Court Opinion

ID: 5182246
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:43:41.765344+00
Date Added: 2024-06-11T08:26:36.854431
License: Public Domain

O’Brien, J. (dissenting):
In the month of June, 1896 (on exactly what day in that month does not appear), a petition was presented by a majority of the directors of the corporation for a voluntary dissolution. Subsequent to the filing of such petition, and on the 9th day of June, 1896, the corporation made a general assignment for the benefit of creditors to the appellant. On the same day the assignee took possession of all the books, papers and property of every kind and description belonging to the company and has continued in the actual *404possession thereof down to the present time. On the 30th of June, 1896, which was subsequent to the making of the general assignment, an order was entered in this proceeding appointing the respondent temporary receiver of the corporation, and he thereupon qualified and demanded of the appellant and his attorneys the delivery of the books , of the corporation. This demand was refused upon the ground that the appellant was entitled to the possession of such books as assignee of the corporation. Thereupon the respondent made a motion to compel the appellant and his attorneys to summarily deliver such books tó the respondent. Upon the hearing of that motion the order now appealed from was entered.
It is settled that a corporation can make a valid general assignment but whether, if made subsequent to the filing of a petition for the vol- • untary dissolution of the corporation and before the appointment of the receiver,, such assignment vests title to the property of the corporation in the assignee, has never been passed upon except incidentally in this same proceeding on another appeal (In re Muehlfeld, etc., Co.; Looschen v. Muehlfeld, etc., Co., 42 N. Y. Supp. 802 ; S. C., 12 App. Div. 492), where, referring to the decision made, herein by the court below, it was said: “ The decision of Mr. Justice. Stover, which is cited, to the effect that the appointment of the receiver related to-the time of filing the petition, does not apply to this case. That decision was made upon the authority of section 2430 of the Code of Civil Procedure) which holds that a transfer of property of the corporation,, made after the filing of a petition for a voluntary dissolution, is void as against the receiver. The transfer in question in the motion before Mr. Justice Stover was made by the corporation by á general assignment, executed after the petition for voluntary dissolution was filed. His decision, therefore, that it was void under this section, as against the receiver, was correct.” Although that question was not directly involved, it was fully considered, and-upon reconsideration.., we hold it to be a correct statement of the law. ' :.
This, however, leaves the other question presented, as to the right of the court below, by summary order, to compel the assignee to deliver the assets ' of the corporation: in his hands to the receiver.. It has been held that the appointment of a receiver takes effect so as to relate back to the date at which the appointment was made,. *405and not to the date at whidh the petition was filed. (In re Christian Jensen Co., 128 N. Y. 550; In re Schuyler's Steam Towboat Co., 136 id. 169.)
In The Matter of Schuyler's Steam Towboat Go. it was said: “ The appointment of receiver is completed at the farthest by the filing and entering of the order appointing him, although before he proceeds to the discharge of his duties he may be directed to execute and file a proper bond. When that is done he can take actual manual possession of the property and his, title relates back to the time of his appointment.” So regarded, the title of the receiver here to the books and property relates back to the 30th of June, 1896, when the order appointing him was entered. But the assignment was made twenty-one days prior to that time, and the books and property now required to be delivered over were then taken possession of by the assignee.
It is conceded, however, that the assignment was subsequent to the filing of the petition. Assuming it to be void as against the receiver, and that in a proper action it would be so determined, the question remains whether the receiver should be remitted to his remedy by action, or this proceeding extended in such a way as to make the assignee a party thereto so as to bind him; or whether, as was here done, the assignee can be directed by summary order to turn over the books and property to the receiver. In Parker v. Browning (8 Paige, 388) it was held that if the property is in the possession of a third person who claims the right to retain it, either the receiver must proceed by suit in the ordinary way to try his right to it, or the complainant must make such third person a party to the suit and apply to have the receivership extended to the property in his hands; so that an order for the delivery of the property may be made which will be binding upon him and which may be enforced by process of contempt if it is not obeyed. In Olmsted v. The Rochester, etc., Railroad Co. (46 Hun, 552) the property of a corporation had been sold under the foreclosure of a mortgage, and upon that sale all the books of the company of which possession was sought were delivered to the purchaser, who thereafter conveyed them to two other corporations, in whose possession they remained. A receiver subsequently appointed demanded delivery to him of all the property and books of the corporation, which was *406refused, and it was therein held that as the books passed under the sale to the purchaser, and were by him transferred .to two new companies, and thereafter passed to a new consolidated company, and were then held by -that company, which claimed to own them absolutely, it could not be deprived of the possession of- the books by a summary order made in the action.
