In re Merritt & Lyon

5 Paige Ch. 125 | New York Court of Chancery | 1835

The Chancellor.

From the facts stated in this petition, it is evident that the receiver, at the instigation of Lott Merritt, is prosecuting an unjust, vexatious and oppressive suit, in the supreme court, in the name of one of these petitioners against the other, without the least shadow or pretence of right to commence such a suit in the name of B. Merritt. And when these facts are taken in connection with the very singular decree which appears to have been agreed upon by the parties in the chancery suit, I think there is some reason to apprehend that the suit in the supreme court is the result of an improper combination, between the parties in the chancery suit, to prosecute an action at law against Lyon in such a way as to deprive him of the testimony of B. Merritt, the .only witness, not interested, who could explain the endorsement on the back of the sealed note; and thereby to shut out the defence. I presume, therefore, that this petition must have been dismissed on the sole ground that the vice chancellor supposed he had not jurisdiction to interfere, in such a case, in .behalf of persons who were not parties to the suit in this court. The objection that the petition was not entitled in the suit in which the receiver was appointed, was very properly waived by the counsel for (he respondents, on the argument, as that suit is sufficiently referred to in the body of the petition.

It is not necessary to refer to any authority, to show that one person has no right to institute a suit in the name of another, without his consent, either express or implied ; or that, the person in whose name such suit is instituted, is entitled to have the proceedings stayed, upon an application to the appropriate tribunal. And even where the bringing such a suit is proper, as where this court directs a receiver to bring a suit at law in the name of another person, the uniform practice of the court is, to require the party who brings such suit, to give security to indemnify the nominal plaintiff against the costs. (Green v. Winter, 1 John. Ch. Rep. 60. Ex parte Little, 3 Moll. Ch. Rep. 67.) Where the person bringing the suit in the name of another has no legal or equitable light to institute such suit, the person in whose name it is brought is not bound to lie by and suffer it to proceed, even upon the tender of an adequate indemnity. On the contrary, if he is satisfied his name is improperly used for the purpose of harrassing or oppressing the defendant, it is his duty, as an honest man, to interfere, where he lias a right to do so. In ordinary cases, where a suit is instituted in the name of another without his consent and without authority, the remedy of the party in whose name it is brought, is by an application to the court in which the suit is instituted, to stay the proceedings, and to punish the person, by whom it is instituted, for an abuse of the process of the court. And the remedy of the defendant against whom such a suit is commenced is by indictment, or by a suit for the penalty given by the statute in such cases. (2 R. S. 550, § 1.) In this case, if the court of chancery should not interfere to restrain the petitioners from proceeding in that manner against the receiver who is its officer and is supposed to act under its authority and by its direction, these remedies would be open to them. It does not follow, however, that the cóurt is to lose all jurisdiction over its officer, or over its suitors, because those who may be injured or oppressed by the proceedings of a receiver, may possibly have a remedy by an application to another tribunal. Where this court directs a receiver to bring a suit at law in the name of another person, upon giving the usual indemnity, it will interfere by injunction to restrain the nominal plaintiff from discontinuing or releasing the action, or from applying to the court of law to stay the proceedings. The court will also, in its discretion, restrain third persons from instituting proceedings at law against its officers, acting under its direction, although the persons by whom such proceedings are instituted are not parties to the suit in this court. (Ex parte Clarke, 1 Russ. & My. 563. Batchelor v. Blake, Hogan’s Rep. 98. Nugent v. Nu-gent, Smith’s Office of Receiver, 104, note; 2 Molloy’s Rep. 372, S. C. Aston v. Heron, 8 Legal Obs. 218. Wardle v. Lloyd, 3 Moll. R. 388.) If this court can interfere in this summary manner, against persons who are not parties to the suit, to protect a receiver or other officer acting under its direction, it may also interfere in the same manner to protect third persons against an abuse of power, attempted to be exercised by another under pretence of an authority derived from this court as an officer thereof. The possession of a receiver or a sequestrator is considered as the possession of the court by whom he is appointed. And if a third person claims adversely, he must apply here for leave to bring a suit at lavv to try his title; or he may ask to come in and be examined pro inleresse suo to establish his title in this court. For the same reason, a suit brought by a receiver is to be considered as brought under the authority of this court; and if brought in the name of a third person, without his authority and without any foundation or pretence of right, as in the present case, the parties to such suit may apply here for protection against the unjust and unauthorized proceedings of the receiver.

The order of the vice chancellor, dismissing the petition, with costs, must therefore be reversed, with costs to be paid by the respondents. The receiver must also be directed to •discontinue the suit at law, and to pay to Lyon his costs therein, so as to indemnify D. Merritt against such costs j and'' the note must be delivered up to be cancelled,¡and the receiver is to be perpetually enjoined from instituting or prosecuting any süit thereon.