17 N.M. 694 | N.M. | 1913
OPINION OP THE COURT.
— This is a proceeding for a writ of prohibition against John T. McClure as Judge of the District Court of Chaves County, and against said District Court. The facts giving rise to the controversy may be briefly stated as follows:
One E. E. Lund, being a judgment creditor of the Eagle Mining & Improvement Company, instituted a proceeding against said corporation as an insolvent under the provisions of chapter 79 of the laws of 1905, seeking an injunction against the further exercise of its corporate functions by it, and seeking the appointment of a receiver of its assets. The corporation answered, setting up that all of its property had been conveyed by mortgage • deed to one J. H. Fulmer, Jr. Thereupon Fulmer was ordered to be made a party defendant. Upon final hearing, the court made the following finding:
“Upon the pleadings and the proofs submitted, it is found by the court that the defendant corporation is insolvent and cannot, as now conditioned, conduct its business in the future with safety to the public or advantage to the stockholders. - A decree may accordingly be drawn .granting the relief prayed in the complaint and as provided by chapter 79 of the laws of A. D. 1905.”
Thereupon a decree was entered appointing a receiver, but omitting to adjudge insolvency or to enjoin the fur-the rexercise of coiporate functions by the corporation. 'This decree was brought to the Territorial Supreme Court by writ of error, and the writ was dismissed on the ground that, there being no injunction, the order appointing a receiver was interlocutory and not reviewable. Eagle Mining & Improvement Co. v. Lund, 15 N. M. 696.
Upon the remanding of the case to the District Court, the Eagle Mining & Improvement Company offered' to file an amended answer, setting up certain occurrences since the writ of error was sued out, and hereinafter mentioned, which application was denied. Thereupon, on October 4th, 1911, the cause came on for final hearing, and the District Court, reciting its former findings, and that its former decree by inadvertence failed to award the injunction, entered a final decree adjudging insolvency, •awarding injunction, and appointing the same receiver who had never qualified under his former appointment, and ■ordered said decree to take effect nunc pro tunc as of September 18th, 1908, the date of the original decree in the case. 'On March loth, 1912, the relator intervened in the •cause, and set up that it was the owner of the property sought to be administered by the court through the receivership, by reason of a certain foreclosure proceeding-prosecuted to final decree and sale in the District Court •of Lincoln county, and by conveyance to it from the said J. H. Fulmer, Jr., the purchaser at the foreclosure sale; that no receiver of the property of the Eagle Mining & Improvement Company had qualified, and hence none was made party defendant: That E. E. Lund, the plaintiff in the receivership case, was made a party and answered; that the receiver appointed by the nunc pro tunc decree of October 4th, 1911, qualified and was assuming possession of the property and interfering with the possession of intervenor, relator here. It prayed for a decree that it owned the property, and for- an order to the receiver to refrain from further inteference with the same. A demurrer was interposed to the petition of intervention but, so far as appears, the same remains undisposed of.
Subsequently, the receiver being still in charge, relator filed a motion in the receivership case, to be permitted to install certain machinery which should not become subject to the receivership. The court denied the motion, but made an order permitting the installation of the machinery provided it became a part of the estate, and as such, subject to the administration of the court through the receivership.
It appears that the domicile of the Eagle Mining & Improvement Company is at Parsons, in Lincoln County, in the Sixth Judicial District, and that all of its' property was situated in said County of Lincoln, all of its business done there, all of its officers residing there, while the action for the injunction, and receivership was begun and prosecuted in Chaves County in the Fifth Judicial District. Most of the property is real estate in the form of mining property.
A consideration of this case naturally involves three propositions, which may be stated as follows:
1. Is the subject matter of the action within the general scope of the jurisdiction of the Chaves County court?
2. If within the general jurisdiction of that court, what effect did the proceedings have upon the jurisdiction of courts of concurrent jurisdiction?
3. Was the manner of seizing possession of the property lawful and, if not, does the conduct of the relator waive the error?
