OJnrnfU Ham ^riynnl Sltbtaty Cornell University Library KFN6063.E26 1857 3 1924 022 885 374 Cornell University Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924022885374 Prepa/ring for Ptiblication : THE LAW AND PRACTICE OF REFEREES UNDEK WITH FOKMS. BY CHARLES EDWARDS, Esquire. ON RECEIVERS IN EQUITY AND UNDER THE NEW YORK CODE OF PROCEDURE ; WITH PRECEDENTS. BY CHARLES EDWARDS, COUNSELLOR AT LAW, ADTHOE OP "PARTIES IN CHANCERY," ETC., ETC. SECOND EDITION. NEW YOEK: JOHN S. VOORHIES, LAW BOOKSELLER AND PUBLISHER, 20 NASSAU STEEET. 1851. Entered accordm|-to Act of Congress, in the year 185T, by JOHN B. TOOEHIES, In the Clerk's Offloe of the Distriet Court of the United States for the Southern District of Hew York. Bakke & Godwin, Printers, 1 Spruce Bt,, N. Y. THE AUTHOR, WITH SENTIMENTS OF EEGAED AND ESTEEM, THIS SECOND EDITION OF HIS WORK ON RECEIVERS TO HIS FRIEND, THOMAS DUNLAP, ESQUIKE, OF PHILADELPHIA, COUNSELLOR AT LAW. COIJTENTS. CHAPTER I. OF EECEIVEKS GENERALLY. Power of the court to appoint a receiver ; and the utility of such an oflBcer. What is a receiver. His general powers ; and what property he can control. In what stages of a cause a receiver may be appointed ; the na- ture and form of pleading necessary to sustain an appli- cation ; and orders of court affecting him. Who can nominate a receiver. From what time he is to be con- sidered as appointed 1 CHAPTER n. WHERE A RECEIVER WILL NOT BE APPOINTED. Against the legal estate or party in possession. Inadequacy of price. Against a trustee having a power of sale to pay debts. Pending the removal of a trustee. Corpora- tion as trustees under an original grant. Executor being poor. Executor generally. Tenant in common. Rates and tolls not already imposed. Where a trustee mixes the trust funds with his own moneys. Where a party has delayed applying for a receiver. Will contesting in a surrogate's court. Mortgagee in possession. Salaries of public officers. Public office in litigation. Mortgage not wholly due or security inadequate. As between de- fendants. To enforce appearance from an absent defend- ant. Where there is already a receiver. Stockholder against a director. Danger of eviction. On defendant's motion. Where admiralty is the proper forum. . , 24 viii CONTENTS. CHAPTER III. WHO CANNOT OB OUGHT NOT TO BE RECEIVERS. Officers acting under the United States. Attorneys or solici- tors interested; and, attorneys and solicitors generally. Prochein 'ami. Officers of a corporation acting out of their charter, etc. Mortgagee. Members of the legisla- ture. Trustee. A party in the cause 65 CHAPTER IV. GENERAL PRACTICE ON THE APPOINTING A RECEIVER, Motion for a receiver. Order. Summons. Attachment where a party does not attend before a referee or master. Pro- ceedings on the reference. Receiver's owti solicitor and counsel. The effect of a receiver pendente lite. Remov- ing a receiver from part of a larger property. . . 76 CHAPTER V. WHAT A RECEIVER MAT AND WHAT HE MAY NOT DO, WITHOUT APPLYING TO THE COURT. Ejectment. Repairs. Improvements. Pay out money. Lease for any number of years. Let for a year. Renew a lease. Power to determine a subsisting lease. Give notice to quit. Distrain where more or less than a year's rent is due. Become a tenant. Bring actions. Appoint an agent. Carry on trade. Obtain a writ of assistance. Have a sequestration where a party does not deliver over property. Have an attachment against a person inter- fering with the property in his custody. Sell bad debts. Appeal. Apply for instructions. Proceeding against another receiver. Cancel policies. Re-insure risks. Sell timber. Bid on property 113 IX CHAPTER VI. CORPORATE BODY. BANK. INSURANCE COMPANY. ASSOCIATION. Corporation generally. Voluntary dissolution of a corpora- tion ; and practice in relation to it. Corporation sus- pending business for a year. Charging directors, etc., and making them personally liable. Corporation not paying taxes. Insurance companies rendered insolvent by the great fire in New York. Corporation having a judgment against them, with an execution unsatisfied ; and practice thereon. More particularly of banking and insurance corporations. Banking or insurance company becoming insolvent or violating its charter ; and practice in relation thereto. Receiver of a safety-fund bank pay- ing its circulating notes. Where an execution on a judg- ment against any corporation or joint-stock association for banking purposes issuing bank notes or any kind of paper credits after the first of January, 1850, has been returned unsatisfied or could not be met (if issued). Where a creditor of such corporation or association has a demand exceeding $100, of which payment shall have been refiised. Where any one oi' more stockholders of any such corporation or association, owning one tenth of capital, applies for an order to declare the corporation insolvent. Particular powers of receivers of mutual insu- rance companies. Commissions to a receiver of a mutual insurance company. Commissions to a receiver of a bank. Religious congregation. Reference of claims against receivers of insolvent corporations. . . ■ . 162 CHAPTER VII. Partnership, 307 CHAPTER VIII. Mortgagor and Mortgagee, ...... 356 X CONTENTS. CHAPTER IX. RECEIVERS UNDER THE NEW YORK CODE OF PROCEDURE. JUDG- MENT DEBTOR. CBEDITOE AND DEBTOR. Receiver generally under the code. General remarts on sec- tions connected with supplementary proceedings. Prac- tice under supplementary proceedings. Order for a receiver. Bond of a receiver. Actions by the receiver. His selling doubtful debts. Orders for a receiver to pay oif judgment debts. Judgment creditors' suits generally. Judgment creditors' suits against a fraudulent assignment. Jndgment creditors' suit against fraudulent judgment. Insolvent assignee. Debtor coercing creditor. Receiv- er's powers and restrictions under judgment creditor's suit 362 CHAPTER X. Executor. Administrator. Trustee 513 CHAPTER XI. Lunatic. Infant 639 CHAPTER XII. Vendor and Purchaser. Tenant in Common. Waste, r-52 CHAPTER XIII. Receiver paying dividends in general cases. . . 565 CHAPTER XIV. I Personal and pecuniary liability of a receiver. Priv- ileges and liabilities op the sureties of a receiver. 573 CONTENTS. xi CHAPTER XV. Filing inventory and accounts. Final accounting. Al- lowances TO A RECEIVER. DISCHARGING OLD RECEIVER AND APPOINTING NEW ONE. 609 CHAPTER XVI. MISCELLANEOUS ; AND ADDENDA. Tenant. Rent. Title deeds. Legatee and executor. Amend- ing complaint after motion for a receiver and before argmnent. Prayer or demand for a receiver. . . 669 APPENDIX. Report, Orders and Opinion touching the Empire Bank OF New York ; and Decision in the case of Liv- ingston V. The Bank op New York, . . . 675 TABLE OF CASES. A. Aberdeen v. Chitty, . . %&1 Abraham v. Plestoro, . . 8 Accessory Transit Company ads Patten, . . . 14,63 Acker ads. Hart, . . 408, 411 Adams ads. Calvert, . . 45 Ainsley, In re, . . . . 110 Albany City Bank v. Schermer- horn, . 129, 147, 476, 482 Alexander v. Duneale, . .459 Allen ads. Connor, ... 78 Allen ads. Maguire, ... 14 Allen V. Smillie, . . 363, 610 Allen o*. Taylor, 114, 135, 520, 528 Allen ais. Wilson, . . . 376 Alven V. Bond, . . . 135 American Fire Insurance Co. ads. Depeyster, .... 228 American Fire Insurance Co. ads. Lowerre, .... 228 American Fire Insurance Co., Re- ceivers of the, aSs. Holbrook, 227, 254 Ames V. Downing, . . . 350 Ames V. Trustees of Birkenhead, 147 Anderson v. Anderson, . .161 Anderson ads. Anderson, . . 161 Anderton ads. Street, 42, 43, 44, 558 561 Andrews ads. Wilson, 369, 370, 374 Angel V. Smith, 3, 114, 115, 145, 149 Annan and others ads. Merritt, 84 Anonymous, 13, 40, 72, 95, 116, 518, 549, 550 Archdeacon v. Bo-wes, . . 670 Argall ads. Mills, . . . 346 Armstrong v. Byrne, . .479 Arnold ads. Bank of Ogdensburg, 60, 358 Arthurs v. Arthur, . . 14, 61 Arthur ads. Arthurs, . 14, 61 Ash V. Savage, .... 456 Ashbrooke ads. Dumville, . 49 Ashe ads. Wise, ... 62 Astor Bank, The, ads. Kattens- troth, 13 Astor V. Turner, . . 358, 359 Atkinson v. Henshaw, . . 50 Atkinson ads. Philips, . . 329 Atterbury ads. Payne, . 553, 654 Attorney-General v. Bank of Co- lumbia, . . 68, 69, 249, 253 Attorney-General v. Bowyer, . 527 Attorney-General v. Day, 22, 65 Attorney-General v. Haberdash- ers' Co., .... 668 Attorney-General v. Life and Fire Insurance Co., . . 5, 251 Attorney-General v. Mayor, (fee, of Gal way 16 Attorney-General v. Mayor of Bristol, .... 37 Attorney-General v. Mayor and Aldermen of Stafford, . 40, 536 Attorney-General v. tJtica Insu- ranoe Co., 248 Attorney-General v. Vigor, 117 Austen v. Daniels, . 142 Austen ads. Swift, . 150 Averall v. Wade, 98 B. Babcook v. Booth, . Badcock ads. Gordon, Baddeley ads. Bainbrigge, Baddington ads. Lowndes, Bagot V. Bagot, Bagot ads. Bagot, Bain ads. Goulding, Bainbrigge v. Baddeley, . Baker ads. Leonard, Baker ads. Russell, . 162 635 32 46 17 17 326 32 449 133 XIV TABLE OF CASES. 16, 36, 561 Ball ads. Doe 142 Ball V. Oliver 50 Ballard ads. Sturtevant, 422, 467, 461, 462, 464 Bamford v. Baron, . . .461 Bank Comm'rsa Bank of Buffalo, 246 Bank Comm'ra v. City Bank of Buffalo, .... 246 Bank Comm'ra v. Commercial Bank of Buffalo, . . .246 Bank Comm'rs v. St. Lawrence Bank, 142 Bank of Buffalo ads. Bank Com- missioners, .... 246 Bank of Columbia ads. Attorney- General, . 68, 69, 249, 263 Bank of New York ads. Living- ston, lati Bank of Niagara, In re, 110, 111, 303, 643, 644, 646, 648 Bank of Ogdensburg v. Arnold, 60 Banks ads. Gould, . . 88, 316 Bangs V. Grey, . . . 300 Baptist Church in Hartford a. Witherell, .... Barlow v. Gains, Barnett ads. Vann, Barnes ads. Drewry, Baron ads. French, . Barry ads. Brodie, . Baron ads. Bamford, Bartlett v. "Williams, Barrow v. Paxton, . Barney v. Griffin, Basely ads. Hugonin, Batten v. Earnley, . Baugh ads. White, . Baylon v. Smithers, . Beardmore v. Phillips, Beckford ads. Quarrell, Beecher ads. Scott, . Bell ads. Lespinasse, Belden ads. Whitney, Belden ads. Terry, . Bennett v. Bobbins, . Bender ads. Scouton, Berkeley v. Kmg's College, Cam- bridge, Berney v. Sewell, Bertie v. Ld. Abingdon, . Betts ads. Goodyear, 866, S'TS, 374 BUlinghurst, ex parte, . 639, 640 Bing ads. Grote, Birch, In re. Birch ads. Watkins, Bissell V. Hopkins, 804 86Y 662 47,49 70 73 451 456 462 474 633 517 675 460 93 63, 64, 66 15, 42, 615 . 87 . 81 . 457 . 130 376 69 54 612 857 . 541 . 449 42S, 462, 468 Bishop of Bath and Wells ads. Phipps 64 Blakeney v. Dufaur, 308, 380 Blake ads. Earl of Fingal, 16, 25, 30, 74, 75, 563 Blake ads. Lynch, . . .150 Blanchard v. Cawthorne, 68, 133 Blennerhaesett ads. Naeon, . 136 Bloodgood V. Clark, 15, 77, 864, 898, 399, 492 Bloom ads. Slee, , . . 248 BJoomfield ads. Cane, . . 669 Blunt V. Clitherow, . . 117, 613 Bolenham v. Hoskyns, . . 698 Boehm v. Wood, . . 553, 558 Bogburst ads. Preble, . . 635 Boisgerard ?). N. Y. Banking Co., 164 Bond ads. Allen, . . . 135 Bonithon v. Hockmore, . . 70 Bonner ads. Pitt, . . . 641 Booth ads. Babeock, . . 142 Booth 1). Clark, ... 8 Bowyer ads. Attorney-General, 627 Bowes ads. Archdeacon, . . 670 Bowden v. M'Leod, 165, 304, 305 Bowers ads. Bead, . . . 324 Bowater ads. Rigge, . . 598 Boydell ads. Harrison, . 696, 667 Brace ads. Child, . . . 400 Brady ads. M'Cosker, . 20, 636 Bradt v. Kirkpatrick, . . 492 Brandon v. Brandon, . . 126 Brandon ads. Brandon, . . 126 Brenan v. Preston, . . . 826 Brent ads. Watkins, . 50, 517 Brest ads. Scott qui tam, . . 70 Brewster ads. Hamilton, . 600, 604 Briant ads. Jenkins, . 625, 635 Bridgstocke v. Mansel, . . 671 Bridgstocke ads. Thomas, . 360 Broad v. Wiekham, . . 8, 12, 152 Brodhead ads. Greenwood, . 341 Brodie v. Barry, . . .73 Brooks V. Greathed, 54, 116, 145 Brooks V. Powers, . . . 454 Brouwer, receiver, v. Harbeck, 142, 165, 167 Brouwer, receiver, v. Hill, . 142 Brown v. Dowdall, . . . 557 Brown ads. Parker, . . 4, 145 Bruin ads. Iddings, . . 6, 60S Brush ads. Keyes, . . . 479 Bryan v. Cormick, . . . 8, 64 Buchanan v. Hamilton, . . 617 Bucknal v. Boiston, . . . 422 Buisson ads. Jacquin, . . 309 TABLE OF CASES. XV Bunbury v. Winter, . IS Bunch ads. Mitchell, 1 Burdick v. Post, . Hi Burke, Matter of, . s Burns v. Morse, . 478 Burrall v. Leslie, . 504 Butchart v. Dresser, . 324 Butler V. Stoddard, . 412,416 Buxton V. Monkhouse, . 11 Byrne ads. Armstrong, . 419 Byrne ads. Stone, . . 156 0. Oadogan v. Keanett, Cagger v. Howard, . Caines ads. Verplanck, Calvert v. Adams, . Camp V. Receivers of Niagara Bank, 252 Cane v. Bloomfield, . . . 669 Candler v. Candler, . . . 836 Candler v. Pettit, . . . 397 Canajoharie, Trustees of, ads. Gardner, . . . .338 Cape ads. Dawes, . . . 460 Carter, /re j-e, . . . 596,612 Carter ads. .Tennings, . . 463 Carew v. Johnstone, . . TO Carew ads. Paynter, . . 360 Carter ads. Radeliff, . . 542 Carter a. Fleetwood, Pulvertoft ads. Metcalf, Purdy V. Rapelye, Q. Quarrell v. Beckford, Quin 1). Gunn, . Quin V. Holland, Quincy v. Cheeseman, 16, 35, 661, 464 35 35 135 535 98, 627 326 69 64 349 25 77, 552 667 53, 54, :>?> '. 14 . 17 . 359 Radcliff, ex parte, 540 Radcliff V. Carter, . 542 Ragan v. Kennedy, . 469 Raines ads. Rex, 517 Randall ii. Cook, . 431 465 470 Rapelye ads. Purdy, 661 667 Raphael ads. Cockburn, . 93 599 Rathboue ads. Starr, 408 Rawlinson ads. liidd. 450 Ray -0. Macomb, 110 Raymond v. Franks, 17 Raynes ads. Dawson, 603 Read n. Bowers, 324 Read ads. Doe, Lessee of Mar- sack and others, . 125 126 Read v. Wheaton, 402 Receivers ii. Patterson Gas-Light Co 4 277 278 Reddington, In re, . 118 Reid V. Middleton, . 22 131 Reilly ads. Cooper, . . 67 Revett ads. Milbank, 42, 43 44, 568, 561 Rex V. Raines, . : 617 Rhodes ads. Shaw, . 596 663 Richards v. Chave, . 61 Richards v. Perkins, , 671 Richardson v. Ward, 661 Ricketts ads. Lawson, . 660 Ricketts ads. Newton, 52 TABLE OF CASES. xxm Eidout V. Earl of Plymouth, . 699 Eigge V. Bowiiter, . . . 598 Eipley a&. Howell, . 4,11,62 Eippoii ads. Gouthwaite, . .672 Bobbins ads. Bennett, . . 130 Eobei'ts, In re, . . . 651 Eoberts v. Everhard, . . 334 Eobinson u. Hadley, . 61,76 Robinson v. Shearei-, . .129 Eobibsqn ads. Waring, . . 341 Rochester City Bank ads. Mick- les, 246 Rogers ads. Hosack, . . 524 Eogers ads. Le Roy, . . 483 Rogers ads. The People ex rel. Lovett,, ... 86, 144 Rogers v. Ross, . . . 535 Roiston ads. Bucknal, . . 422 Roller ads. Ryal, . . . 448 Ross ads. Rogers, . . . 535 Eous V. Noble, . . . 517 Eowe 0(is. Norway, . . 56, 384; Rowe V. Wood, . . .54 Rowley v. Van Benthuysen, . 404 Rowth V. Howell, . . . 574 Royes ads. Morgell, . . . 125 Eundle ads. Tink, . . .147 Russell V. Baker, . . .133 Russell ads. Hamilton, . 422, 453 Russell ads. Hathernwaite, . 619 Russell ads. Sewall, . . . 476 Rutten V. Tallis, . . 99, 314 Ryal V. Roller, . . .448 Eyckman «i. Parkins, . .110 S. Sabaton ads. Chipman, . . 404 Sagory ?;. Dubois, . . 164, 276 Salt V. Lawson, . . . 374 Salter, ex parte, , . . 650 Salway v. Salway, . . . 576 Salway ads. Salway, . . 575 Sands V. Codwise, . .419 Sandford v. Sinclair, . . 14 Savage ads. Ash, . . . 456 Sayles ads. Phettiplaoe, . . 454 Scandi'ett ads. Smith, . , 93 Scalterwood v. Harrison, . 70 Schenek ads. Katseh, . . 334 Sehermerhorn ads. Albany City Bank, . . 129,147, 476,482 Scholefield and others v. Hull and others, . 156, 401, 410 Schreiber ads. Lateward, . 670 Seott V. Beecher, . 15, 42, 515 Scott gui tarn. v. Brest, Soouton V. Bender, . Sealey ads. Meadon, . 75, Seaman, In re, 541, 696, 601, Sedgwick ads. Connab, 474, Selby ads. Thompson, Senior ads. MeCredie, Sewall 1}. Russell, Sewell ads. Berney, Seymour v. Wilson, Shafford ads. HoUister, dhakel v. The Duke of Marlbo- rough, ..... Sharp V. Garter, . . 12, Shaw and others ads. Gibson and others, .... Shaw V. Rhodes, . . 596, Shaw V. Shore, Shearer ads. Robinson, Sheldon^. Weeks, . Shepherd v. Oxenford, Shepherd j;. Towgood, Sherburne ads. Middleton, Sherwood ads. Furniss, . Shewall v. Jones, Shore ads. Shaw, Silver v. The Bishop of Norwich, Simmons ads. Tylee, Sinclair ads. Sandford, Skerretts, In re. Skinners' Company v. The Irish Society, 70 376 357 625 479 16 86 476 64 377 393 553 549 105 653 14 129 81 332 349 628 142 657 14 32 82 14 Skip V. Harwood, . . 2, 3, Slanning v. Style, Slee V. Bloom, Small ads. Weed, Smillie ads. Allen, . . 363, Smith ads. Angel, 3, 114, 115, Smith ads. Comyn, . Smith V. Danvers, Smith ads. Dixon, Smith ads. Harlock, Smith V. Henry, Smith ads. Jeffreys, Smith V. Jeyes, Smith V. Lowe, Smith V. Lyster, Smith ads. Potter, Smith 1). Scandrett, . Smith V. Smith, Smith ads. Smith, Smith V. Vaughan, . Smith ads. Wardall, Smithers ads. Babylon, Snowden ads. Pitt, . Snyder v. Gree, '73, 25, 25, 540, 86 114 517 248 476 610 145, 149 4 336 160 360 459 381 308 339 661 467 93 516 616 661 420 460 129 460 XXIT TABLE OF CASES. Spader ads, Hadden, Speiglemeyer v. Crawford, Sprague ads. Warren, Squire, Inre, . Stafford, Mayor and Aldermen of, ads. Attorney General, 40, Stainton ii. The Carren Company Starr et al. v. Morange, Starr v. Rathbone, . Stebbins ads. Sea Ins. Co. 79, ?66, Steele v. White, Stenhouse v. Christian, Stennett ads. Mann, Stephenson ads. Lupton, 2, Stevens ads. Hager, Stewart and others ads. Phillips, Stilwell V. Wilkins, . . 33, Stimpsou ads. Whiteright, . . Stint ads. Dunoumban, St. John ads. Hitchcock, . St. Lawrence Bank ads. Bk. Com missioners Stoddard ads. Butler, . 412, Stone V. Byrne, Stone V. Grubhara, . . 448, Stone V. Wishart, Stoueman ads. Gladden, 41, 42, Stoveld, Ex parte, . Stratton ». Davidson, Street v. Anderton, 42, 43, 44, Stureh v. Young, Sturgeon ». Douglas, Sturtevant v. Ballard, 422, 457, 462; Style ads. Slanning, Sullivan v. Sullivan, Sullivan ads. Sullivan, Supervisors of Erie ads. Mutual Ins. Co. of Buffalo, Swaby v. Dickon, Sweet V. Austin, Swift ads. Ward, Sykes v. Hastings, . T. 133, 396 664 111 642 536 41, 619 407 408 358, 359 156 335 607 111 63 569 655 ,346 617 405 142 416 166 461 67 615, 619 74 14 558. 561 361 115 461, 464 517 22 22 239 654 150 159 72 Tallis ads. Rutten, . . 99,314 Talmaget). Pell, 164,261,274, 275, 276 Tanfield v. Irvine, ... 14 Tanfield v. Weston, . . . 4, 23 Tappan v. Gray, ... 60 J14, 135,520,628 . 46 . 637 . 396 . 68 . 118 421, HI, HI . 118 Taylor v. Allen, Taylor v. Jardine, Taylor v. Emerson, Taylor v. Jones, Taylor v. Oldham, Taylor ads. Waters, Twyne, In re, : Tempest v. Ord, Terry v. Belden, Texiere v. Da Costa, Thackaberry v. Christian, Tharpe v. Tharpe, . Tharpe ads. Tharpe, Thomas v Bridgstocke, . Thomas v. Davies, . Thomas v. Dawkin, . Thompson ads. Donovan, Thompson ads. Hoyt, Thompson v. Selby, . Thornton ads. Hightower, Tims ads. Hart, Tink V. Rundle, Todd V. Cooke, Tolderoy v. Colt, . Topham ads Pemberton, Towgood ads. Shepherd, Trafford ads. Duckworth Trimleston ads. Lloyd, Trotter v. Howard, . Trumbull v. Ogden, Gibbons and others, ..... Trustees of Birkenhead Ames, .... Tulk ads. Hart, Turner ads. Astor, . Tuttle ads. Hall, Tylee v. Simmons, . Tylee v. Tylee, Tylee ads. Tylee, . Tyrrell ads. DownsMre, . . 62 Tyson v. Fairclough, 43, 46, 669 tJ. United Insurance Co. of N. Y., Jn re 220 United States Car Spring Co. ads. Day 166 United States Insurance Co. ads. Hall 277 Utica Insurance Co. ads. Attor- ney-General, . . . 248 Utica Insurance Co. v. Lynch, 692, 642, 663 . 467 . 339 . 405 . 96 . 96 . 360 . 19 . 96 . 606 166, 275 . 16 276, 277 399,492 . 147 368, 373, 394 30 349 349 16,77 27 457 61 ads. . 147 16, 624 358, 359 463 TABLE OF CASES. XXV Valle 1). O'Reilly, . . 12, 62, 324 Van Benthuysen ads, Eowley, 404 Van Buren v. Clienango County Mutual Insurance Co. . 301, 302 Vanderheydena Vanderheyden, 649 Vanderheyden ads. Vauderhey- den 649 Van Home, In re, . . 550, 605 Van Sehaiok ads. Marten, 143, 309, 337, 344 Vann v. Barnett, 15, 85, 561, 562 Vaughan ads. Palmer, . . 5l Vaughan ads. Smith, . 540, 661 Veitch ads. Magrath, . .112 Verplank v. Cainea, . . 2, 21, 532 Verplanok v. Mercantile Ina. Co., 5, 6, 248, 250 Vioks V. Kegs, .... 457 Vigor ads. Attorney-General, . 117 Vincent v. Parker, . . .11 Viscountess Mount Cashell ads. Dillon, . . . .517, 520 Vize ads. Wrixon, . . .122 Vorley v. Garrad, . . . 607 W. Wade ads. Averall, . Wakeman v. Grover, Walker, Mx parte. Walker v. House, Walker v. Walker, Walker ads. Walker, Walker v. Wild, Waller ads. Irving, Wallis, G. W., In re, Walsh ads. Henn, Walsh V. Walsh, Walsh ads. Walsh, Walters v. Walters, Walters ads. Walters, Ward ads. Richardson, Ward V. Swift, Wardall v. Smith, Wardell v. Leavenworth, Wardle v. Lloyd, Ware ads. MoCraoken, Warford ads. EUicott, Waring ads. Lees, Waring v. Robinson, Warner v. Gouverneur's tors, Warren, Sx parte, . Warren v. Sprague, . G . '480 2,513 . 309 50 50 600, 602 12, 324 . 542 308,339 62 62 600 600 661 159 420 490 3 340 4, 545, 546 150 . 341 Execu- 356,358 539, 540 . Ill Wash V. Medley, . . . 460 Waterbury and others, In re, . 171 Waters v. Taylor, . . .118 Watkins v. Birch, . . 449 Watkins J). Brent, . . 50,617 Weaver ads. Garrettson, . . 308 Webb V. Cashel, . . 612 Weed ads. Pierce, . . . 397 Weeks ads. Sheldon, . 81 Weed V. Small, ' . . .476 Wellesley, Marquis of, ads. Page, 55 West w. Frazer, ... 99 Weston ads. Fairfield, . . 3 Weston ads. Tanfield, . . 4, 23 Wheaton ads. Read, . . 402 Whitcomb ads. Goodman, 78, 308, 324, 338 White 1). Baugh, . . 575 Whitney v. Belden, ... 81 White V. The Bishop of Norwich, 32 White ads. Corning, 398, 489, 500 White V. Joy 383 White ads. Chautauque County Bank, . . . 