35 How. Pr. 428 | N.Y. Sup. Ct. | 1867
The plaintiffs moved at a special term in the third district (where the venue was laid) for an order against Charles B. Sedgwick, Esq., of Syracuse, to show cause why the custody of the assets of said bank was withheld from L. Harris Hiscock, the receiver appointed therein by Justice Peckham; why an attachment should not issue against him, the said Sedgwick; why he should not be punished for his alleged misconduct; and why the order (of Justice Poster) appointing him, the said Sedgwick, receiver, should not be vacated.
The motion is made upon all the papers in the case, and it is necessary to look into most of them to determine the merits of the application. The Central City Bank suspended payment on Saturday, the 29th day of December, 1866. Upon a petition of the attorney general, accompanying papers stating that fact and the insolvency of the bank, verified on the 31st day of. December, 1866, Justice Peckham, at a special term, granted an order for the defendant to show cause on that day, at 11 o’clock A. m., why the business of said corporation should not be closed and a receiver appointed. This- order, together with the summons and complaint, were personally served upon Hon. LeBoy Morgan, the vice president and a diree
The ground upon which said Sedgwick refused compliance with said order, and declined to deliver said assets, was, that, as he claimed, he himself was the lawful receiver of the bank, and entitled to hold and administer its assets. On the 29th day of December, 1866, (the day on which the bank suspended payment,) George Barnes, the cashier of the institution, instituted proceedings, under the act of 1849, to obtain an injunction against the bank and the appointment of a receiver; that is, he employed counsel and verified a petition, on that day, for
The proceedings under which the respective parties acted in obtaining the appointment of their respective receivers, considered without reference to each other or to the validity of the statute under which they were respectively had, appear to have been regular’, or at least not invalid. Some objections, partly of a technical character, are taken by the defendant against the plaintiffs’ proceedings, on the question of regularity, but I think they have not sufficient foundation to invalidate the proceedings. Thus, in regard to the orders made by Justice Peclcham, first, the order to show cause; and second, the order appointing a receiver, it is said they are invalid, because not shown to have been made at a regularly adjourned special term, and not to have been actually entered by the clerk. As to the first objection, I think the an
Again, it is said that the order to show cause was not properly served, and that no proper evidence of service was furnished to the court or incorporated in the order. The order was served on the vice president, and I think he was a proper person on whom to serve. It now appears that he was also a director, and I rather think that
It is supposed that as both of these receivers were appointed on the same day, and Sedgwick has possession of the assets, the court will not inquire into the fractions of a day, to displace his possession. But it is a question of actual priority, which, I think, we are bound to settle, and that where parties stand upon their legal rights, in a matter in which, in themselves considered, both are unexceptionable men, if we can fairly determine the question of legal priority, the ends of justice require that it should be carried into execution.
These preliminaries disposed of, two questions remain: 1. Were the Revised Statutes in operation, so as to justify the proceedings taken by the attorney general ? 2. If so, which party had the legal priority of right to the possession of the assets ?
We will consider the latter question first.
Although the petition for the appointment of a receiver was first prepared and verified in the case pending before Justice Foster, yet the first judicial action was taken in the case pending before Justice Peckham, both, however, being on the same day. The precise hour does not appear, further than that Judge Peckham’s order was served about half an hour before Judge Foster’s order was granted.
All the subsequent judicial proceedings necessary to perfect the appointment of a receiver, had before Justice Peckham, preceded those before Justice Foster. Justice Peckham’s order to show cause was returnable at 11 a. m., and his order for the appointment of a receiver, as granted, was filed with the clerk about 11.35 A. m., together with
The defendants claim that the provisions of the Revised Statutes, entitled “ Of proceedings against corporations in equity,” (2. R. 8. 464, 465,) under .which the plaintiffs evidently proceeded in this case, are abolished by chapter 226 of the Laws of 1849, (p. 340,) under which the proceedings were instituted which resulted in the appointment of Mr. Sedgwick. There is no express repeal; and if there be any repeal, it must .be a repeal by implication, resulting from the inconsistency of the two statutes, ■ or from the evident intent of the legislature to substitute the latter proceedings in the place of the former. The first four sections relate to the liability of stockholders, and have no connection with this subject. Sections 5 and 6 provide for the speedy enforcement of claims against the bank by suit, judgment and execution, and, on the return of an execution unsatisfied, for an order declaring the insolvency of the corporation. Sections 7, 8 and 9 provide.for an application for an order of the same kind by a creditor having a demand exceeding $100, after the lapse.
