a final decree charges costs, fees, and expenses of a receiver and auditor to funds arising from a receiver's sale of property subject to a warehouseman's lien, which funds were insufficient to pay the lien, and the lienholder excepts to that portion of the decree as well as previous rulings appointing the receiver and auditor and enjoining a sale to satisfy the lien, and where the petition shows that it was by an unsecured creditor for alleged unpaid salary for clerical work, it must be held that the court erred in appointing a receiver and auditor and in enjoining the sale. The error in appointing the auditor rendered all his actions nugatory and requires a reversal of the portion of the final decree excepted to.
2. While failure to except to an auditor's report within the time allowed by law renders the report binding upon all parties, this refers to auditors legally appointed, and does not apply here where it is held that the court erred in referring the case to an auditor. The reversal of the order of reference carries down with it all proceedings that followed it.
3. Nor did the lienholder acquiesce in the previous rulings or become liable for any part of the costs and expense of the proceedings by asking the court to set up its lien — after being so ordered by the court — or by later consenting to a receiver's sale when it was losing storage of $145.24 per month, or by receiving the portion of the funds awarded it under the decree when, under all circumstances, it was entitled to such funds and even more.
No. 17324. FEBRUARY 12, 1951. REHEARING DENIED MARCH 14, 1951.
On April 12, 1949, Nina Jackson filed suit against Calimode Inc. for alleged unpaid salary earned by her as a secretary and stenographer. As amended, the petition alleged that the petitioner was entitled to a lien on the property of the defendant, and prayed for judgment, for the defendant to be enjoined from disposing of its assets, for the appointment of a receiver, and that United Bonded Warehouse Inc., which was at that time advertising for sale certain furnaces belonging to the defendant under the Bonded Warehouse Receipts Act, be enjoined from making the sale so advertised. It was alleged that a number of other parties had claims against the defendant, which was insolvent, and that it was necessary, in order to avoid a multiplicity of suits, that all such parties having claims against the defendant intervene in the action, and that United Bonded Warehouse Inc. be enjoined from making the sale because the property would not sell for as much at public sale as the petitioner, because of her acquaintance with certain parties, could obtain for the same at a private sale. The court, by ex parte order, appointed a receiver, made United Bonded Warehouse Inc. a party defendant, and enjoined it from completing the sale which was being advertised. Upon being served with a copy of the court's order, United Bonded Warehouse Inc. filed its response, in which it was asserted: that as to the property it was advertising for sale it was a depository for hire in possession of the furnaces, and as such had a lien on the property under the statute for accrued storage charges in the amount of $2365.93; that the property would not have a value sufficient to pay the full amount of its claim, and that the monthly storage charge was $145.24; that the sale which it was undertaking to make was in conformity with the right conferred upon it by the Uniform Warehouse Receipts Act; that the property could not be sold for a sufficient amount to satisfy the respondent's lien at either public or private sale; that to delay the sale would impose upon the respondent a total loss of storage charges at the rate of $145.24 per month; and that any expense of a receivership which might be charged against the property would in fact be a charge against the respondent. It was further alleged that the petitioner had no lien on the property which it was advertising to sell, and had an adequate remedy at law to sue for any claims which she had for unpaid salary; and, hence, that she was not entitled to the relief sought. The respondent prayed that the court's order enjoining the sale be dissolved, that the receiver be discharged, and that the respondent be discharged without liability for any costs of the proceedings. Upon the filing of this response, the court issued the order directing the petitioner and receiver to show cause why the prayers should not be granted. At the time designated in the order for the hearing, the court refused to grant the relief sought, and appointed the person who had previously been appointed the receiver as the auditor in the case, with authority to investigate and rule upon all questions of fact and law and report his findings to the court at the next term. To this order United Bonded Warehouse Inc. excepted pendente lite, asserting that the court erred in referring the case to an auditor, in appointing the receiver as auditor, and in refusing to dissolve the previous order restraining the sale and in refusing to discharge the receiver.