2, 3, 475, 482 White V. Low, . . . 141 White, Receiver, ., of^ <&G.. makeih oath and saitJi^ that the lands^ tenements and prernises, in the pleadings in this cause mentioned and of which a receiver is directed to le appointed^ are now at the clear yearly rent of % exclusive of taxes and all other deductions and outgoings. (A rental, in the form of schedule, is sometimes set out in the affidavit.) The officer can also examine any party or other person as a witness to get at the amount of property and compel the production of books and papers. "We have pointed out, in a former part, as to who cannot or ought not to be a receiver. Sometimes an order authorizes the master or referee to appoint a receiver on each side ; and even where there is no such express direction, yet it can be done by consent or even on his own opinion : 1 Granfs Oh. Pract. 302, 'id edition. When the officer has approved of a person as re- ceiver, he fixes the amount of the penalty ; and the solicitor or attorney draws out and engrosses the proper bond, which may be in the following form : APPOINTING A EECEIVEE. 91 Know all men ly 4Tiese presents that we, A. G., of, cfec, W. G., of, &G., and A. A., of, &c., are Jield and firmly hound unto the people of the State of New YorTi, in the sum of lawful money of the United States of Amer- ica, to he paid to the said the people of the State of New York (a) For which pay- ment well and truly to he made, we and each of us hind oursel/ces respectively and our respective heirs, executors and adminis- trators, estate and effects, firmly hy these presents. Sealed with our seals. Dated the day of 18 — . Whereas hy an order of the court of, <&c., hearing date the, (&c., made hefore, &g., wherein A. B. is plaintiff and G. D. and others are defendants, it was ordered that it sJiould he referred, &c. (here recite the order.) Now the condition of this ohligation is such, that if the hounden A. G., (the receiver,) shall and do, under the rules and practice of the court, duly file his ifn- ventory, and annually or oftener, if thereunto required, duly account for what he shall receive w have in cha/rge as receiver in the said cause ; and pay and apply what he shall receive or home in charge as he may, from time to time, he directed or ordered hy the court ; and do and perform his office of receiver in (a) I believe that this bond would be good if made out to the clerk. In England, the parties are bound to the master of the rolls (the chief of the masters in chancery) and to the master before whom the reference is had. 92 GENEBAL PRACTICE ON THE all tilings accordiiig to the t/rue intent and meaning of the aforesaid order ^ then this recognizance to he void or else to remain in full force. Sealed and delivered^ ) in the presence of ] This bond, when, executed by the proposed re- ceiver and bis sureties, must be proved and acknowl- edged in the manner prescribed by law for the proof or acknowledgment of deeds of real estate. An AFFIDAVIT of justification for the sureties to swear to, can be written (by the solicitor, attorney, referee or master) at the foot of the bond, in the following form : {Title) W. G.^ of^ (&c., and A. A., of, &c., severally make oath and say ; and first the saidW. G., for himself saith, That he is worth the sum of dollars^ (the amount of the penalty, being double the amount of the property in bulk ; or if it relates to real estate, then double the yearly value of the estate), after all his debts and liabilities are paid and satisfied; and this deponent, the said A. A., for himself, saith, that he is worth the sum of dollars, after all his debts and liabilities are paid and satisfied. Sworn, c&G. This can be sworn before the referee or master or a commissioner to take the acknowledgment of deeds. APPOINTING A RECEIVEE. 93 If the matter of sureties, in case of a receiver, be put on the same footing as special "bail, then they ought to he freeholders or housekeepers. Such is the general rule in England as to special hail. How- ever, it seems to he there adopted and required, in order that the plaintiff may know where to find them, while the value of what he might rent or hold in fee is not so material : for his other effects may he made to answer ; and if he has sufficient of them, it will do: Zofft, 148. The honest rule seems to be, that they must be real and substantial persons : Smith v. Scandrett, "W. Black. 444 ; Beardmore v. Phillips^ 4 Maule &, Selwyn, 173. And in a country like ours, where the wealthy men, having large mercantile and steady property, are to be found in boarding-houses and hotels, such men, it is believed, would be good spe- cial bail ; and, by parity, good sureties for a receiver: for the referee or master would look to residence and general substance clear of debt and liability. The sureties of a receiver must be within the juris- diction: Gockburn v. Raphael^ 2 Sim. & S. 453. Infants, lunatics, idiots, married women and such other persons as are by law disabled from contract- ing, are ineligible as sureties : Smith, 16. By the practice of the Irish court of chancery, the sureties must be possessed of real estate ; but this certainly could not be the unbending rule in our own court. Although it is the right of the master or referee to accept or reject a person proposed as a surety, yet where any doubt as to the sufficiency or sol- 94 GENERAL PRACTICE ON THE vency of the surety exists, tte opposing attorney or solicitor lias a claim to attend at the time appointed for acknowledging the recognizance or bond, and examine the sureties on these points ; and he should, for that purpose, forthwith serve a notice upon the opposing solicitor or attorney and the master or ref- eree, requiring to be notified duly of the time and place of justifying. If the latter is not fully satisfied as to the qualifi- cation of the sureties on their oath and examination, he ought not to allow such surety to acknowledge the bond ; and in case he thinks proper to do so, the party conceiving himself aggrieved may apply, by motion, to the court to vacate or set aside the bond, and obhge the party to obtain new and suffi- cient sureties. If the sureties, or either of them, are rejected, a new surety or sureties, as the case may be, must be proposed and a further summons to approve obtained and served : 8mit\ IT. The practice has prevailed in New York to let a plaintiff be one of the sureties for the receiver ; and there seems to be no decided objection to it where he is every way responsible ; although, as the courts are jealous of allowing the chance of control which might attach by the receiver's employing the plain- tiff's counsel and solicitor, this practice would be best avoided; for it shows intimacy between the receiver and the surety and may be strengthened into control. It was the practice with some masters to file their report, showing the name of the receiver they had APPOINTING A RECEIVER. 95 approved of ; and then wait eight days, in order to have it confirmed, before they appointed and took .from him the necessary bond. But this practice is erroneous, and he is to be considered as appointed at once, i. e., from the moment he and his sureties have perfected the bond and the same is filed and a certificate thereof had of the clerk for the master or referee and his report is filed. There is no possible occasion to wait the usual eight days to confirm the report, and it is final from the time of being filed : Bennetts Master, 95 ; and see the argument of counsel in Harris v. Kemhle, 4 Russ. 474. What we have here said must, however, be taken with the distinct understanding, that, by the terms of the order of reference, the referee or master is directed to appoint a receiver ; for Chancellor Wal- worth drew a distinction, where the order was to report a proper person to be appointed a receiver and approve of sureties ; deciding, in the latter case, that the appointment was not complete until it was confirmed by the special order of the court ; while under the prior form of order, no confirmation would be necessary, and that the receiver, on filing the re- port of his appointment and the bond taken, could immediately enter on the duties of his office : Mat- ter of the Eagle Iron Works, 8 Paige's C. R. 385. The reason of this will be apparent when it is under- stood that the master's judgment is conclusive, unless some substantial objection can be shown : Garland V. Garland, 2 Ves. 137 ; Anon. 3 Ves. 506. And when there is such objection, it must be brought before the court by a special petition and not in the 96 GENERAL PRACTICE ON THE form of exceptions — as exceptions will not lie to a report of tlie appointment of a receiver : Thomas v. JDctAjohvn^ 3 Br. C. C. 507 : Wilhins v. WiUiams, 3 Ves. 587. And in order to support an objection to the appointment of a receiver, a strong case of dis- qualification is necessary : Tha/rpe v. Tharpe, 12 Ves. 317. The court will not set aside the appointment, un- less the person selected is legally disqualified, or his situation is such as to induce a belief that the inter- ests of the parties will not be properly attended to by him : Matteo^ of the Eagle Iron WorJss, 8 Paige's C. E. 385. Where such a case exists, the party who objects, after stating the grounds of objection in his petition, should pray that the referee or master review his report. This petition must be served on all inter- ested parties ; and be moved upon in court on regu- lar notice : Wynne v. Z/ord N&wborough^ 15 Ves. 283. And if the court should be in favor of the peti- tion, by ordering the master or referee to review his report, then the parties will proceed by proposing a new person or persons and issuing summonses as before : Smith on Receivers^ 11. A Report will be in the following form : {Title.) To the Justices of the Swpreme Court of the State of New Yorh. In pursuance of a/n order of this court, made in the above entitled action, hy, cfec, hearing date the — day of , 18 — , whereby, among other things, it APPOINTING A EECEIVER. 97 was referred to the undersigned, residing in the city of New YorTc, to wppoint a receiver in this cause, of the pa/rtnership stocic, c&c, and to take from tJie said receiver the requisite security : I, S. C, the referee (or tnaster) named in said order, do report : — That I have heen atteoided on the said reference hy the attorney and counsel of the plaintiff and of the defendant. That I, thereupon, proceeded on tlie matters so referred. That A. B., of the city of New Yoi^h, was proposed on the part of the complainant, to be the receiver in this cause ; and no objection being made to his appoint- ment, and dee/ming him a fit and pyroper person for such t/rust, I have appointed him to be such receiver. That the said A. B. thereupon executed a bond in the usual form to The People of the State of New Yoi^h, in the penal sum of % , conditioned for the faith- ful discharge of his duties as such receiver. That J. H. and M. L., of the city of New Yorlc, were proposed as the sureties of the said receiver; and being satisfied, by their affidavits of justification, that they were each worth the requisite amount, I approved of the said sureties as sufficient / and the said sure- ties thereupon executed the said bond jointly with the said receiver. And I do further report, that I have caused the said bond, with my approval endorsed thereon, and the said affidavits of justification to be filed in the office of the derli of this court. All which is respectfully submitted. Bated New Yorh, Becember — , 18 — . Tlie above form will answer in all general cases. Even where there has been a contest for the appoint- 98 GENERAL PRACTICE OW THE ment of a receiver, yet the officer is limited, in his report, to the fact of approval of the party by him, without setting forth any of the reasons which induced him to make his appointment ; for, as the chancellor said, in Ga/rla'nd v. Garland^ 2 Vesey, jr. IST, questions are not to be brought up before the court in this way, merely to try which way the stick will fall, and for the chance that another judge may be of another way of thinking. And in Greuze v. The Bish/yp of London^ 2 Brown's Ch. Ca. 253, the court said that the master's report and approbation should stand until the person recommended by him was impeached as an improper person. Where one of the sureties of a receiver dies, not leaving any property, the court will direct a new surety to be appointed : Averall v. Wade, Fl. &, K. 341. In case a bond given by a receiver (on his ap- pointment) happens not to be filed in the proper office, through inadvertence, the court may direct it to be filed nunc pro tunc: Whiteside v. P render gast, 2 Barb. Ch. Rep. 471. A receiver will, generally, be vested with power to lay hold and possess himself of personal property, immediately after he has been appointed and his security has been approved and filed : without any necessity of an assignment from the parties who are to give it up to him. The title of the receiver becomes perfect when he has given the requisite security, and it, then, relates back to the order appointing him. That order is,^er *e, a sequestration, and gives to APPOINTINa A RECEIVER. 99 tlie receiver all tlie necessary means of enforcing his rights. It will override an intermediate levy : Rutten V. Tallis, 5 Sandf 610 : West v. Frazer, ib. 653, and see Mann v. Pentz, 2 Sand. Cli. E. 25Y. Still, in respect of the receiver's exercise of his powers in courts of h/io, an assignment to him by the party is proper ; and, in general cases, as to the legal title to real estate, it is indispensable ; but in equity, al- though usual in our practice, it is unimportant ; and in England it is not practiced : lb. Justice Wniard, ia Porter v. Willi(wiis.i 5 Seld. 142, threw out the opinion that, since the Code of Pro- cedure of the State of New York, under supplement- ary proceedings instituted by a judgment creditor, no assignment, transfer or conveyance to a receiver is necessary to vest the legal estate in him, and that real and personal property are, in this respect, placed upon the same footing. His Honor points to § 464, which enacts, that the term property, as used in the Code, shall include " property real and personal," also §§ 462 and 463, which define what is meant by real and personal property ; and observes of the Code : " It puts real " and personal propertyin the same category. The " statute of frauds affords no objection to this view ; "it is there enacted (2 R S. 134, § 6) that no estate " or interest in lands, &c., shall hereafter be created, "granted, assigned, surrendered, or declared, unless " by act or operation of law, or by deed or convey- " ance in writing, subscribed by the party, &c., or by " his agent, &c. It was competent for the legisla- " ture to remove that impediment to conveyances, or 100 GENERAL PRACTICE ON THE " to declare what act or operation of law should work " a transfer of title. They seem to have done so, by " giving a legislative definition to the word ' property,' " so as to embrace real as well as personal property." It seems to be conceded that, before the Code, the transfer of the title of real estate to a receiver did not take place by the mere order of the court and without an actual conveyance from the party to the suit in whom such legal title was vested, notwith- standing the act of April 28th, 1845 (Laws 90, 91), which enacts that any receiver appointed by virtue of an order or decree of the Court of Chancery may take and hold real estate upon such trusts and for such purposes as the court may direct, subject to the further order or direction of the court ; while the second section empowers receivers so appointed by an order or decree of the Court of Chancery to sue, in their own name, for any debt, claim, or demand transferred to them, or to the possession or control of which they are entitled as such receivers : see Wil- son Y.Wilso7i, 11 Barb. Oh. K.. 594, and Porter v. Willia/ms^ supra. It has been decided that, since the New York Code of Procedure, a receiver appointed by a justice of the Supreme Court under supplementary proceed- ings instituted by a judgment creditor, on the return of an execution unsatisfied, can, after perfecting his appointment, maintain an action in his own name to set aside an assignment of real and personal property made by the judgment debtor, on the ground of fraud, without having first received, from such debtor, an assignment to himself as such receiver : Porter v. Williams, 5 Seld. 142. APPOINTING A EECEIVEB. 101 Inasmucli as an assignment in writing, even of personalty, would do no harm, and save all ques- tions, and could be made to embrace the usual power to collect debts in the name of the parties, it might be well, in many cases, to require it ; and the broad words of such an assignment might cover even rights in secret real estate possessed, for instance, by partners, &c. We, therefore, give here, a general form of an as- signment of a stock in trade ; and, one embracing particular real estate. It is believed that, from these precedents, almost any special form of a transfer to a receiver can be drawn. Geisteeal Assignment to a receiver of Stock in trade, &c. TJiis Indenture made the day of in the year 18 — , between C. D. and M JF., heretofore part- ners in trade doing business in the city of New Yorh under the style of of the first part^ and A. B. of, (&G., receiver of the estate and effects hereinafter re- ferred to appointed by the Supreme Court of the State of New Yorh of the second pa/rt ; whereas in and by an order of the said court, before, <£er, 1838, be made evidence in the cause. There, the defendants had been required to answer the allegations in the bill, to which answer a replication had been filed ; and on the taking of the testimony before the examiner, the complainants offered, as evidence, as an exhibit to be used on the hearing to falsify the allegations in the answer, an examination which had been taken before a master on a ref- ei'ence under an order of the court to appoint a receiver in the cause, and requiring the judgment debtor to deliver over the property to the receiver under oath, before the master, in the usual form. The OTiancellor : " The exhibit which the vice- " chancellor has refused to suppress is the examina- " tion of one of the appellants upon oath. It is, there- " fore, evidence of the strongest character against " him, and ought not to be suppressed, unless it is " wholly irrelevant to the matters in issue between " the parties, or was obtained under such circum- " stances that it cannot be legally used as evidence " for the complainants on the hearing. I think " there can be no reasonable doubt as to the rele- " vancy and materiality of this examination, as evi- " dence to support the complainants' case upon the " matters in issue between the parties. If it tends, " in any manner, either alone or in connection with " any other evidence which may be introduced at " the hearing, to shpw that the alleged assignment " from Shaw to Albert was fraudulent, or intended " to delay or hinder the creditors of Shaw in the " collection of their debts, or to sho-sy that Albert is APPOINTING A RECEIVER. 107 " indebted to Shaw, or that he has any property of the " latter in his hands, the exhibit cannot be rejected " as irrelevant. And as the complainants could not " use one part of the examination as evidence and " reject other parts thereof as immaterial, without "the consent of the adverse party, the fact that " much of the examination is wholly immaterial to " the question in issue between the parties, forms no "ground for suppressing such examination. Upon " the view I have taken of another question in this " case, it is not necessary for me to inquii-e whether " there are not many things in this examination which " were irrelevant to the matters upon which the mas- " ter was authorized to examine the defendant Albert " on oath upon the reference. In the case of Fitz- " 'burgh V. Everingham^ 6 Paige's Rep. 30, it was de- " cided that under the common order of reference to " appoint a receiver, tfcc, upon a creditor's bill, the " complainants were only entitled to examine the de- " fendant on oath in relation to the subject matter of " the reference. And the proper course is there " pointed out, which defendant is to pursue, if he is " advised by his counsel that questions put to him are " improper or irrevelant to the matters referred to the " master, but which the master decides it is proper for " him to answer. He is to refuse to answer, which refu- " sal is in the nature of a demurrer to the interroga- " tory. And then the question wUl be brought before " the court upon an application to compel him to an- " swer and to punish him for the contempt in refusing " to answer if the interrogatory was not an improper " one. Counsel should be careful, however, in advis- 108 GENERAL PRACTICE ON THE " ing their clients not to answer in such cases, unless " the question is clearly irrelevant or improper : as " the client will have to pay the costs of the applica- " tion to the court, if it turns out that he is in the " wrong and may be further punished in the dis- " cretion of the court, for his contempt in refusing to " answer. And in such case, if the counsel has ad- " vised him not to answer, where there was no real " doubt as to the propriety of the question or where "the answer could not prove injurious to the client " if he was an honest man, the counsel will, himself, " be liable to the client for the damage the latter has " sustained by such improper advice. "Where the question is relevant and proper, in " relation to the subject matter of inquiry before the " master, the defendant must answer it, although he " may have been required to answer as to the same " matter on oath in response to the allegations ia the " bill and though he has not given a written consent " under the one hundred and ninety-fii'st rule, so as " to entitle the complainants to insert a clause in their " order of reference to take his examination on oath " as to all the matters in the bill as a substitute for " an answer in the usual form. Whether the ques- " tions, which the defendant has answered before the " master upon this reference as to a collateral matter, " were proper or improper in relation to the subject " of that reference, I do not see any legal principle " upon which he can object to his examination as " evidence against him upon the hearing the same " cause upon pleadings and proofs or in any other " proceeding in the cause as to which the exaniina- APPOINTING A EECEIVER. 