2021 Georgia Code
Title 9 - Civil Practice
Chapter 8 - Receivers
§ 9-8-1. Appointment of Receiver - Grounds Generally

When any fund or property is in litigation and the rights of either or both parties cannot otherwise be fully protected or when there is a fund or property having no one to manage it, a receiver of the same may be appointed by the judge of the superior court having jurisdiction thereof.

(Ga. L. 1855-56, p. 219, § 2; Code 1863, § 271; Code 1868, § 265; Code 1873, § 274; Code 1882, § 274; Civil Code 1895, § 4900; Civil Code 1910, § 5475; Code 1933, § 55-301.)

- For article, "The Civil Jurisdiction of State and Magistrate Courts," see 24 Ga. St. B.J. 29 (1987). For article, "Buying Distressed Commercial Real Estate: What are the Alternatives?," see 16 (No. 4) Ga. St. B.J. 18 (2010). For article, "2014 Georgia Corporation and Business Organization Case Law Developments," see 20 Ga. St. Bar. J. 26 (April 2015).

This section had its origin as far back as 1855. Mitchell v. LaGrange Banking & Trust Co., 166 Ga. 675, 144 S.E. 267 (1928) (see O.C.G.A. § 9-8-1).

- The purpose of appointing a receiver pending the litigation is the preservation of the property and the rights of the parties. Bigbee v. Summerour, 101 Ga. 201, 28 S.E. 642 (1897).

The purpose of a receivership is to preserve the property contested for pendente lite until the final disposal of all questions, legal or equitable, involved in the action. Parrish v. Rigell, 183 Ga. 218, 188 S.E. 15 (1936); Benton v. Turk, 188 Ga. 710, 4 S.E.2d 580 (1939); Jones v. Wilson, 195 Ga. 310, 24 S.E.2d 34 (1943); Conner v. Yawn, 200 Ga. 500, 37 S.E.2d 541 (1946); Liddell v. Johnson, 213 Ga. 752, 101 S.E.2d 755 (1958).

This section also provides for appointment of receiver when there is fund or property having no one to manage it. Waycross Military Ass'n v. Hiers, 209 Ga. 812, 76 S.E.2d 486 (1953) (see O.C.G.A. § 9-8-1).

Receiver is appropriate under this section where person managing property seems inimical to its best interests. Warner v. Warner, 237 Ga. 462, 228 S.E.2d 848 (1976) (see O.C.G.A. § 9-8-1).

Words "having no one to manage it" in this section, have reference, not to a mere physical management, but to a proper and efficient management. Mere physical management by an unfriendly or irresponsible person might conceivably be worse than no management at all, because it may amount to mismanagement and waste, if not destruction and total loss. Parrish v. Rigell, 183 Ga. 218, 188 S.E. 15 (1936); Waycross Military Ass'n v. Hiers, 209 Ga. 812, 76 S.E.2d 486 (1953); Farrar v. Pesterfield, 216 Ga. 311, 116 S.E.2d 229 (1960) (see O.C.G.A. § 9-8-1).

- Order assigning a case to another judge pursuant to Ga. Unif. Super. Ct. R. 3.3 did not violate O.C.G.A. §§ 9-8-1,9-8-5, and9-11-24 as: (1) neither O.C.G.A. § 9-11-24 nor O.C.G.A. § 9-8-1 applied to the assignment; (2) the receiver transferred the property to a corporation before it was sold to a limited liability company (LLC), and the receiver was not named as a defendant; (3) the appellate court was unable to determine the extent that the property remained subject to orders in the receiver case, and equitable remedies affected the rights of the receiver; (4) the LLC's action was against the corporation and its managing declarant, not the receiver, and included claims for monetary damages; and (5) the managing declarant failed to show a legal or factual basis for questioning the assigned judge's staffing to support the complex litigation. Leventhal v. Cumberland Dev., LLC, 267 Ga. App. 886, 600 S.E.2d 616 (2004).

