Links v. Connecticut River Banking Co.

| Conn. | Jun 7, 1895

Baldwin, J.

The plaintiffs state a strong case for equitable relief, but they have mistaken their remedy.

By General Statutes, §§ 1942, 1965, the Superior Court, as a court of equity, had power to wind up the affairs of the Enterprise Manufacturing Company and decree its dissolution, on a petition by stockholders in the company, showing due cause; and on complaint of any person aggrieved by such doings to grant such relief as the nature of the case might require. The plaintiffs allege that proceedings of this nature were had, resulting in a decree dissolving the corporation, appointing a receiver, and ordering him to collect all debts due to it forthwith; and that under this decree they have proved in those proceedings claims against the corporation to a large amount, which have been allowed by the court.

It would seem from the statements in the complaint that .the selection of a receiver was inconsiderately made. The demurrer admits that the company was insolvent, and that he was a stockholder, who had paid nothing on his stock, a director who had falsely and fraudulently certified under oath, in the organization certificate, that all the stock had been fully paid up in cash, and the secretary of the company at the date of the decree. These circumstances were doubtless unknown to the Superior Court, when he was appointed, and if brought to its attention, on a motion for his removal, would be such as to require immediate action to that end. But while their existence is conceded in the case at bar, it cannot be assumed in passing upon the questions involved in the proceedings in the other action. The plaintiffs made the Enterprise Manufacturing Company and the receiver of the company, as such, garnishees in their writ, but not defendants. He was made a defendant individually and in his own right, as a delinquent stockholder, and joined in the demurrer; but this cannot affect his rights, as receiver, to be heard, before he is condemned.

The plaintiffs allege that he has refused to sue any of the delinquent stockholders, or to allow them to sue in his name, upon giving him sufficient indemnity; that he is acting in collusion with the other stockholders; that he has abandoned all title to their unpaid subscriptions; and that the Superior Court has refused to order him to sue, or to let them sue in his behalf. In determining the effect of such a condition of things upon the plaintiffs’ rights to the remedy they seek, we are again, and for the same reason, compelled to regard it as not established for the purpose of determining what relief they might obtain or should have obtained in the receiver suit, after a decision by the receiver to abandon the stock claims as not worth pursuing. As creditors of the corporation, whose claims had been proved and allowed under the decree, they had the right to be heard there upon any of the doings of the court or the receiver, by which they might claim to be aggrieved. They had the right to ask for the removal of the receiver, but they have not done this. They had the right, should any decree be passed in the progress of that cause, which as to them was a final one, and was unfavorable to their interests, to bring it before this court for review upon appeal. Trustees v. Greenough, 105 U.S., 527" court="SCOTUS" date_filed="1882-05-18" href="https://app.midpage.ai/document/trustees-v-greenough-90604?utm_source=webapp" opinion_id="90604">105 U. S., 527; Neville v. Litchfield Carriage Co., 47 Conn., 167" court="Conn." date_filed="1879-05-15" href="https://app.midpage.ai/document/neville-v-litchfield-carriage-co-6580931?utm_source=webapp" opinion_id="6580931">47 Conn., 167; Leonard v. Charter Oak Life Ins. Co., 65 id., 529.

The Enterprise Manufacturing Co. has been dissolved, and its rights of action against its delinquent stockholders have passed to its receiver. General Statutes, § 1822. The administration of its estate is in the hands of the Superior Court for Hartford County; but only in the exercise of its jurisdiction over the cause in which the receiver was appointed. It can no more make orders to affect that cause, while sitting to hear another, between different parties, pending in the same county, than if it were a different court, or in session in a different county. These distinctions are not merely formal. They are essential to the administration of justice. An estate in the possession of a receiver must be administered in the presence of those who were parties to the appointment, or they would be denied their day in court.

The plaintiffs sought to improve their situation by applying to the court, in the present suit, for an order under which the receiver could be made a co-defendant. This application was properly refused, the leave of the court in the receiver suit not having previously been obtained. A receiver appointed by judicial authority cannot, in the absence of a statute to the contrary, be subjected to suit without the leave •of the court whose officer he is, granted in the cause in which he was appointed. Porter v. Sabin, 149 U.S., 473" court="SCOTUS" date_filed="1893-05-15" href="https://app.midpage.ai/document/porter-v-sabin-93643?utm_source=webapp" opinion_id="93643">149 U. S., 473. He is presumed to be acting according to the will of that court; and to sue him is necessarily to bring in another court to take part in the disposition of the estate which has been put in his charge. The rule that where a court has once acquired jurisdiction over a particular subject-matter, it retains it free from interference by any other court, is that which governs; and cases affecting legislative receiverships, or receivers of national banks, are therefore inapplicable, as authorities.

The refusal to allow the amendment of the complaint, by adding, seven months subsequent to the institution of the action, and after two successive demurrers had been sustained, a second count, constitutes no ground of appeal. General Statutes, § 1027.

There is no error in the judgment of the Superior Court.

In this opinion the other judges concurred.