109 "tion is material and relevant. As well might a " party, who had answered a bill of discovery which "he w^s not legally bound to answer, afterwards " object to the answer being used against him upon "a trial at law, on the ground that he was not " legally bound to answer the bill, but might have " demurred to the same successfully. The decision " of the vice-chancellor was, therefore, right in refuS- " ing to suppress the exhibit as improper testimony "for the complainants on the hearing. And the " order appealed from must be affirmed, with costs." If a receiver be extended over new or additional property, the order for that purpose is on the terms of such receiver entering into further security, by recognizance, in double the value of such additional property, the proceedings on which order are exactly similar ,to the giving of security originally. If the receiver, in such case, neglect or is unable to procure such further security, having been required by notice in writing so to do, the course is to apply to discharge him and appoint a new receiver over the entire property at the expense of the estate. And the receiver so discharged will be entitled to the costs of vacating his recognizance, after he shall- have ac- counted ; Smith on Receivers^ 192. In cases coming within the rule, a receiver who has consented to accept the trust in one suit may be compelled to accept and execute the trust in a second suit, provided both suits are commenced before the chancellor or before the same vice-chancellor, so as to give the court jurisdiction over such receiver. And if the receiver refuses to give security in the 110, GENERAL PRACTICE ON THE second suit, lie may he removed from Ms trust as receiver in tlie first ; and the court may appoint another person receiver in both suits : Gdgger v. Howard, 1 Barb. C. K. 368. Mecewer's own Solicitor cmd Counsel. When the receiver is, thus, fully appointed, he should retain his own solicitor and counsel. Nor will it be well for such receiver, even though he may be a professional man, to act as younsel in the busi- ness of his trust, as he will not be entitled to any extra counsel fees for his work : In the matter of the JBanlc of Niagara, 6 Paige's C. R. 213. As a general rule, a receiver is not allowed to employ the counsel, solicitors or attorneys of either of the parties in a suit to assist him in the discharge of his duties. The attorneys, solicitors or counsel of the several parties are bound in duty to their clients to watch the proceedings of the receiver and to see that he faithfully discharges his trust. The undertaking to act as the counsel, solicitor or attorney for the receiver, under such circumstances, would, therefore, frequently cast upon the person, thus assuming to act, inconsistent and conflicting duties — both of which duties could not properly be dis- charged by the same person : Ryckmajn v. Parians, 5 Paige's C. R. 545 ; see also In the matter of Ains- ley, 1 Edwards' V. C. Rep. 576 ; Ray v. Macomb, 2 ib. 165 ; Wilson v. Poe, 1 Hogan, 322. The appointment of a receiver who acts under the APPOINTING A RECEIVER. HI directions of a defendant, is objectionable : Liupton V. Stephenson^ 11 Ir. Eq. Eep. 484. The rule -whicli prohibits a receiver from employ- ing the solicitor of either of the parties to the suit, in which he is appointed receiver, is intended to protect the rights of the parties to such suit : Wa/rren V, Sprague^ 11 Paige's Ch. Eeports, p. 200. But if such parties make no objection, the receiver may employ the solicitor of either to aid him in the dis- charge of his duty : lb. And a mere stranger to the suit has no right to object to the employment, by the receiver, of the solicitor of one of the parties to the original suit, to institute a new suit against such stranger : Wa/rren v. Sprague, 11 Paige's C. K. 200 ; S. a 3 K Y. Legal Observer, 122. Although we see no objection to a lawyer, who may have been appointed receiver, acting as counsel in the business of the trust, yet he must understand that in doing so, he will not be allowed extra counsel fees on account of it. His commissions are consid- ered to be a full compensation : In the matter of the Bank of Niagara^ 6 Paige's C. R. 213. A suit properly commenced is neither barred nor abated by the appointment of a receiver of one of the defendants, j?e?M?e?ife lite. At most, such appoint- ment will only render the suit defective, so as to make it irregular for the plaintiff to proceed until the receiver is brought before the court by a supple- mental pleading, in the nature of a bill of revivor : Wilson V. Wilson, 1 Barb. C R. 592. Even if such subsequent appointment of a receiver constituted a valid defence, it could not be pleaded 112 GENERAL PRACTICE ON APPOINTING RECEIVER. as a bar to tlie suit generally, but should be pleaded merely in bar of the further continuance of the suit; in analogy to the form of pleading in similar cases in suits at law : lb. Where, by the appointment of a receiver of one of the defendants pendente liU^ a suit has become so defective that it is improper for the complainant to proceed until the receiver is brought before the court, the proper course for the other defendant is to apply for an order that the complainant bring the receiver before the court, by a supplemental biU in the nature of a bill of revivor within a time to be fixed, or that the bill be dismissed ; and that, in the mean time, all proceedings be stayed : II). JRemoving a receiver fi-om pa/i't of a la/rge property. If a receiver has a control over a larger estate than is necessary to satisfy claimants, the defendant can apply for a reference to inquire whether it is necessary, for the purpose of the cause, that the receiver should be continued over the entire estate ; and if not, what would be a competent part thereof for the purposes of the rights of the parties and cred- itors in the cause ; and on the report coming back, the receiver will be removed from off the rest of the estate. And if the probable result of the reference appeared clear upon the facts, the order would pro- ceed, at once, to discharge the receiver from such parts of the premises as the master should report it unnecessary that he should be continued over: Mor gratJi v. Veitch, 1 Hogan, 110. CHAPTER V. WHAT A RECEIVEE MAY AND WHAT HE MAY NOT DO, WITHOUT APPLYING TO THE COUKT. EJECTMENT. EEPAIKS. IMPROVEMENTS.- PAY OUT MONET. LEASE EOR ANT NUMBER OF YEARS. LET FOR A TEAR. RENEW A LEASE. POWER TO DETERM- INE A SUBSISTING LEASE. GIVE NOTICE TO QUIT. DISTRAIN WHERE MORE OR LESS THAN A TEAR'S RENT IS DUE. BECOME A TENANT. BRING ACTIONS. AP- POINT AN AGENT. CARRT ON TRADE. OBTAIN A WRIT OF ASSISTANCE. HAVE A SEQUESTRATION WHERE A PARTY DOES NOT DELIVER OVER PROP- ERTY. HAVE AN ATTACHMENT AGAINST A PERSON INTERFERING WITH THE PROPERTY IN HIS CUSTODT. SELL BAD DEBTS. APPEAL. APPLT FOR INSTRUC- TIONS. PROCEEDING AGAINST ANOTHER RECEIVER. CANCEL POLICIES. RE-INSURE RISKS. SELL TIMBER. BID ON PROPERTT. l^ectTnent A RECEIVER cannot bring ejectment without leave of the court. Indeed, the court has gone so far as to say " he cannot turn out the tenant " without ap- plication ; Wynne v. Lord Newboroug\ 1 Vesey, jr. 165 ; S. C. 3 Bro. C. C. 88. The court will direct in whose name the suit shall be brought : Green v. Winter^ 1 J. C. R. 60 ; and 8 114 WHAT A RECEIVER MAT may require tlie receiver to indemnify the person in whose name the suit is commenced : lb. I have here said " may " require such indemnity, for, although Chancellor Kent (in Green v. Winter) says that a receiver " wiU " be required to give it, yet the case to which he refers, of Taylor v. Allen^ 2 Atk. 213, was one where a receiver had not already been ap- pointed or given any general security. No one would like to take the office of receiver and bring an action of ejectment — and that, too, after getting the authority of the court for it — and' still have to give personal indemnity. The receiver would, of course, be liable upon the general security he had given, if he acted wrong in the action, while it would seem that the estate in his hands, belonging to the cause, should solely be amenable. If the chancellor meant that the receiver should give an indemity as a receiver and not personally, and so that the fund should satisfy any damage, then the difficulty is cleared ; and this, I take it, would be all that should or could be required ; and it carries out the idea that after a tenant has attorned to a receiver, the court is the landlord : Angel v. Smith, 9 Ves. 335. I find my- self somewhat borne out in this by the order made in Ship V. Harwood, see note (c?), Collyer on Partnership, 196 ; and which I had not seen when I wrote the above paragraphs. There, mfe/' alia, the receiver was to be at liberty to bring actions, &c. : " and the persons in whose names such actions shall " be brought,' are to be indemnified against any costs " and damages on account thereof, out of the stools, " goods, and effects in the said trade," &c., &c. And OR NOT DO -WITHOUT LEAVE. II5 SO, I perceive, was the order in Wilson v. Greenwood, 1 Swanst. 471. Cliancellor Walworth, In the matter of Merritt, 5 Paige's C. R 125, S. C. on appeal, 16 Wend. 405, echoes the principle contained in Green V. Winter, supra ; but he is no further explanatory to show the character of the security ; and his Honor also refers to Ex parte Little, 3 Molloy, 67, which was not a case of a receivership. It is probable that, upon an application for the receiver to bring ejectment, the court would refer it to a master to report upon the propriety of the re- ceiver's bringing ejectment, and as to the species of indemnity, with power to take, approve and. file the bond of indemnity ; and. so that the receiver should be considered as having full power to commence the ejectment from the time the master's report should stand confirmed. This would be a saving, and prove more expeditious than to require the master's report to come first before the court for an order referring the matter back again to take the indemnity, (?e v. ^aZ? (11 Mee. & W. 531), 4 Edw. Ch. R. 134. It is presumed that tlie receiver, being positive in tlie propriety of bringing an action, would hardly be authorized to discontinue it, without leave of the court, obtained through a short petition. Appoint an agent. If the estate, over which the receiver is appointed, be at a distance, he may appoint his own agent : V. Lindsey, 15 Ves. 91. Carry on trade. "Where a receiver of the effects of a business is appointed, he should, ordinarily, proceed and sell the establishment without delay ; but, in the mean time, the business should be carried on by him as usual : so that the goodwill thereof may be secured to the purchaser, and the full value of the establish- ment realized by the partners on such sale. This OR ISm DO WITHOUT LEAVE. 143 was said by Chancellor Walworth, in Marten v. Van ScTmich, 4 Paige's C. E. 480. The suit related to a newspaper, its subscription list and advertising col- umns, and to a printing establishment ; and, there, the court went on to say, "But the court will not "take upon itself the responsibility of continuing " the publication of a political paper, by a receiver, " any longer than is absolutely necessary to prevent " a sacrifice of the property. Until a sale can be " effected, the defendants may continue to snperin- " tend the editorial department of the paper, as they " have heretofore done ; but the paper must be per- "sonally responsible for any publication therein " which is improper. There must be a reference to " a master to appoint a receiver without delay." And, in Const v. Harris, 1 Turn. & Kuss. 518, Lord Chancellor Eldon said, " that it was not the business " of the court to manage or carry on, from time to " time, a partnership of any hind; and that it was " impracticable for the court to do so." Obtain a writ of assistance. A writ of assistance, directed to the sheriff of the county where the lands are situate, may, in some extreme cases, be obtained ; but for this purpose, it must satisfactorily appear that the receiver cannot, without such extraordinary aid, execute his office. In a late case in Ireland, where it appeared that the receiver had made several attempts to distrain, which proved ineffectual, owing to the lawless and unruly conduct of the tenantry and the people of that part 144 WHAT A RECEIVER MAY of the country where the lands were situate, the receiver, in attempting to distrain, having been as- saulted and his life threatened : the court granted a writ of assistance directed to the sheriff of the county as prayed. And it further appearing that the prin- cipal defendant, who was a magistrate, in some measure sanctioned such conduct, and although ap- plied to by the receiver to render his assistance as a magistrate, refused to do so, adding that he was sorry for what was already paid to him ; his lordship added to the order a special direction that the sheriff should call on the said defendant, as a magistrate of the county, to aid and assist the receiver in the execution of the order of the court and in the preservation of the peace on the occasion : Smith on Receivers^ 139 ; and see Oreern v. Green^ 2 Simon, 394 and 430. JIave a sequestration where a party does not deliver over property. In the People ex rel. Lovett v. Rogers^ 2 Paige's C. E. 103, a defendant was decreed to be in contempt for not delivering over his property to a receiver. He was ordered into custody ; and the court gave liberty to have his property sequestrated and deliv- ered to the receiver, and to prohibit all persons who had any such property, or effects in their possession or under their control, or who were indebted to the defendant, from delivering the said property or effects, or paying debts to him or to his order, or applying the same to his use, after publication of OR NOT DO "WITHOUT LEAVE. 14,5 notice of tlie order, on pain of contempt. See pro- ceedings in this case in Appendix No. 144 of vol. i. of V. C. Hofl&nan's Ch. Pr. Can have an attachment against a person interfering with the property in his custody. The possession of a receiver is not to be disturbed without leave of the court : Brooks v. Greathed^ 1 Jac. &, Walker, 178; and even an action cannot be brought against him without such leave : Angel v. Bmith, 9 Ves. 335. If a receiver takes possession of goods, under the express directions of the court, or where the master has decided that the goods are in the possession and under the control of the defendant, and has directed the defendant to deliver the possession to the re- ceiver, the court will assume the exclusive jurisdic. tion of the subject and will not suffer the receiver to be sued at law for taking such goods : JParher v- Brown, 8 Paige's C. E. 388. A receiver is under no obligation to attempt to take property from the possession of a third person or even from the defendant himself by force, with- out an express order of the court directing him to do so: lb. The receiver or party who wishes an actual delivery of the property, should call upon the master or referee to decide what property, legally or equitably, belonging to the defendant and to which the receiver is entitled under the order of the 10 146 WHAT A RECEIVER MAT court, is in the possession of tlie defendant or under his power or control. And it is the duty of the officer to direct the de- fendant, to deliver to the receiver the actual posses- sion of all such property or to allow him to take possession thereof. If the defendant is dissatisfied with such decision, he must apply to the court to review the decision or he wUl be compelled by process of contempt to comply with the directions : Hid. Where the property is in the possession of a third person, who claims the right to retain it, the receiver must either proceed by suit against him, or the complainant must make him a party to his suit and apply to have the receivership extended to the property in his hands, so that an order may be made for its delivery and be enforced by process of con- tempt : Ih. Where the property is legally and properly in the possession of the receiver, it is the duty of the court to protect such possession, not only against violence, but also against suits at law. But if the property is in the possession of a third person, under the claim of title, the court will not protect the officer who attempts, by violence, to obtain possession, any fur- ther than the law will protect him, his general authority being unquestioned : Ih. Where a receiver is in possession of real estate which is subject to the lien of a judgment, the sale of the premises by the sheriff, upon an execution on such judgment, does not disturb the possession of the receiver, and the sheriff cannot, therefore, be OR NOT DO WITHOUT LEAVE. 147 proceeded against for a contempt in making sucli sale. But the purchaser cannot disturb the posses- sion of the receiver, when he obtains his conveyance from the sheriff, without the permission of the court : Albany City Batik v. Schermerhorn^ 9 Paige's C. E,. 372. A railway company, without the leave of the court, took proceedings, under a certain beneficial statute, to take possession of lands in the possession of a receiver under the court. On an ex pa/rte motion, they were restrained : Tinh v. Rundle^ 10 Beavan's Rep. 318. The court cannot protect the rights of the receiver by a summary proceeding against a person, not a party to the suit, who seizes upon property which has never been in the possession of the receiver or his agents : Albany City Bank v. ScTiermerJiorn^ 9 Paige's C. R. 372 ; and see Ames v. Trustees of Bir- kenhead^ 20 Hare, 332. An interesting and important case, relative to taking property out of the possession of a receiver, came before Chancellor Walworth on appeal : Noe V. Gibson^ 7 Paige, 513. The relator was appointed receiver of the prop- erty and effects of the defendant, Gibson, who duly assigned the same to him under an order of the court on the thirty-first of December, eighteen hun- dred and thirty-eight. And the alleged contempt was, for forcibly dispossessing the receiver of a vessel, a part of the assigned property, without authority or permission of the court, under the fol- lowing circumstances : — The sloop, at the time of 148 "WHAT A RECEIVER MAT the assignment, was lying at Eaton's Island, in the county of Queens, about twelve miles from New York, upon which island the defendant resided, he having rented the same of the respondent, Eaton, for one year from the first of April, eighteen hundred and thirty-eight. On the second of January, eigh- teen hundred and thirty-nine, the receiver went to the island and took the vessel into his custody or possession and left his workmen there employed in shipping the rudder and making some other slight repairs which were necessary to enable them to bring the vessel to New York. Subsequently, on the same day, Eaton issued a distress warrant for three quarters' rent, alleged to be due to him from the defendant, and sent the other respondent, Hyatt, a constable of Queens' county, to distrain upon the vessel. He did so accordingly, but made no attempt to remove the vessel ; and the receiver afterwards caused the same to be removed to New York and left it in charge of a keep employed by him for that purpose. Some two or three days afterwards the respondents came to where the vessel was at New York and took it out of the possession of the keeper and carried it off. The Chancellor : " The vice-chancellor has " clearly mistaken the law and practice of this court " if he supposed the respondents were justified in " taking this vessel out of the custody of the receiver " upon a distress warrant for rent, without the per- " mission of the court first obtained for that purpose. " It is evident from the affidavits, that before there " was any attempt to levy upon the vessel for the OR NOT DO "WITHOUT LEAVE. 