Case Name: Ralph Raymond, Respondent, v. The Security, Trust and Life Insurance Company, Appellant, Impleaded with ALBERT B. Ovitt, as Receiver of the American Union Life Insurance Company, Respondent, and Others, Defendants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1905-02
Citations: 101 A.D. 546
Docket Number: 
Parties: Ralph Raymond, Respondent, v. The Security, Trust and Life Insurance Company, Appellant, Impleaded with ALBERT B. Ovitt, as Receiver of the American Union Life Insurance Company, Respondent, and Others, Defendants.
Judges: 
Reporter: Appellate Division Reports
Volume: 101
Pages: 546–550

Head Matter:
Ralph Raymond, Respondent, v. The Security, Trust and Life Insurance Company, Appellant, Impleaded with ALBERT B. Ovitt, as Receiver of the American Union Life Insurance Company, Respondent, and Others, Defendants.
Creditor’s action to obtain an adjudication that a transfer by one corporation t'O' anothervwas an illegal preference — the ’admission as a party to such creditor’$ action of a receiver of the first-meñtióned corporation, appointed in a sequestration action — the eorpm'ation receiving such illegal preference is not entitled, to a discontinuance tif the creditor’s action on paying the amount due to the'creditor instituting it-— tire receiver is entitled to an affirmative judgment.
Á judgment creditor of the American Unión Life Insurance Company brought, an action to obtain an adjudication that certain transfers of securities made by the American -Union Life Insurance Company to the Security Trust and. Life Insurance- Company were- null" and void, and to obtain an accounting with respect to such property. Subsequently a .receiver of the American Union Life Insurance Company was appointed in an action brought-for the sequestration of its property. Such receiver was; by consent of the plaintiff, made a. "party to the first-mentioned action and he served" an answer which admitted, all the allegations of the complaint and demanded an affirmative judgment. a& prayed for in the complaint. This answer was served upon the Security Trust and Life Insurance Company. The receiver represented a large number of , creditors of t-lie corporation. ,* .
The action "was tried at Special Tcrm and was decided in favor of the plaintiff and of the defendant receiver. Before the. decision had been filed or the judg ment entered the Security Trust and Life Insurance Company made a motion to discontinue and dismiss the action upon the payment into court of the amount of the plaintiff's claim, principal and interest, together with the costs and expenses of the action, or upon payment into court of such sum as the court might deem just and proper.
Held, that the motion was properly denied;
That the receiver, having succeeded in the action, would be entitled to have an ■ affirmative judgment, as prayed for by him, irrespective of the right of the plaintiff to continue the action;
That the mere payment of the plaintiff's claim did not dispose of the right of the receiver.
Appeal by the defendant, The Security Trust and Life Insurance Company,- from an order of the Supreme Court, made at the New York Special Termxand entered in the office of the clerk of the county of New York on the 28th day of November, 1904, denying the said defendant’s motion .for an order discontinuing and dismissing this action upon the payment of the plaintiff’s claim, with costs and expenses.
Edmund L. Mooney, for the appellant, Security Trust and Life Insurance Company.
Alexander T. Mason, for the Attorney-General, attorney for Francis H. Hendricks, Superintendent of Insurance.
Bert Hanson, for the respondent Ovitt as receiver.

Opinion:
Ingraham, J.:
The action was brought by the plaintiff as a judgment creditor of the American Union Life Insurance Company. The complaint alleges the recovery of the judgment and the return of an execution unsatisfied, the execution of a contract between the American Union Life Insurance Company and the Security Trust and Life Insurance Company, a copy of which is annexed to the complaint, and the delivery under that contract of certain securities to the appellant; that at the time of the making of the contract the American Union Life Insurance Company was insolvent and that the said contract and the assignment and transfers made in pursuance thereof were made and accepted by the appellant for the purpose and with the intention of giving a preference to certain of the creditors of the American Union Life Insurance Company over its other creditors, and that the transfer of the securities under said contract left the American Union Life Insurance Company insolvent, effected an entire suspension of its lawful business, and was made without the consent or knowledge of a large number of the stockholders of the American Union Life Insurance Company and in violation of the rights of its stockholders.