A decision of the first proposition above mentioned requires an examination into the nature of the action provided by chapter 79, laws of 1905. This act was adopted bodily from the corporation act of New Jersey of 1896, to be found in Parker’s New Jersey Corporations, and in which all of the New Jersey decisions are cited and digested. In that state the courts have interpreted the statute-in numerous cases. In Gallagher v. Asphalt Co. of America, 65 N. J. Eq. 258, the U. S. Circuit Court of New Jersey had taken jurisdiction of the asphalt company, and of all of its assets, and, through a receiver, was distributing the same to its creditors, and the objection was made that the New Jersej'" court had no jurisdiction under the statute to entertain the proceedings, the jurisdiction having been assumed by the Federal Court. The New Jersey Court, after pointing out that the Federal Court was not assuming to strip the corporation of its power to exercise its corporate functions, but was administering the corporate assets under its general equity powers, overruled the objection and proceeded to discuss the nature of the statutory proceeding. The court said:
“Both sides, I think, conducted their argument somewhat under a misconception in regard to the nature of this act — or at least upon the idea that the suit brought under that act is an action for a receiver — an action necessarily to reach assets and effect their distribution through a receiver. I do not find that that is the main purpose and object of our statute, and the histoiy of our statute strongly indicates that that view is erroneous. In my opinion, our statute, originally passed, as I said, in 1892, provides for a proceeding more in the nature of a quowarranto than of a creditor’s bill. It provides for a proceeding which can be pursued to a finish, even though the-corporation has no assets whatever. Whether a receiver shall be appointed under our statute or not, is wholly discretionary with the court, and the receivership is not the essential object of the suit. The discretionary power to appoint a receiver can only be exercised at the time the injunction is ordered, or at some time thereafter * * * As in the New York act, the direct object of the suit is accomplished by an injunction placing the corporation under disability — restraining it from the exercise of any of its franchises. ' As in the New York act, the receivership is purely discretionary, and when created follows the decree for an injunction. A decree for an injunction might go, although there were no assets. The order appointing the receiver could never be made unless the decree passed at the same time, or had already passed, disabling the corporation by the injunction. * * *
“Insolvency is one of the jurisdictional facts upon which the decree goes. The decree itself is that the corporation shall be enjoined from the exercise of its franchises. That is the decree. It is often said that our statutorjr suit is a proceeding in rem — that the status of the corporation is permanently fixed by this decree. True enough. But the status is not the status of a corporation as insolvent. It is the status of a corporation with respect to the exercise of ’its franchises. The status that is determined and fixed by the decree is that of a corporation under disabilities, ■enjoined from exercising its franchises. * * *
“Now, I think it will be perceived that our statutory ■suit in a proceeding more in the nature of a quo warTanto than a creditors’ bill for a receivership. In the case of a creditors’ bill, the direct object is the sequestration of the assets by a receiver, and any injunction is ancillary to that object. If there are no assets, and consequently no receivership, it would be a strong case which would afford any function for an injunction. On the other hand in the case of a quo warranto suit, the direct object is to procure a forfeiture of the corporate franchises — practical corporate death — and a receivership in those states where there can be a receivership in a quo warranto case is purely ancillary and dependent upon the necessities of the particular case — dependent upon the existence of assets to be received and distributed. If a corporation is insolvent to the extent defined by our statute, it is not material whether it has or has not assets, or if it has assets what their value may be; the suit proceeds to final decree in any case. * * *
“The result, therefore, is that the motion to dismiss this bill is denied. The bill will be retained (in spite of the fact that all of the assets of the corporation are in the possession of a receiver of the Federal Court, and at present there seems to be no reason why any receiver should be appointed by this court), for the accomplishment of the statutory object of this suit, which has no essential relation to the sequestration or distribution of assets.” See also Pierce v. Old Dominion Copper Mining & Smelting Co., 67 N. J. Eq. 399, to the same effect, referred to and approved in the Eagle Mining & Improvement Co. v. Lund, 15 N. M. 696.