149 " alleged arrears of rent, the property was legally as " well as actually in the custody of tlie court through " its officer. Any attempt, therefore, to take the " property out of the custody of the receiver or of " the persons employed by him to take care of the " same, was a contempt of court. The landlord and " his bailiff may have mistaken their legal rights ; " and if so, that may be sufficient to protect them " from punishment for a willful contempt. But it " forms no ground for excusing them from restoring "the vessel which they have improperly rescued " from the custody of the law in which it had been " placed by the order of the court. So far as the " defendant was himself concerned, there is no ex- " cuse whatever for this interference on his part to " deprive the receiver of the possession of the prop- " erty. And if, as there is much reason to suspect, " the landlord has been induced to distrain upon the "property at his instigation, he ought to be pun- " ished by imprisonment for his most unjustifiable " attempt to prevent the course of justice, in addi- " tion to a fine sufficient to pay the costs and ex- " penses of the proceedings, and to make good the " injury sustained by his willful contempt. " It is well settled, that after a receiver has been " appointed, and has taken the rightful possession of " the property, it is a contempt of court for a third " person to attempt to deprive him of that possession "by. force or even by a suit or other proceeding, " without the permission of the court by whom the " receiver was appointed {Angel v. Smithy 9 Vesey " Rep. 355). "Where the receiver is in possession of 150 WHAT A EECEIVER MAT " property upon whicli a third person has a claim "for rent, the proper course for the landlord is " to apply to the court, upon notice to the receiver, " for an order that the receiver pay, the rent or that " the landlord be at liberty to proceed by distress " or otherwise, as he may be advised (^SmitKs Off. " of Reo. TY). And if the claim is contested, the "court will permit the claimant to go before the " master and be examined pro interesse suo. The " same principle is applicable to every other interfer- " ence with the possession of a receiver, sequestrator, " committee or custodee who holds the property as " the oflScer of the court ; as his possession is, in law, " the possession of the court itself : (Johns v. Glaugh- " ton, Jacob's Ch. I^ep. 572 ; Lees v. Wo/rinff, 1 Ho- "gan'sRep. 216 ; Orone v. O'Dell, 2 Idem. 144 ; Sweet "v. Austin, Conroy's Eep. 174; I/ynxih v. Blake, '■'■Idem. 201 ; Kaye v. Cunninghmn, 5 Madd. E.ep. " 406 ; Matter of Heller, 3 Paige's Rep. 199 ; Matter " of Hopper, 5 Idem. 489.) The landlord and his " bailiff in the present case, therefore, instead of at- " tempting to take the vessel out of the custody of " the receiver or his agent, should have applied to " the court for an order directing the receiver to pay " the rent out of the proceeds of the vessel, as was " done in the case of Dixon v. Smith, 1 Swanst. 457. " And if the landlord's claim upon the vessel for the " arrear of rent was disputed, the court would have " given him leave to go before the master and be " examined pro interesse suo ; to the end, that upon " the coming in of the master's report, such an order " might be made in the case as justice required. It OR NOT DO ■WITHOUT LEAVE. 151 " is not too late to make sucli an application now. " But that is no ground for refusing an attacliment " against the respondents : as it appears that the " vessel was worth several hundred dollars, while the " rent claimed was less than eighty. In any event, " therefore, the receiver is entitled to have the ves- " sel restored to him, of which he had been dispos- " sessed by an act of these parties, which was a con- " tempt of the court. The order appealed from must, " therefore, be reversed, without costs however, as " this appears to be a new question in this court; and " an attachment must issue against the respondents, " in which they are to be holden to bail in the sum " of two hundred and fifty dollars each, unless they " shall, within twenty days after service of this order " and of a copy of the taxed bill on them or their soli- " citors, restore the vessel to the receiver and pay " to him the taxable costs of the application to the "vice-chancellor. The proceedings are to be remit- " ted to the vice-chancellor, and the attachment is to " be issued returnable before him, upon filing an affi- " davit of the receiver, showing the default of the " defendants in returning the vessel and paying the " costs." In Fitzpatrick v. Fyre, 1 Hogan, 171, a motion was made by the receiver for a conditional order for an attachment against a tenant who had rescued a distress made to enforce payment of his rent. The master of the rolls said, "I have no jurisdiction to " interfere in this case. The receiver \s proceeding "to- enforce the rent by a common-law remedy; and " he can -have no remedy for this rescue but at com- 152 WHAT A RECEIVER MAT " raon law or under the statutes wMcli apply to res- " cue of distress, and those remedies are various and " effectual. Had this tenant used any violence to- " wards the receiver (who is an officer of this court), " or threatened to use any, I would attach him, but " not otherwise." Perhaps this case may be clearly distinguishable from those cited in the above opin- ion: those go on the idea of rightful and perfect pos- session ; this, on the mere taking by distress, which might or might not have been rightful, and certainly was not perfected. See also Broad v. Wickha/m^ 4 Sim. 511. Sell had debts. Although it may be that a receiver has a right, under his general powers, to sell bad debts (indeed he expressly has this right, under proceedings against a judgment creditor), yet it would be most advisa- ble, in particular cases, to present a petition to the court for leave to do so. Form of petition to sell bad debts : To, &G. (Title.) The petition of A. B. Re- \ ceiver in this action, j Respectfully showeth, Tliat hy an order of this court, made on the day of , your petitioner was ap- OR NOT DO WITHOtTT LEAVE. 153 pointed receiver of^ (&c., referred to in the pleadings in this action ' that your petitioner gave the requisite lond^ toiih sureties^ as security, which has been long ago approved and filed: and your petitioner has acted under the trusts of his said receivership ; tluvt^ amnong other bonds, promissory notes and booh debts embraced by your petitioner's said receivership, are the follow- ing (here set them forth particularly) ; tliat your petitioner, as such receiver, has made repeated appli- cations personally and by letters to all the said persons respectively ovnng the aforesaid bonds, pro- missory notes and booTc debts, but without effect / and nothing has been collected from any one of them; that yowr petitioner has made diligent inquiry in relation to the pecfwwiary standing of the said A. B. &c. [the debtors ;] and, from such inquiry your petitioner lias reason to believe and does believe that all and every the debts, embraced by the said bonds, promissory notes amd book debts a/re desperate or bad — and that it is not desirable to rish the expense of costs in bringing actions to recover any one of tliem : but that it toill be best to sell all and every the same and all benefit that may arise therefrom : You/r petitioner, therefore, pi^ays that this court will grant an order, allowing and authorizing yowr petitioner, as such rcQeiver, to sell all and every the said bonds, promis- sory notes and book debts by public auction^ or private sale, that is to say, a certain bond, &c., (here describe them again,) or for such, other or further order as this cou/rt may see fit to grant. And, dsc. (Jurat.) 154 WHAT A RECEIVER MAY Order thereon : At a court, &c. Present, &c. (Title.) On reading and filing the petition of A. B. the receiver in this suit, ashing foi' leave 'to sell certain alleged desperate or had debts, due to the estate over which he is receiver, consisting of certain honds, promissory notes and hooTe dd)ts herei/nafter more partiGularly referred to / cmd the court deeming it proper cmd hest that such debts slwuld be sold; now, on motion of Mr. G. O., of counsel for the said petitioner : it is ordered, that the said A. B., as rer cei/uer herein, do and he is hereby cmthorized and allowed to sell, at public auction, at (the Merchants Exchange in the city of New York) all and every the said bonds, promissory notes and book debts, namely, one bond, <&c., (here describe them.) And it is also ordered, that the said sale shaU be for cash; cmd that the said receiver shall give at least (fourteen) days' notice of the said sale, by publishing the same for (two weeks) in one or more new^apers printed and issued in (the said city of New York.) And the purchasers or assignees of such dehts will, by virtue of this cyrder, be authorized to sue for and collect the same in the name of the receiver, an his receiving, a sufficient indemnity against all costs and expenses to which he may be subjected in consequence of any suits. (a) (a) No master or referee need be employed in the sale. OR NOT DO WITHOUT LEAVE. 155 Form of advertisement. (Title.) Notice is hereby given, that hy virtue of an order of the court of c&c, the subscriber, as receiver in the above suit, will sell, at public auction, at the Mercha/nt^ Exchange in the city of New Yorh, on the day of next, at t/welve ddock at noon, the following bonds, promissory nx>tes and booh debts, namdy, a certain bond, &c., (here describe them all accurately and minutely,) which sale is to be entirely for cash. And the purchasers or assignees of the said dd)ts will be authorized to sue for and collect the same, in the name of the subscriber, as receiver in the above suit, on his receiving a sufficient indemnity against all costs and expenses to which he may be subjected in consequence of any suits. Dated this day of , 18 — . A. B., Receiver. A sale by a receiver is a sale by an officer of a court, under its supervision ; and no one is restricted from purchasing thereat or enforcing actions in con- nection with what may be purchased. Therefore, attorneys can so buy and enforce by action. The law against attorneys purchasing choses in action (2 R. S. 288, §§ Yl. 75) does not apply to such cases. The sale is public and under the supervision of the court and must be made to close up the concern, and bears no resemblance to those cases where a member of the bar so far forgets his place and duty as to seek for and put in suit contested claims which, perhaps, would have for ever slept, had the parties in interest 156 WHAT A EECEIVER MAT remained upon the ground : Marni v. FaircMd^ 5 Barb. S. C. Rep. 108. Appeal. It is believed that a receiver can appeal against any order which may affect his proper duties : See Stone V. Byrne^ 6 Bro. Pari. Ca. 213 ; also, Steele v. White, 2 Paige's C. R. 478 ; Cuylm' v. Morelcmd, 6 Ih. 273. If he had not this power and did not make nse of it, injustice might be done to parties in the suit. He would, in some cases, run the risk of costs, but, although an appeal should be decided against him, yet, if there were a fair question and the matter unvexatious, the court, in awarding costs, could direct them to be paid out of the funds ia his hands: -2 B. S. 613, § 2. And where parties desire to appeal from an order appointing a receiver, it should be done by the parties affected ; as, for instancy, by assignees of a debtor, in case he has made an assignment, and not by the debtor. In Scholefield and others v. Htdl and others, 6th August, 1839, the debtors took the appeal and not their assignees. Chancellor "Walworth said : " So far as the question of fraud in the assignment is " concerned, these appellants do not appear to .be " the proper parties to an appeal from the decision "of the vice-chancellor. They do not appear to " have any legal interest in the question whether " the property shall be applied to the payment of "the debt of these complainants which they are " liable to pay at aU events or to the satisfaction of OR NOT DO "WITHOUT LEAVE. 157 "otlier delbts which, they have preferred in the " assignment. That is a question which more prop- "erly arises between the complainants and the " assignees ; and the assignees appear to be the " proper parties to an appeal from the decision as to "the appointment of a receiver as to that property, "if it had been legally and in good faith assigned to "them." The court of chancery will enforce its order of removal of a receiver by attachment, although a receiver has entered an appeal from the order dis- charging him and filed an approved appeal bond : In re Golvin^ 3 Md. Ch. Decis. 278. "Whatever right a receiver may have to appeal from an order affect- ing his duties, he cannot have a right to do so against an order of the court discharging him. This is decided in the above case of Oolvin. By that case it appears the act of Maryland of 1830, c. 185, gives, by implication, an appeal from orders appoint- ing receivers, but does not give the right of appeal from orders discharging receivers : neither has the legislature ever, in terms or by implication, given such right. The coart observed that the appoint- ment of receivers is a high power, never exercised if any other safe or expedient remedy can be used, and never where irreparable injustice might follow. But if any reasonable doubt exists on the question of the right of a party in interest to appeal from an order discharging a receiver, and directing him to account for and pay over the property, it is clear the right of appeal from such an order does not exist in him- self : In re Cohin, 3 Md. Ch. Decis. 278. 158 WHAT A RECEIVER MAY A'pphj for InsPructions. A receiver has a right to apply to the court for instructions in relation to funds when the question is as to what may be his duty under its orders, for he is an officer of the court as much so as the clerk of the court would be if he held moneys : GwUs v. Leavitt, 1 Abbott's Pract. E. 274. Generally, however, the receiver in a cause ought not to make any application to the court. If he finds himself in circumstances of difficulty, he should apply to the plaintiff to make the necessary applica- tion, and only on his default should he be consid- ered as properly applying to the court : Pwrker v. Dwrm^ 8 Beav. 497. And it was observed in Ire- Icmd V. Eade, 1 Beavan, 55 ; S. C. 13 L, J. (K S.) Ch. 129, that a receiver ought not to present a peti- tion or originate proceedings in the cause ; that any necessary application ought to be made by the par- ties to the suit ; although there may be exceptions to the rule, — as, where a receiver has incurred costs in the execution of his duties and which the parties had long neglected to provide for. There, he would be justified in presenting a petition for their pay- ment : Irelamd v. Eade, 1 Beav. 55 ; /S (7, 13 L. J. (N. S.) Ch. 129, and see Covrand v. Hamner, 9 Bea- van, 3. Proceeding against another Receiver. A receiver appointed to get in property, part of which he finds in the possession of another receiver. OR NOT DO "WrTHOUT LEAVE. 159 ought not to take proceedings to deprive tlie latter of sucli possession without the authority of the court : Ward v. Swifi, 6 Hare's Chan. Kep. 312. Cancel Policies. Heinsure Mishs. A receiver of an insolvent Insurance Company may cancel policies, with the assent of the assured, and refund proportional parts of premiums : 2 R. S. 470 ; but such a receiver will not be authorized to reinsure for risks already assumed by the company and to pay the new premium out of the assets of the company. But his proper course is to refund the unearned portion of the premiums received, where the assured are willing to do so, and let them reinsure for themselves : Matter of the Groton In- surance Company^ 3 Barbour's Ch. E.. p. 642. The author knows of a late case (The Matter of the Mechanics^ Fire Insurance Oompany) where rein- surance of risks was allowed ; but it was granted on an ex parte application by the receiver, and, prob- ably, without much reflection. In the above case of The Oroton Insurance Company., the receiver asked leave to reinsure the risks which the cor- poration had assumed, compromise claims against the corporation, and pay its officers their salaries in full. Chancellor Walworth observed : " It does " not appear to be pro|)er, however, to authorize the '' receiver to reinsure for risks already assumed by " the company. The statute authorizes the receiver " to cancel such policies with the assent of the assured " and to refund to the assured so much of the premi- 160 WHAT A RECEIVER MAT " urns which may have been paid as shall be in pro- " portion to the period the policy has to run at the "time of such cancelment (2 R. S. 470, §§ 75, 77). " And if those who have insured with an insolvent " corporation are not willing to assume the risk of " reinsuring for themselves on those terms, which they " undoubtedly do at the same rate which the receiver " would have to pay for a reinsurance of the risk "which the company had assumed, for the same " period, they must take their chance of a rateable " dividend with the other creditors, in case of a loss. " The part of the application which asks for leave " to reinsure, and so much thereof as asks permission " to pay the officers of the insolvent company more " than their rateable proportion of the assets of the " company, as between them and other creditors, " must be denied." Compromise. The receiver of an insolvent corporation may, upon application to the court, be authorized to com- promise disputed and doubtful claims against the company, by the allowance of so much of such claims he may deem just and equitable ; Matter of the Oroton Insurance Company^ 3 Barbom''s Ch. R. p. 642. He may also be authorized^ in any case where he may deem it expedient, and for the interest of the creditors and stockholders of the company to do so, to compromise with debtors of the corporation who are unable to pay in full upon the receipt of such OR NOT DO -WITHOUT LEAVE. 161 part of the debts due from them as lie shall deem reasonable and for the best interest of such cred- itors and stockholders of the company ; Ih. Sell Timber. Where timber-trees were blown down on an estate over which a receiver had been appointed, the court ordered the receiver to sell them to the best advantage, and to keep a separate account of the produce of the sale, with liberty to the parties to apply, at any future time, as they might be ad- vised: Crofts V. Poe, Jon. & C. 193. Bid on Property. It is contrary to the practice and policy of this court to permit the receiver in the cause to bid at the sale of the lands over which he has been ap- pointed: Anderson v. Anderson^ 9 Ir. Eq. R. 23. 11 CHAPTER VI. CORPORATE BODY. BANK. INSURANCE COMPANY. ASSOCIATION.(a) COEPOEATION GENEEALLY. VOLFNTAEY DISSOLUTION OF A COEPORATION ; AND PEACTICB IN EELATION TO IT. COEPOEATION SUSPENDING BUSINESS FOE A TEAR. CHAEGING DIEE0T0E8, ETC., AND MAKING THEM PEE- SONAIiLY LIABLE. COEPOEATION NOT PAYING TAXES. INSUEANCE COMPANIES RENDERED INSOLVENT BY THE GREAT FIRE IN NEW YORK. CORPORATION HAVING A JUDGMENT AGAINST THEM, WITH AN EXECUTION UN- SATISFIED ; AND PRACTICE THEREON. MORE PAETIC- ULARLY OF BANKING AND INSURANCE CORPOEATIONS. BANKING OR INSURANCE COMPANY BECOMING INSOLV- ENT OR VIOLATING ITS CHARTER ; AND PRACTICE IN RELATION THERETO. RECEIVER OF A SAFETY FUND BANK PAYING ITS CIRCULATING NOTES. WHEEE AN EXECUTION ON A JUDGMENT AGAINST ANY COEPOEA- TION OE JOINT STOCK ASSOCIATION FOE BANKING PURPOSES ISSUING BANK NOTES OE ANY KIND OF PAPEE CEEDITS AFTEE THE FIRST OF JANUARY, 1850, HAS BEEN EETUENED UNSATISFIED OE COULD NOT BE MET (if issued). WHEEE A CEEDITOE OF SUCH COE- PORATION OE ASSOCIATION HAS A DEMAND EXCEED- ING $100, WHICH SHALL HAVE BEEN REFUSED. WHERE ANY ONE OE MORE STOCKHOLDERS OF ANT SUCH CORPORATION OE ASSOCIATION, OWNING ONE TENTH OF CAPITAL, APPLIES FOR AN ORDER TO DE- (a) See also, Partnership, Chapter vii., post. CORPORATE BODY, ETC. 163 CLARE THE CORPORATION INSOLVENT. PARTICULAR POWERS OF KECEIVERS OF MUTUAL INSURANCE COM- PANIES. COMMISSIONS TO A RECEIVER OF A MUTUAL INSURANCE COMPANY. COMMISSIONS TO A RECEIVER OF A BANK. RELIGIOUS CONGREGATION. REFER- ENCE OF CLAIMS AGAINST RECEIVERS OF INSOLVENT CORPORATIONS. Corporation Generally. The editors of the fourtli edition of the Revised Statutes of the State of New York, in that portion of them which treats of proceedings against corpora- tions in equity, observe : " The Code of Procedure " having abolished the distinctions between actions " at law and suits in equity, and provided but one " form of action for the protection of private rights " and the redress of private wrongs, there are strictly " no proceedings against corporations in equity. The " rights, however, which are secured by the provisions "of this article are by § 471 of the Code preserved " and provision is made for securing them by civil " action to be prosecuted in conformity with the " Code." The very broad powers which the Revised Stat- utes bestowed on the chancellor, over directors, managers, and other trustees and officers of corpora- tions now vest in the Supreme Court. That these powers are broad will be seen by an elucidation of them, as mainly contained in that part of the New York Statutes which speak " of proceedings against corporations in equity" (2 E. S. 462, § 33 [§ 41, 4th 164 CORPORATE BODT. BANK. edition]). And here it will be well to say that bank- ing associations under the general banking law of 1838, are within the provisions of the Revised Stat- utes entitled, " Of proceedings against Corporations " in Equity ;" JBoisgerard v. The New York Banking Co., 2 Sandf. Ch. R. 23 ; Sagory v. Dubois, 8 Ih. 466 ; Gillet V. Moody, 3 Comst. 