De Bemer v. Drew

39 How. Pr. 466 | N.Y. Sup. Ct. | 1870

By the Court, Potter, J.

The receiver in this case was appointed in the original action, which was against a foreign corporation, after judgment, and upon proceedings supplemental to execution. By chapter 2, title 9, section 292 of the Code, it is provided that when an execution against the judgment debtor, issued to the sheriff .of the county where he has a place of business, is returned unsatisfied, in whole or in part, the judgment creditor, at any time after such return made, is entitled to an order from a judge of the court, requiring such judgment debtor to appear and answer concerning his property, &c. Such an order was not made. But section 298 of the same chapter has this additional provision: “The judge may, also, by order, appoint a receiver of the property of the judgment debtor in the same manner, and with like authority, as if the appointment was made by the court according to' section 244.” Section 244 is in chapter 5, of title 7, of the Code, which treats of “provisional remedies in civil actions,” and provides, in subdivision 4 of that section, that in cases after judgment, when a foreign corporation has been dissolved, or is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights, a receiver may be appointed. Such are the powers conferred by the provisions as to the appointment of receivers for judgment debtors generally, and in cases of foreign corporations. In this respect the Code is a remedial statute, and is to be carried out so as to advance and secure the object of its enactment. This foreign corporation appeared by its attorney in the original action, and thus submitted itself to the jurisdiction of the court of this State, -and by the result of the action of the court, the corporation became the judgment debtor of the plaintiff in that action, and this gave the court power over its property and rights of action within this State, and brought it as much within the jurisdiction of the court as if it were a corporation under the laws of this State. (Dart v. Farmers’ Bank of Bridgeport, 27 Barb. 337, 343.) The fact that it is .a foreign corporation, does not relieve it from the status of being a “judgment debtor,” nor from the provisions contained in the sec'ond and third subdivisions of section 244, which apply in general terms to all judgment debtors, when, as in this case, an execution has been returned unsatisfied, and the judgment debtor refuses to apply his property in satisfaction of the judgment. The fourth subdivision of section 244 is merely cumulative to the second and third, and includes corporations, domestic and foreign, and the appointment of receivers for them, in the cases provided in the Code, and by the special statutes, either before or after judgment; and being cumulative, does not change the general' powers conferred by the second and third subdivisions of the same section, which apply to all judgment debtors—when the object of the action is only to carry the judgment of the court into effect. It is a universal rule with a court of equity, never to permit injustice to be done, or a wrong to go unredressed upon mere technical objections, if the court have jurisdiction of the subject matter and of the parties; especially if such injustice lies in the way of the enforcement by the court of its own judgment. Ho good reason is perceived why a corporation judgment debtor, domestic or foreign, should he permitted to escape the proper execution of a judgment of this court, more than a private individual. The statute being general in its terms, as to all judgment debtors, it is but a fair and reasonable construction to be given to a remedial statute, that it includes all persons. Corporations are not excepted in terms, and ought not to be in practice.