The distinction to be made between that case and the one at bar is, that there, long prior to the appointment of the receiver, the property and books had passed into the hands of a third party who claimed title to them; while here, upon the filing-of'the petition, the court acquired jurisdiction over the proceeding and over the property of the corporation, which property was" thus placed in the custody of the court. We do not- think that the custody thus obtained could be disturbed, though it was subject to any liens or rights acquired as against it by creditors or others, which, if prim-an d superior to the rights of the receiver, could be enforced against such receiver. But we do not think that such custody could be affected by the illegal effort of the directors to wrest such property from the court by a general assignment, transfer or judgment suffered, because these acts were expressly prohibited by statute.
We realize, however, that by this process of reasoning we are brought back again to the original question, as to whether the disturbance of such custody, or the obtaining possession of the property of the corporation after the'petition was filed and before the order appointing the receiver, empowered the court by a summary-order to také the property of the corporation -from one who had obtained possession of some or all of it and who held it under a claim of title.
It has been the practice, long sanctioned, to permit a receiver to-apply for an order for the delivery to- him of property of the corporation which has been wrongfully taken possession of by officers- or others. And if this can be done .in such a way as not to impair the rights of third parties who have the property, it is a practice that should, be continued, because it is essential for the proper preservation and expeditious final distribution of the assets of a corporation that they should be in the hands of a receiver. We do not think that by such an order the assignee is debarred from asserting his rights by action against the receiver. And in the end it narrows *407down to a question as to whether the possession should be allowed to remain in one who, upon a summary application, the court can conclude wrongfully has the property, leaving to him his right of action, or whether it should compel the receiver to begin an action and secure the property only by obtaining a binding judgment. If required to sue therefor, this might, in a given case, involve a number of actions on his part to get possession of the property, assuming ' that portions of it were in various hands. Having in mind the fact that the receiver is the officer of the court, charged with the custody of the property and holding it subject to the rights of all those interested in the corporation, it seems more advisable that he should be permitted to obtain the property by order, without prejudice, however, to any right of action which the third parties, against whom the order was directed, might have against such receiver.
Whilst it may be true that the title of the receiver is to be fixed as of the date of his appointment, it cannot be assumed that the rights of , third parties dealing with the property of the corporation are to be fixed as of such date; for the sections of the Code as to the effect of the filing of the petition make all acts seeking to wrest from the corporation its property void. The result thus sought to' be accomplished was to prevent preferences and to secure among creditors an equal distribution, which necessarily involved the idea that all the property which the corporation had at the date of filing the petition was placed beyond the power of the officers to deal with, and was to be held by the court until, upon the qualification of the receiver, it could be turned over to him.
We think, therefore, a distinction must be made between property which has readied the hands of third parties prior to the filing of the petition in the voluntary proceeding and property which has been thus acquired subsequent thereto. In order to obtain property held by third parties under claim of title prior to the filing of such' petition, we think the receiver must proceed by action. But, as to property which, by the act of the officers of the corporation, or by any of the void acts mentioned in tire Code, or by force, has been taken from the corporation subsequent to the filing of the petition, it is competent for the court, from whose custody such property has been virtually taken, to require in a summary way that it be restored, and to that end the receiver, after qualifying, in a proper case, of *408which, the present is an instance, can make a motion in the proceeding for an order directing such restoration. ■
I think the order was right and should be affirmed, with ten dollars costs and disbursements.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.