In the New Jersey cases it is said that the proceeding is a proceeding in rent, but it is clearly pointed out in these cases that the res is the status of the corporation, not its assets.
We have hesitated to adopt this conclusion by reason of a practical question involved. Under this holding a corporation having a domicile in one corner of the state, may be sued by a creditor residing in the extreme- opposite corner of the state and thus be subject to great costs and inconvenience. But no matter what the consequences may be, we can not see our way clear to adopt any other doctrine. The reinedy, if any is needed, lies with the legislative and not with the judicial department.
In this connection, we have not failed to notice the provisions of sec. 83 of the corporation act hereinbefore mentioned. The section is as follows:
“Any creditor or claimant who shall lay his claim before such referee, may, at the same time, demand that-a jury shall decide thereon, and in like manner the receiver may demand that the same shall be referred to a jury; and in either case such demand shall be entered on the minutes of the referee, and thereupon an issue shall be made up between the parties, under the direction of the District Court, and a jury impaneled, as in other cases, to try the same in the District Court of the county in which the corporation carried on its business or had its principal office, as in other civil cases, ana the claim shall be docketed as other civil cases in said court; the verdict of the jury shall be subject to the control of the court as in suits originally instituted therein, and when rendered, if not set aside by the court, shall be certified by the clerk to the receiver and referee, and the creditor shall be considered in all respects as having proved his debt or claim for the amount so ascertained to be due, and in all cases in which ho trial by jury shall be demanded the court shall have jurisdiction to pass upon the claims presented and to determine the rights of the claimants, and to make such order or decree touching the same as shall be equitable and just.”
This section was adopted from sec. 77 of the New Jersey Corporation Act, which is as follows:
“Any creditor or claimant who shall lay his claim before such receiver may, at the same time, demand that a jury shall decide thereon, and in like manner the receiver may demand that the same shall be referred to a jury; and in either case such demand shall be entered on the minutes of the receiver, and thereupon an issue shall be made up between the parties under tire direction of one of the justices of the Supreme Court, and a jury empaneled, as in other cases, to try the same in the circuit court of the county in which the corporation carried oh its business or had its principal office; the verdict of the jury shall be subject to the control of the Supreme Court, as in suits originally instituted therein, and when tendered, if not set aside by the court, shall be certified by the clerk of the Supreme Court, to the receiver; the creditor shall be considered, in all respects, as having proved his debt or claim for the amount so ascertained to be due, and in all cases in which no trial by jury shall be demanded the court of chancery shall have jurisdiction to pass upon the claims presented and to determine the rights of the claimants, and to make such order or decree touching the same as shall be equitable and just.”
It appears that the legislature attempted to adapt the New Jersey law to our situation, but that the adaptation is perhaps faulty in that it is not clear and specific as to just what is meant. In New Jersej7 the Chancery Court has, we understand, territorial jurisdiction throughout the state, and it is clearly pointed out in their act that the jurisdiction of the main insolvency proceeding is vested in a court other than the one in which issues of fact are-to be tried by a jury. In our jurisdiction, however, the several district courts are courts of both common law and chancery jurisdiction, and possess all of the general original jurisdiction in their respective districts, with some minor exceptions, and to the exclusion of other district courts. At first glance it would seem anomalous for an issue to be framed under the direction of one district court, to be tried to a jury in another district court of equal dignity and general character of jurisdiction. In other words, if a district court has jurisdiction of a given subject matter, it would seem that its jurisdiction should be adequate to dispose of every issue that might arise in the course of the litigation. But the legislature, we assume, could provide, if it so desired, for just such a result as has been outlined, and the question is whether it is so provided bj7 the act in question.