" Even before the Code, there was a statute provision by which the chancellor (now the Supreme Court) was given jurisdiction over directors, managers, and other trustees and officers of corporations; among other things, to compel ■them to account for their official conduct in the management and disposition of the funds and property committed to their charge, and to decree and compel payment by them to its creditors, of money or property they have acquired to themselves, or transferred to others. (2 R. S. 462, §§ 41, 33; 3 id. 762, 5th ed.) True, the court in this State cannot regulate the internal affairs of a foreign corporation, nor enforce any remedy beyond the bounds of the State; they cannot annul or forfeit their charters, but they can, and it is their duty, to provide for the collection of debts against them, when they, or their property within the State, are brought within the jurisdiction of the courts of the State. (Howell v. Chicago and N. W. Railroad Co., 51 Barb. 383.) I do not, however, with, all my respect for the court whose decision I have cited, concur with them in holding that the provisions of the Code were not intended to extend the power of the court over foreign corporations further than it existed before; but, on the contrary, I think it was expressly intended to give a new and more simple and appropriate method of bringing them in subjection to our laws. Before the Code, foreign corporations could only be proceeded against by attachment against their property for the collection of a debt, or for the redress of a wrong. By the 127th section of the Code, civil actions can now be commenced against them, as against all other persons, by summons, and jurisdiction of them and their property can be obtained by the publication of the summons upon an order of the court, whenever they have property within the State, or when the cause of action arises within the State. (§ 135.) I do not think, as is claimed by the defendant’s counsel, that the only power possessed by the court to appoint a receiver is conferred by the 224th section of the Code. The court had full and perfect jurisdiction over the defendants, by their appearance in the action by their attorney, and as well by the statutes as by an inherent power which the courts possess, to enforce their own judgments. They can compel the payment of the claim by any of the methods known to a court of equity for that purpose. When a court of equity obtains jurisdiction of an action for any purpose for which it is authorized to give judgment, it holds such jurisdiction for every other purpose; hut especially for the purpose of giving effect to its judgment. There is, therefore, no force in the objection that the court had no power or jurisdiction to appoint a receiver. If the court . erred in a question of practice, in appointing a receiver, while possessing jurisdiction in the action, and of the parties, the"appointment is not void; relief can only he obtained in such case, by an appeal, and review directly from the order appointing him; it cannot be taken advantage of collaterally. The cases cited, showing that the better practice in appointing receivers is upon bill filed, are cases before the practice established by the Code, or before the practice, under the Code, was fully established. But if we were at liberty, in this collateral way, to review the order appointing a receiver, the objection that no appointment could be made without notice to the party interested, except in certain extraordinary cases which do not exist in this, is not well taken. First, this comes clearly within the extraordinary class of cases where it is allowed.

The defendant had never filed in the office of the Secretary of State any designation of a person upon whom papers could be served. There was evidence of their insolvency or refusal to pay their judgment debts; they had discontinued their organization and the exercise of their franchises ; they had neglected to hold meetings of their officers; they had sold out to another company their property, and the officers of the defendant had become officers in the new company, and one of them, to wit, the president of the defendant had become the president of the new company, and had the avails of the sale of the defendant’s property then in his possession. This surely ought to be regarded as an extraordinary and exceptional case, and alone, I think, would justify the appointment of a receiver, even ex parte. (Sandford v. Sinclair, 8 Paige, 373. People v. Norton, 1 id. 17. Howe v. Deuel, 43 Barb. 508.)

[Schenectady General Term, April 5, 1870.

Nor is the objection good, that there was no legal notice of the appointment of receiver given to the party interested. The notice was served upon the attorney of the defendant, who appeared in the action upon which judgment was obtained. In such a case, this was good service. (Flynn v. Bailey, 50 Barb. 77. Pitt v. Davison, 37 N. Y. Rep. 235.)' In the last case cited this question was fully examined, and the rule then laid down covers this case. It is said: “ Where the proceeding is to enforce a civil remedy, the party in default has already had the opportunity of contesting his liability to perform what the proceeding seeks to compel him to perform, and such proceeding, in effect, is but an execution of the judgment against him.” “ His obligation has been established by the judgment, in regard to which he has been heard, and this proceeding is merely to enforce the fulfillment of that obligation ” It is distinguished from a proceeding to punish for criminal contempts, since the statute, and the party should be-allowed to regard the attorney as continuing until the satisfaction of the judgment under such proceedings, unless notice of change to the contrary has been given. This ought more especially to be the rule, when the party is a foreign corporation, and when other service is either impossible or difficult. (See Drury v. Russel, 27 How. 130; and Lush v. Hastings, 1 Hill, 660.) If we are right in these views, the plaintiff" was properly appointed receiver, has legal capacity to sue, and the complaint is sufficient in its statement of a cause of action. The result is, the order of the special term overruling the demurrer, must be affirmed, with costs.

Potter, Sosekrans, James and Boches, Justices,]