Appointment of receiver is always equitable remedy. Tumlin v. Vanhorn, 77 Ga. 315, 3 S.E. 264 (1886); West v. Mercer, 130 Ga. 357, 60 S.E. 859 (1908).

Appointment is improper where only legal rights are involved and the party has an adequate remedy at law. Jordan v. Beal, 51 Ga. 602 (1874); South Carolina & Ga. R.R. v. Augusta S.R.R., 107 Ga. 164, 33 S.E. 36 (1899).

Trial court abused its discretion by sua sponte appointing a receiver absent any statutory basis for the appointment. Patel v. Alpha Inv. Properties, Inc., 265 Ga. 597, 458 S.E.2d 476 (1995).

- In an action by an insurer as subrogee of its insured to recover money paid for a fire loss, appointment of a receiver to take charge of funds received by the defendant from sale of the defendant's residence and other assets was not warranted because the funds did not constitute a "fund or property which is in litigation." Chrysler Ins. Co. v. Dorminey, 271 Ga. 555, 522 S.E.2d 232 (1999).

Appointment of receiver does not affect nature of any primary right, but is simply a means by which primary rights may be more efficiently preserved, protected, and enforced in judicial proceedings; it adjudicates and determines the right of no party to the proceeding, and grants no final relief directly or indirectly. Rogers v. Rogers, 180 Ga. 300, 178 S.E. 698 (1935).

- Appointment of a receiver determines no right as between the parties, nor does it affect the title in anyway. Jones v. Wilson, 195 Ga. 310, 24 S.E.2d 34 (1943); Conner v. Yawn, 200 Ga. 500, 37 S.E.2d 541 (1946).

- Because a question of fact as to the existence of an investor's ownership interest in a company was created by evidence that the company owner admitted that the investor owned 47 percent of the company, and based on evidence that the owner was sending company funds to Greece, the trial court erred in granting summary judgment to the owner and in denying the investor's request for a receiver to protect the investor's investment on the basis of a lack of interest in the company. McElvaney v. Roumelco, LLC, 331 Ga. App. 729, 771 S.E.2d 419 (2015).

Receiver's duty is to administer assets in such manner as to receive their highest value for the benefit of the estate and of creditors. Northeast Factor & Disct. Co. v. Mortgage Invs., Inc., 107 Ga. App. 705, 131 S.E.2d 221 (1963).

Receiver, a fiduciary, is held to higher standard than that of people dealing in the market place. Northeast Factor & Disct. Co. v. Mortgage Invs., Inc., 107 Ga. App. 705, 131 S.E.2d 221 (1963).

Judge of superior court is authorized, in proper case, to appoint receiver upon interlocutory hearing; in such a case, the receiver merely takes the property in custodia legis for the purpose of preserving the status until a jury can pass upon the case. Benton v. Turk, 188 Ga. 710, 4 S.E.2d 580 (1939).

- Dismissal of the plaintiff's lawsuit against the receivers was upheld because the plaintiff failed to obtain leave from the trial court in the lawsuit against a former business partner before filing a separate lawsuit against the receivers appointed in that case. Considine v. Murphy, 297 Ga. 164, 773 S.E.2d 176 (2015).

- In an action involving a business dispute between joint owners, the trial court did not manifestly abuse the court's discretion in finding that the appointment of a receiver was justified because the plaintiff showed that the defendants attempted to assert sole control over the business assets in which the plaintiff had an ownership interest by unilaterally dissolving the parties' LLC and operating through a separate entity. Nayyar v. Bhatia, 348 Ga. App. 789, 824 S.E.2d 675 (2019).

Appointment of receivers and their duties are matters within discretion of court and not the subject of agreement of the parties. Cochran v. Eason, 227 Ga. 316, 180 S.E.2d 702 (1971).

The appointment of a receiver necessary for the protection of the litigant's interests is a matter resting in the discretion of the trial court. Dixie-Land Iron & Metal Co. v. Piedmont Iron & Metal Co., 235 Ga. 503, 220 S.E.2d 130 (1975).

