Court Opinion

ID: 3878209
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:10:33.779486+00
Date Added: 2024-06-11T14:15:15.507059
License: Public Domain

I am unable to concur in the opinion by Mr. Justice Pope in this case. There can be no doubt that the order appointing a receiver of the property of the insolvent corporation operated to place the property in the custody of the Court, and that no judgment thereafter rendered could acquire any lien or priority over said property.Regenstein v. Pearlstein, 30 S.C. 192. This principle, I understand, is admitted, but the point is made that the order of Judge Gary, dated 12th April, 1899, so modified the order of 5th April, 1899, as to render the judgment obtained by the National Union Bank after the property was in custodialegis, a lien on such property. Such an order, to say the least of it, would be a very remarkable and unusual one, and its language should be very clear and compelling before any Court should give it such construction. The order is: "After hearing argument of counsel, and on motion of Wilson Wilson, attorneys for the National Union Bank of *Page 313 
Rock Hill, S.C. a creditor of said Iredell Land Company, with action pending, it is ordered, that the order heretofore made in the above case restraining creditors of the Iredell Land Company from suing or prosecuting their demands save in said cause, be, and the same is hereby, so modified as to allow the said the National Union Bank of Rock Hill, S.C., to prosecute its action against the said Iredell Land Company to final judgment without hindrance or prejudice, under the terms of said order. Ernest Gary, presiding Judge." There is absolutely nothing in the order which purports to vary or modify the appointment of the receiver and his custody of the property. Of course, Judge Gary was aware of the legal effect of placing the property of the insolvent in the hands of a receiver, and we imagine he would not mean to alter rights fixed by the appointment of a receiver, without expressing it in unmistakable language. The object of a receivership is to do justice by an equal distribution of the insolvent's assets among his creditors, according to their rights at the time of the appointment. The practical effect of Mr. Justice Pope's construction of Judge Gary's order is to give one creditor all the assets of the insolvent under an alleged priority acquired after the receivership. Is a result so unjust compelled by the terms of the order? I think not. The order merely permits the creditor who was suing at the time of appointment of the receiver, "without hindrance or prejudice, under the terms of the order," restraining prosecution of action against the insolvent, to prosecute its actionagainst the insolvent to final judgment. The words "without hindrance or prejudice" relate solely to the prosecution of the suit and not to the effect of the final judgment. That is to say, the order restraining suits was vacated, so far as the National Union Bank was concerned. Said bank's rights under the final judgment were to stand as if no restraining order had been issued, and prosecution of the action would no longer subject it to a process for contempt, as in case of disobedience of the original order. It would hardly be contended, if no restraining order had ever been *Page 314 
issued, that the judgment obtained after the appointment of the receiver would become a lien upon the assets in the custody of the Court.
There is another construction of the order which I think is permissible, if the words "without hindrance or prejudice" do not relate wholly to that part of the order restraining the prosecution of suits. These words may have been intended to guard the rights of all the creditors under the order appointing the receiver. That is to say, such final judgment shall be without prejudice to the rights of creditors as fixed by the order appointing the receiver. I cannot think that Judge Gary intended to affect the rights of the creditors as fixed in the order of receivership, and give a single creditor a preference in the distribution of the insolvent's assets.
I think, therefore, that the appellant's exceptions should have been sustained and the judgment of the Circuit Court reversed.