Case Name: In the Matter of the Application of the Directors of The Christian Jensen Co., Limited, for a Voluntary Dissolution
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1891-10-27
Citations: 40 N.Y. St. Rep. 621
Docket Number: 
Parties: In the Matter of the Application of the Directors of The Christian Jensen Co., Limited, for a Voluntary Dissolution.
Judges: 
Reporter: New York State Reporter
Volume: 40
Pages: 621–624

Head Matter:
In the Matter of the Application of the Directors of The Christian Jensen Co., Limited, for a Voluntary Dissolution.
(Court of Appeals,
Filed October 27, 1891.)
1. Corporations—Dissolution—Code Civ. Pro., § 2423.
On the 10th of March, 1891, the petitioners prayed the superior court for a voluntary dissolution of their corporation, and the receiver appointed on that day filed his bond on the 11th and took possesion on the 12th, on which day the order of March 10 was served on W. but no copy of the petition served was therewith W. had commenced an action of replevin on the lit-h, and on that day attached certain property of the corporation, and on motion of the receiver W. was restrained from taking any further proceedings in the replevin action. Held, no error; as the title of the receiver related back to the date of his appointment and the property was in. the custody of the law when attached.
2. Same.
Where the title of the order showed that the proceeding was for a voluntary dissolution of the corporation, and the order recited that it was insolvent and required all persons to show cause why the prayer of the petition should not be granted, it is in substantial compliance with § 2423 of the Code, which provides that the order must be to show cause “ why the corporation should not be dissolved.”
8. Same—Code, § 2424.
Where such an order is defective for not complying with § 2424 of the Code, because it did not require the order to be published or specify the newspapers, it must be taken advantage of by motion, but is not a defect which renders the appointment of the receiver a nullity.
Appeal from judgment of the New York superior court, general term, affirming order made at special term restraining appellants as creditors from prosecuting certain suits and proceedings.
John Fennell, for app’lt; John C. Coleman, for resp’t.
Affirming 39 N. Y. State Rep., 379.

Opinion:
Earl, J.
On the 10th day of March, 1891, the directors of the Christian Jensen Company, Limited, presented a petition to the superior court of the city of New York praying for a voluntary dissolution of the corporation. As the petition is not contained in the record, we must assume that it was proper in form and substance. In fact no objection is made that it did not comply with the provisions of the Code relating to the voluntary dissolution of corporations. Sections 2419 et seg. Upon the presentation of the petition the court made an order appointing Isidor Grayhead temporary receiver o£ all the property and assets of the corporation, as authorized by § 2423 of the Code, which also provided " that all person or persons whomsoever, whether creditors of the said Jensen Company, Limited, or otherwise, are hereby enjoined and restrained from bringing or continuing any action against the said corporation for the recovery of any moneys due said creditors, and until the further order of this court in the premises." The next day the receiver filed his bond and became qualified to act; and he took actual possession of the property of the corporation on the 12th day of March. The order of March 10th was served on the appellants, who composed the firm of Charles F. Wahlig's Sons, on March 12th, but no copy of the petition was served with the order. On the 12th of March the attorney for the petitioners, without notice to the appellants, made a motion that the order of March 10th be amended nunc pro tune in certain particulars, and that motion ivas granted. On the 11th of March the appellants commenced an action in one of the district courts in' tbe city of New York against the corporation, and in that action a writ of replevin was issued to one of the city marshals, who on the same day replevied from the corporation certain property in its possession, and on the same day they commenced an action in the court of common pleas to recover a money judgment, and in that action a warrant of attachment was issued to the sheriff of the city and county of New York, and on the same day he attached certain property of the corporation.
Thereafter the receiver made a motion at a special term of the superior court to restrain the prosecution of the suits thus commenced by the appellants, and after hearing counsel for the parties the court made an order granting the motion and permanently restraining the appellants from taking any further proceedings in the actions brought by them. From that order they appealed to the general term, and then to this court.
