Court Opinion

ID: 5183408
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:45:13.340036+00
Date Added: 2024-06-11T08:26:39.237966
License: Public Domain

Ingraham, J.
(dissenting):
The motion made to the court below was to allow the petitioner, the Merchants’ National Bank,, which liad obtained a warrant of attachment against the property of the defendant, a foreign corporation,- to levy upon certain property belonging to the said defendant in the possession of the firms of Gatlin & Co. and O. H. Sampson & Co. The motion was denied in the court below, upon the ground that the attachment granted to the appellant had been vacated. As the order vacating the attachment has been reversed, and the attachment reinstated, the reasons assigned by the court below do.not now exist, and the question is whether, upon the papers presented to the court, the petitioner should be allowed to complete the levy upon his attachment. It appears that on the 15tli day of April, 1897, the appellant commenced an action against the defendant, a foreign corporation, and obtained an attachment. On the nineteenth day of April the sheriff served a copy of it'upon amembér of the firm of Gatlin & Co., and also upon a member of the firm of 0. IT. Sampson & Co. Upon calling oil the firm of Gatlin"& Co. a Mr, Park, a member of the firm, was served with a copy of the warrant of attachment, and the sheriff said that he desired to levy the attachment on the property of the defendant. Mr. Park referred the sheriff to a Mr. Cowdrey, who was standing by, and to whom the said Park handed the papers served on him by the sheriff, and said that Mr. Cowdrey had authority to speak for the firm. The sheriff then asked Mr. Cowdrey whether he or said firm had in. their possession, or under their control, any property belonging to the defendant. Mr. Cowdrey replied that they had none. Relying upon this statement, the sheriff made no further effort to levy upon any particular property. On the 15th day of April, 1897, the sheriff applied to the firm of 0. H. Sampson & Co,, in the city of New York, and saw a Mr. Eugene H." Sampson, a member of the firm. A certified copy of the warrant of attachment was then delivered to Mr. Sampson, with a statement that the sheriff desired to levy upon any property of the defendant in his possession, or in the possession of the firm. Mr. Sampson said that he did not know of any property of the defendant in his possession, or under the control of the said firm. The same statement was made by both of these firms to a clerk of the plaintiff’s attorney, who, about that time, made inquiries as to the property of the defendant. Subse*505quently, and on the twenty-eighth day of April, the plaintiff in this action, a stockholder of the defendant corporation, commenced an action in this court against the corporation. The defendant corporation voluntarily appeared in that action, and, on consent, receivers were appointed of all property of the defendant in this State. These receivers were'given power to take possession of all the goods, chattels and property of" the defendant, and no further directions were ■contained in the order, except to receive the property.
The complaint in this action alleges the appointing of the receivers of the property in Massachusetts, demands judgment that the Massachusetts receivers be appointed receivers of the property of the defendant in this State, with the authority to receive the same and to convert the same into money under the direction of the court, and restraining all creditors of the corporation from interfering with the receivers of such property. Neither in the action commenced in Massachusetts nor in the action commenced in this State is any demand made for the dissolution of the corporation, or for a distribution of its property among its creditors. Nor does either the order granted in this State or the order granted in the State of Massachusetts, provide for such disposition of the receivers’ property. The orders appointing the receivers, both in this State and in the State of Massachusetts, appear to be devised simply for the purpose of holding the property of this foreign corporation so as to prevent the creditors in this State from obtaining liens upon it, and having it for the benefit of the stockholders of the corporation. There is no statement in the complaint in the action commenced in this State that there is not sufficient property in this State to pay all creditors of the corporation here. On the contrary, it appears that there was property of the corporation here to the value of upwards of $75,000; and the only statement of the creditors of the corporation in this State is, that the defendant is indebted to the petitioner, the Merchants’ National Bank, in the sum of $13,964.49, and to the National Broadway Bank in the sum of $18,657.35. Sundry other creditors are spoken of, but it does' not appear that the aggregate amount of their claims exceeds in value the property in this State. It is further alleged that the receivers in Massachusetts are authorized to continue the business of the corporation for the purpose of *506realizing the greatest possible value out of the assets thereof; that, in order to protect the corporation and stockholders of the corporation, it is necessary that the business. of the corporation should be-continued; that receivers should be appointed to take possession of, and control, the property in said State, and that under the order of this court the receiver should co-operate with said receivers-so appointed in Massachusetts in the disposition of the said prop-, erty, and in the doing of all acts that may be necessary for the-protection of the said assets and the realization of the full value thereof.
We have thus a case where a New York creditor, having'obtained-a warrant of attachment against a foreign corporation, is prevented by the false statements of the agents of that corporation from levying upon its property until the corporation, in an action commenced by stockholders and upon the consent of the corporation, can procure the appointment of a receiver for the benefit of the stockholders, who will prevent the .New York creditors from obtaining liens on the property to secure their demands. I do not- think that the-interests of foreign corporations, and the stockholders of foreign corporations, should be protected at the expense of our citizens, who-are creditors of the corporation. Upon the granting of this warrant of attachment the action against this corporation was commenced,, and the court accpiired jurisdiction over the property of the foreign corporation within this State. (Code, § 416.)
By section 644 of the Code it was the duty of the sheriff to immediately execute the warrant of attachment by levying upon so much of the property of the defendant as would be sufficient to pay the-demand of the plaintiff, and by section 649 of the Code a levy under a warrant of attachment must be made by taking the personal property capable of manual delivery into the--sheriff’s actual custody. In the discharge of this duty he waited upon those having-the custody of the defendant’s property and was informed that they had no property of the defendant in their custody. There was no-intimation to the sheriff, or to the attaching creditor, that this statement was false until a stockholder of the corporation, in collusion with the officers of the corporation, had obtained the appointment, of these receivers. Thus, by a false statement, intentional or unintentional, made to the sheriff by an agent of the corporation, the *507corporation and its officers were enabled by means of this process of the court to prevent the sheriff from levying upon property of the corporation, which it was his duty to levy upon, and which it was the right of the attaching creditor to have levied upon, to secure the payment of any judgment that he should obtain. The property is in the. hands of the court, held by its receivers, not' for the benefit of creditors, but subject to the order of the court. The power of the court to allow the sheriff to make the levy, notwithstanding the possession of the receiver, is undoubted, and I think this is a case in which the court should protect the creditor who, by diligence, had obtained a position which entitled him to a lien upon the property of the corporation, á,nd should allow the sheriff to complete his levy, which would have .been effectual.but for the misrepresentations of the agents of the corporation.
I think, therefore, that the order appealed from should be reversed and the receivers in-this action directed to allow the sheriff to levy upon the property of the defendant corporation in his possession ;. and that, upon such levy being made, the title of the receivers to the property of the defendant corporation, in the possession of the firms of Gatlin ¡fe Co. and O. H. Sampson & Co., when the warrants of attachment were served upon these firms, he subordinate to the levy made by the sheriff in execution of this warrant of attachment, and that the sheriff have permission to take such property, or sufficient thereof, to properly execute the warrant—with costs of this appeal, and ten dollars cosis of the motion in the court below to the appellant.
Patterson, J., concurred.
Order affirmed, with ten dollars costs and disbursements.