Some little light is thrown upon the question by the adaptation of the law from the New Jerse}7 act. In New Jersey it clearly appears that the issues are to be tried by a jury in a court other than that in which the main insolvency proceeding is pending, and the legislature followed the New Jersey act as closely, in terms as possible under our circumstances. While not conclusive, this is persuasive as to the legislative intent that the venue of the main cause may be in one county, and the venue of an issue of fact before a jury in another county. Again, ■our district courts possess both common law and chancery jurisdiction. While our district courts, so possessed of both jurisdictions, are presided over by the same judge, still the functions of the cciurt in the two classes of eases are as distinct as those of the English courts of chancery, ■and the English common law courts. And when the district court entertains an insolvency proceeding of this kind, it sits as a court of chancery, and when it tries an issue to a jury, it sits as a court of law, with entirely different powers and functions.
But a more careful inspection of our • act itself, leads to the conclusion that the legislature contemplated that the venue of the main action and that of the issue at law, might be in different counties or even -in different ■districts. It is to be observed that the venue of the issue at law alone is fixed by the act, wherein it provides:
“And thereupon an issue shall be made up between the parties, under the direction of the district court, and a jury empaneled, as in other cases, to try the same in the district court of the county in which the corporation carried on its business or had its principal office, as in other civil eases, and the claim shall be docketed as other civil cases in said court.”
And it is seen that this venue may be either in the county where the corporation carried on its business, or in the county where it had its principal office. It is a matter ■of common observation that corporations may have, and do have, their principal office in a given county, and may transact all of their business in another county or district.. A corporation having its principal office in Santa Ee 'County, may do all of its business 'in Dona Ana County, for instance. The word “business” in this connection, evidently means the acts of the corporation whereby they come in contact with the public, and is the equivalent of ■occupation. It does not refer to the internal manage-, ment of the corporation, such as the holding of director’s and stockholders’ meetings and the like, else the business of the corporation would always be done at its principal office. Once admitted that the venue of the main insolvency proceeding and that of the trial of an issue to a jury may be in different counties, or even in different districts of the state, it seems clear that sec. 83 was not intended to, and does not control, the venue of the maim action.
As a practical question we assume that the issue maybe framed under the direction of the district court in which the main insolvency proceeding is pending, and that the-same may be filed by either of the parties in the proper-district court, as provided by the act, and as an ordinary-action at law in a civil case.
A discussion of the second proposition necessitates a-determination of when jurisdiction of a subject matter attaches, and what effect' the same has upon the concurrent jurisdiction of other courts. It is to be remembered' that Fulmer, the mortgagee, was a party to the proceedings in the Chaves County court, served with process, and answering, setting up his mortgage. It is likewise to be-observed that under the act, chap. 79, laws of 1905, ample-provision is made for the determination of every question of law or fact involving the validity, priority or other-characteristic of any claim of any creditor of the insolvent corporation, and for the payment of the same out of the estate of the insolvent. It is further to be observed that the parties before the Lincoln county court, where-the mortgage of Fulmer was foreclosed, were the same as the parties before the Chaves county court. It is true that in the Lincoln county court the form of the procedure was somewhat different, in that it was strictly a foreclosure-proceeding, but Lund, the plaintiff in the Chaves county proceeding, was made a defendant and the question as to-the priority of the claims of Fulmer and Lund respectively, was litigated. In the Lincoln county proceeding the-fact of the pendencjr of the Chaves county proceeding was called to the attention of the court by the answer of Lund. While these proceedings, as before said, were slightly different in form, the essential elements of the two were-the same in each instance. In the Chaves county proceeding the mortgage could not be foreclosed in form, but the question of its validity, its relative priority, and the subjection of the insolvent estate to its payment, were all •within the scope of that proceeding. We therefore consider the two proceedings as identical in substance and effect.
This doctrine has often been applied under various circumstances. Thus, in Farmers’ Loan, etc. Co. v. Lake Street Railroad Co., 177 U. S. 51, a contest arose, between a trustee under a trust deed to secure the payment of certain bonds of a railroad and a set of minority bond holders, who were seeking to oust the trustee from its office, and to prevent its action in the Federal Court to foreclose the mortgage. The proceeding was first instituted' in the Federal Court. The Supreme Court of the Hnited States, in passing upon the question, says:
“The possession of the res vests the court which has first acquired jurisdiction with the power to hear and determine all controversies relating thereto, and for the-time being disabled other courts of co-ordinate jurisdiction from exercising a like power. This rule is essential to-the orderly administration of justice, and to prevent unseemly conflicts between courts whose jurisdiction embraces the same subjects and persons.
