(220 S. W.)

within that principle, and it was not necessary generally grows out of the necessity of having to make the stockholders parties to the suit." some agent to act for beneficiaries, who are usually too numerous to act together. In such This is not an action by a third party, case the presumption is great that he is their but, as shown by the petition, the plaintiffs representative, not only as to the general manand named defendants are all stockholders, agement of the assets, but also to prosecute and and for a stronger reason the doctrine andefend suits involving title to the assigned nounced applies to this case. That the trus-84 Tex. 421, 19 S. W. 606, 31 Am. St. Rep. estate.' In the City of Sherman v. Williams, tees would have the right in their own name 66, it was developed that a lot of land had to sue as individual stockholders to recover been taken by the city to meet a tax collector's the amounts subscribed by them will not be default as to a special fund created in the inquestioned. If under their powers they can terest of outstanding bondholders. A judgment institute such a suit either in their own creditor of the city levied execution upon the names or in the name of the association, we property and caused it to be advertised for safe, think the reverse of the rule unquestionably when the city brought suit to enjoin the sale, on the ground that the property, being held by applies. The case as made by the pleadings it for the special fund mentioned, was not subis one in which the defendants, trustees, are ject to sale to satisfy the execution. The city, sued by some of the beneficiaries, alleging in- it is apparent, was acting in effect as trustee solvency of the trustees, breach of trust, mis- for the outstanding bondholders, but the right conduct, misapplication of trust funds, use of the city to maintain the suit was not quesof their authority as trustees of the fund for tioned by counsel for the court, and the final relief prayed for was granted." their own personal profit, refusal to account for and pay over income, fraud in executing a fictitious note and mortgage, loss of trust funds through employment of irresponsible parties selected by them to perform the very duties imposed upon them by the articles for personal execution, alleging danger of further loss by reason of negligence and carelessness, and we think the rules governing in cases of trust and the appointment for receivers for trust estates applies. City of Austin v. Cahill, 99 Tex. 172, 88 S. W. 542, 89 S. W. 552, is a case where the appellee sued the city, praying for a mandamus requiring it to levy a tax for the purpose of paying interest alleged to be due on certain bonds previously issued by the city. The contention was made that the bondholders who had not been made parties were necessary parties to the action. The Supreme Court held that the act of the Legislature which created the sinking fund made the city a trustee for the benefit of the bondholders, and, contrary to the general rule, it was not necessary for the latter to be made parties. The opinion contains an exhaustive review of the authorities. After conceding the general rule that cestuis que trustent ought to be made parties, it said in part:

These causes declare the equitable doctrine of virtual representation, under which only parties must be joined who fairly represent the interest or right involved so that the case may be tried fairly and honestly. Smith v. Swormstadt, 16 How. 288, 14 L. Ed. 942; Grafton v. Holt, 58 W. Va. 182, 52 S. E. 21, 6 Ann. Cas. 403. The doctrine of virtual representation has been often recognized and applied in cases of trusts where those beneficially interested are represented by executors, administrators, assignees in bankruptcy, trustees in insolvency, conventional trustees for the benefit of creditors, and receivers. Baltimore v. United R., etc., Co., 108 Md. 71, 69 Atl. 436, 16 L. R. A. (N. S.) 1006. Chief Justice Marshall evidently had this rule in mind when in Hopkirk v. Page, Fed. Cas. No. 6697, he said:

"Where the interest of one person is involved in that of another, and that other possesses the legal right so that the interest may be asserted in his name, it is not I think, always necessary to bring both before the court."

tin v. Dryden, 1 Gilman (Ill.) 187; Whitney Miss. 404: Von Schmidt v. Huntington, 1 v. Mayo, 15 Ill. 251; Goldman v. Page, 59