479 ; Talmage v. Fell, 3 Seld. 328. Powers of the Court ; 1. To compel directors, man- agers and other trustees and officers of corporations to account for their official conduct, in the management and disposition of the funds and property committed to their charge. 2. To decree and compel payment by them, to the corporation whom they represent and to its creditors, of all sums of money, and of the value of all property which they may have acquired to themselves or transferred to others, or may Lave lost or wasted, by any violation of their duties, as such trustees. 3. To suspend any such trustee or officer from exercising his office, whenever it shall appear that he has abused his trust. 4. To remove any such trustee or officer from his office upon pi'oof or conviction of gross misconduct. 5. To direct new elections to be held by the body or board duly au- thorized for that purpose and to supply vacancies created by such removal. 6. In case there be no such body or board, or all the members of such board be removed, then to report the same to the governor, who shall be authorized, with the consent of the senate, to fill such vacancies. 7. To set aside all alienations of property made by the trustees or other officers of any corporation, contrary to the INSURANCE COMPANY. ASSOCIATION. 165 provisions of law, or for purposes foreign to the law- ful business and objects of sucL. corporation, in cases where the person receiving such alienation knew the purpose for which the same was made ; and 8. To restrain and prevent any such alienation in cases where it may be threatened or there may be good reason to apprehend it will be .made. The chancellor has a control over religious corpo- rations (so far as their property and the temporali- ties are concerned) upon the principle of trustee- ship : Bowden v. M-Leod^ 1 Edwards's V. C. Rep. 588. To authorize an injunction and the appointment of a receiver of a corporation, there must be a well- grounded apprehension of injury about to be done. Where the misconduct alleged in the bill occurred, if at all, several years before, and no act is threat- ened, nor mischief impending, an injunction and receiver will not be ordered : Kean v. Colt^ 1 Halst. Ch. (New Jersey) 365. Where a debt due to a corporation has been fraud- ulently discharged, a complaint or bill to obtain satisfaction of the debt, against the original debtor, will be properly filed in the name of the receiver who may have been appointed by the court of chan- cery, under the provisions of the Revised Statutes, to wind up the affairs of the company : Nathmi v. Whithck, 9 Paige's C. R. 152. The receiver of an insolvent corporation cannot impeach or disaffirm the lawful and authorized acts of the corporation : Hyde v. Lynde^ 4 Comst. 387 ; S. P., Brouwer v. Harbeck^ 1 Duer's Superior C. Rep. 114. 166 CORPORATE BODY. BANK. The receiver of a corporation takes under the law and not under the corporation ; and should make all the assignments and do all lawful acts in his own, name, and not in the name or under the seal of the corporation : Hoyt v. Thompson^ 1 Seld. 320. The Superior Court of New York, is so limited in its jurisdiction that it cannot appoint a receiver of the property or effects of a foreign corporation for the purpose of winding up its affairs : Day v. TJ. S. Oar Sp^ing Co., 2 Duer's K. 608. The provisions of the Code of Procedure of the State of New York (§ 292) have no relation to in- solvent corporations. The provisions of the Eevised Statutes (2 R S. 463) are preserved by § 4Yl of the Code, and must govern proceedings supplementary to execution against insolvent corporations : Sam- Tnond V. TJie Hudson River Iron and Machine Go., 11 Howard's Pr. Eep. 29. Where no statute intervenes to disallow it, a re- ceiver of an insolvent corporation may maintain a suit to avoid usurious transactions, entered into by the company which he represents : Leavitt v. De Launay, 4 Sand. Ch. Rep. 281. In the case of Cur- tis V. Leavitt, receiver, Court of Appeals, 1857, it was adjudged that the Statute ch. 172 of Laws of 1850, providing that no corporation should thereaf- ter interpose the defence of usury, prohibited the receiver from availing himself of such objection in any stage of the cause ; and that too, although the objection was taken in pleading before the passage of the act. That it is, in effect, a repeal of the usury laws so far as regards corporations. INSURANCE COMPANY. ASSOCIATION. IQ^ Where a corporate body do an act, througli their proper officers — such as, making a contract or lease with a third party — although they may have ex- ceeded their authority as between themselves and their powers and the public officer might interfere, yet, it appears, that the shareholders are not the par- ties to annul it and obtain a receiver, especially where it has been acquiesced in by such sharehold- ers for a length of time : Gray v. Chxiplin^ 2 Euss. C. R. 126. A payment, or transfer made when a corporation is insolvent or made in contemplation of insolvency which actually ensues, with intent to give a prefer- ence, is void (1 E.. S. 722, § 9) ; and in such a case, in an action by a receiver for the money or property, it is not necessary to prove open and avowed insol- vency at the time of the payment or transfer ; nor, that the creditor knew the pecuniary condition of the corporation : Brower v. Harbeck^ on appeal from case in 1 Duer, 114. With regard to suits or proceedings in favor of any corporation pending at the time of its dissolu- tion, the act of the 26th April, 1832 (chap. 295), has declared that the same are not to abate, but may be continued by the receivers, in the name of such cor- poration or in the name of the receivers, who may be substituted as plaintiffs under the direction of the court in which the suit is pending and subject to such order as the court may deem expedient in rela- tion to the payment or security of costs. And whenever a receiver of the property or effects of a corporation is appointed, either before or after its 168 COEPORATE BODY. BANK. dissolution, new suits may be brougtt and carried on by any such receivers, either in their own names or in the names of the corporation for which they may have been appointed. But no new suit is to be brought in the name of a corporation after it shall have been dissolved or after the expiration of its charter. Although a receiver may be removed or die, yet no suit, which has been brought in his name, will abate ; but the same can be continued in the name of his successor or of the corporation, if its charter should not have expired or been dissolved, as may be directed. Vohmtary dissolution of a corporation.(a) A petition may be presented to the court of chancery (supreme court), for a decree (judgment) dissolving a corporation, whenever the directors, trus- tees or other officers having the management of its concerns, or the majority of them, shall dis- cover that the stock, property and effects of such corporation have been so far reduced, by losses or otherwise, that it will not be able to pay all just demands to which it may be liable, or to af- ord a reasonable security to those who may deal with such corporation — or, whenever the directors, trustees or officers or a majority of them shall, for (a) This does not extend or apply to any incorporated library society, religious corporation or to any select school or academy incorporated by the regents of the university or by the legislature : 2 iJ. jS. 472. INSUEAKCE COMPANY. ASSOCIATION. 169 any reason, deem it beneficial to the interests of the stockholders that such corporation should be dis- solved : 2. R. S. 467. The statute is particular in regard to what the petition shall contain : Ih. §§ 59 (§ 69, 4th edit.) This petition will be referred to a referee, to hear the allegations and proofs of the parties and take testimony in relation thereto ; and he is, with all convenient speed, to report the same to the court, with a statement of the property, effects, debts, credits and engagements of such corporation and of aU other matters and things pertaining to the affairs of such corporation. Upon the coming in of the report, if it shall appear to the court that such cor- poration is insolvent, or that for any other reason, a dissolution thereof wiU be beneficial to the stock- holders and not injurious to the public interest, a decree is to be entered dissolving the corporation and appointing one or more receivers of its estate and effects; and such corporation will, thereupon, be dissolved and cease to exist : Ih. § 65 (§ 75, 4th edit.) Any of the directors, trustees or other officers of such corporation or any of its stockholders may be appointed receivers ; but before they enter upon the duties of their appointment, they wiU have to give security to the people of the State in such penalty as the court shall direct, conditioned for the faithful discharge of the duties of their appointment and for the due accounting for all moneys received by them. Such receivers will be vested with all the estate, real and personal, of such corporation, from the time 170 CORPORATE BODY. BANKS. of their having filed their security and be trustees of such estate for the benefit of the creditors of such corporation and of its stockholders. And they will have all the power and authority conferred by law upon trustees to whom an assignment of the estate of insolvent debtors may be made : 2 K,. S. 469, §§ 67, 68 [§§ 77, 78. 4th edit.] If there should be any sum remaining due upon any share of stock subscribed in such corporation, the receivers must, immediately, proceed and recover the same, (unless the person, so indebted, should be wholly insolvent ;) and, for that purpose, may file their bill in the court of chancery or commence and prosecute an action at law for the recovery of such sum, without the consent of any creditors of such corporation. And, immediately on their appoint- ment, the receivers are to give notice thereof, which is to contain the same matters required by law in notices of trustees of insolvent debtors ; and, in addition thereto, require all persons holding any open or subsisting contract of such corporation to present the same in writing and in detail to such receivers at the time and place specified in the notice. The notice will have to be published for three weeks in the state paper and in a newspaper printed in the county where the principal place of conducting the business of such corporation may happen to have been situated : Ih. §§ 69, 70 [§§ 79, 80. 4th edit.] The effect of the appointment of receivers, in these cases of voluntary dissolution of corporations, will render void all sales, assignments, transfers, mort- INSURANCE COMPANY. ASSOCIATION. 171 gages and conveyances of any part of the property or things in action of the corporation which may have been made (after the filing of the petition) in payment of or as a security for any existing or prior debt or for any other consideration ; while, all judg- ments made within that time by such corporation wdl be absolutely void as against the receivers and the creditors : Ih. Yl, [§ 81. 4th edit.] In the case of Waterhury and others^ 8 Paige's C. R. 380, judg- ments had been obtained on cognovits against the corporation known as the Eagle Iron Worhs^ after a petition had been presented for its dissolution ; Chancellor Walworth observed : " So far as relates " to the judgments which were obtained upon the " cognovits, given after the presenting the petition for "the dissolution, there can be no doubt that the "judgment-creditors are entitled to no advantage over " the other creditors either as to the real or personal " estate of the corporation. The seventy-first section " of the article of the revised statutes relative to the " voluntary dissolution of corporations, (2 E.. S. 469,) "expressly declares, among other things, that all "judgments confessed by the corporation after the " filing of a petition for the dissolution thereof, shall " be absolutely void as against the receivers who may "be appointed and as against the creditors of the cor- " poration. And it makes no difiference whether the "judgment is confessed upon a bond and warrant of " attorney given for that purpose, or after the com- " mencement of a suit in the usual way. The object " of the statute unquestionably was, to prevent the " corporation or its oflS.cers from doing any act by 172 CORPORATE BODY. BANK. "whicli one creditor should get a preference over " another, with their assent. And the intention of the "legislature would be entirely frustrated if the courts *' should hold that a preference could be given by a " withdrawal of a plea, or the signing of a cognovit, in " a suit commenced in the usual form of commencing " adversary suits. The receivers in the present case "are, therefore, entitled to the real and personal " estate of the corporation for the benefit of all the " creditors rateably ; discharged of any lien created " either by the judgments which were confessed, or " by the executions which were issued thereon." On the voluntary dissolution of a corporation, its debtors are to account to the receiver. This is to be done, after the first publication of the notice of their appointment : IK 72 [§ 82, 4th ed.] By way of further reference to the acts and powers of the receivers, it will be as well to give an extract from the statute {IK §§ 72, 73, 74, 75 [§§ 82, 83, 84, 85, 4th edition]): "And all the provisions of " law, in respect to trustees of insolvent debtors, " the collection and preservation of the property " of such debtors, the concealment and discovery " thereof and the means of enforcing such discov- " ery shall be applicable to the receivers so ap- " pointed and to the property of such corpora- " tion. Such receivers shall have the same power " to settle any controversy that shall arise between " them and any debtors or creditors of such corpo- " ration by a reference, as is given by law to trus- " tees of insolvent debtors ; and the same proceed- " ings for that purpose shall be had, and with the INSURANCE COMPANY. ASSOCIATION. I73 like effect ; and application for the appointment of referees may be made to any officer authorized to appoint such referees on the application of trustees of insolvent debtors, who shall proceed therein in the same manner, and the referees shall proceed in like manner and file their report with the like effect in all respects. The receivers shall be sub- ject to all the duties- and obligations by law im- posed on trustees of insolvent debtors, so far as they may be applicable, except where other pro- visions shall be herein made. They shall call a general meeting of the creditors of such corpora- tion, within four months from the time of their appointment, when all accounts and demands for and against such corporation, and all its open and subsisting contracts, shall be ascertained and ad- justed as far as may be, and the amount of moneys in the hands of the receivers declared. If there shall be any open and subsisting engagements or contracts of such corporation, which are in the nature of insurances or contingent engagements of any kind, the receivers may, with the consent of the party holding such engagement, cancel and discharge the same, by refunding to such party the premium or consideration paid thereon by such corporation, or so much thereof as shall be in the same proportion to the time which shall remain of any risk assumed by such engagement as the whole premium bore to the whole term of such risk ; and upon such amount being paid by such receiv- ers to the person holding or being the legal owner of such engagement, it shall be deemed canceled 17i CORPORATE BODY. BANK. " and discharged, as against such receivers." They are authorized to retain a sufficient amount to meet the payments made to cancel and discharge any open or subsisting engagements : Ih. § 77 [§ 87, 4th ed.J. But the receiver is not authorized to reinsure for risks already assumed by the company and to pay the new premium out of its assets ; In the matter of the Oroton Insurance Co., 3 Barb. Ch. E. 642. The receivers can protect themselves against the probable effect of any suit which may be pending against them or the corporation for which they are trustees : by retaining the proportion which would belong to such demand if established, and the neces- sary costs and proceedings in their hands, to be applied according to the event of such suit or to be distributed in a second or other dividend: lb. § 78 [§ 68, 4th edit.] And should any suit, pending at the time of a second dividend, be terminated, the re- ceivers are to apply the moneys retained in then- hands for that purpose to the payment of the amount recovered and their necessary charges and expenses ; and if nothing shall have been recovered, they are to distribute such moneys, after deducting their ex- penses and costs, among the creditors and stockhold- ers of the corporation in the same manner as is directed in respect to a second dividend : lb. § 84 [§ 96, 4th edit.] The statute has directed the order in which the receivers shall pay the debts of the corporation, amongst those creditors who may have exhibited and proved their claims, namely : 1, AU debts enti- tled to a preference under the laws of the United INSTTEANCB COMPANY. ASSOCIATION. 1^5 States ; 2. Judgments actually obtained against such, corporation, to the extent of tlie value of the real estate on which, they shall respectively be liens ; and 3. All other creditors of such corporation, in pro- portion to their respective demands, without giving any preference to debts due on specialties : § 79 [§ 89, 4th edit.] And as to a second and final divi- dend, the statute runs thus : " If the whole of the " estate of such corporation be not distribated on " the first dividend, the receivers shall, within one "year thereafter and within sixteen months after "theii' appointment make a second dividend of all " the moneys in their hands, among the creditors " entitled thereto ; of which, and that the same will " be a final dividend, three weeks' notice shall be " inserted once in each week, in the state paper, and " in a newspaper printed in the county where the " principal place of business of such corporation was " situated. Such second dividend shall be made in "all respects in the same manner as herein prescribed " in relation to the first dividend, and no other shall "be made thereafter among the creditors of such " corporation, except to the creditors having suits " against it or against the receiver pending at the " time of such second dividend, and except of the " moneys which may be retained to pay such credit- " ors, as herein provided " (before referred to) ; " but " every creditor, who shall have neglected to exhibit " his demand before the first dividend and who shall " deliver his account to the receivers before such sec- " ond dividend, shall receive the sum he would have " been entitled to on the first dividend, before any 176 CORPORATE BODY. BANK. " distribution be made to tbe otber creditors. After " such, second dividend shall have been made, the " receivers shall not be answerable to any creditor " of such corporation or to any persons having claims " against such corporation, by virtue of any open or " subsisting engagement, unless the demands of such " creditor shall have been exhibited and the engage- " ments upon which such claims are founded shall " have been presented to the said receivers, in detail " and in writing, before or at the time specified by " them in their notice of a second dividend. If after " the second dividend is made, there shall remaia " any surplus in the hands of the receivers, they shall " distribute the same among the stockholders of such " corporation, in proportion to the respective amounts " paid in by them, severally, on their shares of " stock :" §§ 80, 81, 82, 83 [§§ 90, 91, 92, 93, 4th edit.] The receivei's will be entitled (over their dis- bursements) to such commissions as the court may allow, not exceeding the sum allowed by law to executors or administrators : Ih. § 76. These commissions (to executors) are, over and above their expenses : for receiving and paying out all sums of money not exceeding one thousand dol- lars, at the rate of five dollars per cent. ; for receiving and paying any sums exceeding one thousand dol- lars and not amounting to five thousand dollars, at the rate of two dollars and fifty cents per cent. ; and, for all sums above five thousand dollars, at the rate of one dollar per cent. Besides this, they are, in all cases, to have such allowance for actual and neces- rffSURANCE COMPANY. ASSOCIATION. 