41 N.Y.S. 804 | N.Y. App. Div. | 1896
There are two appeals before the court in this action.
Tbe first is from an order appointing temporary receivers; the second from an order overruling tbe answer of the defendant as frivolous and directing judgment for the relief demanded in the complaint.
The action was brought by the Attorney-G-eneral in the county of Kings, in the second judicial district, to obtain a judgment dissolving tiie defendant corporation and declaring forfeited its corporate privileges and franchises. The essential allegation pf the com
The answer contains no denial of the insolvency of the defendant, but it alleges, as a separate defense, that, prior to the commencement of this action, a majority of the directors having the management of the concerns of the defendant had commenced, in this court in the first judicial district, a proceeding for the voluntary dissolution of the coiqioration, pursuant to the provisions of the Code of Civil Procedure; and that the ground for such application was that the defendant was insolvent; that such proceedings had been had, ujion due notice to the Attorney-General, that on September 2, 1896, an order had been made at a Special Term, held in and for the city and county of Hew York by Mr. Justice Pbyor, directing all persons interested in the defendant corporation to show cause, upon a day named therein, why the defendant should not be dissolved; that upon application of said petitioners, and upon like notice to the Attorney-General, and upon the same day and at the same term of the court, an order had been made and duly entered appointing two temporary receivers of the property of said corporation; that said receivers had duly qualified and filed the security required of them by the court, and duly demanded possession of the property of the defendant from the said Superintendent of Banks ; that an appeal had been taken from said last-named order by the Attorney-General, and that such proceedings were still pending in this court.
The answer contained other matter, alleged as separate defenses and denials of other allegations of the complaint, but none of them were, we think, material to the question presented by the complaint and they require no notice.
Upon the summons and complaint, and upon the affidavit of the Superintendent of the Banking Department of the State, a motion was made by the Attorney-General, at a Special Term held at the city of Newburgh by Mr. Justice Dickey on September 12, 1896, for the appointment of temporary receivers of the defendant in this action. In opposition to such motion the defendant read all the
Thereupon, after argument, Mr. Justice Dickey granted the motion of the Attorney-General and appointed as temporary receivers of the defendant in this action Mr. Edward H. Hobbs, of Brooklyn, and Mr. Benjamin B. Odell, Jr., of Hewburgh.
The order of Mr. Justice Dickey appears, from his opinion, to rest upon his determination that, inasmuch as the Superintendent of the Banking Department had taken possession of the bank and its business and property, the directors of the corporation, at the time they presented their petition to the court in the proceeding for a voluntary dissolution, were not, in the language of section 2419 of the Code of Civil Procedure, “ directors * * * having the management of the concerns of a corporation,” and that consequently the Special Term held by J ustice Pryor, at which said petition was presented, had no jurisdiction to entertain the application.
This proposition the Attorney-General has very fully argued at our bar.
Since the argument, the order granted by Justice Pryor has been affirmed by the Appellate Division in the first department, and that decision is conclusive upon the right to maintain the proceedings for the voluntary dissolution. The ¡lower of the court in the first department to entertain that application cannot be questioned in this action.
The court had jurisdiction of the subject-matter and the authority to appoint temporary receivers, and it necessarily possessed the power to decide any controverted question of fact upon which the exercise of its power depended.
Jurisdiction, in the strict meaning of the term, as applied to judicial officers and tribunals, means no more than the power lawfully existing to hear and determine a cause. It is the power to adjudge concerning the general questions involved, and is not dependent upon the state of facts which may appear in a particular case. It is entirely independent of the manner of its exercise,
As the Code has conferred upon the Supreme Court the power to dissolve a corporation upon the petition of a majority of the directors having the management of its concerns, the question whether the petitioning directors had the management of its concerns was a judicial one, which the court at Special Term was called upon to decide, and its decision either way did not affect its jurisdiction and could be reversed only upon appeal. It may have been erroneous, but until reversed it is conclusive in all other tribunals, upon the questions presented.
For the purpose of this appeal, therefore, we must assume that the fact that the Superintendent of the Banking Department had taken possession of the bank and its property and business, did not preclude the directors from prosecuting the proceedings for a dissolution of the corporation or deprive the court of the right to exercise any of the powers which the statute conferred upon it in proceedings of that character. But we are also of the opinion that the pendency of the proceedings for a voluntary dissolution are not a bar to the maintenance of an action by the Attorney-General in the name of the People for substantially the same relief. It was so decided in People v. Seneca Lake Grape & Wine Company (52 Hun, 174). While it is true that the statutes relating to the voluntary dissolution of corporations have, since that case was decided, been very much changed, and the power which the court may exercise in those proceedings very much enlarged, and while the grounds upon which dissolution was sought in that action were different from those alleged in the petition of the directors in the voluntary proceeding, the relief sought in each case was the same, and we think the decision rested upon a sound principle of law. There would, we think, be serious objections to treating a proceeding for the voluntary dissolution of a corporation as an action between the People and the corporation, or to holding that the People were a party to that proceeding in the true sense of that term. But however that may be, we place our decision upon the
We, therefore, conclude that the answer of the defendant set forth no defense, and that the order overruling it as frivolous must be affirmed.
But, while we affirm the right and power of the Arrorney-General to maintain this action for the purpose of obtaining a judgment dissolving the corporation, it by no means follows that receivers of the property of the corporation should be appointed herein either by an intermediate order or by final judgment, while the other uroeeeding is pending.
The distribution of the property of the corporation among the creditors, and stockholders is chiefly an administrative function. It is the result of, and an incident to, the dissolution of the corporate body. It is to be performed by the court, through the medium of receivers; and such receivers, when appointed, are the officers of the court, and subject to its direction and control. When, therefore, the court has, in one proceeding brought for the dissolution of the corporation, acquired jurisdiction over the fund, and has appointed its officers to take possession thereof and administer upon it, it is difficult to see how the order of another and co-ordinate branch of the same court, which seeks merely to take the fund out of the hands of one set of receivers and place it in the possession of another set, is to be upheld.
Should receivers be appointed in this action the legal relation of the court to the fund would not thereby be in the slightest degree changed. It would still be in the possession and control of the court. All that would be accomplished would be to displace one set of receivers and substitute another.
Ho step can be taken in the voluntary proceedings except upon due notice to the Attorney-General. The duties imposed upon him in reference to the administration of the fund are authorized mainly for The protection of the stockholders and creditors, and are precisely the same in one proceeding as in the other. The interests of all parties are, therefore, amply protected, and no public or private interests demand any further order by the court in this action. If the receivers appointed by Justice Pryor are for any reason objectionable, application may be made to the court for their removal. The fund is now in the possession and control of the court, and no further order or judgment is at the present time necessary to enable it to decree its proper distribution among those entitled to it.
Judgment may be entered in this action for the dissolution of the
All concurred.
Order overruling the answer as frivolous affirmed, with ten dollars costs and disbursements. Order appointing receivers reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.