New Jersey Lumber Co. v. Ryan

| N.J. | Nov 18, 1898

The opinion of the court was delivered by

Collins, J.

There can be no dispute that to the statutory discovery and relief authorized in chancery in behalf of a judgment creditor may be joined, under one bill, relief against persons to whom the judgment debtor may have made voluntary or fraudulent transfers or who hold property or things in action in trust for him. The general powers of a court of equity extend to such a jurisdiction, and it is an every-day practice to exercise it. Examples of such exercise are to be found in the reported cases of Whitney v. Robbins, 2 C. E. Gr. 360, and Bates v. Norton, 10 Dick. Ch. Rep. 251. Such persons may be made parties defendant, and the bill will not be multifarious because of inquiring into separate transactions. After the preliminary examination authorized by the statute a receiver pendente lite of the property and things in action belonging to or held in trust for the judgment debtor may be appointed, with authority to possess, receive and, in his own name as such receiver, sue for such property or things in action, but the court of chancery cannot, on such examination as against one claiming lawful ownership, prejudge that any particular property or thing in action belongs to or is held in trust for the judgment debtor, and by its order compel transfer and delivery to the receiver before answer and final hearing. Of course a court of equity, where an alleged fraudulent transfer is attacked, has discretionary power to resort to a receivership as an auxiliary measure of protection and to compel delivery of property to the receiver, but such power is only exercised where there is a strong case made for the complainant on affidavits, which the transferee is afforded opportunity to meet and where there is danger that the property may not be forthcoming to answer to the decree. High Rec. §§ 9, 11; Flagler v. Blunt, 5 Stew. Eq. 518, 523; Sobernheimer v. Wheeler, 18 Stew. Eq. 614, 631. The ease before us does not present that aspect. The orders were based entirely on the statute, and the only authority there given beyond that for the mere appointment of a general receiver is for an order that the judgment debtor convey and deliver to such receiver all his property and rights in action and the evidence thereof. The depositions taken on the preliminary examination were properly used against the lumber company as ex parte affidavits on the application for injunction, and as they disclose sufficient reason for preserving the status quo, I think that the order of October 15th and so much of the order of October 26th as provides for that end may stand. So, too, the appointment of a receiver of all property and things in action belonging or due to or held in trust for Meigs and Stewart, or either of them, and the requirement of a bond from the receiver, are within the statute and may stand, but any adjudication as to the property and book accounts or other choses in action which were transferred by Meigs to the lumber company and remain undisposed of, was premature and to that extent, and as to the direction to the lumber company to deliver such property and choses in action to the receiver and to execute any conveyance or transfer thereof to him, the order of October 26th must be reversed.

For reversal — Collins, Depue, Dixon, Garrison, Ludlow, Yan Syckel, Bogert, Hendrickson, Nixon — 9.

Far affirmance — None.