United Bonded Warehouse Inc. then demurred to the petition as amended, on the grounds that no cause of action was alleged and that the petitioner had an adequate remedy at law. On July 25, 1949, the auditor overruled the respondent's demurrer and overruled a motion of the respondent to discharge the receiver and to dissolve the order enjoining the sale. To these rulings exceptions pendente lite were duly filed. On July 12, 1949, the trial judge issued an order requiring all persons holding claims against the defendant to intervene by filing their claims with the auditor on or before September 12, 1949, or be forever barred. On August 12, 1949, the warehouse company amended its response, setting forth that, in view of the denial of its motion to dissolve the injunction and discharge the receiver, it had become necessary in order to protect the respondent's interest, under the order of July 12, 1949, to intervene; and, without waiving any of its rights, it prayed that the court set up its warehouse lien as the first and superior lien against the property involved, which it had stored with it, and that no cost or expense of the proceedings be taxed against it. The warehouse company appeared before the auditor on July 25, 1949, through its counsel, expressly stating that the special appearance was for the purpose of (1) supporting its previous motion to discharge the injunction and the receiver, and (2) to object to the case being referred to the auditor.
On January 21, 1950, the warehouse company filed a motion reciting the history of the case, and stated that no sale had been made, that storage charges were accumulating at the rate of $145.24 per month, that the receiver could not pay these storage charges which were being incurred by him, and that, therefore, it was losing $145.24 each month in which the property remained stored in its warehouse. The motion again requested that the injunction against the sale be dissolved, and that it be allowed to sell the property to satisfy its lien. At the hearing on this motion, the trial judge requested the parties to agree upon a court order to sell the property. Upon the failure of other parties, which included a number of intervenors and the petitioner, to agree to the respondent's request that it be permitted to sell the property under its lien and in order to avoid further accumulation of storage charges, which would be a total loss to the respondent, it agreed with all parties that the receiver sell the property without prejudice to any party, and that all claims attach to the proceeds of the sale and be divested from the property itself. On May 15, 1950, the receiver reported the sale of the property for $2040.50.
On June 5, 1950, the auditor made his report to the court, in which he made certain findings of fact and law and recommended: a judgment in favor of the petitioner against the defendant in the amount of $718.70, and that it should be declared as a special lien ranking as a laborer's lien; a judgment in favor of United Bonded Warehouse Inc. in the amount of $4283.42, and that it be declared a first lien ranking as a warehouseman's lien upon the funds of the receiver; a judgment in favor of an intervenor in a stated amount; and that the costs and expenses of the proceedings be taxed against the parties in the proportions the court judged to be proper. On June 15, 1950, the auditor petitioned the court to approve his report and to allow his reimbursement of expenses as receiver and auditor. Upon this petition and without the introduction of any evidence except a statement by the auditor, reciting the actions he had taken and a statement by the warehouse company that fees should not be allowed in excess of those provided in Code § 55-315, and that none of the same should be charged against the funds in the hands of the receiver, the court issued a decree or order fixing the receiver's fee at $500, to be paid from the proceeds of the sale which were in the hands of the receiver, the receiver to reimburse himself for expenses incurred, amounting to $42.50, and pay all court costs. It was further ordered that the auditor receive a fee of $250, and that this, together with $90 expenses of reporting the evidence, be assessed against each of the parties, including the warehouse company, in equal amounts of $68 each; and that the remainder of the funds in the hands of the receiver be paid to United Bonded Warehouse Inc., the court having previously entered an order making the report of the auditor the judgment of the court. On September 5, 1950, the final decree was signed, adopting the findings of fact and law and conclusions on matters of law, made by the auditor, as the judgment of the court; and it was decreed that the petitioner have judgment against the defendant, Calimode Inc., for $718.70, ranking in the status of a laborer's lien upon the property of the defendant, and have a special lien; and further decreed that United Bonded Warehouse Inc. have judgment for $4283.42, declaring it to be a special and first lien ranking in status as a warehouseman's lien upon the funds received from the receiver's sale of the defendant's property; and further decreed a judgment in favor of Atlantic Metallic Casket Company for $21,133.92; and decreed further that the court costs and expenses of the receiver, amounting to $42.50, and the fee of the receiver, amounting to $500, be paid from the funds in the hands of the receiver arising from the sale of the defendant's property, and that the remainder of such funds be paid to United Bonded Warehouse Inc. To that portion of the final decree, ordering payment of expenses and the receiver's fee from the fund arising from the sale of property on which the warehouse company had a lien, and decreeing also that this company pay $68 auditor's cost, exceptions were made, and error also is assigned upon each of the exceptions pendente lite theretofore filed.