“Nor is this rule restricted in its application to cases where property has been actually seized under judicial process before a second suit is instituted in another court, but it often applies as well where suits are brought to-enforce liens against specific property, marshal assets, administer trusts or liquidate insolvent estates, and in suits of a similar nature where, in the progress of the-litigation, the court may be compelled to assume possession and control of the property to be affected.”
In McDowell v. McCormick, 121 Fed. 61, an action by a creditor was brought against an insolvent corporation in a court of general jurisdiction in the State of Indiana, which court appointed a receiver. Subsequently on the ¡application of another creditor, another court of Indiana, of co-ordinate general jurisdiction also appointed a receiver, who thereupon took possession of the insolvent ■corporation’s property. It was held that the first named •court acquired complete and exclusive jurisdiction of the subject matter irrespective of any actual seizure of the propert}', and the record of such proceedings was admissible in evidence to prove title to the property as against title asserted by the second appointee. It is said by the ■court:
“When the complaint on behalf of another creditor was filed in the La Porte Superior Court, summons was ■served and an appearance entered, that court was without present jurisdiction of the subject-matter, ‘for the prop■erty could not be subject to two jurisdictions at the same time.’ Covell v. Heyman, 111 U. S. 176, 182. Possession of the property obtained by its receiver was, of course, nugatory as were any orders for the sale thereof.”
In Louisville Trust Co. v. Knott, 130 Fed. 820, the minority stockholders of the corporation filed a bill in the state court for an inspection • of its books, the ascertainment of its debts and liabilities, together with a sale and distribution of its assets, and other equitable relief. 'The majority stockholders appeared in that case, but pending the same filed a creditor’s bill for the appointment ■of a receiver in the Federal Court, who when appointed took possession of the assets, which the Federal - Court refused to surrender to a receiver subsequent!}' appointed by the state court. It was held that the state court had first acquired jurisdiction of the subsequent matter of the administration of such corporation’s assets, though' it had not first taken physical control thereof, and hence was entitled to their surrender by the receiver of the Federal Court. The court says:
“To avoid such conflict, most liable to arise between the Federal and State Courts, it has come to be settled, as we think, that, wherever a State or Federal Court has lawfully taken jurisdiction of a case for the purpose of subjecting assets within its territory to the charge- or disposition which the law applicable- to the case requires, such assets are thereby brought in custodia legis.. subject to the power and control of the court, and that no other court of co-ordinate jurisdiction can, in a suit commenced while the assets are in that situation, lawfully deprive the court, which has already acquired the right of control, of the possession of them. This because the-possession of the res is indispensable to the exercise of' its jurisdiction by the court to the. end that it may be-impressed by its decree. It does not seem to us important that a receiver had not actually been appointed. An appointment of a receiver ‘would rest upon considerations of convenience, and might be made at any time during-the progress of the case, if occasion should arise. The-conversion of the assets might be made without the employment of a receiver at all. Besides the appointment goes upon the ground that the court has acquired control of the assets. He is a mere agent of the court. The-possession is that of the court, and not his own. It is quite true that in many cases this rule has been stated in terms no broader than to include an actual possession by the court consequent upon seizure. But it is seen that generally in such cases the exigency did not make it necessary to go beyond that limit. When the question we are-now considering has been actually presented, the decisions-have been quite uniformly in accord with the rule which we have indicated as the correct one.”
