Case ID: ad_87/html/0317-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.: Van Brunt, P. J. (concurring):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Timothy J. Kieley and Frederick T. Mueller, Comprising the Copartnership Firm of Kieley & Mueller, Respondents, v. Barron & Cooke Heating and Power Company, Appellant.
    
      Receiver of a corporation — what must be shown to authorize his appointment before final judgment—the application should be on an affidavit, not on a complaint alone.
    
    In an action brought by a judgment creditor of a domestic corporation for the sequestration of its property, an order appointing a temporary receiver thereof will not be granted as a matter of right upon the complaint alone, even though, having the usual verification, such complaint states all the allegations thereof positively; such relief should not be granted until final judgment, except in a case where it satisfactorily appears that it is essential to the. protection of the plaintiff's rights that it be granted before.
    
      Facts and circumstances with reference to the condition and management of the corporate affairs, showing that the appointment of a temporary receiver is necessary in order to render effectual a final judgment in favor of the plaintiff, should be shown. | .
    
      Semble (per Van Brunt, P. J.), that the facts and circumstances authorizing the appointment of a temporary receiver should appear by affidavit.
    Appeal by the defendant, the Barron & Cooke Heating and Power Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 18th day of May, 1903, granting the plaintiffs’ motion for the appointment of a temporary receiver of the defendant corporation.
    
      Anthony J. Griffin, for the appellant.
    
      R. M. Crater, for the respondents.
   Laughlin, J.:

This is an action for the sequestration of the property of the defendant, a domestic corporation, brought pursuant to the provisions of section 1784 of the Code of Civil Procedure. The plaintiffs allege in their complaint that they recovered‘a money judgment against the defendant on the 31st day of October, 1902, and that the judgment was duly docketed and execution issued thereon and returned unsatisfied. The verification of the complaint is the usual verification that the allegations are true, except as to those matters that are therein stated to be alleged upon information and belief, and that those are believed to be true ; but all - of the allegations in the complaint are positive, and the verification is, therefore, equivalent to an.unqualified verification that the allegations are true to the knowledge of the affiant. The plaintiff served notice of the motion for the appointment of a receiver, based upon the summons and complaint alone, on the 25th day of April, 1903, at the time the summons and complaint were served. Ho other papers were presented on the motion, but the defendant appeared and objected to the granting thereof.

The court is authorized to appoint a temporary receiver in such an action (Code Civ. Proc. § 1788); but this does not justify the appointment of a receiver as a matter of right upon the bare allegations of the complaint alone. ■ The effect of the order appointing the receiver is to take the entire possession, control and management of the corporate property and affairs out of the hands of its officers and directors. This relief should not be awarded until final judgment, except in a case where it satisfactorily appears that it is essential to the protection of the plaintiff’s rights. There was no proof before the court of the necessity for the appointment of a receiver prior to final judgment. When the motion was made, the defendant had not answered, nor had its time to answer expired. The plaintiff may be defeated in the action. The order sequestrates the property of the defendant and decrees the relief that would be granted upon final judgment in favor of the plaintiff, except that the amount of the indebtedness has not been directed to be paid over. Facts and circumstances with reference to the condition and management of the corporate affairs, showing the necessity of the receivership pending the action in order to render effectual a final judgment in favor of the plaintiff, should have been shown. It may be that the rights of the plaintiff, if he is entitled to any relief prior to judgment, could be sufficiently protected by an injunction order, which the court might grant without resorting to a receivership ; and it may be that the protection of his rights does not require the appointment of a temporary receiver.

It follows, therefore, that the order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Patterson, Ingraham and Hatch, JJ., concurred.

Van Brunt, P. J. (concurring):

I concur in result. I think that the facts authorizing the appointment of a receiver should appear by affidavit.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.-