Case ID: ny-sup-ct_8/html/0636-01.html
Source: Caselaw Access Project
Author: {"author": "Davis, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

EDWARD S. CLINCH, Respondent, v. THE SOUTH SIDE RAILROAD COMPANY OF LONG ISLAND, Appellant.
    
      Corporation—Receiver of—how appointed— Chapter 151, Laws 1870.
    The provisions of chapter 151, of the Laws of 1870, cover all the cases mentioned in title 4, chapter 8, part 8, of the Revised Statutes, providing for the appointment' of a receiver of a corporation upon the petition of a judgment creditor, after execution returned unsatisfied; and, since the passage of said act, the remedies therein provided must be pursued.
    The plaintiff recovered a judgment against the defendant, upon which execution was issued and returned wholly unsatisfied. Upon an affidavit showing these facts, and that the defendant was insolvent, he then applied, upon motion, eight days’ notice of which had been given, for an order appointing a receiver. The motion, was granted, and a receiver appointed. Held, that the proceedings were irregular, as not being authorized by section 3, of chapter lol, Laws 1870, and that the order appointing the receiver should be reversed.
    Appeal from an order made at Special Term, appointing a receiver of the defendant corporation.
    The facts are stated in the opinion.
    
      Tracy, Catlin <& Brodhead, for the appellant.
    
      John H. Bergen, for the respondent.
   Davis, P. J.:

The plaintiff in this action brought suit against the defendant in Kings, and recovered judgment, the roll whereof was filed in Kings, and transcript filed, and judgment docketed, in Queens and Suffolk counties. An execution in due form was issued to the sheriff of Suffolk county, and by him duly returned wholly unsatisfied. The defendant’s railroad runs through the counties of Kings, Queens and Suffolk, and it has offices and stations in each of those counties. Upon an affidavit, showing these facts, and also that the railroad company is insolvent, the plaintiff applied, upon motion and eight days’ notice, at the Special Term of the district, at chambers, for an order appointing a receiver. The defendant appeared and opposed such motion, and read on the hearing an affidavit, showing that on or about October 1st, 1872, the railroad company was mortgaged, to secure a million dollars of its bonds, to trustees, and that default having been made on such mortgage, the trustees have taken and are now in possession of, and operating, said railroad, and that the trustees have brought an action to foreclose the mortgage, which action was commenced before notice of this motion was given, and is still pending.

The motion of the plaintiff was granted, and Edward D. Gale was appointed receiver, and from the order appointing such receiver, this appeal is taken.

Prior to the act of 1870, the provisions of chapter 8, part 3, title 4, of the Revised Statutes, remained in, full force, unaffected by the Code. They were expressly excepted from the operation of the Code, by section 471. The thirty-sixth and thirty-seventh sections of the statute, provided that whenever a judgment at law, or decree in equity, shall be obtained against a corporation, and an execution issued thereon, shall have been returned unsatisfied, upon the petition of. the person obtaining such judgment or decree, or his representatives, the Court of Chancery may sequestrate the .property of such corporation, and may appoint a receiver of the same, and that upon a final decree, on any such petition, the court shall cause a just and fair distribution of the property of such corporation, and of the proceeds thereof, to be made among the fair and honest creditors of such corporation, in,-proportion to their debts, etc.

■ These sections also point out the mode of instituting the proceedings, to wit: by petition of the judgment creditor; and they provide substantially .fo.r .a formal suit, in equity, to be commenced by petition,-and-terminated by a final decree upon hearing and adjudication.

Whether an affidavit and notice of .motion, such as were presented in this case, would have been deemed a sufficient conformity to the statute, need- not be determined, because it seems clear that the mode of proceeding pointed out by the statute, has been superseded by the new mode indicated by the act of 1870.

Section 3 of that act, declares that the receiver of the property of a corporation, can be appointed only by the Supreme Court, in a -civil action, and in one of the following cases, upon at least eight days’ notice of the application therefor, to the proper officers of such corporation: “ 1. In a civil action brought by a judgment creditor of the corporation, or his representatives, after execution has been issued upon such judgment, and returned unsatisfied, in whole or in part.”

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“ 5th. In the cases specifically mentioned in title 4, chapter 8, part 3 of the Revised Statutes.”

The provisions of the act of 1870, clearly cover all the cases mentioned in the statute above referred to ; and there seems to be no reason to doubt that the remedies given by the statute, and especially those named in the thirty-sixth and thirty-seventh sections, must now be pursued by a civil action, instead of by petition, as provided for in the former statute. This change is substantial and important. It substitutes a new form of procedure, which is exclusive of all pre-existing modes.

We are not’ at a loss to ascertain what a civil action is, for that is something distinctly defined by law, as distinguished from a special proceeding; and section 471 of the Code declares that where a civil action shall be brought, such action shall be conducted in conformity to this act.

Whether an affidavit, made in the original action in which the judgment was recovered, with notice of a motion for the appointment of a receiver founded thereon, would have been sufficient "before-the act of 1870 or not, it is clear that it is not the commencement of a civil action, within the requirements of the act of 1870. Tne proceedings were, therefore, irregular, and the order based thereon was improvidently granted.

The order appealed from should be reversed, with costs.

Daniels and Beady, JJ., concurred.

Order reversed, with costs. 
      
       Chap. 151 Laws of 1870, p. 421.
     
      
       2 R. S., Edm. ed., p. 483.
     
      
       See Code, §§ 2, 3, 4, 5, 6.
     
      
       See City of Rochester v. Bronson, 41 How., 78; Bangs v. McIntosh, 23 Barb., 591; 6 Paige, 482; 10 id., 290; Mann v. Pentz, 3 N. Y., 415.