In Sullivan v. Algrem, 160 Fed. 366, it is said:
“The legal custody of specific property by one court of competent jurisdiction withdraws it, so far as necessary to accomplish the purpose of that custodj', until that purpose is completely accomplished, from the jurisdiction of every other court. The court which first acquired jurisdiction of specific property by the lawful seizure thereof,, or bjr the due commencement of a suit in that court, from which it appears that it is, or will become, necessary to-complete determination of the controversy involved, or to-the enforcement of the judgment or decree therein, to-seize, charge with a lien, sell, or exercise other like dominion over it, thereby withdrawing that property from the jurisdiction of every other court, and entitles the former to retain control of it requisite to effectuate its judgment or decree in the suit free from the interference of every other tribunal.”
In Lang v. Choctaw, etc. R. Co., 160 Fed. 355, Judge Sanborn states the doctrine in the same form.
In Waters-Pierce Oil Co. v. State, 103 S. W. 836, there was a conflict of jurisdiction between the state court and the Federal Court as to the custody of the estate of the Waters-Pieree Oil Co., whose charter had been lately forfeited by the State of Texas. In that case it is said:
“There is a rule, not only one of comity, but by force of judicial decisions of the highest court in the land has become one of jurisdiction, a rule so universally recognized that no court will question it, and it may be stated to be: That, when the power of a court of jurisdiction is first invoked to seize and administer property, its jurisdiction is exclusive, and no other court of concurrent jurisdiction can interfere to materially disturb or hinder the former in the exercise of its authority and jurisdiction over the res.
The court further says:
“When did the property become in custodia legis, and when did the jurisdiction of the trial court attach? For the purpose of this controversy, we need not discuss the conflict of decisions which on the one hand held that the jurisdiction is complete from the filing of the bill, and upon the other that it does not attach until the service of subpoena, for here in this instance it is clear that the defendant corporation was in court properly served and appearing in the receivership j>roceedings. When service is had, or there is the equivalent by appearance, if there could be any doubt as to which of the two lines of decisions should prevail, the weight of reason and authority is clear to the effect that the jurisdiction of the court will, under the doctrine of relation, after the order made, commence from the time’of the filing of the bill for'appointment, although no possession has been' taken by the receiver of the property sought to be administered by the court. This principle is well settled.” See Craig v. Hoge, 28 S. E. 217, for specific application of this principle to other cases ■of the general character of the ease at bar. See also numerous cases collected in the note to Young v. Hamilton, Ann. Cases, 1912 A. 150.
It seems clear from the foregoing authorities, and upon principle, that the Chaves county court, upon the filing •of the bill and the service of process in-the proceeding which contemplated the adjudication of the question of insolvency, the awarding of an injunction against the corporation, if found insolvent, stripping it of its corporate powers, adjudicating the claims of all of its creditors, subjecting its estate to the payment of the same, absorbed -all of the jurisdiction concerning the corporation and its property, to the exclusion of all courts of co-ordinate jurisdiction.
As before stated, an exception to the general rule exists as to actions in personam, as the exception is usually stated. The early and leading case pointing out this exception is Buck v. Colbath, 3 Wall. (U. S.) 334. In that case a United States Marshal was sued for trespass, and he defended himself on the ground that his acts were performed under a writ from a proper Federal Court, and Mr. Justice Miller, speaking for the court, says:
“It is scarcely necessary to observe that the rule thus announced” (the general rule heretofore mentioned) “is ■one which has often been held by this and other courts, and which is essential to the correct administration of justice in all countries where there is more than one court having jurisdiction of the same matters. * * * But it is not true that a court having obtained jurisdiction of a suit, and of parties before it thereby excludes all other •courts from the right to adjudicate upon other matters having a very close connection with those before the first ■court, and, in some instances requiring the decision of the same question exactly.
