Case Name: Owen v. Homeopathic Mut. Life Ins. Co. et al.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1890-05-26
Citations: 10 N.Y.S. 75
Docket Number: 
Parties: Owen v. Homeopathic Mut. Life Ins. Co. et al.
Judges: 
Reporter: West's New York Supplement
Volume: 10
Pages: 75–76

Head Matter:
Owen v. Homeopathic Mut. Life Ins. Co. et al.
(Supreme Court, General Term, Third Department.
May 26, 1890.)
1. Receivers—“Devolution of Liability”—Substitution.
There is no “devolution of liability” where a receiver is appointed on the voluntary dissolution of a corporation within Code Civil Proc. § 756, providing that, in case of a “devolution of liability, ” an action may be continued against the original party, unless the court directs the person on whom the liability is devolved to be substituted in the action, or joined with the original party, as the case requires.
2. Same—Laches.
Where a receiver has been appointed on the dissolution of a corporation, against whom an action is pending, a motion to substitute him as party defendant, in its stead, comes too late after he has distributed the assets, under order of the court, among proved claims duly advertised for under the statute.
Appeal from special term, Saratoga county.
Action by Sarah Owen against the Homeopathic Mutual Life Insurance Company. It was held at special term that under Code CiVil Proc. § 756, on the appointment of a receiver of a corporation against which an action was pending, there was a “devolution of liability.” Edwin M. Kellogg, the receiver of defendant, appeals from an order substituting him party defendant in its stead. Section 756 is as follows: “In case of a transfer of interest, or devolution of liability, the action may be continued by or against the original party; unless the court directs the person to whom the interest is transferred, or upon whom the liability is devolved, to be substituted in the action, or joined with the original party, as the case requires.”
Argued before Learned, P. J., and Landon and Mayetam, JJ.
William H. Arnoux, for appellant. William H. McCall, for respondent.

Opinion:
Learned, P. J.
It cannot be properly said that there is a "devolution of liability" when a receiver is appointed on the voluntary dissolution of a corporation. He does not become liable for the debts. His duty is to distribute the assets in the manner prescribed by law. Possibly there may be cases where, for the purpose of determining the existence or the amount of a debt, he could be made a party to an action previously pending against the corporation ; though we do not see why, in most instances, those matters could not be determined in the proceeding under the statute in which the receiver was appointed. But, however that may be, in the present case the receiver had advertised for claims under the statute; he had even served the plaintiff and her attorney personally with notice to present their claim; the plaintiff had presented no claim; and the receiver, under the statute, had distributed the assets, reserving only enough to meet his expenses. After all this, the present motion was made. Under these circumstances, it would be unjust, by making him a party to this action, to throw on him the expense of litigation; especially when there are no assets from which to pay the claim, should the plaintiff be successful. The plaintiff urges that the question, how the debt is to be paid, if proved, is not before us; that that need not be determined until the plaintiff shall have succeeded in the action. But, clearly, the only hope of the plaintiff must be, under the circumstances, to compel the receiver to pay from his own funds. On what ground that could be urged we do not know. But at any rate, we ought not to expose the receiver, who has followed the directions of the statute, and has thus discharged his duty properly, to the expense of defending the action, and to the risk of some attempt to make him personally liable. The plaintiff had full notice of the time when claims were to be presented. If she had presented this claim, and any ques tian had arisen whether it could be passed upon otherwise than in a formal action, she might, at that time, have made this motion. Then the receiver was in possession of funds, and had not made his distribution. But, whatever might have been done at that time, the plaintiff is now too late. The order is reversed, with $10 costs and printing disbursements.