1. This court has repeatedly attempted to emphasize the imperative necessity of strict adherence to the general rule that, before an unsecured creditor will be permitted to obtain an injunction, receivership, or other equitable relief, it must be made clearly to appear that there is a present manifest wrong or injury imminently impending. Crawford v. Ross, 39 Ga. 44; Jones v. Wilson, 195 Ga. 310 ( 24 S.E.2d 34; Irwin v. Willis, 202 Ga. 463 ( 43 S.E.2d 691). In the case last cited, attention was called to the constitutional mandate that the citizen or his property be protected, and that this protection was not afforded when courts, by the appointment of receivers, deprived the citizen of the possession of his property where his right thereto had not been forfeited under some rule of law. The allegations of the amended petition here show that the action is a simple suit by a clerical employee for an alleged unpaid salary. The description of the employment shows unmistakably that the petitioner is entitled to neither a general laborer's lien, under Code § 67-1801, nor a special laborer's lien, under § 67-1802, since it is shown that no manual labor was involved. See Bell v. Withers Cigar Co., 196 Ga. 48 ( 26 S.E.2d 260).
When given its most favorable construction in favor of the petitioner, the amended petition shows that equitable relief is sought because a number of other creditors have claims against the defendant, and the only complaint against the admitted lienholder, United Bonded Warehouse Inc., is that its sale, pursuant to and in virtue of its right under the Uniform Warehouse Receipts Law, would result in realizing a smaller amount upon the sale of the property by public sale than could be obtained at a private sale. Upon this ground alone the petitioner successfully sought and obtained court interference with the plain legal right of the lienholder. By that action the court simply deprived this party of rights conferred upon it by the law of this State. Code (Ann. Supp.), § 111-435 (Ga. L., 1937-38, Ex. Sess., pp. 390, 403). In this situation the lienholder petitioned the court to dissolve the ex parte injunction and discharge the receiver, pointing out that it had a lien for accumulated storage charges amounting to $2365.93, and that the property which it held and was undertaking to sell was insufficient in value to pay the amount of its claim; that storage charges on the property were accumulating at the rate of $145.24 per month, and all such accumulative charges would be a total loss to the warehouse company; and that any expense of a receiver charged against the property would, in reality, be a charge against the warehouse company. These facts, being undisputed, were sufficient under the law to demand an order dissolving the injunction, discharging the receiver, and relieving this party of any liability for costs in connection with the suit. Instead of so ordering, the court appointed an auditor, although there was nothing in the pleadings to indicate any complicated or involved accounts or facts that would justify the appointment of an auditor. In Carr v. Walker, 205 Ga. 1 ( 52 S.E.2d 426), this court indicated its disapproval of referring simple cases to an auditor, which involves complicated procedure and added costs. There no exception was made to the appointment of an auditor, but here exceptions pendente lite were filed to the appointment of the auditor. The exception here is meritorious. There was no justification whatever for referring this simple suit on an open account to an auditor, and litigants' property can not be confiscated by such unnecessary expenses. This plaintiff in error was, without any lawful reason, deprived of its plain right under the law to protect itself against loss of storage charges and compelled to sustain a loss of approximately $1900 in storage charges; and, by the decree excepted to, the court imposed upon it a further loss of $542.50 in receiver's charges plus court costs and $68 as auditor's expenses.