The appointment of a receiver is a matter left to the trial court's discretion. Shaw v. Cousins Mtg. & Equity Invs., 142 Ga. App. 773, 236 S.E.2d 919 (1977), overruled on other grounds, Mock v. Canterbury Realty Co., 152 Ga. App. 872, 264 S.E.2d 489 (1980).

Trial court had the authority to appoint a receiver over the two corporations in a case involving a dispute over the ownership rights in an internet-based software program since the matter was in litigation and it appeared that the rights of the first partner could not be otherwise fully protected because it appeared that the two corporations were committing financial improprieties related to an initial order for relief that the trial court granted to protect the rights of the parties involved. D.C. Micro Dev. v. Lange, 259 Ga. App. 611, 578 S.E.2d 251 (2003).

- The appointment of a receiver rests in the discretion of the trial court and can be made for the protection of the parties even though there is no prayer for a receiver made in the complaint. McGarrah v. Bank of S.W. Ga., 117 Ga. 556, 43 S.E. 987 (1903); Dixie-Land Iron & Metal Co. v. Piedmont Iron & Metal Co., 233 Ga. 970, 213 S.E.2d 897, later appeal, 235 Ga. 503, 220 S.E.2d 130 (1975).

- A receiver should not be appointed to take possession of property unless it is clearly made to appear that a receiver is required in order to protect the rights of those interested in the property. Bird v. General Disct. Corp., 194 Ga. 282, 21 S.E.2d 651 (1942); Jones v. Wilson, 195 Ga. 310, 24 S.E.2d 34 (1943).

- No matter how strong the apparent equity of a complainant may be, if there is no necessity for a receivership, the courts will not change the status until final decree. Jones v. Wilson, 195 Ga. 310, 24 S.E.2d 34 (1943); Furr v. Jordan, 196 Ga. 862, 27 S.E.2d 861 (1943); Conner v. Yawn, 200 Ga. 500, 37 S.E.2d 541 (1946); Jue v. Joe, 207 Ga. 119, 60 S.E.2d 442 (1950); Liddell v. Johnson, 213 Ga. 752, 101 S.E.2d 755 (1958).

Where evidence is conflicting, trial court's discretion to appoint receiver is broad. Warner v. Warner, 237 Ga. 462, 228 S.E.2d 848 (1976).

- Where there is no evidence to sustain averments that property in dispute will be damaged or injured before judgment, it is not abuse of discretion to refuse to appoint a receiver. National Casket Co. v. Clark, 181 Ga. 6, 181 S.E. 146 (1935).

- The grant or refusal of a receivership is a matter largely within the discretion of the trial court, but the exercise of the right is reviewable by the Supreme Court. Friedlander v. Friedlander Bros., 175 Ga. 477, 165 S.E. 426 (1932).

- Where the rights of either party would be endangered for the lack of a receiver, the discretion of the trial court in appointing a receiver will not be disturbed unless there is manifest abuse of discretion. Mitchell v. LaGrange Banking & Trust Co., 166 Ga. 675, 144 S.E. 267 (1928).

The discretion of the trial court will not be disturbed unless manifestly abused. Parrish v. Rigell, 183 Ga. 218, 188 S.E. 15 (1936); Farrar v. Pesterfield, 216 Ga. 311, 116 S.E.2d 229 (1960); Anthony v. Anthony, 237 Ga. 872, 230 S.E.2d 752 (1976).

Task of appellate court is to affirm trial judge unless the trial judge abused discretion by appointing receiver. Warner v. Warner, 237 Ga. 462, 228 S.E.2d 848 (1976).

Large discretion is vested in the trial court in granting injunctions and appointing receivers; and unless some principle of substantial equity has been violated, the appellate court will not control the judge's discretion unless clearly abused. Crockett v. Wilson, 184 Ga. 539, 192 S.E. 19 (1937).

Allegation of insolvency without more does not authorize appointment of receiver and injunction against defendant's disposing of its assets. Stalvey v. Pedi Joy Shoes Corp., 220 Ga. 489, 140 S.E.2d 264 (1964).

