Court Opinion

ID: 6134465
Source: CourtListenerOpinion
Date Created: 2022-02-04 21:35:13.488629+00
Date Added: 2024-06-11T08:54:27.973141
License: Public Domain

Hardin, P. J.:
According to Whitney v. New York and Atlantic Railroad Company (32 Hun, 173), a receiver appointed of a corporation has “ all the powers and authority conferred, and is subject to all the duties and liabilities imposed upon a receiver appointed (upon) the voluntary dissolution of a corporation.” (Code of Civil Pro., § 1788.) Such a receiver is entitled to “ the property real and personal, things in action, contracts and effects of the corporation so far,as they were owned by it at the time of the appointment. In that case it was said that the receivership could not include that which was legally *185included in a mortgage, but the creditor’s receivership must be confined to the property not covered by the mortgage. But there was no question about the validity of the mortgage. Not so in the case before us. The extent of the mortgage is disputed, and some of the bonds secured by the mortgage are alleged to be invalid. To the extent that the mortgage and bonds are valid, the owners have the paramount right. ( Whitney v. N. Y. and Atlantic R. R. Co., supra, 175.) Indeed, we do not understand the plaintiff to claim to the contrary, but he seeks to have it ascertained aud determined to what extent 'the mortgage and bonds are valid and effectual as a lien upon the property that came to his- hands as receiver. The mortgage and bonds were executed to secure or pay debts. It is averred that some of the bonds have been diverted from that purpose and used to pay debts “ not existing when said mortgage was made and delivered.” It is averred that the mortgage was made “ covering all and singular the franchises, rights, privileges and liabilities, corporate or otherwise, of and belonging to said iron works which then wére, or at any time'thereafter might be owned, held, possessed, used or enjoyed by it,” and also all and singular its real estate,” etc.
We find no averment that any of the mortgaged property has been sold. It is therefore inferable or presumable that all of it remains and was owned by the company when plaintiff was appointed receiver, and that he as such is interested in the proper application and distribution of it, and that he is interested to protect it from invalid liens for the benefit of his cestui que trusts.
It is alleged that the Eversons, who demur and appeal, claim with others to be “ the owners aud holders of the bonds of said iron works which they severally claim are secured by said mortgage.” It seems to us that they are proper parties to this action, and that the plaintiff cannot have the validity of the mortgage, and the extent of the indebtedness which is valid, ascertained and determined without the presence of all the parties having the bonds issued under the mortgage. It is apparent that the plaintiff has alleged that the mortgagor owned some if not all of the mortgaged property when the receiver was appointed. Being a corporation it must be assumed, in the light of the averments of the complaint, that it owned its own “ franchises and right, and property.” The *186receiver represents the corporation, its stockholders and creditors. (Atty. Gen. v. Mut. Ins. Co., 11 N. Y., 275.)
Taking all the facts found in the complaint, it cannot be said that they do not warrant some relief in equity, and in such cases the complaint must be sustained. (Brinkerhoff v. Brown, 6 Johns. Ch., 139; Prindle v. Caruthers, 15 N. Y., 425; Weeks v. Cornwall, 39 Hun, 643.)
It is allowable to a receiver to have an action to set aside illegal transfers or incumbrances created by the officers or by the corporation, and it is proper to stay an action brought by a creditor to enforce such debts or liens as are invalid or illegal. (Atty. Gen. v. Mut. Life Ins. Co., 11 N. Y., 272.)
Ye are of the opinion that the demurrer was properly overruled. Judgment and order affirmed, with costs, and leave given to appellants to answer in twenty days upon payment of the costs of the demurrer and of this appeal.
Follett, J., concurred.