#### NATIONAL SURETY CORPORATION v. VAN B. SHARPE and LOUISE R. SHARPE, Trading and Doing Business as CARTHAGE WEAVING COMPANY.

(Filed 13 December, 1950.)

Receivers § 7—

A creditor of an insolvent, having appeared and filed claim, may not object to an order in the receivership proceedings after notice requiring it to litigate its claim in that action and restraining it from maintaining an independent action thereon.

Appeal by movant York Mills, Inc., from *Sink, J.,*as of September Term, 1950, of Moose.

Affirmed.

This case was here at Spring Term, 1950, on the appeal of York Mills, Inc., movant, and is reported in 232 N.O. 98, where the facts are stated.

*Gavin, Jackson & Gavin for National Surety Corporation, appellee.*

*W. D. Saibiston, Jr., for American Woolen Company, respondent.*

*John M. Spratt and Carroll >c& Steele for York Mills, Inc., appellant.*

HeviN, *J.*

In the opinion written for the Court by *Justice Hrvin*on the former appeal the cause was remanded to the Superior Court for the *84determination of tbe validity and priority of tbe claim of tbe plaintiff in accordance with tbe rules regulating tbe “presentation, proof and payment of claims in receivership.” It was held that there was no valid basis for tbe contention of tbe York Mills, Inc., that its claim is a preferred one.

In tbe subsequent bearing in tbe Superior Court of Moore County, it appeared that tbe successive receivers in charge of tbe defendants’ business reported a substantial loss in tbe operation from July, 1949, to September, 1950, and that tbe present receiver did not have funds sufficient to pay tbe losses and continue operation. Thereupon it was ordered that tbe receiver cease further operation, only preserving tbe property, paying laborers, and collecting accounts; that tbe clerk give notice to all claimants and creditors to present claims in writing on or before 23 October, 1950; that tbe clerk give notice of meeting of all creditors with receiver 3 November, to bear bis report and to make recommendations to tbe resident judge whether operation should be continued or tbe property sold and tbe business concluded; that all creditors and claimants be required to assert and litigate their rights in this action and be restrained from independent action thereon, and that tbe clerk notify all creditors and persons interested in tbe affairs of defendants to become parties to this action. Tbe movant York Mills, Inc., excepted to this order and appealed.

Tbe receivership in this case was based originally upon tbe affidavit of tbe plaintiff in which tbe facts constituting its cause of action are set out, tbe insolvency of defendants alleged, and restraining order sought, and also upon tbe petition of tbe defendants admitting insolvency and praying that a receiver be appointed to operate tbe business of tbe defendants and fulfill tbe contract set out in plaintiff’s affidavit. Thereupon by order of court a receiver was appointed and commanded to take charge of and direct tbe affairs of tbe defendants according to tbe law governing receiverships and according to tbe further orders of tbe court.

Tbe order of Judge Sink, entered September, 1950, from which tbe appeal in this case was taken, properly required all creditors and claimants to assert and litigate their rights in this action which was begun by issuance of summons July, 1949. Tbe law contemplates tbe settlement of all claims against tbe insolvent debtor in tbe original action in which tbe receiver is appointed. Hence all persons who have claims against tbe debtor who desire to participate in tbe distribution of tbe estate must present their claims in writing to tbe receiver. G.S. 55-152; *Surety Corp. v. Sharpe,*232 N.C. 98 (101), 59 S.E. 2d 593.

Tbe appellant York Mills, Inc., has appeared in this case and filed its claim with tbe receiver. Its rights thereon are subject to tbe determination of tbe court in this action. Its demurrer *ore tenus*to tbe affidavits *85on which., with defendants’ petition, the receivership was ordered, cannot be sustained.

On the appeal of York Mills, Inc., the order of Judge Sink is

Affirmed.