This act, it is plain, does not cover a large number of eases in which courts of equity have exercised jurisdiction over corporations, many of which are recited in the title of the Revised Statutes heretofore quoted, and among others, several of the cases specified in sections 39, 40 and 41 of that title, (2 R. S. 464,) by which, in the event of the insolvency of a corporation, its violation of any of the provisions of its act of incorporation, or of any other act binding on such corporation, a court of equity may, up on the application of the attorney general, in behalf of the state, issue an injunction restraining the corporation from the exercise of its corporate powers, and from the collection of its debts, and from the disposition of its property, and may also, in any stage of the proceedings, appoint one or more receivers to take charge of the property and effects of such corporation.
I think it could not have been intended by the act of 1849 to repeal these provisions of the Revised Statutes, so far as respects the people of the state. The act of 1849 does not provide for them, otherwise than as they might happen to be creditors of the corporation. It is. emphatically the right of the people, in their sovereign capacity,
They say: “In all cases in which the act of 1849 is applicable, it is deemed to supersede the provisions of the Eevised Statutes.” (Livingston v. The Bank of New York, 5 Abb. 343.) The language is guarded, and I think leaves the Eevised Statutes to operate, in a case like the present. Nor does Justice Allen, in the case of Ferry v. The Bank of Central New York, (15 How. 450,) decide the question adversely to the views now presented. On the contrary, he says: “I am aware that the policy of the law does not favor the repeal of statutes by implication, and that, ordinarily, there must be a clear repugnance between the two statutes, before the latter will be held to operate as a repeal of the former,* in the absence of a repeal in terms, and that courts hold against the repeal when both can stand together. These two statutes cannot be said to be so repugnant to each other that they cannot, in many things, stand together.” * * “ The question is one of too much importance to be hastily decided at special term, unless necessary to the determination of a pending matter; and as. I do not deem it essential to pass upon it upon this motion, I will not further consider it.” It will be noted
As the result of these considerations, I think that the order of the special term, which continues the injunction, should be reversed.
Something is said, in the papers, about the comparative fitness of these two persons for the office of receiver; their comparative leisure for that purpose; and the comparative extent in which they represent the wishes of a majority of the stockholders. But I discover no reason for any just-criticism upon either of them as to their personal fitness or business capacity. If any objection really exists, on that score, there can be no reason why an application for his removal, and having that object directly in view, may not be hereafter made.
It is further said that it is inadmissible in this collateral way to attack the proceedings before Justice Foster. We do not propose to take any j urisdiction of those proceedings ; but pending before us, in an application originating in this district, a question as to the validity of the appointment of a receiver, and as to the priority of his title to the assets of the bank, compared with that of a receiver appointed elsewhere, we cannot decline to decide the question necessarily involved. Uor should Mr. Sedgwick be punished for contumacy, or for a disobedience of the order of the court. He appears to have acted in good faith, and had the authority of an order of the court, which he was probably entitled to regard as valid, until pronounced otherwise, on the question of priority, by a competent tribunal. That decision being now pronounced, it will be his duty to obey it and deliver over the assets to Mr. His-cock, the receiver first appointed. I see no other course to pursue. These receivers cannot with propriety both act. They are appointed under distinct and independent proceedings, and by the terms of their appointment each has entire control of all the assets of the bank. The title
I think the proper order to be entered is, that the order of the special term be reversed; that L. Harris Hiscock be declared the lawful receiver of the property and assets of the Central City Bank, and entitled to their custody and possession; that Charles B. Sedgwick, Esq., deliver over the same, on demand, to said Hiscock, so far as they are in the possession or under the control of said Sedgwick; and that in the event of his neglect or refusal to do so, said Hiscock have leave to apply at a special term for the proper enforcement of this order.
Miller, J., concurred.
Peckham, J., expressed no opinion.
Order reversed.
Peelcham, Miller and Sogeiom, Justices.]