“In examining into the exclusive character o fthe juris-dietion of such cases, we must have regard to the nature •of the remedies, the character of the relief sought, and the identity of the parties in the different suits. For example, a party having notes secured by a mortgage on real estate may, unless restrained by statute, sue in a court of chancery to foreclose his mortgage, and in a court of law to recover judgment on his note, and in. another-court of law in an action of ejectment to get possession of the land. Here in all the suits the only question at issue may be the existence of the debt mentioned in the-notes and mortgage; but as the relief sought is different, and the mode of proceeding is different, the jurisdiction of neither court is affected by the proceeding in the other. And this is true, notwithstanding the common object of' all the suits may be the collection of the debt. The true effect of the rule in these cases is, that the court of chancery cannot render a judgment for the debt, nor judgment of ejectment, but can only proceed in its own mode, to foreclose the equity of redemption by sale or otherwise. The first court of law cannot foreclose or give a judgment of ejectment, but can render a judgment for the payment of the debt; and the third court can give the relief byejectment, but neither of the others. And the judgment by each court in the matter properly before it is binding and conclusive on all other courts. This is the illustration of the rule where the parties are the same in all three-of the courts.”
In commenting upon the illustration of the principle-given in this case, Mr. Justice Field, in the Circuit Court in the case of Sharon v. Terry, 36 Fed. 337, 359, uses the-following language:
“The exceptions to the doctrine that priority of jurisdiction controls priority of decision, to which we have-referred, and to which our attention has been called bv counsel of the defendants, will be found on examination to range themselves under two classes: First, where the-same plaintiff has asked in the different suits a determination of the same matter; as, for instance, where different obligations are issued upon the same transaction, which is attacked in each suit as fraudulent and illegal, and therefore vitiating the several obligations; or where the jurisdiction of a court of equity, as well as a court of law,, is invoked by him with reference to the matter. Of course - a decision first rendered in either suit may be pleaded in the others. The plaintiff must abide the adjudication which lie has sought. And, second, where the cases are upon contracts or obligations, which from their nature are merged in the judgment rendered, the subject upon which the first suit is founded having thus ceased to exist.”
But it is apparent that the ease at bar does not fall within the exceptions. In this case the same parties,'the same questions, the same relief could be obtained in both proceedings, with some additional relief to the plaintiff. But so far as the mortgagee, Fulmer, is concerned, the two cases are exactly alike in all particulars, except’ the technical form of procedure and of subjecting the property to the payment of this debt.
In connection with this exception to the general rule, and as illustrative of the same, reference is made to Gallagher v. Asphalt Co., 65 N. J. Eq. 258; Squire v. Princeton Lighting Co., 72 N. J. Eq. 883, and Gallagher v. True American Pub. Co., 74 Atl. 741. In each of these cases the action was in personam upon a legal demand against an insolvent corporation, and judgments were obtained after the filing of a proceeding against the defendant corporation as an insolvent, but before an adjudication of insolvency and the award of an injunction. It was held that until an adjudication of insolvency and the awarding of an injunction that creditors of the corporation might pursue their legal remedies in personam, and thereby acquire a preferential claim against the insolvent estate. But these cases in no way affect the general doctrine above', stated.
It seems clear, therefore, that upon the filing of the bill and the service of process in the Chaves county court, that court absorbed the whole jurisdiction over the defendant, corporation, its creditors and its estate, and-that the Lincoln county court had' no jurisdiction then to entertain the foreclosure proceeding.
A serious question is presented by reason of the manner in which the Chaves county court took possession of the estate of the insolvent corporation. The receiver who was finally appointed and qualified, found in possession of the property a stranger to the record, claiming to own the. property and protesting against any interference with its possession. This cannot ordinarily be done. See Havemeyer v. Superior Court, 84 Cal. 327, 18 A. S. R. 192. Eights to property cannot ordinarily be tried in a ■summary manner by the appointment of a receiver who arbitrarily takes possession of the same. The more orderly and proper method, in cases where property is found in the possession of a stranger to the record, claiming ownership and right to possession of the same, and which is sought to be taken into possession as the property of another person, is to authorize the receiver to bring a suit to try the title. But whether in this case the facts justified the taking of the possession of the property under the circumstances shown by the record or not, the relator being privy in estate with the mortgagee, Fulmer, it is not necessary for us to decide by reason of the subsequent ■conduct of the relator.
For the reasons stated the alternative writ of prohibition will be discharged, and it is so ordered.