The doctrine has in many cases been applied to members of unincorporated associations. Suits in equity may be brought by or against some of the members of the associa""To this rule there are well-recognized ex- tion as representatives of all the members, ceptions, but these embrace mainly that class especially where the defendants in such casof cases where, by reason of the number of ben-es were managing officers or trustees. Mareficiaries, it is inconvenient to make them parties, and where it may be presumed that it was the intention to invest the trustees with power to prosecute and defend suits in their own names. An apt illustration of the exception is Cal. 55. The rule has also been applied in found in the case of the trustees in a mortgage a suit to enjoin a strike of laborers where to secure a series of negotiable bonds upon the court held that it was sufficient to bring the property of railroad companies. Shaw v. in the leaders of the strike to represent the Railroad, 5 Gray [Mass.] 162. Another illusorganization, regardless of their official retration is afforded by the case of an assignee lation to their society. American Steel, etc., in the deed of an assignment made by an insolvent for the benefit of his creditors. Co. v. Wire Drawers', etc. Unions, Nos. 1 and son v. Stewart, 93 U. S. 155, 23 L. Ed. 483. 3 (C. C.) 90 Fed. 598. 20 R. C. L. p. 669, § The appointment of an assignee in such cases 9, states the rule in this language:

Kerri

"As an exception to the rule that all persons having an interest in the subject-matter of an equity suit must be made parties, the doctrine of virtual representation which originated at an early date recognizes the right of a few per

sons to sue for themselves and all others sim

[5, 6] Appellate courts will not ordinarily interfere in the appointment of receivers unless a clear abuse of discretion is shown. 23 R. C. L. p. 10, § 4. In any event, under rule €2a (149 S. W. x) which provides that ilarly situated. Under this doctrine the persons no judgment shall be reversed on appeal, on who are not joined by name as parties are in a the ground that the trial court has commitsense before the court. They have been called ted an error of law, unless the error comquasi parties and have even been said to be par-plained of amounted to such a denial of ties in substance and legal effect. In all cases the rights of the appellant as was reasonably to which the doctrine of representation applies calculated to cause, and probably did cause, there must be joined as parties persons who fairthe rendition of an improper judgment in ly represent the interest or right involved so that it may be tried fairly and honestly. It is the case, or was such as probably prevented sufficient if the parties before the court enable the appellant from making a proper presentait fairly and fully to adjudicate the question tion of the case to the appellate court, the involved. The parties represented must have a appointment without the association being a common interest with those before the court, party is not reversible error. and consequently the parties before the court filed no motion to discharge the receiver, Appellants cannot act as representatives, if their interests are antagonistic to those who would be repre- and did not raise the question of nonjoinder And so a suit in equity may in the trial court. See, also, Schuster et al. v. Crawford, 199 S. W. 327, and authorities; Slaughter v. American Baptist Publication Society, 150 S. W. 224. We have discussed this question upon the theory that the association belongs to the class designumerous. The doctrine of representation has nated as "trusts" by Wrightington in his also been recognized in cases of trusts, so that work on Unincorporated Associations (page persons beneficially interested are considered 4). It is not clear from the petition what as represented by one occupying a trust rela-authority the stockholders may have over tion, especially when the cestuis que trust are the board of trustees in directing the affairs numerous so that it would be impracticable to of the association, but some of the provisions bring all of them before the court." of the articles of the association seem to in

sented.

be brought by some of the members of an unincorporated association as representatives of all the members, whether organized for public or private purposes, and in some of the cases relating to the members of such associations stress has been laid on the fact that the members are

Section 11, Id., extends the doctrine to parties defendant, saying:

"Apart from the question of the parties be ing numerous, this rule of representation has been applied to defendants representing as trustees all parties having a beneficial interest in the subject-matter," etc.