- Where stock of corporation is owned in equal shares by two contending parties, which condition threatens to result in destruction of business, and it appears that parties cannot agree upon management of business, and under existing circumstances neither one is authorized to impose its views upon the other, court of equity may appoint receiver to preserve property of corporation, administer it, and, if necessary, dispose thereof for protection of creditors and owners. Farrar v. Pesterfield, 216 Ga. 311, 116 S.E.2d 229, later appeal, 216 Ga. 381, 116 S.E.2d 556 (1960).

- Trial court did not abuse the court's discretion in issuing an interlocutory injunction enjoining officers from disposing of any of the documents or assets of a corporation and continuing a receivership because the officers controlled the assets that were a subject of the litigation, raising the possibility that the assets could be dissipated before the litigation is resolved; although the officers made several vague arguments about the powers granted to the receiver, the officers failed to show that the trial court abused the court's discretion in granting those powers. Pittman v. State, 288 Ga. 589, 706 S.E.2d 398 (2011).

While the borrowers argued that the appointment of a receiver was improper because the bank had an adequate remedy at law, the supreme court presumed that there was sufficient evidence to support the appointment, such as evidence that the assets at issue were being dissipated. Alstep, Inc. v. State Bank & Trust Co., 293 Ga. 311, 745 S.E.2d 613 (2013).

Receivership was proper for the subsidiary of a non-profit health care sharing ministry given allegations that a licensing contract had been terminated but that the former licensee was continuing to control the subsidiary's customers and funds, and funds were needed to pay health care costs. Aliera Healthcare, Inc. v. Anabaptist Healthshare, 355 Ga. App. 381, 844 S.E.2d 268 (2020).

- In a suit between cotenants of real estate to obtain equitable relief with respect to the common property, a receiver may be appointed where the plaintiff's title or right is probable and a receivership is necessary for the preservation of the subject matter of the suit or for the protection of the interests of the parties therein pending the litigation. Waycross Military Ass'n v. Hiers, 209 Ga. 812, 76 S.E.2d 486 (1953); Warner v. Warner, 237 Ga. 462, 228 S.E.2d 848 (1976).

- Under this section, when any property is in dispute and the rights of one or both parties cannot otherwise be fully protected, the court may appoint a receiver to hold the property pending the final decision of the case; in such cases, the defendant, though a bona fide claimant, may be compelled to deliver the property into the possession of the receiver, pending the final adjudication of the defendant's rights. Braswell v. Palmer, 191 Ga. 262, 11 S.E.2d 889 (1940) (see O.C.G.A. § 9-8-1).

In a suit between adverse claimants to property, a proper case for the appointment of a receiver is made when the right or title of the moving party is probable and a receivership is necessary for the preservation of the subject matter of the suit or for the protection of the interests of the parties pending the litigation. Anthony v. Anthony, 237 Ga. 872, 230 S.E.2d 752 (1976).

- Evidence that a partner misappropriated a law firm's funds before the partners decided to dissolve the firm; borrowed money on the firm's line of credit without the other partner's permission and without notifying the bank that the firm was going to be dissolved; and took records from the firm, including most personal injury files, supported the appointment of a receiver under O.C.G.A. §§ 9-8-1 and9-8-3. Fulp v. Holt, 284 Ga. 751, 670 S.E.2d 785 (2008).

- There is no reason why partition in equity may not be fully and effectually accomplished through and by receivership. Waycross Military Ass'n v. Hiers, 209 Ga. 812, 76 S.E.2d 486 (1953).

- There is no provision of law which authorizes the appointment of a "permanent" receiver in the sense that the receiver might manage the affairs of the alleged incompetent until the incompetent's mental restoration, no matter how long delayed, or until the incompetent's death. All of the duties which might be performed by such a receiver could be equally performed by a legal guardian, who would not only have the right, but the obligation, to possess oneself of the property and assets of the ward and manage the incompetent's affairs. Parrish v. Rigell, 183 Ga. 218, 188 S.E. 15 (1936).