177 sary expenses as shall appear just and reasonable : 2 K. S. 93, § 68. And the receivers are to be subject to tlie control of the court, and may be compelled to account at any time ; and can be removed by it ; while any vacancy, created by such removal or by death or otherwise, may be supplied by the court: lb. 4V2, § 85 [§ 97, 4th edit.] As to the accounting by the receivers : They are, within three months after the time prescribed for making a second dividend, to render a full and accu- rate account of all their proceedings to the court, on oath. This account is to be referred to a master or referee, who is to examine and report thereon. But previous to rendering such account, the receivers must insert a notice of their intention to present the same, once in each week, for three weeks, in the State paper and in a newspaper of the county in which notices of dividends are required to be in- serted, specifying the time and place at which such account will be rendered. The master or referee is to hear and examine the proofs, vouchers and documents offered for and against the account ; and is, then, to report fully to the court. When the report comes before the court, such court is to hear the allegations of all concerned ; and allow or disallow the account ; and decree the same to be final and conclusive upon all the creditors, stockholders and persons having claims against the corporation, as well as upon any open or subsisting engagement. The receivers must also account, from time to time, in the same manner and with the like effect for all moneys which may 12 178 CORPORATE BODY. BANK. come to their hands after tlie rendering of such, ac- count, as well as for all moneys which may have been retained by them : lb. § 86, 87, 88, 89 [98, 99, 100, 101, 4th edit,] The receivers are to pay all unclaimed dividends into court : Ih. 89. Appeals can be had from the orders and decrees of the court, at any time within six months after any of them are made : Ih. § 90 [§ 102, 4th ed.j. Practice on the vohontary dissolution of a corporor tion. Form of Petition for dissolution. /Supreme Court. To the Justices of the Supreme Court. The petition of the suhscribers, " composing a Tnajority of the directm's of the N.I. Company of New Yor\ for and on be- half the said Company, RespectfuUy showeth : That the said N I. Company of New Yorh is an incorporated insurance company in the city of New Yor\ within the true intent and mearir ing of that part of the Revised Statutes entitled, " Of the vohmtary dissolution of corporations^'' 2 B. 8. p. 466 ; and was duly incorporated by an act of the INSUKANCE COMPANY. ASSOCIATION". 179 legislature of the State of New York, passed the , 18 — . £y tvhich last mentioned act it is enacted that the stock and affairs of the said corpora- tion shall he managed hy directors, of whom your petitioners are part and constitute the major- ity thereof ; Tlmt shortly after tlie passage of the said act of incoiporation, that is to say, on or about the day of , the said company ivent into operation in the city of New Yorh hy [underwriting marine risks, &c.], as hy the said act it was authorized and empowered to do ; a/nd contin- ued the said business until ahotit the day of . That heavy losses were sustained hy the said company, so that the greater part of the stock, property and effects were lost. That when a change was made in 'the direction of the said company, to wit, on or about the day of , arnd whereby your petitioners constituted a majority of the present directors, they found the affairs of the said company in a very embarrassed condition • and having diligently and faithf idly investigated the na- ture, situation and security of the property, affairs and concerns of the said company, they fou.nd tlie fwnds and capital of the company so much reduced and wasted by losses, u/nder former director's, that the said company would he unable any longer to carry on the business for which they were incorporated. That your petitioners, thereupon, together with their associates, at present directors of the said company, commenced a settlement of the affairs of the said com- pa/ny in such mcmner as they believed to be for the best interest of the stockholders and creditor's. That 180 CORPOKATE BODY. BANK. they liquidated and discha/rged the dehts due hy the said compamy as fa/r as possible ; and setUed out- standing claims so far as they could; amd after hom- ing diligently^ fully and fairly settled the affairs and concerns of the said company, they find amd so they o/oer thefa^t to he that, hy reason of the losses afore- said, the f wads, stock, property and effects of the said compav/y are almost exhausted and spent amd are so fa/r reduced as to he wholly inadeguate to ca/rry on the business of the said company, vmder the said act of incorporation. Your petitioners have accordingly come to the canchision that it is ineaypedient any longer to continue the business of the said compa/ny / and that the interests of the stockholders would be best promoted hy a dissolution. And, to that end, yow petitioners, pw^suant to thatpa/rt of the Revised Stat- utes of the State of New York, entitled, " Of the vol- untary dissolution of corporations'''' {and hereinbe- fore referred to), have annexed to this their petition a full, just amd true inventory of all the estate, both real a/nd personal, in law and equity of the said compa/ny and of all the books, vouchers and securities relating thereto. Also a full, just and t/rue account of the cap- ital stock of the said compamy, specifying the names of the stockholders and their residence, where known, the number of shares belonging to each, the amount paid in upon such shares respectvvel/y and the amxnmt still dm thereon. Also, a statement of all incwm- brances on the property of tfie said company by judg- ment, mortgage, pledge or otlierwise. Also, a full and true account of all ilie creditors of the said com- pany and of all engagements entered into by the com- INSURANCE COMPANY. ASSOCIATION. Igl pany which, h(me not heea fully satisfied or canceled. All which facts., accounts., inventmHes and statements are verified hy the affidamt of yowr petitioner to he just and true so far as they Tcnow or have the means of lemming, (a) • Your petitioners., therefore., pray that the said N. I. Company of New Yorh may., hy a decree of this court., in that hehalf to he pronounced., he dissolved., pursuant to the provisions of the (Statutes aforesaid. And., &c. Jurat. (Title.) G. H.., &G. &C.., the petitioners named in the preced- ing petition, heing severally duly sworn., do respect- ively depose and say., that they have read the above petition and Tcnow the contents thereof ; and the same is true so fa/r as they respectively Tcnow or- have the means of Tcnowing. Also., that the accounts., inven- tories and statements Tiereunto annexed., and marTced as scTiedules A. B. O. Z>., are just., full and true., so far as they respectively Tcnow or have the means of Tcnowing. 8chedtdes. Schedule A. — A full., just and true invefntory of oM the estate., hoth real and ^personal., in law and equity, of the N. I. Company of New YorTc / and of all tTie hooTcs, vouchers a/ad securities relating th&reto, namely : (a) 2 R. S. 467, § 60. 182 CORPORATE BODY. BANK. Real estate^ &g. <&c. &c. Personal property^ (&g. c&c. <&c. Books, vouchers and secwrities. One Ledger, &g. &G. C&G. Schedule B. — A full, just and true account of the capital stock of ilie N. I. CompoMy of New Ym% specifying the nmnes of the stockholders, on the gay of , 18 — , their residences, where known, the number of shares belonging to each, the cumount paid in upon such shares respectively and the amount still due thereon, c&c. &G, &c. Schedule O. — A statement of all incumbrances on the property of the said the N. I. Company by judgment, mortgage, pledge or otherwise, &g. &c. &c. Schedule D. — A full and true account of aU the creditors of the said the N. I. Company and of all engagements entered into by the said company, which have not been full/y satisfied or canceled, with the place of residence of each creditor and of every person to whom such engagements were made wliere the same is knoion and the circumstance of their being u/n- known where the fact is so ; the sum okoing to each creditor • the nature of each debt or demand; and the true cause or consideration of such iiidStedness in each case. On presenting this petition the following order will be allowed -.(a) (a) 2 R. S. 468, § 61. In moving for the order the counsel will get the court to fix the day on which interested persons are to show cause. The statute directs that it shall not be less than three months from its date : Ih. And also designate the newspaper in which the order is to be inserted : 75 § 62. INSUEANCE COMPANY. ASSOCIATION. 183 At a Court^ &G. Present, <&c. (Title.) A majority of the directors of the N. I. Company of New Yorh, Tjeing an incorporated company, ha/ving presented their petition in the above matter to, &g., pursuant to the provisions of that pa/rt of the Revised Statmjles of the State of New Yoi% entitled, " Of the voluntary dissohition of corpo^-ations^'' which petition sets forth the reasons that induce the said applicants to desire a dissolution of the said corporation ; and prays that the said N. I. Company may, hy a decree of the court, he dissolved; to which said petition is annexed a full, just andtriie inventory [here take in tte heading of eacli schedule], which said petition, acGOWfits, inventories and statements are verified by the said directors, hy afiidamit annexed to the said petition, to he just and t/i'ue, sofa/r as they respectively hnoto or have the means of hnowing. Whereupon, a/nd on reading and filing the said petition, accounts, inventories and ajffidawit ; and on motion of Mr, F. G., of counsd for the petiticmers : it is ordered, that all persons interested in the said N. I. Company show cause, if any they have, before S. C, Esquire, residing in the city of New YorTc, who is hereby ap- pointed referee for that pv/rpose, at his office. No. street, in the city of New Yorh, on the ^y cf next, why such corporation should not be dissoT/ved. On the reference, the referee hears allegations and proofs of the parties ; and takes testimony in relation thereto. He is entitled to the use of the ■ 184 CORPORATE BODY. BANK. original petition and schedales ; and can require the same, by an order on the clerk or officer with whom they may have been deposited ; but he will have to return the same with his report : 2 R. S. 468, § 63, 64. The referee reports to the court with all conve- nient speed, with a statement of the property, effects, debts, credits and engagements of the corporation and of all other matters and things pertaining to its affairs : Ih. If, on the coming in of the report, the court should decree a dissolution, the attorney will be prepared with proof of advertising ; and draw such decree, embracing the appointment of one or more re- ceivers. The following will be the form of a decree or judgment :{<£) At a courts &g. Present, &g. (Title.) This matter coming on to he heard, pursuant to the petition of a majority of the directors of the above company, which was presented to this court on the day of last, praying that the said company, which is an incorpoi^ated insurance company in the city of New Yorh, might be dissolved pursvxint to the provisions of the Revised Statutes in that case made (a) The statute is silent as to when the decree may be obtained ; but it might be safest to move for it only in term time, (during the sitting of a Justice at Special Term.) INSURANCE COMPANY. ASSOCIATION. 185 and provided. And on reading and fiUng sundry affidavits^ proving^ to the satisfaction of the court., the due publication of a notice in the State paper called the Evening Journal., pi'inted in the city of Albany., a/nd in the , one of thepuhUc newspapers pub- lislied and printed in the city of New York for the space of time and in the manner directed by the afore- said Revised Statutes. And on reading the report of S. G.., Usquire, referee., residing in the city of New Yorh, bearing date the day of , made in pu/rsuance of an order of this court in- the above mat- ter, bearing date the day of last, whereby all persons interested in the N. I. Company of New York were required to show cause before the said referee on the day of , why the said The N. I. Company of New York should not be dissolved: by which said report it appea/rs that (&c., here set forth the finding of tlie referee). Now, on hearing Mr. J. K. of counsel for the petitioners (and Mr. , of counsel in opposition) It is ordered, ad- judged and decreed, and this court, by virtue of the power and authm^it/y vested in this court by the stat- utes aforesaid, doth order, adjudge and decree that the said N. I. Company be a/nd the same is hereby dissolved, pursuant to the provisions of the said stat- utes ; and that a just distribution be made of the estate, funds and effects of the said The N. I. Com- pany of New Yoi'k among the stockholders, in propor- tion to their rights therein, after the payment of all its debts and the extinguishment of all its covenants, contracts and engagements. And it is further or- dered, adjudged and decreed, that it be referred to 186 CORPORATE BODY. BANK. , Esquire^ as referee, to examine amd ascertain who are or is a suitable person or persons, being directors, trustees or other officers or stockholders of the said company, to le appointed the receivers or re- ceiver of the estate, funds amd effects of the said company, for ike purposes of and pu/rsuant to the said statutes in such case made amd provided ; and of how many persons the said receivers should consist. And it is furtlier ordered, that he report the na/mes of the su/reties who ma/y he proposed for the said persons respectively / a/nd as to the fitness and sufficiency of the said proposed swreties to give hond, with the per- son or persons who ma/y he appointed recei/oers as aforesaid in such sum as the referee shall approve ; amd that he report thereon with all convenient speed. The latter part is so drawn as to require another report ; before the full appointment of the receivers. This would not seem to be really necessary ; and it is believed that the power might be left fully to the referee, so that he could, under the above decree, approve and receive the receiver's bond and file it with his report — and so that the appointment would be perfect (as in ordinary cases) from the time such report and bond were filed. However, this has not been the course generally pursued ; and we have, therefore, taken, not our own view exactly, but adopted the practice of other solicitors and attor- neys. Pursuant to this practice and on the coming in of the report (as to the persons proposed and the suffi- ciency of their sureties, and which report will be in the ordinary form) an order is entered confirming it and appointing the receivers ; as thus : INSURANCE COMPANY. ASSOCIATION. 187 At, (&C. Present, &o. (Title.) On reading ike report of 8. C, Esquire, referee, residing in the city of New Yorh, hearing date the day of , made pwsvmit to a/n order of this court in the above matter, hearing date the day of , wherehy it was, among other things, referred to the said 8. 0. as such referee, to examine and ascerta/in, &g. ; hy which report it appears that the said referee had heen attended hy counsel, touching the matters so referred in and hy the said order ; and that A. B., of, &c., G. D., of, &c., E. E, of the same city, (&c., (&G., were proposed hefore him as suitahle persons to he appointed receivers fon^ ilie purposes aforesaid and and as their sureties. That he, the said referee, had considered of the said proposal, and was of opinion that the recevuers so to he appointed should cmxsist of persons; and finding hy testimony taken hefore him, that all hf the said persons so proposed as such receivers were stock- holders of the said compa/ny, and tliat the first na/med four of them were also directors of the said company ; [aad that, at a special meeting of the directors of the said company, consisting of out of , the whole number of present directors thereof, a res- olution was duly passed recommending the said per- sons to be proposed as such receivers;] and also finding hy testimony taken hefore him, as well as from his personal knowledge, that all the said persons were residents of the city of New Yo?'k omd of good repute as to pecuniary circumstances, integrity and 188 CORPOKATE BODY. BAifK. cwpacity for business ,' and also reporting tlmt the sv/reties for the said receivers should justify in the sum of $ , and also finding that the said and , as sureties^ could justify in the said sum of % . Therefore he was of opinion that the said A. B., G. Z>., cfec, were suitable persons to he appointed the recei/vers of the said compa/ny^ for the purposes referred to in the said order^ and that the said and were proper persons to he their sv/reties in the premises. Now^ on motion of Mr. J. R.^ of counsel for the petitioners in this matter : it is ordered^ that the said report he fled; and that the same he and is hereby confirmed. And it is fu/rther ordered^ adjudged and decreed that the said A. _5., c&c, he and they hereby are appointed the receivers of the said N. I. Company of New YorJs, for all the purposes contemplated w intended in and by the provisions of the said Hevised Statutes in such case made amd provided^ subject to the control, of this courP^ until the affairs of the said company he finally closed: upon their executing and aclcnowledging^ to- gether with as their sureties and filing in the office of the cleric of this court a bond., in such form as the said master shall approve, to the people of the State of New Yorh, in the penal sum of % , conditioned for the faithful discharge of the duties of their appointment, as such receivers of the estate, funds and effects of the said N. I. Company of New YorJc, and for the dnie accounting for all moneys which may he received by them, tlie said A. B., (&c., as such receivers aforesaid. The said receivers shall he vested with all the estate, real and personal, of INSURANCE COMPANY. ASSOCUTION. 189 such company, from the time of their having filed their secv/rity hy the hand aforesaid ; and shall le trustees of such estate for the henefit of the creditors of such company and of its stochholders. Sv^h re- ceivers shall ha/oe all the power and authority con- ferred hy law on such t/rustees to whom an assigiv- ment of the estate of insolvent debtors may l>e made, pwrsua/at to the provisions of the fifth chapter of the second part of the Revised Statutes. If there shall le any sum remaining due on any share of stock sub- scribed in svxih company, the receivers shall irrmiediately proceed and recover the same, v/nless the person so in- debted shall be wholly insolvent / a/ndfor thatpu/rpose may commence and prosecute an action at law or in equity for the recovery of such sum, without the consent of any creditors of such company. The said receivers, immediately on their appoini/ment, shall give notice thereof, which shall contain the same matters required by law in notices of trustees of insolvent debtors / and, in addition thereto, shall require all persons holding any open or subsisting contract of such company to pre- sent the same in writing and in detail to Such receiv- ers at the time and place in such notice specified • which shall be published for three weeks in the State paper and in a newspaper printed in the county where the principal pkwe of conducting the business of such company shall have been situated. And all sales, assignments tra/nsfers, mortgages and convey- ances of any part of the estate, real or personal, in- cluding things in action of every such, company made after the filing of the petition for a dissolution thereon (i. e., after the day of last), in payment 190 COEPOKATE BODY. BANK. of or as a secv/rity for cmy existing or prior debt^ or for any other consideration and all judgments eon- fessed by sv^h company after that time a/re heffd/y decreed and declared to he absohjutel/y void as against the said receivers and as against the creditors of such compam/y. And after the first pvhUcation of the notice of the appovntment of the said recei/vers^ every person having possession of amy property belonging to the said company, and every person indebted to it, shall acGownt a/rid answer for the amount of such debt cmdfor the value of such property to the so/id receiv- ers / and all the provisions of law in respect to trus- tees of insolvent debtors, the collection and preservor tion of the property of such debtors, the concealment and discovery thereof and the means of enforcmg such discovery, shall be applicable to the receivers so appointed a/nd to the property of such company. And such receivers shall have the same power to settle any controversy that shall arise between them and any dd)toi^s or creditors of su^h com- pany, by a reference, as is given by law to tnmstees of insolvent debtors ; a/nd the same proceedings for that pu/rpose shall be had and with the like effect; and application for the appointment of referees may be made to any officer authorized to appoint such referees on the application of trustees of insolvent debtors, who $hall proceed therein in the same man- ner ; and the referees shall proceed in like manner and file their report with the like effect in all respects. The said receivers shall be subject to all the duties and obligations by lato imposed on trustees of insolvent debt- ors, so far as they may be applicable, except where other INSUEANCE COMPANY. ASSOCIATION. 