, 1892-07-22

Appellant contends that because the
Smiths complaint was not filed until after
be had made a motion for default against
the defendant he should not have been
stopped in obtaining his judgment and
decree Of foreclosure. s156, Code of Proc,
provides that an Intervention may be filed
"befOre trial, and we think this one was
therefore in time,
2. Numerous other creditors of the
Huron Lumber com pany who had not OBJ
tanned judgments and had no liens, and
were simple contract creditors, were al
lowed to file so called interyentions and
the cause was then kept waiting until they
could sue at law and obtain judgments,
when they came in again and filed sup
Elemental complaints. This, under the
statute and authorities, was wholly il
regular. Under a statute exactly like ours,
the supreme court of California, in the
leading case of Horn v. Volcano, etc. COM
pany, 13 CAL, 81, held that a simple con-
tract creditor of common debtor could
not intervene in a foreclosure suit. Our
statute also provides that no intervention
shall be cause for delay in the trial of an
action between the original parties. s157.
Intervention, as we have it, is a peculiar
proceeding and should not be extended so
as to take the place of equity suits which
furnish ample remedy in most cases. The
error committed is not, however, available
to the appellant, excepting in the disposi-
ton of the case made hereafter.
3. The court below disposed of the case
and the property by holding theappellant's
mortgage void, and directing the receiver
to sell the property and alter paying the
costs of the receiYership to pay in full the
Judgments of the intervenOrs, and the bal
ance, if any, to the appellant.
We cannot approve this disposition for
several reasons:
1. At the time when the Smiths filed
their Intervention the court had already
rNT NarrN NNan Narav. 10
vent and brought the whole of its property
into the court by the appointment of re-
ceiYer. Appellant seems to maintain that
the appointment of the receiver was only
in aid of his effort to preserve the mort
gagged property for his benefit, and appeals
to the evidence in the case to show that the
company was not insolvent, but only en-
barrassed, since the value of its assets was
estimated by witnesses to be more than its
liabilities. But when we turn to the aft
davit of the appellant himself, upon which
the motion was made by him for the ap-
pointment of a receivCf, we find that he did
not allege merely such matters as we're
necessary to entitle him to a receiver of the
mOrtgaged property pendent lite; but he
charged generally that the corporation was
insolYent and wholly unable to pay its Just
debts as they became due in the course of
its business; that it had present Liabilities
to the amount of fully forty thousand
dollars, with available assets of but half
that much; that it had closed business,
stopped working its mill, and thereby put
an end to all its income; that it was neces-
sary that steps be taken to continue the
working Of its mill to secure the applica-
ton of its rents and the profits of its busi-
ness to the repayment of the claim of ap-
pellant and its other liabilities. No denial
of these allegations was made by the COM
pany, and the court took the appellant at
his word and appointed a receiver gener-
a1f kH.a0 aow Of Tuv
fore, the status Of the corporation and its
property was as it was adjudged to be on
the petition of the appellant on the day the
receiver was appointed, unaffected by tes-
timOny taken many months later. The re-
ceiver having been thus appointed, repre-
sented the corporation and all of its credit
ors. He was a trustee for both. 1t was
his duty, under the orders of the court, to
take proof of all claims presented to him,
to recommend the allowance of those
which he deemed just, and the disallow-
ance of such as were improper. 1t was
not necessary that any claim thus present.
ed should be in the form of a judgment, or
that there should be technical interven-
tiOns. If claims were disputed by the re-
ceiVer the court had full power to decide
the points at issue, calling in jury if nee
essary. Any creditor having proved his
claim would have the right to contest the
claim of any other creditor if the receiver
should fail or refuse to do so in proper
case.
In word, this was fund in court, the
benehciaries Of which should receive their
respective shares as expeditiously as the
nature Of the property would permit, and
the principles governing the proceedings
are substantially those enacted into stat
utes of insolvency in the states, and into
bankruptcy acts by the United States. 1t
was just as much the duty of the receiver
in this case to oppose the appellants
.na ur,sI. IL H,a -
signee in bankruptcy or insolvency; for,
although the corporation could not dis
pute it, he was the trustee for other
creditors who could, and it was his duty to
act in their interest to the end that all
creditors should share alike.
Both parties seem to have overlooked all
these matters, and have proceeded as
though they could expect to be paid in
full, leaving other creditors nothing, there
being, as appears in the case, a number of
creditors who did not intervene. But the
race is not to the swift alone when the
prize is in court of equity for equal dis
tribution. Neither do we agree that the
appellant and Ball should be placed upon
any other footing than other creditors.
The court below finds that money to the
amount represented by their notes was
received and used by the corporation. and
Notwithstanding their preference failed,
their debts being bona tide entities them to
participate in the fund. StrattOn, receiver,
VS.. Allen, 16 NJ =. 229; Rouse VS.. Mer-
chants bank supra. Ball, to be sure, was
a stockholder and director, but that does
not estop him. Bristol Milling, etc., Co.
vs.. Probacy, Waits insolV Corps, s156.
If through any delinquency of his as
director the corporation has suffered, the
receiver can yet, under the direction of the
court, cause him to make good the loss.
Our conclusion upon the whole case is
that the courts decree adjudging appell-
a ts mortgage void be affirmed, and its
de rec of distribution be reversed And
the eafter the cause will be remanded with
instructions to the court below to direct the
receiver to take proof of claims against the
Huron Lumber company as they existed
on the oath day of January, 1891, without
any subsequent addition of interests or
costs of suits, and to proceed thereon ac-
cOrding to this decision. Inasmuch as the
interYenOrs took upon themselves the bur-
den OF opposing appellants mortgage, al
though irregularly, they will be allowed
before the final distribution, their cost in
Cured in defeating the mortgage, that is,
upon the trial of the case, and reasonable
attorneys fee of one hundred dollars; and
the appellant will be allowed his costs OF
this appeal before the final distribution
standing as to his costs on the same foot
ing as the interYenOrs. STILES, ].
We concur: Anders, c. j.; Scott J..
Dunbar, ].