Court Opinion

ID: 5236620
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:10:46.170847+00
Date Added: 2024-06-11T08:27:44.324459
License: Public Domain

Laughlin, J. (dissenting):
The defendant company is a New Jersey corporation. Section 65 of the General Corporation Law of New Jersey (Laws of 1896, chap. 185), as amended by chapter 300 of the Laws of 1912 authorizes the appointment by the Court of Chancery of a receiver of a corporation at the instance of a creditor or stockholder, where the corporation is insolvent or has suspended its ordinary business for want of funds, or “its business has been and is being conducted at a great loss and greatly prejudicial to the interest of its creditors or stockholders.” Section 66 of the act provides for the liquidation of the business by the receiver; and section 68 vests the title to all the property of the corporation in him. A stockholder residing in New York filed a bill in the Federal court, which, on account of the diversity of citizenship, had the jurisdiction that was conferred by the statute on the Court of Chancery of New Jersey, and that resulted in the appointment of the receivers.
The hill appears to have been filed, not for the liquidation of the business, but for the continuance thereof, and in other respects it is not entirely clear that it was sufficient to give the court jurisdiction; but as no point is taken in that regard, I shall assume that the receivers were duly appointed.
This action was pending when the receivers were appointed. It would not have been competent for the New Jersey court, and it was not competent for the Federal court administering the New Jersey statute, to stay the prosecution of this action and there was no attempt to do so. This court on a motion to dismiss an appeal taken by the receivers from the judgment held that notwithstanding the receivership, the plaintiff was entitled to prosecute the action to judgment against the corporation. (Jones v. Woodin, 164 App. Div. 79.) The provisions of section 2435 of the Code of Civil Procedure give a judgment creditor the absolute right to examine the judgment *182debtor in proceedings supplementary to execution at any time within ten years after the return of an execution unsatisfied in whole or in part. This right to examine the judgment debtor is given to the judgment creditor and does not pass to a receiver of the judgment debtor. (Matter of Walker, 157 App. Div. 609.) Assuming, therefore, that the receivers are in good faith endeavoring to obtain possession of all the property of the corporation, they cannot obtain such an examination. An application was made to the Federal court to stay the examination, and the motion was denied and the order provides, in effect, that it is without prejudice to the right of the receivers to any property that may be discovered. The examination is not limited to the discovery of property upon which the judgment may be a lien, or which the judgment creditor would have the right to have applied on his judgment. The purpose of the Legislature was to authorize an unlimited examination to discover property or property rights of the judgment debtor, and to afford a basis for action even by a receiver. (Matter of Walker, supra.)
I am of opinion, therefore, that the plaintiff was entitled to the order for the examination of the judgment debtor, and I dissent from its being vacated.
Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.