This injury was imposed in virtue of a petition wherein the petitioner made no claim against this party, charged it with no misconduct or fault, but alleged simply that, if it was permitted to complete its sale in compliance with the law, the property would not sell for as much as could be obtained by private sale. The General Assembly of this State, in enacting the Uniform Warehouse Receipts Law, in the exercise of its power, declared by law that it was proper and wise that public sales, as therein provided, be made instead of private sales. By that enactment the manner of sale was put beyond the lawful reach of other creditors or even the courts to alter. No expenses of the petitioner's suit, including receiver's and auditor's fees, which in no wise benefited this lienholder, can be lawfully charged against the funds until this lien has been satisfied. Lewis v. Edwards, 92 Ga. 533 ( 17 S.E. 920); Lowry Bkg. Co. v. Atlanta Piano Co., 95 Ga. 146 ( 22 S.E. 42); Bradford v. Cooledge Bro., 103 Ga. 753 ( 30 S.E. 579); Macon Savings Bank v. Carter, 107 Ga. 778 ( 33 S.E. 679); Garmany v. Lawton, 124 Ga. 876 ( 53 S.E. 669); Peninsular Naval Stores Co. v. Culbreth, 162 Ga. 474 ( 134 S.E. 608); Zachry v. Industrial Loan c. Co., 182 Ga. 738 ( 186 S.E. 832); Mendenhall v. Stovall, 191 Ga. 452 ( 12 S.E.2d 589). The error in overruling the motion of the plaintiff in error to dissolve the injunction and in appointing an auditor rendered nugatory all subsequent proceedings. Bush v. Murphey Co., 113 Ga. 345 ( 38 S.E. 828); Howell v. Jackson, 171 Ga. 245 ( 155 S.E. 26). And it follows that the portion of the final decree directing payment of any expenses or costs from the funds arising from the sale of property on which the plaintiff in error had a lien, and directing the plaintiff in error to pay certain costs, was erroneous; and direction is given that the decree be modified to direct the payment of the full proceeds of the sale to the plaintiff in error upon its lien for storage.
2. But counsel for the defendant in error insist that, irrespective of the rulings complained of in the exception pendente lite, this court should affirm the final decree, which is in complete accord with the auditor's report, because no exceptions were filed within the time allowed by law to the report of the auditor. The law requires exceptions to an auditor's report, and when not excepted to within the time provided by law the report becomes final and binding. Code, §§ 10-301, 10-407; Merchants Nat. Bank v. Armstrong, 107 Ga. 479 ( 33 S.E. 473); Lefkoff v. Sicro, 193 Ga. 292 ( 18 S.E.2d 464); Carr v. Walker, supra. However, as ruled in Bush v. Murphey Co., supra, and Howell v. Jackson, supra, when the court errs in referring a case to an auditor all subsequent proceedings become nugatory. In those cases it is true that exceptions were filed to the auditor's report, but such exceptions were unnecessary, since the order of reference was reversed. By reversing the order appointing an auditor the foundation of all subsequent proceedings is thereby destroyed and such proceedings, being the superstructure, must meet the same fate as the foundation upon which they rest. A reversal of the order referring the case to an auditor is tantamount to holding that no auditor lawfully existed and, hence, that the purported auditor's report was a nullity, in that the person making the same had no official status and was without jurisdiction.
3. Counsel for the defendant in error make the contention that, because this plaintiff in error, after having been made a party defendant by an ex parte order and in response to an order of the court to set up its claim or be forever barred, set up its lien and prayed that it be declared a prior lien and consented to a sale by the receiver — thereby acquiescing in and becoming a party seeking relief — is estopped to deny liability for expenses and costs of the proceedings. Confronted with a seizure by the receiver, under an order of the court, of the property upon which it held a lien, and with the failure of the receiver to sell the same while the plaintiff in error, in the meantime, was sustaining a dead loss of $145.24 per month in storage charges on the property — the plaintiff in error did consent to a sale by the receiver without prejudice, and was fully justified in thus seeking to protect itself as best it could against the continuing losses caused by the failure to sell the property. Georgia Veneer c. Co. v. Florida Nat. Bank, 198 Ga. 591 ( 32 S.E.2d 465). This plaintiff in error was unquestionably entitled, as held above, to the full proceeds from the sale of the property in question. Therefore it surrendered no rights to complain and have reviewed that part of the decree awarding a portion of the funds to others, and that part requiring it to pay $68 of the auditor's expenses, by accepting the balance of the fund which was awarded to it by the decree. There is no exception to the part of the decree favorable to the plaintiff in error.
Judgment reversed with direction. All the Justices concur.