191 provisions shall he therein made. They shall call a gen- eral meeting of the creditoi^s of such company within four months from the time of their appointment^ when all acGOimts a/nd demands for a/nd against such comr pany and all its open cmd subsisting cont/racts, sJiall be ascertained and adjusted, as far as may be, and the amount of moneys in the hands of the receivers declared. If there shall be any open and subsisting engagements or contracts of such company, which are in the natnire of insurances or contingent engagements of any hind, the receivers may, with the consent of the party holding such engagement, cancel and dis- charge the sams, by refunding to such party the premium or consideration paid thereon by such cor- poration or so much thereof as shall be in the same proportion to the time which shall remain of any risk assumed by such engagement, as the whole premium bore to the whole term of such risk ; and upon such amount being paid by sucJi receivers to the person holding or being the legal owner of such engagement, it shall be deemed canceled and discharged as against such receivers. Such receivers shall, in addition to their actual disbursements, be entitled to such commis- sions as the court shall allow, not exceeding the sum allowed by law to executors or administrators. The receivers shall retain out of the moneys in their hands, a sufficient amount to pay the sums which they are hereinbefore authorized to pay, for the purpose of canceling cmd discharging any open or subsisting engagements. If any suit be pending against the said compa/ny or against the receivers, for any demand, the receivers may retain the proportion which would 192 CORPORATE BODY. BASTK. helong to such demcmd if established cmd the necessa/ry costs and proceedings^ in their hands^ to he applied acGording to the event of such suit or to he d/istributed in a second or other dvvidend. The receivers shall distribute the residue of the moneys in their hcmds at the times, in, the order of payment and with the for- malities set forth in the statnites ; cmd shall account cmd he subject to account as is tlierein directed. And the said receivers shall be subject to the cont/rol of this Gou/rt, and may be compelled to account at any trnne / , a/nd they may he rernoved by the cowrt ; cmd any vacancy created by such removal, by death or otherwise, may be supplied by the court. The bond of the receivers will be approved by the referee ; and should be acknowledged before a commissioner of deeds : Rule 1V2 in Chancery. Form of the bond to he entered into by the receivers and the sn/reties : Know all men, &c. (taking the usual form of penalty of a money bond and making the receivers and their sureties bound to the people of the State of New York in the sum reported by the referee or fixed by the court,) WHEREAS at a Special Term of the Supreme Court, held for the State of Nexo Yorh at the City Hall of the city of New Yo?'h, before, c&c, it was then INStTRANCE COMPANY. ASSOCIATION. 193 and there and hy an order hea/ring date tlie day of 18 — , in the matter of the JV. I. Com- pany of New York, amx)ng other things, ordered, c&c. [here recite order for tlie appointment of the re- ceivers.] JVbw the coTidition of this obligation is such, that if the above bounden A. B., &g., [receivers] shoiR faithfully discharge the duties of their appoint- ment, as such receivers of the estate, funds and effects of the said N. I. Convpamy ; and fully accoimt, pass accounts ojnd file inventories of and for all moneys received by them pursuant to the statutes in such eases made and provided and as the rules and practice of the court or the court itself (a) {under the Statute) may direct, then the above obligation to be void, other- wise to remain in fuR force. Sealed and delivered \ in the presence of j On the appointment of a receiver of all the prop- erty and effects of a corporation, for the purpose of closing up its affairs, it is proper to restrain its direc- tors and officers from collecting debts and demands due to the corporation, and from paying out, assign- ing or delivering any of its property, money or effects to any other person, or from encumbering such property : Morgan v. The N. Y. and Albany R. R. Po., 10 Paige's C. K. 290. The dissolution of a corporation will not work an abatement of any suit then pending in their favor ; id) They may be compelled by the court to account at any time : 2 R. S. 472, § 85, and must do so within a certain period after the second dividend: 76. § 86. 13 194 CORPORATE BODY. BANK. and the same is to be continued in the name of the corporation or in the names of the receivers, who may be substituted as plaintiffi under the direction of the court in which the suit may be pending ; and the receivers can bring new actions in their own names or in the name of the corporation where it has not been dissolved : 2 E. S. 472, §§ 92, 93. Immediately after the receivers are appointed, they must give public notice of it. The notice will embrace a requisition to all persons, who hold any open or subsisting contract of the corporation, to present the same in writing and in detail to the receivers, at a time and place to be specified. The notice will have to be published for three weeks in the state paper and in a newspaper printed in the county where the principal place of conducting the business of the corporation is situated : 2 E. S. 469, § 70 [§ 80, 4th edit.J The following form of notice wUl answer : Notice is hereby given, that the svhscribers have heen appointed, hy the Supreme Court, receivers of the estate, funds ami effects of the N. I. Company of New Yorh, pwrsuant to the provisions of the Revised Statutes of the State of New Yorh, entitled '■'■Of the " voluntary dissolution of corporationsP AU persons indebted to the said company are to render an account of all dd>ts and sums of money owing hy them and to pa/y the sa/me to the said receivers hy the day of ■ next [no particular time is mentioned in the statute ;] all persons having in their possession any property or effects of the said company are to deliver the same to the said receivers hy the same day ; mSTTRAN'OE COMPANY. ASSOCIATION. 195 aU the creditors of such company are to deliver their respective accounts and d&mands to the said receivers or one of them hy the day of [not less than forty days from the first publication of the notice ;] and all persons holding any open or svh- sisting contract of the said JV. I. Gompamy^ are to present the same in writing mid in detail to svxih receivers at the on the day of [no particular place or time is mentioned in the statute.] Dated, New YorJo, 18 — . \ Receivers of the estate, funds >• and effects of the N. I. ) Company of New York. The receivers are to call a general meeting of creditors within four months from the time of their appointment, when all accounts are to be adjusted : 2 K. S. 470, § 74 [§ 84, 4th edit.] The following may be the form of the notice : Notice is herd/y given, that the subscribers, ap- poimted by the /Supreme Court, receivers of the estate, fumds and effects of the N. I. Company of New Yorh, do hereby call a general meeting of the creditors of the said company at the , on the day of next [the statute is silent as to time] when all accounts and demands for and against such corporation and all its open and subsisting coni/racts will be ascertained and adjusted asfa/r as may be ; and the amount of mxmeys in the hands of the receivers decla/red. Dated, New YorTc, 18—. I Receivers of the N I. ~l^^ r Company. 196 CORPORATE BODY. BAJTK. If, at this meeting, any questions arise wMcli re- quire the direction and decision of the court before a distribution of the fund is made, they may be sub- mitted in a summary manner, or on the petition of the party making a claim to preference or other claim against the fund and that, too, on such notice as the court may think proper to direct, if the serv- ice of a personal notice is impracticable or would be inconvenient or expensive. But, as the order of the court, on such an application, would be decisive of the rights of the parties, unless appealed from, the court would not proceed on a mere ex parte hearing, without directing some notice to be given, either in the public papers or otherwise, so that the several creditors, interested in the fund, and whose rights might be affected by the decision, could have an opportunity to be heard : In the matter of the reedv- ers of the Globe Insurance Company, 6 Paige's C. R. 104. The statute has no reference as to what formah- ties shall be used in regard to a first dividend ; and it only gives the order in which debts shall be paid ; but it is believed to be safest to get the sanction of the court, through a petition and order, for each dividend. "When, therefore, the general meeting of the cred- itors has taken place, and accounts and contracts have been ascertained and adjusted, as far as can be, and the moneys in hand declared, it will be right to present a petition in about the following form : INSURANCE COMPANY ASSOCIATION. 197 Supreme Cov/rt. To the Justices of the Supreme Oou/rt. (Title.) The petition of A. £., c&c., re- ceivers of ilie estate, funds and effects of the N.I. Qom- pamy of New Yot\ JRespecifully showeth : That, hy a decretal order, made in ilie above matter on the day of , 18 — , lefore, &g., it was ordered, adjudged and decreed that the said N. I. Company of New York be and the same was thereby dissolved, pursuant to the provi- sions of that part of the Revised Statutes, entitled, " Of the voluntary dissolution of corporations i'"' that by a/nother order made in the ahove entitled matter on the day of , founded on the report of S. C, Esquire, referee, residing in the city of New Yorh, to whom the ahove matter had been duly referred, this cov/rt was pleased to order, adjudge and decree that your petitioners be and they thereby were appointed the receivers of the estate, funds, cmd effects of the said The N I. Company of Neto YorTc, for all the pv/rposes contemplated or intended, subject to the con- trol of this court. That you/r petitioners severally forthwith accepted and tooTc on themselves the burthen of the execution of the trusts of their receivership ; amd, accordingly, possessed themselves of all the es- tate, fumds cmd effects of the said compcmy, as far forth as the same heme come to the observation, Tcnowl- edge or information of your petitioners. That the 198 CORPORATE BODY. BANK. said decree or decretal order of the day of last^ decreeing a dissohiUon of the said company^ has not^ to the hnowledge, information or heUef of yaw petitioners., heen a/ppealed from / and six months si/nce the said date thereof hawing now elapsed., the said company has, as they a/re advised hy covnsel and Re- lieve, ceased to he a hody corporate. That, pwrsuant to the stalnite in that case made and provided, yowr petitioners, as such receivers of the said The N. I. Company of New YorTc, did duly advertise and call a general meeting of the creditors of the said com- pany, as will appea/r ly the copy notice of meeting and afflda/vit of the pvMication thereof Thereto annexed, marked schedule No. 1 ; at which meeting cdl accounts and demands for and against the said company and all its open and subsisting contracts were ascertained and adjusted asfa/r as might he / and the amount of moneys in the hands of yau/r petitioners, as such re- ceivers, was declared; [Here set fortli tlie settling or canceling of any subsisting contracts or other special matter arising at tlie meeting or otherwise.] That yowr petitioners hawe hereunto annexed a full and fair statement, marked schedule No. 2, of c^ the ac- counts and demands for and against the said com- pany and all its open and subsisting contracts as well as the amount of moneys in the hands of your peti- tioners ; and which amount, being the sum of % , yov/r petitioners declare is the exact a/mount of moneys in their hands as such receivers. That there a/re suits now pending piere set forth all suits pending against the company and its receivers] ; that no dividend has ever heen declared ; that your petitioners, in schedule INSURANCE COMPANY. ASSOCIATION. 199 No. 3. hereto annexed, Tuzve set down the said sum of $ , being the said exact sum of moneys m their hands, a/nd then, in the said last mentioned schedule, deducted, to meet subsisting contracts, the sum, of $ , also deducted, to meet prohable disbursements and commissions, th-e sum of % , a/nd also de- ducted, to m,eet the proportion which would belong to the demands for which actions a/re brought if estab- lished, a/nd the necessary costs a/nd proceedings to be applied according to the events of the actions or to be disi/riiuted in a second or other dividend, the sum of % , learning a residue or balance of % ; that the last mentioned residue or balance of % , or so much thereof as may be necessa/ry, should be paid to meet the debts of the said The N. I. Company accord- ing to the stat/ate in such case made and provided : You/r petitioners, therefore, pray that this court will be pleased to grant a/n order, in the above entitled matter, author- izing and empowering them to distrib- ute the said residue of $ , or so much thereof as may be necessa/ry, among all those who shall have exhib- ited their claims as creditors a/nd whose debts shall have been ascertained, as follows :(a) 1. All debts entitled to a preference under the laws of the United States ; 2. Judgments actmally obtained against such compa/ny to the extent of the value of the real estate on which (a) 2 R. S. 470, 471, § 79. 200 CORPORATE BODY. BANK. they shall respectwehj he liens,' and 3. All other creditors of such company in proportion to their respective de- mornds, without giving any preference to debts due on specialties — or for such other or further order as the cov/rtmay see fit to grant. AtuI^ <&c. (Jurat ; and Schedules 1, 2, and 3.) On motion of this petition, tlie court would direct the receivers to advertise the dividend and require creditors to come in within a limited period (ninety days might be a fair time in which they should be required to show their demands), (a) Form of okdee on the last petition : At a cowrt, &c. Present^ &c. (Title.) On reading and fiUng the petition of A. B.^ &c.^ receivers of the estate^ funds am,d effects of the N. I. Company of New Yorh, a company heretofore incor- porated^ but now dissolved under that part of the provisions of the Revised Statutes, entitled,^ " Of '■'■the vohintary dissolution of corporations;'''' and 'which petition was duly verified and had certain schedides thereto amiexed, slwwing, among other things, the accounts and demands for and against (a) The statute does not, in terms, require any advertising of the first payment. INSURANCE COMPANY. ASSOCIATION. 201 the said company and all open and svbsisting con- tracts, and the amount of moneys in the -hands of the said receivers, with a statement showing how much of the latter, hy way of residue, the said receivers propose to make subject, if necessary, to a first dividend inpayment of the debts of the said com- pam/y ; cmd on motion of Mr. J. JR., of coum,sel for the said petitioners : it is m^dered, adjudged and de- creed, and this court, hy virtue of the provisions of the statutes in that case made and provided, doth order, adjudge and decree that the said petitioners, as such receivers, as aforesaid, he and they her Ay a/re authorized to decla/re and make a dividend and payment out of the said % , to and among and in satisfaction of, 1st. All debts entitled to a preference umder the laws of the United States ; 2d. Judgments actucdJ/y obtained against the said the N. I. Company of New York to the extent of the val/ue of the real estate on which they shall respect- ively be Uens / and, Sd. All other creditors of such compa/ny, in proportion to their respective demands, without giving am,y preference to debts due on specialr ties. They, the said receivers, fm^st giving at least [ninety] days' previous notice thereof, by publishing, in the State paper cmd also in Pwo of the public news- papers prvnted in the city of New York, the one an evening amd the other a morning paper, an advertise- ment of the said dividend and payment. The said advertisement to be published in the said newspapers for the space of at least [seven] weeks, once, at least, in each week. 202 CORPOEATE BODY. BAWE. Advertisement. Notice is Tiereby gi/ven^ ^pwrsuomt to the directions of the Swpreme Cowrt^ by am, order made the day of 18 — , that a dividend or dist/ributive payment of the dMs of the N. I. Gompany of New Yoi^h, is ready to be made a/mong all those creditors of the said corrvpa/ny who hame exhibited their claims as creditors, cmd whose debts home been ascertained, as follows : 1st. All debts entitled to a preference v/nder the laws of the United States : 2d. Judgments actiudh/ obtained agaiMst the said company, to the extent of the value of the real estate on which they shall respectively be Uen^ ; and ?>d. All other cred- itors of such company, in proportion to thevr respect- ive demcmds, without giving any preference to debts due on specialties. Office for payment, No. street, New York ; howrs of payment, between — a/nd — o'clock in the forenoon of each day. Dated, New Ym^k , 18—. \ Receivers of the N I. Com- j pam,y. Where there are bad or desperate debts and unavailable property, the receivers (under the power given to trustees of insolvent debtors : 2 E. S. 42, § 7) can sell them by public auction, after giving at least fourteen days' public notice of the time and place of sale, and also publishing the same for two weeks in a newspaper printed in the county where the sale is to be made (if there be one). INSURANCE COMPANY. ASSOCIATION. 203 Notice of sale of remaining properties hy auction. In the matter of \ the^ (&c. ) Notice is hereby given, that hy virtue of an order of the Supreme Cov/rt the sub- sarihers, receivers of the estate^ funds and effects of the N. I. Company of N&vo Yorh, will sell, at public auction, at the Merchants' Exchange in the city of New Yorh, on the day of next, at twelve o^clock at noon, all the remaining dd>ts, securities, claims and choses im, action belonging to them as the receivers of the late compa/ny, consisti/ng of the following, that is to say : and that the purchasers or assignees thereof will be authorized to sue for and collect the same in the name of the subscribers, as such receiwers, on their receiving a sufficient indemnity against all costs and expenses to which they may be subjected in consequence of any such suits. Dated this day of 183—. ) Receivers of the N. I. j Compa/ny. With regard to a second and final dividend amongst the creditors, this must take place within one year after the first and within sixteen months after the appointment of the receivers : 2 R. S. 471, §80. 204 CORPORATE BODY. BANK. Petition for a second and final dividend amongst tlie creditors. Supreme Cowrt. To the Justices of the Supreme Gowt. (Title.) The petition of A. -S., cfec, re- ceivers of the estate^ funds cmd effects of the N. I. Compomy of New Yorh. That, ly virtus of a petition heretofore presented in this matter and hy an order granted thereon amd hearing date the day of 18 — yowr petitioners were ordered to make afwst dividend and payment, out of the swm of $ amumgst all such of the creditors of the said N. I. company of New Yorh who should have exhibited their claims as creditors, and whose debts should have heen ascer- tained, as follows ; 1. All debts entitled to a 'pref- erence under the laws of the United States ; 2. Jvdg- ments actmally obtained against such company to the extent of the value of the real estate on which they should respectively be liens / and, 3. All other cred- itors of such company in proportion to their respective demands without giving any pref&i'ence to debts due on specialties / that your petitioners, prior to making such dividend and payment, did conform to another pa/rt of tlie said order, by advertising a notice of such dividend amd panjmeat, in, &c, ; that your petitioners INSURANCE COMPANY. ASSOCIATION. 