Case Name: In re The E. M. Boynton Saw and File Company
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1884-12
Citations: 1 How. Pr. (n.s.) 69
Docket Number: 
Parties: In re The E. M. Boynton Saw and File Company.
Judges: 
Reporter: Howard's Practice Reports
Volume: 3
Pages: 69–71

Head Matter:
SUPREME COURT.
In re The E. M. Boynton Saw and File Company.
Corporations — Voluntary dissolution of—When receiver may be appointed— Heport of referee in such, cases, what must contain — Code of Civil Procedure, sections 3426, 2429.
The court has no power to appoint a receiver under proceedings for the voluntary dissolution of a corporation until the making of the final order dissolving the corportion.
Section 2426 of the Code of Civil Procedure requires the report of the referee to contain “ a statement of the effects, credits and other property and of the debts and other engagements of the corporation and of all other matters pertaining to its affiairs :
Held, that the requirement of the Cede is one of substance and not of form, and a failure to comply with it renders the final order void.
Second, Department, General Term, December, 1884.
John B. Whiting and Charles E. Chase, for certain judgment creditors, appellants.
Charles II. Luscomb, for respondents.

Opinion:
Bbown, J.
— This is a purely statutory proceeding, and the court has no power or authority to act, except as such power is conferred by the statute. The authority for the appoint ment of a receiver is given by section 2429 of the Code, and this can only be exercised upon granting the final order dissolving the corporation. There was no power in the court therefore to appoint a temporary receiver, and the order of ¡November 2, 1883, was void. This view of the statute is in harmony with the decision of the courts (Matter of French Mfg. Co., 12 Hun, 488; Chamberlain agt. Rochester S. P. V. Co., 7 Hun, 557; In re Open Board of Brokers, 3 Monthly L. B., 57).
The statute does not give the court control over the corporate property until the decision is made upon the return to the, order to show cause. If such control had heen given there would doubtless be, as an incident to such control, authority to restrain creditors from suing the company and to prevent any interference by creditors with the corporate assets (Phœnix Foundry Co. agt. N. R. Cons. Co., 4th Dept., 19 W. D., 439).
But in the case of " The Eagle Iron Works " (8 Paige, 385) the chancellor held that an injunction would not be granted in such a proceeding as the one we are considering, and said : " The statute has not given to the court any control over the property until the coming in of the master's report and the dissolution of the corporation." He pointed out the difference between a proceeding for a voluntary dissolution of the corporation and proceedings against corporations in equity, and held that in the former case creditors who by their diligence obtained a lien upon the corporate property could not be deprived of the preference they had acquired ; while in the latter case the court might interfere by injunction to restrain the creditors' proceedings. I think, therefore, the order appointing the temporary receiver was void, and should have been vacated.
Another point is made by the appellant which I think is fatal to the proceedings: Upon the hearing upon the order to show cause, the court referred the matter to a referee " to take proof of the insolvency of the corporation and all matters relating thereto." This the court had power to do, and the Code provides {sec. 2426) that the report of the referee or decision of the court " must contain a statement of the effects, credits and other property, and of the debts and other engagements of the corporation, and of other matters pertaining to its affairs." The referee returned the testimony to the court, but made no report upon any of the matters mentioned in the statute, and there does not appear in the appeal papers to have been any decision of the court, except that contained in the final order. This, however, makes no mention of the matters required by the statute.
In the case of the Pyrolusite Manganese Company (29 Hun, 429), for a voluntary dissolution, a similar defect was held to be fatal to the proceeding. The requirement of the Code was one of substance and not of form, and a failure to comply with it renders the final order void.
The order appealed from must therefore be reversed, with costs, and the proceedings remitted to the special term to proceed anew upon the referee's report in the manner required by the statute.
Barnard and Dykman, JJ., concurred.