The essence of the rule as recognized by the decisions is that, where the party holding the legal estate is a party to the suit, those having merely an equitable interest need not be made parties defendant unless the rights of those holding the equitable interest are in some way antagonistic and adverse to that asserted by the plaintiffs. It is clear that in the instant case the Texline Burk Oil Company, as such, could not, if it were a party, assert any adverse interest to that of the plaintiffs herein. The wrongs complained of by the plaintiff are certainly a violation of the rights of the association, as well as of all its members. Carleton v. Roberts, 1 Posey, Unrep. Cas. 587, says:

"While the rule that all parties in interest ought to be made parties is well established, so also are the exceptions to it. Another is where parties form a voluntary association for public or private purposes, and those who sue or defend may fairly be presumed to represent the rights and interests of the whole. In these cases the suit may well be brought by the plaintiff, either alone or with others, in behalf of himself and all others interested. Story's Eq. Pl. 94, 97, 114a, 115."

dicate that, while the promoters intended to create a joint-stock association, yet, under the rules of law announced in the decisions in section 14 in Unincorporated Associations, the Texline-Burk Oil Company should be held to be a partnership rather than a jointstock association. Of course, if it is a partnership under the rules announced in that section, the association could not be sued by name, since a partnership, regardless of the name in which its business may be conducted, is not a legal entity.

[7-10] A necessary party is one who is so vitally interested in the subject-matter that a valid decree cannot be rendered without his presence as a party. Biggs v. Miller, 147 S. W. 632.

This being the test, it is clear, we think, that the association is not a necessary, though it may be a proper, party. Appellants have waived the question of nonjoinder of proper parties by failing to raise it in the lower court. The case made by the pleading being one in which trustees are sued by some of the beneficiaries in behalf of others alleging insolvency of the trustees, breach of trust, misconduct, misapplication of trust funds, use of their authority as trustees of the fund for their own personal profit, refusal to account for and pay over income, fraud in executing a fictitious note and mortgage, loss of trust funds through employment of irresponsible servants selected by them to perform the very duties imposed upon them

(220 S.W.)

except in cases of the greatest emergency, demanding immediate interference of the court."

The text states the rule as shown by the cases in the note, where it is sought to de

by the articles for personal execution, and danger of further loss by reason of want of care and attention, the rules governing in cases of trust and the appointment of re ceivers for trust estates apply. It is uniformly held that such facts, even under general equity practice, are grounds for the re-ful, but we have no such case under considmoval of such trustees and the appointment of receivers, at least until new trustees are

selected. Perry on Trusts (6th Ed.) § 275; 39 Cyc. pp. 261–264.

"Notwithstanding the aversion already indicated which courts of equity entertain toward the appointment of receivers to displace trustees, except for good cause shown, it has been held when the object of the action was the removal of a trustee from his trust on the ground of unfitness, that the court might properly appoint a receiver pendente lite, the propriety of relief in such case being regarded as a matter resting in the discretion of the court to which the application was addressed. When land is devised to a trustee to hold and manage it and to pay the rents and income to certain beneficiaries, the insolvency of the trustee and his misapplication of the proceeds of sales of the property and his failure to apply the income in accordance with the terms of the trust, and his appropriation of such income to his own use, constitute sufficient ground for an injunction and a receiver in an action by the beneficiaries for an accounting.

So the withholding of trust funds by defendant is sufficient ground for a receiver upon a bill by the beneficiary for an accounting as to such funds." High on Receivers (4th Ed.) § 697.

' [11] Appellant's next proposition is that

prive one of property to which he has a clear right, and the claim of the applicant is doubt

eration here. As stated, the defendants in the main are trustees, charged with certain specified duties, while the applicants are the beneficiaries, rendered helpless, unless aided by the court, by the instrument framed by the trustees and constituting them such. We quote further (Id. p. 39):

"The general rule that notice must be given to the adverse party of an application for the appointment of a receiver is not inflexible, but yields to an imperative necessity for an ex parte appointment to prevent irreparable loss. Thus it has been frequently held that notice might be dispensed with in cases where it appeared that the defendant was insolvent and was disposing of his property with the intention of placing it beyond the reach of his creditors. It must, however, clearly appear that the danger is real, and that the delay incident to the giving of notice will result in an irreparable injury, and the defendant should be afforded a speedy hearing on a motion to vacate the order."

