Adams v. Haskell & Woods

| Cal. | Jul 1, 1856

The opinion of the Court was delivered by Mr. Justice Heydenfeldt.

Mr. Chief Justice Murray and Mr. Justice Terry concurred.

The order of the Court below in this case, requiring the receiver to pay over the funds and deliver the books and papers to Cohen, Jones and Roman, may be considered as having two objects: First, to make them custodians of the fund, and second, to authorize them to distribute the fund under a proceeding in bankruptcy, which had been commenced, and which was brought to the notice of the Court.

The proceedings in bankruptcy failed because they were illegal and void, consequently the second object of the order had no existence. The parties therefore to whom the fund was committed, were merely custodians or receivers, or bailees by virtue of the order of the Court. They received it from the Court because its possession by the receiver was the possession of the Court; they received it by order of the Court and could consequently only hold it subject to the direction of the Court; it is in their hands, and is not their property; they are surely answerable to some one for it; it can only be to the power from whence they derived it, and whose special property it was when they obtained it.

It is no answer to this to say, that the fund has been attached by the garnishments of the creditors of Adams & Go.; it was not the subject of attachment. It was already in the hands of a receiver before any attachment issued. The receiver is the officer of the Court, and the fund in his hands is in Court, in the custody of the law, and can only be disposed of by the order and direction of the Court.

Nor, (as was contended at the bar,) is its disposition subject to be affected by any action of the immediate parties to' the suit. The bill was filed for the purpose of securing the assets of the partnership, and having them distributed to the creditors. This purpose a Court of Chancery will carry out without regard to any attempt on the part of the partners to evade or defeat it. It was the duty of the Court, as soon as this bill was filed and the property was under its control, to require all the creditors of Adams & Co. to appear, within a given time, before a master to be appointed for the purpose, and have their claims audited, under such rules and regulations, as to notice, as would secure a fair hearing and a just account.

Upon the report of the master and its confirmation, the fund would then be distributed, pro rata, among the creditors whose claims were allowed.

Ordered, that the certiorari be dismissed.