- Since the evidence did not show that the rights of the parties could not be fully protected without the appointment of a receiver, a trial court did not err in refusing to appoint a receiver; a lender did not present any evidence of insolvency, waste, mismanagement, or misappropriation of assets on the part of the owners of a restaurant. Patel v. Patel, 280 Ga. 292, 627 S.E.2d 21 (2006).

Trial court's order denying a shareholder's request for the appointment of a receiver for a corporation under O.C.G.A. § 9-8-1 was proper because there was no showing that the appointment of a receiver could have reversed an improper tax election by the corporation and, although the corporation's president inaccurately represented before 2000 that the president was the sole owner of the corporation, the corporate structure had clearly been recognized since that time, and it was not shown that these prior representations affected the current or future operation of the corporation; further, although the funds for a building's purchase were paid from the president's personal account, it was undisputed that the building was now owned by the corporation, and the evidence was that improper corporate expenditures had been adjusted in the audit so as to ensure that the shareholder's proper share of the corporation was accurately measured. There was no showing that the president or the corporation were insolvent, or that the shareholder would not have been able to ultimately gain the shareholder's appropriate share of the corporation's value. Treu v. Humanism Inv., Inc., 284 Ga. 657, 670 S.E.2d 409 (2008).

Trial court may entertain suit by executors for direction, and still appoint receivers to execute directions given therein; the two powers of the court are given equal recognition in the Code, and are not antagonistic, but are coordinate and consistent. Benton v. Turk, 188 Ga. 710, 4 S.E.2d 580 (1939).

Cited in Jordan v. Beal, 51 Ga. 602 (1874); Tufts v. Little, 56 Ga. 139 (1876); Graham v. Fuller Elec. Co., 75 Ga. 878 (1885); Vizard v. Moody, 117 Ga. 67, 43 S.E. 426 (1903); Sherridan v. Fowler, 156 Ga. 238, 118 S.E. 853 (1923); Crockett v. Tripp, 167 Ga. 322, 145 S.E. 507 (1928); Dixon v. Tucker, 167 Ga. 783, 146 S.E. 736 (1929); McCord v. McPherson, 40 Ga. App. 614, 151 S.E. 53 (1929); Smith v. Dorris, 41 Ga. App. 20, 151 S.E. 827 (1930); Martin v. Citizens' Bank, 170 Ga. 180, 152 S.E. 234 (1930); Sheffield v. Sheffield, 177 Ga. 202, 170 S.E. 83 (1933); McDermid v. McDermid, 182 Ga. 320, 185 S.E. 515 (1936); Voyles v. Federal Land Bank, 182 Ga. 569, 186 S.E. 405 (1936); Levitsky v. Turk, 182 Ga. 873, 187 S.E. 107 (1936); Ramey v. McCoy, 183 Ga. 616, 189 S.E. 44 (1936); Wright v. Edmondson, 189 Ga. 310, 5 S.E.2d 769 (1939); White v. Glasgow, 193 Ga. 609, 19 S.E.2d 305 (1942); Astin v. Carden, 194 Ga. 758, 22 S.E.2d 481 (1942); Adams v. McGehee, 211 Ga. 498, 86 S.E.2d 525 (1955); Kirchman v. Kirchman, 212 Ga. 488, 93 S.E.2d 685 (1956); Rogers v. McDonald, 224 Ga. 599, 163 S.E.2d 719 (1968); Adler v. Ormond, 119 Ga. App. 60, 166 S.E.2d 384 (1969); Franco v. Stein Steel & Supply Co., 227 Ga. 92, 179 S.E.2d 88 (1970); Apperson v. Cronic, 251 Ga. 34, 302 S.E.2d 559 (1983); Petrakopoulos v. Vranas, 325 Ga. App. 332, 750 S.E.2d 779 (2013).

RESEARCH REFERENCES

Am. Jur. 2d.