In this case no motion was made, but the appellants content themselves with bringing the case to this court and attacking the trial judge's action solely upon the sufficiency of plaintiff's allegations to sustain it. Quoting

further:

"Moreover, it has been held that a receiver will not be appointed without notice when a court has the powers to grant a temporary restraining order without notice and the same is ample to protect the property until notice is given and the application for a receiver heard and determined." Id. p. 39.

the court was not warranted in appointing the receiver ex parte. It is true that the general rule is that receivers should not be appointed except upon notice and hearing, but under the allegations here we think the rule should not be applied. As stated above, this is not a suit in which the appointment of a receiver is the only relief sought. A fair While it is true that a temporary restrainconsideration of the petition shows that it is an action against trustees, brought by the ing order might meet the ends of justice, in beneficiaries for themselves and others whose so far as several grounds stated in the petinames they were not able to learn, after dili- tion are concerned, as to others, even a mangent effort, alleging many things authorizing, datory injunction would not be an adequate if true, not only a personal judgment against remedy. These principles, of course, have the trustees, but showing many well-recogbeen applied in jurisdictions where the remnized grounds for the appointment of a re-edy rests purely upon equitable rights. In ceiver. We quote from 23 R. C. L. p. 38 et

seq., as follows:

"Courts of equity are adverse to interfering ex parte and will not ordinarily entertain an application for the appointment of a receiver except upon notice to the adverse party. Such a court has no more power than any other court to condemn a man unheard and to dispossess him of property prima facie his and hand over its enjoyment to another on an ex parte claim for it. It should therefore exercise extreme caution in the appointment of receivers on ex parte applications and be careful that a proper case is presented before it acts, and it should not be done without notice to the party whose property is to be affected, 220 S.W.-8

this state the right to a receiver has been extended, broadened, and defined by statutory enactment. Article 2128, V. S. C. S. subd. 1, authorizes the appointment of reCeivers where partners or others jointly owning or interested in any property or funds show that the property or fund is in danger of being lost, removed, or materially injured. The facts alleged bring this case within that statute. They not only show danger of loss, but actual loss, and the effect of the statute is to entitle them to a receiver without further negativing the existence of an adequate remedy at law. Such has been the holding of the courts of this state with reference to

sale in the mortgage. The powers given the receiver, however, are probably broad enough to meet the emergency. The prayer of the petition does not specifically ask for the removal of the trustees, but it is said in High on Receivers (4th Ed.) § 704:

applications for injunction as well as for re-appropriately issued a temporary restraining ceivers. Acme Cement Plaster Co. v. Ameri- | order preventing the bank from proceeding to can Cement Plaster Co., 167 S. W. 183. In collect its fictitious note under the power of the case of Temple State Bank v. Mansfield, 215 S. W. 154, it was shown by the petition that a trust fund in which appellee was interested was held by that bank with notice of the terms of the escrow agreement under which it was deposited; that the bank refused to furnish any information as to the condition of the account, referring the plaintiff for such information to one James E. Ferguson, who also failed and refused to furnish the desired information. There was no allegation of insolvency, but a prayer for a receiver. Judge Pleasants said:

* *

"We think the allegations of the petition were sufficient to authorize the court to appoint a receiver of the fund. Subdivision 1 of article 2128, V. S. C. S., expressly authorizes the appointment of a receiver 'in an action between partners or others jointly owning or interested in any property or fund, on the application of * any party whose right to or interest in the property or fund or the proceeds thereof is probable, and where it is shown that the property or fund is in danger of being lost, removed or materially injured.' We think, when the trustee of a special fund held under an express trust not only refuses to execute the trust, but refuses to give any information to a joint owner of the fund as to its condition, or as to where or in whose name it is held or deposited, it may be reasonably inferred that the fund is in danger of being 'lost, diverted, misapplied, and put beyond the reach of plaintiff and of this court.' And such allegation in the petition in this case, being a reasonable inference from the facts alleged, is not a mere conclusion of the pleader.

