the bank that Crusade of Divine Living, Inc. had good title to the land.
The loan being in default, the Bank entered judgment on the bond accompanying the mortgage against Crusade. It was then learned that Crusade did not have title to the land described in the mortgage, whereupon two actions were filed by the bank in the Court of Common Pleas of Lackawanna County: (1) an action in Equity, No. 14 September Term, 1966, against Crusade, Scientific, Adolph Hohensee, Freida Hohensee, now Freida Grier, Mildred Hohensee, Gene Basalyga, John J. Kozik and Ervin Hohensee, being all of the persons having any interest, real or apparent, in the subject real estate, to enjoin further conveyance of the land, to set aside alleged fraudulent conveyances, and for an order directing the conveyance of the real estate to the Bank, and (2) an Assumpsit Action against P. M. Judd, No. 564 September Term, 1968, on the certificate of title given by him to the Bank. This later action was settled for $80,000 with the St. Paul Fire and Marine Insurance Company, the liability carrier for P. M. Judd, whereupon the note, bond and mortgage were assigned to the Insurance Company which intervened as a party plaintiff in the equity action.
Against this factual background, Plaintiffs filed this complaint alleging several deprivations of constitutional rights by the Defendants. The complaint contains many irrelevancies and conclusory statements unsupported by factual allegations. The Court has attempted to unravel and comprehend the various claims asserted. Each count of the complaint, and the law applicable thereto, will be discussed seriatim.
Count I contains the major portions of the Plaintiffs' claims. The primary claim is that there exists a conspiracy involving Defendant Bradican, the state court-appointed receiver of Scientific, and other named Defendants, to deprive Ervin Hohensee of his legal right to Hohensee Park. Thus, Plaintiffs contend that they were wrongfully evicted from the property involved, that Defendant Grier is a squatter on the property, and that Defendants are damaging the property to the detriment of Ervin Hohensee. Plaintiffs also contend that the $80,000 loan from Defendant First National Bank of Jermyn and mortgage on the property were fraudulently obtained. Plaintiff Hohensee also contends that he was unconstitutionally incarcerated at the instance of the Defendants from January 29, 1971 to March 3, 1971, during which time Defendants stole his personal property, interfered with his access to the courts, and subjected him to torture. Plaintiffs request an injunction against Defendants asserting any title to or control over Hohensee Park, an order compelling Defendants to return all real and personal property belonging to Plaintiffs, and compensatory and punitive damages. Throughout Count I it is alleged that Ervin Hohensee is owner of 4,457 shares of the 4,479 outstanding shares of Scientific common stock.
Having grounded their claims on the Civil Rights Act, 42 U.S.C. § 1983, Plaintiffs must show a deprivation of constitutional rights by persons acting under color of state law. The deprivation of property rights is a proper constitutional claim under the Civil Rights Act. Lynch v. Household Finance Corp., 405 U.S. 538, 92 S. Ct. 1113, 31 L. Ed. 2d 424 (1972). It must next be determined whether the requisite "state action" has been pleaded. The complaint alleges that Defendant Bradican acted under color of state law and that the other Defendants conspired with Bradican to commit most of the illegal acts. A suit may be brought against private citizens under the Civil Rights Act if it is alleged that a conspiracy existed between the private individuals and one who acted under color of state law. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). Therefore, whether "state action" is present depends upon whether a state court-appointed receiver of a corporation acts under color of state law. There is no Pennsylvania statute governing the appointment of receivers, but it has long been recognized that under certain extraordinary circumstances a court may exercise its equitable jurisdiction to appoint a receiver.
"Receivership, as an extraordinary remedy, like an injunction, is frequently termed the hand or arm of the court, indicating not only authority and power to act, but a means of preserving equality and justice to all interested. The authority of a receiver, as an executive in control, is subject to the court alone; he exercises the functions of the board of directors, managers and officers, takes possession of corporate income, property and assets, directs not only its operation, but, while in control, its policies on all lines."
McDougall v. Huntingdon and Broad Top R. & C. Co., 294 Pa. 108, 116, 143 A. 574, 577 (1928). State action includes "misuse of power, possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law . . . ." United States v. Classic, 313 U.S. 299, 326, 61 S. Ct. 1031, 1043, 85 L. Ed. 1368 (1940). In my view, this concept of state action would include the actions of a receiver appointed by a state court. Of course, as to those of Plaintiffs' claims not alleging a conspiracy between Defendant Bradican and other Defendants, and to those claims involving actions prior to the December 3, 1970 appointment of Bradican as temporary receiver of Scientific, the required state action is absent.
Despite the fact that Plaintiffs have alleged a deprivation of constitutional rights by persons acting under color of state law, Plaintiff Hohensee cannot in this action assert his ownership to the real property in issue. The doctrine of res judicata is properly applicable so that the validity of his 1963 recorded deeds to Hohensee Park is governed by the prior judgment of the state courts declaring those deeds fraudulent and void. See Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 68 S. Ct. 715, 92 L. Ed. 898 (1948). In a previous action in this Court wherein Ervin Hohensee sought to establish his ownership of Hohensee Park, Chief Judge Michael H. Sheridan granted summary judgment "because the highest court in Pennsylvania has decreed his deeds are void." Hohensee v. Grier, No. 69-157 Civil (M.D. Pa., filed July 31, 1973).
Plaintiffs attempt to negate the res judicata effect of the prior judgments by alleging that they were procured by fraud. For the most part, the complaint charges fraud in broad and conclusory language. In a counter-affidavit of Ervin Hohensee (Doc. #272) it is stated:
"The Defendants who are engaged in a colossal conspiracy . . . caused some courts to enter an outrageous, fraudulent chain of judgments procured by defendants' obstruction of justice by the use of bribery, massive reckless perjury, terror, mayhem, murder and a plethora of other organized crimes in said . . . conspiracy."