Brown v. Hazlehurst

Alvey, J., delivered the opinion of the Court. There is -no doubt of the general rule, and it is a wholesome one, that a receiver will not be permitted to lay out more than a small sum at his own discretion, in the preservation or improvement of the property under his charge; but he should, in all cases where it is practicable, or the circumstances of the case will permit, before involving the estate in expense, apply to the Court for authority for so doing. But this general rule, however salutary it may be, should not be so rigidly and sternly enforced as to work wrong and injustice, where the receiver has acted in good faith, and under such circumstances as will enable the Court to see that if previous, authority had . been applied for, it would have been granted. The justice and right of the matter must depend, to a great extent, upon the special circumstances of each case that may be presented.

In the case of Blunt vs. Clitherow, 6 Ves., 799, the receiver applied to be allowed some £461, as money expended in ²⁹ repair of tlie dwelling-house on the estate, and the claim being resisted upon the ground that the expenditure had not been sanctioned by the Court, the Master of the Rolls, Sir Wm. Grant, directed an inquiry into the circumstances of the expenditure, and whether the same was for the benefit of the estate; and it afterwards appearing that the expenditure was made by the direction of the trustees, the claim was allowed without further objection or inquiry. So in the case of the Attorney-General vs. Vigor, 11 Ves., 563, upon motion that the receiver should he allowed for necessary repairs that had been done, Lord ■ Eldon directed an inquiry, whether the repairs were reasonable; at the same time observing that the Court¡ was not in the habit of permitting receivers and commit-j tees to apply the trust funds in repair to any considerable j extent, without a previous application. And again, in the) case of Tempest vs. Ord, 2 Merr., 55, upon application for a| restraining order upon a receiver against paying out' funds for the erection of buildings upon the premises, without the previous direction of the Court, Lord Eldon, said, that formerly, the Court never permitted a receiver-to lay out money without a previous order of the Court; ^ hut now, where the receiver had laid out money without j such previous order, it was usual to refer it to the Master (j to see if the transaction was beneficial to the parties; and, if found to he so, the receiver was allowed the money so laid out; and accordingly an order was made referring the matter to the Master to consider and state to the Court, whether the buildings then being erected were fit and necessary, and for the benefit of the several parties interested in the premises.

It then appears that the right of the receiver co have allowance for his expenditure on account of the estate, does not always depend upon his having obtained the previous order of the Court; but it may depend upon the circumstances and requirements of the estate. ³⁰ In this case the receiver was appointed hy the Court under an agreement of the parties, and hy the agreement and order he was alone to have charge of the property specified. His appointment determined no right, nor did it affect the title of the property in any way; the legal title was in the complainant in the cause, Mr. Hazlehurst, subject to the ultimate judgment of the Court; and f the appointment of the receiver was for and on behalf of jail the parties concerned, and not of the complainant, or jjof the defendants, only. The order making the appointment was without special directions as to powers and duties; it simply placed him in the exclusive charge of the property. The property consisted of a large hotel and several stores thereunder in the City of Baltimore.

At the time the receiver took possession, he found the hotel property under an insurance in several offices to an aggregate amount of $25,000. This insurance had been placed upon the property hy Mr. Hazlehurst, the party now objecting to the allowance to the receiver of the premiums paid for renewals or keeping alive these policies on the property. The ground of objection is, that a previous order ought to have been obtained before the renewal premiums were paid hy the receiver. In other words, that the premiums were paid hy the receiver without authority, and therefore he has no right to claim re-imbursement, under the circumstances of the case.

To this, under the circumstances, we do-not agree. There is not the least pretence that, there was any want of good faith on the part of the receiver in continuing the insurance on the hotel property. On the contrary, it is conceded hy the learned Judge below, and not controverted by counsel, that the nature of the property, and the fact that it was not occupied, rendered it proper that it should be insured. In this, we suppose, every one will agree.

It is therefore safe to assume that if application had been made to the Court for authority to continue the insurance ³¹ on the property, it would have been given. In keeping the policies alive, the receiver was only keeping the property in the condition that he found it. The very object and purpose of his office was to preserve and protect the property for the party who should ultimately he declared to he the owner of it; and the continuing the insurance was hut a safe and usual means to the end to he accomplished. It was not for the one party or the other to object to the insurance; the Court having assumed control and jurisdiction over the property, would have directed what was proper and reasonable for its protection; and while it would have been proper and more regular for the receiver to have applied for authority to insure, we think his act in continuing the existing policies should he adopted by the Court, upon the principle, that where a trustee or other officer of the Court has exercised a power which, if previously applied for, would, without doubt, have been granted, a Court of equity will, in the absence of proof, showing the inexpediency and injustice of so doing, ratify and adopt the act done, as if it had been previously authorized.

Tyson vs. Mickle, 2 Gill, 376 . The adoption or rejection of the act must depend not on the events subsequently occurring, or the final result of the suit, hut on the