"When real estate has been devised to trustees upon certain specific trusts, and a receiver of the estate is appointed upon the ground of their misconduct and incapacity, it is proper, upon the appointment of new trustees, that the management of the estate should be transferred from the receiver to such new trustees, and the court will so order if satisfied that it may be done without injury to the legatees under the will, and when it is apparent that it will result to the advantage of the estate by doing away with the expense of the receivership. The prayer of the petition being for general and equitable relief, and the pleading failing to show the right of the beneficiaries to elect other trustees, if need be, to succeed the receiver in the management of the estate, presents merely a question of practice resting in the sound discretion of the trial court, and is not ground for objection to the appointment of the receiver in the first instance." McCord v. Nabours, 101 Tex. 494, 109 S. W. 913, 111 S. W. 144.

It would needlessly prolong the opinion to discuss the authorities cited by appellant in detail, and to show wherein we think they do not apply to the several allegations of fact contained in the petition. A summary of these allegations is made above, and the applicability of most of the authorities may be disposed of by the general statement that they are not cases applying to receiverships of trust estates. The petition, we think, shows a case clearly within the terms of the statute, and the matter of the appointment was within the sound discretion of the trial judge, and no such abuse of that discretion appears that would warrant this court in reversing his judgment. If upon a trial it should appear that the facts as alleged are not true, that the appellants are not guilty of the wrongs charged, and that the receiver was improvidently appointed under the statute and rules relating to receiverships, appellants have an ample remedy for any wrong. inflicted.

"The right to have a receiver appointed under any of the first three sections of the article above cited is a legal right, not dependent upon the general rules of practice in courts of equity, and, when the facts alleged in a particular case as grounds for the appointment of a receiver bring the case within the provisions of either of these sections of the article, allegations and proof of insolvency of the defendant, inadequacy of legal remedy, or other equitable grounds for the appointment of a receiver are not required to authorize such action by the court. Cotulla v. Mortgage Co., 86 S. W. 340; Shaw v. Shaw, 51 Tex. Civ. App. 55, 112 S. W. 127; Sumner v. Crawford, 91 Tex. 130, 41 S. W. 994. [See, also, 23 R. C. L. p. 31, § 28.] "We are further of opinion that the facts alleged were sufficient to justify the trial court in concluding that for the full protection of. We believe we have disposed of all the plaintiff's rights the immediate appointment of questions presented in appellants' brief. Bea receiver was necessary, and authorized such ing convinced that we were in error in some appointment without notice to the appellant." particulars in quoting from the record, and in the position taken upon some of the propositions of law, the original opinion is withdrawn, and this is made the opinion of the court.

[12] The allegations of a petition to which no answer was filed must be taken as true on hearing a motion of plaintiff to appoint a receiver. Simpson v. Alexander, 188 S. W. 285. We think the court was not only authorized by the allegations in the petition to appoint the receiver ex parte, but might have

Believing that the conclusion reached in the original opinion is correct, the motion is de nied, and the judgment is affirmed.

(220 S. W.)

at that time appellants entered into a contract SUTHERLAND et ux. v. CITIZENS' STATE with Gravis Bros. to sell to them the ranch

Kleberg, Stayton & North, of Corpus money with which to restock the ranch. O. Christi, for appellants.

E. Cannon, vice president of the bank, swore that appellee had offered to buy 100 head of steers for appellants, and that it had never failed or refused to furnish appellants with money to restock their ranch. Cannon said: "I lived up to my agreement with them in every way." Appellants refused to comply with the contract and pay $5 a head on the cattle. J. D. Sutherland admitted that appellee agreed to pay for 100 steers, and offered to let him have $4,500. There

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