- 65 Am. Jur. 2d, Receivers, §§ 1 et seq., 25 et seq., 79, 80, 129.

21 Am. Jur. Pleading and Practice Forms, Receivers, § 2.

- 75 C.J.S., Receivers, §§ 1 et seq., 19 et seq., 142 et seq.

- When receiver of corporation deemed to be vested with title to assets so as to entitle him to sue in a foreign jurisdiction, 3 A.L.R. 262; 29 A.L.R. 1495.

Appointment of receiver as excuse for nonperformance of contract, 3 A.L.R. 627; 12 A.L.R. 1079; 33 A.L.R. 499.

Appointment of receiver for solvent corporation at instance of minority stockholders under statute permitting appointment of receiver when the court deems it necessary to secure ample justice to the parties, 5 A.L.R. 368.

Continuance of business by receiver at loss, 12 A.L.R. 292.

Applicability of penal statutes to railroad receivers, 15 A.L.R. 1372.

Imposition of franchise or excise tax on corporation in hands of receiver, 18 A.L.R. 700; 26 A.L.R. 426.

Receivership proceedings as suspending statute of limitations, 21 A.L.R. 961.

Failure to obtain permission to sue receiver as affecting jurisdiction of action, 29 A.L.R. 1460.

Claim in receivership for breach of contract which was still executory when receiver was appointed, 33 A.L.R. 508.

Conduct pending receivership as contempt of court, 39 A.L.R. 6; 48 A.L.R. 241.

Power of receiver of private corporation to issue receivers' certificates, 40 A.L.R. 244.

Right of receiver to take property in summary manner or by summary proceedings from strangers to the record, 40 A.L.R. 903; 43 A.L.R. 1340.

Inherent power of equity, at instance of a stockholder, to appoint receiver for, or to wind up, a solvent, going corporation, on ground of fraud, mismanagement, or dissensions, 43 A.L.R. 242; 61 A.L.R. 1212; 91 A.L.R. 665.

Leave of court as essential to foreclosure of mortgage on property in hands of receiver, 43 A.L.R. 1357.

Right of receiver who is himself an attorney to employ another attorney at the expense of the estate, 64 A.L.R. 1541.

Friendly or consent receiverships, 84 A.L.R. 1443; 90 A.L.R. 406.

Power of court to appoint receiver in a suit for divorce or separation, 95 A.L.R. 902.

Liability of mortgagee or mortgaged property for expenses of receivership not sought by him, or for expenditures by receiver in connection with the property, 104 A.L.R. 990.

Power of court to appoint receiver of future earnings of husband in order to enforce judgment for alimony, 106 A.L.R. 588.

Necessity as condition of appointment of receiver pendente lite of showing of probability that plaintiff will be entitled to judgment, 109 A.L.R. 1212.

Appointment of receiver after dissolution or expiration of charter of corporation, 109 A.L.R. 1526.

Appointment of receiver after decree or judgment, 111 A.L.R. 500.

Discharge of receiver as affecting pending action against him or judgment therein, 112 A.L.R. 142.

Receiver as within social security and unemployment compensation acts, 143 A.L.R. 984.

Citizenship of receiver as test of diversity of citizenship for purposes of jurisdiction of federal court, 148 A.L.R. 804.

Right of receiver or other liquidator, or court appointing him, to contest or pass upon the merits or amount of claim, as concluded by pendency in another forum of action on claim or judgment thereon, 168 A.L.R. 671.

Appointment of receiver at instance of plaintiffs in tort action, 4 A.L.R.2d 1278.

Appointment of receiver in proceedings arising out of dissolution of partnership or joint adventure, otherwise than by death of partner or at instance of creditor, 23 A.L.R.2d 583.

Action for malicious prosecution based on institution of involuntary bankruptcy, insolvency, or receivership proceedings, 40 A.L.R.3d 296.

Appointment or discharge of receiver for marital or community property necessitated by suit for divorce or separation, 34 A.L.R.4th 698.