They now contend that the first order made by the superior court on the 10th of March did not require, as provided in § 2423 of the Code, all persons interested in the coporation to show cause " why the corporation should not be dissolved," and hence that the order was a nullity. It was the presentation of the petition that gave the court jurisdiction, and even if its order was in some respects irregular, imperfect and informal, it was not a nullity. It was effectual to appoint the receiver, and the moment he was appointed he became an officer of the court, and from that time the property of the corporation was in custodia legis, and the court had the power to preserve and protect it. While the receiver could not interfere with the property of the corporation until he filed his bond, yet after he filed his bond his title related back to the date of his appointment, and so it has frequently been held. Rutter v. Tallis, 5 Sand., 610; Storm v. Waddell, 2 Sand. Ch., 494; Wilson v. Allen, 6 Barb., 542; In the Matter of Berry, 26 id., 55; Deming v. The New York Marble Co., 12 Abb., 66.
It, therefore, follows that when this property was attached and replevied on the 11th day of March, the title was in the receiver, and the property was in the custody of the law, and the court had power to prevent any interference with it in any action, and its dissipation and removal by writ of replevin or attachment.
The court had express authority under § 2423 of the Code to restrain proceedings in the action in which the attachment was issued. As to the replevin action, if the corporation had been a naked wrongdoer in obtaining or retaining the possession of the appellants' property, and they had been the absolute owners of the property, they could have replevied it from the wrongdoer before it came into the actual possession of the receiver, and thus into the custody of the court. Even then, after the property had passed with the other property into the actual possession of the receiver, it could not, without leave of the court first obtained, have been replevied from him in an action against him. The only remedy then of the appellants would have been by an action commenced with the leave of the court, or by petition to the court. Noe v. Gibson, 7 Paige, 513; Riggs v. Whitney, 15 Abb., 388 ; Chautauqua County Bank v. Risley, 19 N. Y., 369 ; Barton v. Barbour, 104 U. S., 126; Evelyn v. Lewis, 3 Hare, 472 ; Ex parte Cochrane, L. R, 20 Eq., 282 ; High on Eeceivers, § 143. But here there was no proof showing what the relations of the corporation and the appellants to the property replevied were. The appellants may have been mortgagees or pledgees, or the corporation may have purchased or obtained the property by fraud, which the appellants could disaffirm. In either of these cases the corporation had an interest in the property and in its final disposition, and it should remain in the custody of the court to be disposed of in this proceeding under the rules and practice applicable to such cases.
As to the alleged defects in the order of March 10th, it did, in substance, require all persons interested to show cause " why the corporation should not be dissolved." The title of the order, "In the matter of the application of the directors of the Christian Jensen Company, Limited, for a voluntary dissolution," showed that the proceeding was for a voluntary dissolution of the corpo ration, and the order recited that the corporation was insolvent, and it required all persons to show cause why the prayer of the petition should not be granted. Under the provisions of the Code, the only prayer to be contained in the petition is for a dissolution of the corporation, and we think the order, in substance, required the persons interested to show cause why such a prayer should not be granted.
It is also objected that the order is defective for not complying with the provisions of § 2424 of the Code, because it did not require the order to be published, and did not specify the newspapers in which it was to be published. It is quite true that that is a defect which the parties could have taken advantage of by motion, or in some other way, but it was not a defect which rendered the appointment of the receiver a nullity. Furthermore the court, having jurisdiction of the proceeding, could make an order, as it did, nunc pro tune, correcting the formal defects in its order. Such an order was in furtherance of justice, did not interfere with any rights-which had accrued, did no harm to any one and the court was perfectly competent to make it It is quite true that if the order made on the 10th had been an absolute nullity the court would have been without power to interfere with the seizure of the property under the attachment and writ of replevin by thereafter making an order nunc pro tune, which then, for the first time became effectual.
Our conclusion, therefore, is that by the order made on the 10th of March, upon a petition properly presented, the court acquired jurisdiction of the proceeding; that its appointment of the receiver was valid; that the property thus came into its possession, and that it had a right to prohibit an interference therewith in any action thereafter instituted.
The order should be affirmed, with costs.
All concur.