The plaintiff demanded' judgment that this contract be declared null and void-; that all money or securities or other property transferred in pursuance of it be declared null and void; that the Security Trust and Life Insurance Company be directed to transfer and deliver to the receiver of the American Union Life Insurance Company such property so assigned and transferred to it, and that the appellant be required to account for all such property and for other relief. The appellant interposed its answer, demanding a dismissal of the complaint. Subsequently, in sequestration proceedings. a receiver of the American Union Life Insurance Company was appointed, who on consent of the plaintiff was made a party defendant. He interposed an answer admitting all the allegations of the complaint and demanding an affirmative judgment as prayed for in the complaint. A copy of this answer was served upon the appellant, the Security Trust and Life Insurance Company.
. The action came on for trial at Special Term and was decided in favor of the plaintiff and the defendant receiver. The receiver then served a proposed decision and judgment. Before this decision was tiled or judgment entered the appellant made a motion to discontinue and dismiss this action upon payment into court of the amount of the plaintiff's claim, with principal and interest, with the costs and expenses of the action, or upon payment into court of such sum as the court might deem just and proper. This motion was denied, and the Security Trust and Life Insurance Company appeals. .
The final judgment appointing' the receiver is not in the record, hut from the affidavit read in opposition to tins motion it appears that on the 10th- day of January, 1903, a judgment was entered in the Supreme Court appointing Albert B. Ovitt receiver of the defendant, the American Union Life Insurance Company, in an action brought under sections 17.84 and 1793 of the Code of Civil Procedure, which provided for the sequestration of the property of the corporation and for a distribution thereof; that afterwards the receiver was by consent of the plaintiff made a party to this action; such consent having been obtained upon a statement by the attorneys for the receiver that it would be wiser to let this action be continued and make the receiver a party than to have him bring a new action to obtain the same relief.
The issues between the receiver, as well as those between the plaintiff, suing on behalf of all the creditors of the corporation, and the appellant, having been brought on for trial and having resulted in a determination in favor of the receiver, the latter would be entitled to have an affirmative judgment as prayed for by him, irrespective of the right of the plaintiff to continue the action. The mere payment of the plaintiff's claim would not, upon the papers presented, dispose of the right of the receiver, under a judgment which sequestrates all of the property of the corporation and requires the receiver to distribute the proceeds of such property among its creditors, to obtain the property of the corporation and to carry out the provisions of the judgment. It affirmatively appears that there is a large number of creditors of the corporation who would seem to be represented .by this receiver, and who are, if the judgment to be entered hereon is correct, entitled to enforce their claims against the corporation or its property. The appellant, however, does not propose to satisfy the claim of the plaintiff in this action. It asks to dismiss the action upon payment into court of the amount of the plaintiff's claim. The action having been .dismissed in face of the receiver's claim, it would not at all follow that the plaintiff could obtain that money in satisfaction of his judgment. The whole litigation has resolved itself into a question between the receiver, representing all the creditors, and the appellant. If the appellant had actually paid the judgment upon which this action, as well as the sequestration action in which the receiver was appointed, was founded a different question would then be presented; but as that has not been done it is not necessary for us to determine just what right the receiver would have if the judgment had been paid. Of course, upon this appeal, no opinion is expressed as to the propriety of the" decision of the Special Term awarding to the receiver the judgment that he asks in his answer against the other defendants, as that question must - be determined upon air appeal from either the interlocutory or final judgment.
It follows that the order appealed from must be affirmed,' with ten dollars costs and disbursements. -
Yan Brunt, P. J., Patterson, O'Brien and Hatch, JJ"., concurred. '
Order affirmed, with ten dollars costs and disbursements.