Case ID: abb-pr_9/html/0364-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—T. R. Strong, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

DE GROOT a. JAY.
    
      Supreme Court, First District;
    
    
      General Term, December, 1859.
    Receiver.—Leave to Sue.
    
      A receiver who is sued as such without leave of court, is entitled to an order, perpetually restraining the plaintiff from proceeding in the action.
    
    Appeal from an order denying petition for an order that the action be perpetually stayed, and that the plaintiff and his attorney be enjoined from bringing any other action of the same nature against the defendants.
    The facts are stated in the opinion of the court.
    
      Charles E. Whitehead, for the appellants.
    
      Levi S. Chatfield, for the respondent.
    
      
       That he may waive this right, see Jay’s case, 6 Ante, 293.
    
   By the Court.—T. R. Strong, J.

The defendant Jay is the receiver, appointed by this court, of the Mechanics’ Eire Insurance Company, an insolvent corporation; and the other defendant is, under an order of the court, the attorney of said receiver. The plaintiff is a creditor of the company, and has brought this action to have the defendants enjoined from enforcing two judgments, one against him alone, and the other against him and another person, in two foreclosure suits, and to have the judgments set aside, and also for general relief, under which general prayer he asks to have the receiver restrained from applying the funds of the company towards paying a particular claim. The ■defendants applied to the court at special term upon petition and other papers for a stay of proceedings in this action, which was denied, and the case is now before the court on appeal from that order.

It does not appear that leave of the court was obtained for bringing the action, and it was assumed on the argument of the appeal that such leave was not applied for or given. The action could not regularly be brought without such leave, and might properly have been set aside or stayed, because it was not specially authorized by the court. The receiver is an officer of the court, and by the well-settled practice, permission of the court was necessary to warrant an action against him. This rule is essential for the protection of receivers against unnecessary and oppressive litigation, and should be carefully maintained. It is a contempt of the court to sue a receiver without such permission.

In most cases of claims against a receiver, or the fund or property in his hands, this remedy by special motion is adequate. Any person having such a claim may resort to this summary remedy. The fund or property being held by the court by its receiver in trust for those entitled to it, or to be paid out of it, the court may administer justice to claimants without suit, upon special application. In the present case all the relief sought, to which the plaintiff is entitled, might be obtained in that mode, and that mode is commended as well by considerations of economy as expedition. The costs of a motion are usually small in comparison with the costs of an action.

Looking at the number and history of the litigations commenced by and in behalf of the plaintiff against this receiver, in connection with the other facts shown on the motion, we are satisfied that the order applied for by the defendants should have been granted.

It was not made a point by the counsel for the respondent that the decision denying the relief asked, was not reviewable by appeal, but the appeal was discussed and submitted on its merits only. We do not feel called upon to raise that question.

The result, therefore, is that the order appealed from must be reversed, and the motion to stay proceedings granted without costs. 
      
       Present, -Roosevelt, Sutherland, and T. R. Strong, JJ.