205 have fulfilled the spirit of the said order hy duly making such dividend and payment amongst such creditors aforesaid ; and your petitioners hawe, in schedule A. hereto annexed^ set forth a full a/nd just statement showing how much of the said sum, of % was applied in the said dividend and pay- ment', that since the former petition and order for the said first dividend and payment^ you/r petitioners^ as such recei/vers, have received and have now on hand {exclusive of what may have ieen heretofore retained to meet suits, outstanding, open or subsisting engage- ments and commissions amd disbursements,) the sum of $ , as will appea/r hy reference to schedule B. hereto annexed — and which contains a statement showing the sources from wh&nce the same arose and the times when received ; that one year has not gone hy since the finest divid&nd and payment were made, nov will sixteen months have elapsed from the time of yowr petitioner^ appointment as recei/oers herein until the day of n£xt / that you/r petitioners, in their best judgment, consider it would be proper to make amd declare a second di/oidend a/mongst the creditors of the said N. I. Company of New Yoik. Yowr petitioners, therefore, pray that this court will he pleased to grant an order, in the above entitled matter, authorizing and empowering them to distribute the said sum of $ or so much thereof as may he necessary, among the creditors of the said the N. I. Company in all respects in the same manner as hereinbefore prescribed in 206 CORPOBATE BODY. BAlfK. relaUon to the first dmidend hy the order of the day of , and so that no other dvoidend^ sa/oe the one now pra/yed for, he made hereaft&r a/mong the creditors of the said com- pany, except to the creditors having suits against it or agamist yowr peti- tioners as receivers pending at the time of the second dividend and except of the moneys which may haA)e heen retained hy yowr petitioners (andTmown to yowr honor through the former petition) yet so that the order now prayed for shall ernhrace a direction that every creditor, who shall ha/oe neglected to exhibit his demand before the first dividend and who shall deUver his account to yowr petitioners hefore the proposed second dividend, shall receive the sum he would hawe heen entitled to on the first dividend, hefore a/ny distribution he made to the other creditors — and so that notice he inserted of such second and final dividend once in each weeh for three weeks vn the state paper and in a newspaper printed in the comity where the principal place of husiness of the said the N. I. Compamy of New YorJc was situated or for such other or fwrther order as the court may see fit to groM. And, &c. INSURANCE COMPANY. ASSOCIATION. 207 Oedeb to be entered on tlie last petition : At a Court J &c. Present, (Sac, (Title.) On reading and fiUng the petition of A. B., &g., receivers of the estate, funds and effects of the N. I. Oompamy of New Yorh, a company heretofore iiwor- porated but now dissolved imder the provisions of that part of the Revised Statutes, entitled, " Of the volmitary dissolution of corporations^'' and which petition was duly verified and had certain schedules thereto annexed, sJiowing, among other things, thepay- tmat of a f/rst dividend to the creditors of the said company, pv/rsua/nt to the said statutes, and also the amount of % — = — in hand, to be used on a second a/nd last dividend to creditors ; and on motion of Mr. J. JR., of counsel for the petitioners, it is ordered, ad- judged and decn^eed, and this court, by virtue of the provisions of the statutes in that case made and pro- vided, doth order, adjudge and decree that the said petitioners, as such receivers as aforesaid, be and they herdyy are authorized a/nd empowered to decla/re and make a second dividend out of the said % to and amongst amd i/n satisfaction of \st. All debts entitled to a preference under the laws of the United States / 'id. Judgments actually obtained against the said the N. I. Compa/ny of New York to the extent of the value of the real estate on which they shall respectively be liens ; and' 3d AU other creditors of such company, in proportion to their respecti/ve demands, without giv- ing any preference to debts due on specialties. And 208 COEPOEATE BODY. BANK. it is lierehy also ordered, adjudged and decreed that no other dividend than the second dividend n/)w de- creed shall hereafter he made in the matter of this a/pplication among the creditors of the sand corrvparvg, except to the creditors ha/oing suits against it or against the said receivers pending at the time of such second dividend a/ad except of the monegs which may he retained to pay such creditors as has hefore heen provided. And it is Ukewise ordered, adjudged and decreed, that every creditor of the said compamy who shall home neglected to exhihit his demand hefore the first dividend amd who shall deliver his account to the receivers hefore such second dmidend, shall receive the swm he would hawe heen entitled to on the f/tst dividend, hefore any ddstrihition he made to the other creditors. They, the said receivers, first giving three weeTcs' notice of the said second dividend and that the same will he a final dividend, hy inserting such no- Idee once in each week in the State paper and in a newspaper printed in the county where the prvndpal place of husiness of such company was situated. Advertisement : Notice is hereby given, pw^suant to the directions of the Supreme Court, hy an order made the day of , 18 — , that a second and final dividend or dist/rihutive payment of the debts of the N.I. Company of New York, is ready to he made and will he made on the day of next [three weeks after advertising], at — o'clock in the forenoon of that day at the office of , No. street, in the INSURANCE COMPANY. ASSOCIATION. 209 dty of New Y&rh^ among all those creditors of the said compa/ay who hxme exhiMted their claims as creditors^ and whose debts home been ascertained, as follows: 1. All debts entitled to a preference under the loms of ilie United States ; 2. Judgments actually obtained against the said company to the extent of the vahie of the real estate on which they shall respecti/vel/y be liens / and, 3. All other creditors of such company in proportion to their respective demands, without giving any preference to debts due on specialties : ex- cept creditors who shall have suits against the said wmpa/ny or its receivers pending at the time of such second dividend, such creditors not being entitled to sKa/re in this dividend. And notice is also hereby gi/ven, that every creditor who shall home neglected to €^hiMt his demand before the fh^st dividend and who shall deliver his account to the receivers before such second diA)idend, shall receive the sum he would have been entitled to on the fwst dividend before any distri- hition be made to the other creditors. And notice is also hereby gi/ven, that no other dividend will be made hereafter among the creditor's of the said company, except to the creditors hawing suits against it or against the receivers pending at the time of such second divi- dend, a/nd except of the moneys which may be retained to pay such creditors. Dated New Yorh, , 18 — . If any suits, which are pending at the time of the second dividend, should be terminated, the receivers are to apply the money retained to the satisfaction of the same, with necessary costs and charges ; and should nothing have been recovered, the receivers 14 210 CORPORATE BODY. BANK. will distribute the moneys, less expenses and costs, among the creditors and stockholders in the same manner as the second dividend is directed to be applied. After the second dividend, the receivers will dis- tribute any surplus among the stockholders, in pro- portion to the respective amounts paid in by them on their shares. This will be done on petition and order. The following will answer as a precedent for a PETITION : Supreme Court. To the Justices of the Supreme Cov/rt. (Title.) The petition of A. JB.^ c&c, re-^ ceivers of the estate^ funds and effects of the N.I. Gom- pcmy of New York, MespectfuUy showeih : That [here set forth the facts of a first and second dividend having been made amongst the creditoi'S.] And your petitioners further show, that all the debts, covenants, cont/racts and engagements of the said company and all claims on the said com- pany or on yowr petitioners, as such receivers as aforesaid, except the cwrrent expenses attending the dosing and poinding up of the hisirvess, concerns and affairs of the said company, have been paid, extin- guished and satisfied, according to their best hnowl- edge, information and belief ; and that there is now no suit, either at law or in equity, depending against INSURANCE COMPANY. ASSOCIATION. 211 the said company or against your petitioners as such trustees as aforesaid. And that^ after the payment of the aforesaid two di/vidends^ and the payment^ extinguishment and satisfaction of all the debts^ covenants, contracts and engagements of the said company, a/n available balance of the estate, fwnds and effects of the said company remains to he, amd, according to the provisions of the Revised Stat- utes of the State of New YorTc, entitled, " Of the vol- " wntary dissolution of corporations^'' amounting to the sum of % , ought to he divided and paid to and amongst the stockholders of the said coiporation im proportion to the respective amounts paid in hy thmn severally on their shares of stock : and they humbly heg leave to propose to this honorable court the day of next as a suitable and conve- nient time for making the said proposed dividend. And they further show that, in addition to the said available balance of % in their hands, there are also some outstanding estate, property and effects of the said company which may, at some future day, be realized either in whole or part, hut when or to what extent it is impossible for your petitioners, at present, to determine. And your petitioners have, in schedule A, hereto annexed, set forth a full, just and Vrue statement of the aforesaid amailahle balance of % • and also, in schedule B., hame set forth a full, just amd true statement of all ilie said still outstanding estate, property and effects of the said company. And yov/r petitioners hereby name to this court percent. on the par value of the capital stock of the said company as the amowntof the dividend which they propose note to make among the stockholders thereof ; and which, 212 CORPORATE BODY. BANK. acGordmg their hest jvdgrmnt, mformaUon cmd heUef will lea/ve sufficient assets in thew Ticmds to satisfy all eocrpenses, hoih cwrrent amd contingent^ attendimg the final closing amd winding up of all and singular the hisiness^ concerns amd affairs of or rdating to the said convpa/ny or you/r petitioners in regard to th&vr aforesaid trust : Yowr petitioners^ therefore, pray that this court will ie pleased to gra/nt an order in the above matter, authorizing and empowering them to decla/re amd make a dividend out of the amailahle hdkmce of the estate, funds and effects of the said the N. I. Company of New York, to and a/mong the stockholders of the said compamy, in proportion to the respective ammmis paid in hy them severally, on their sha/res of stock, on the day of n&jot, of — p^" cent, on the par value of the said stock. Or for such other or further order as the cov/rt may see fit to grant. And, &c., &G. (Jurat ; and, Schedules.) Obdee to be entered thereon : At a com% &c. Present, &c. In the matte)' of the N. \ I. Company, &c. j On reading and filing the petition of A. £., &c., receivers of the N. I. Company INSURANCE COMPANY. ASSOCIATION. 213 of New Y(yi'Tc^ which was heretofore an iiworporated insurance company in the city of New YorJc, and which has ieen dissolved,' and which petition is duly verified by the oath of the said petitioners and has annexed thereto two several statements^ the one exhiMt- ing the available balance of the estate^ funds and effects of the said company now in the hands of the said petitioners^ receivers as aforesaid^ proposed by them to be divided amongst the shareholders of the said company amd amowntin'g to the sum of % , amd the other exhibiting the present outstanding estate^ property and effects of the said company ,' and- fray- ing for an oo'der authorizing and empowering the said petitioners^ as such receivers as aforesaid^ to declare and make a dividend^ out of the said available balance of % , to and among the stockholders of the said company on the day of next^ of — per cent, mi the par vod/m of the said stock w $ a share; and on motion of Mr. J. R.of counsel for the said petitioners, it is ordered, adjudged and decreed, and this court, by virtue of the power and autlwrity therein vested, doth order, adjudge and decree that the said petitioners, as such receivers as afoi'esaid, be and they hereby are authorized and empowered to declare and make a dividend out of the said available balance of the estate, funds and effects of the said N. I. Com- pany of Neiv York, to and among the stockholders of the said company, in proportion to the respective amounts paid in by them, severally, on their shares of stock, on the day of next at the rate of — per cent, on the par value of the said stock or $• per sha/re, they the said receivers giving, at 214 CORPORATE BODY. BANKS. lea-st^ [ninety] days' previous notice thereof^ hy pub- lishing, in the state paper amd also in two of the pvblic newspapers printed in the city of New Yorh, the one am, evening paper the other a morning paper, an advertisement of the said dividend hereby directed, designating therem the howrs of the day when and the place where sv^h dmidend wUl he paid, the said advertisement to be published in the said newspapers for the space of, at least, weeks, once, at least, in each week. Advertisement. Notice is hereby given, pursvunt to the directions of the Svpi-eme Cov/rt, that a dimidend will be paid to the stockholders of the N I. Gompam/y of New York, or their legal representatives, of — per cent, on the par vahie of the stock of the said company or % per share in proportion to the a/mounts paid in by them, on the day of next, at — o'clock in the forenoon of that day at the office of , No. st/reet, in the city of New York. Dated New York, , 18 — . '■ \ Receivers of the N. I. j Company of, die. The receivers must account within three months from the time they make tlie second dividend among creditors, by rendering a full and accurate account of all their proceedings to the court on oath : 2 K. S. 472, § 86. But previous thereto, they are to give public notice thereof, by an advertise- INSUEANCE COMPANY. ASSOCIATION. 215 ment to be inserted once in each week for three weeks in the state paper and in a newspaper of the county in which notices of the dividends are required to be inserted, specifying the time and place at which the account will be rendered : Ih. §8V. Notice of presenting accounts to the court : Notice is hereby given^ ^mrsuant to that part of the provisions of the Revised Statutes of the State of New Yorh, entitled^ '■'■Of the volwnta/ry dissolution of cm^- '■'■poratioThs^'' to all persons in any wise interested in the N.I. Company of New Yorlc, that the svhscrihers^ the receivers of the said company, will render a full and accurate accownt of all thei/r proceedings on oath to the Svpyreme Oov/rt at Special Term, at the city hall of the city of New Yorh, on the — day of n&nt, at the opening of the cowrt on that day or as soon thereafter as counsel can he hea/rd; and a motion will then and there be made that the said account be referred to a referee to examine o/nd report thereon. Dated New York, , 18 — . The account which is thus to be rendered by the ^ receivers will contain a statement of the property received and the application of the same. It can be very well embraced in two schedules : one headed, Statement of the estate, fvmds and effects of the N. I. Company of New York, as they existed and came into the hands of the receivers at the time of their appoint- ment. And an account of their receipts and eapen- 216 CORPORATE BODY. BANK. dilmres since they entered on the duties of their office. This schedule can be subdivided, so that the first part shall run : Assets of the compcmy which passed into the hands of the receivers / and the second por- tion, thus : Their receipts home heen as follows. So showing Total a/numnt of assets. Then, Thdr dis- iwsenients have heen as follows. After this, deduct assets from disbursements and so show, Bakmice in the hands of the receivers / and finish this schedule by showing, This balance consists of. The other schedule will be a mere balance sheet or account current, headed ; Dr. The N. I. Company of New YorTc in account current with the Heceivers^ Or. ; and commencing it, on the credit side, with, Balance in the hands of the recei/vers, (from the other schedule.) The counsel who moves on it, proves advertising, gets the account marked by the clerk of the court, as read and takes it back, in order to use it before the referee. Okdee of reference : At a Cov/rt, (&c. Present, &c. [Title.] On reading and filing affidavits showing the due advertising of notice that the receiv- ers of the estate, fwnds amd effects of the N. I. Com- pany of New YorTc would render a full and accurate account of all thevr proceedings mi oath to this court this day, so that the same might be duly referred to a INSURAU'CE COMPANY. ASSOCIATIOK. 217 r^eree / cmd on reading and marMng such account / a/nd on motion of Mr. J. It. of counsel for the said recemers : it is ordered and adjudged that the said accomit he and the same h&reby is r&ferred to 8. (9!, Esqui/re., residing in the city of New YorJo, as referee, to examine and report thereon • and the said referee i^s to hear amd examine the proofs, vouchers and doGu- mmts offered for and against such account, a/nd reiport thereon fuUy to the cowrt. The referee's report, which, will be annexed to the account and show " fully " to the court what appears before him, can end thus: And I do fwrther report, that the accounts of the said receivers home heen prop- erly Tcept, and all the estate, funds and effects which came to their hands have heen hy them faithfully ap- plied according to law ; and I do, therefore, pass the same as correct inpwrsua/nce of the said order. Order of confirmation, on the coming in of the report : At a Gou/rt, &c. Present, <&c. (Title.) On reading and filing the report of 8. Q., Esquire, referee, hearing date the day of ■ — , to whom was referred the account of all the proceedings on oath of the receivers of the estate, funds ami effects of the said the N. I. Company of New York (and which account is annexed to the said r^or{) • and it appearing that the said report is, i/n all respects, full / amd it also appearing, amongst 218 CORPORATE BODY. BANK. other things embraced hy the said report^ that the ao counts of the said recei/oers home heen properly Teept^ and all the estate^ fimds and effects which ca/me to their hamds home heen Tyy them faithfully applied according to law^ and that the said referee had passed the same as correct — also, that the estate, fvmds and effects of the said compamy, as they existed a/nd ca/me i/nto the hands of the said receivers at the time of thm/r appoint- ment, ammmted to % , whUe the dishwrsements had heen % , learning a hala/nce sliU undivided in their hands of % . Now, on motion of Mr. J. M., of cov/nsel for the said receivers; and no one homing appea/red hefore the said referee or now appea/ri/ng against such account [or, after hearing Mr. A. C. on exceptions taken thereto, and all allegations raised by way of objection], it is ordered, adjudged and decreed amd the cowrt, hy virtue of the power vested in it hy statute, doth order, adjudge and decree that the said report of the said referee he confirmed ; amd that the said account of the said receivers he and the same hereby is allowed in all respects, and is and shall he from henceforth final a/nd conclusive as well upon persons who have claims against it, as upon any and every open amd subsisting engagement and upon aU the stockholders of the said the JV. I. Company of JVewYorh The receivers will account, in the same way, from time to time, for all moneys which may afterwards come to their hands. All unclaimed dividends will have to be paid into court: 2 K. S. Al2, § 89. A petition, for this pur- INSURANCE COMPANY. ASSOCIATION. 219 pose, "will have to be presented. It will recite, shortly, the fact of the appointment of the receivers ; the dividends ordered to be paid ; the amount of unclaimed dividends in hand ; and contain a sched- ule, showing in whose names the shares, to which the dividends relate, stand, and the number of such shares and the apportionment of the dividends among them. And the prayer of the petition may be that such dividends be paid to the chamberlain of the city of New York, or into the New York Life Insurance and Trust Company to accumulate, for the stockholders entitled to the same. The ORDER, on such petition, after a short recital of it, will run : amd^ on motion of Mr. J. R., of counsel for the said receivers^ it is ordered that the said reoevoers do forthwith deposit such a/mount of unclaimed dividends respectvvely^ with the names of the persons entitled to the same^ with the New YorTc Life Insurance and Trust Compa/ny, in the name of the cleric of this cowrt^ to acawmvlate for such stock- holders re^ectivel/y ; a/nd such deposit so made shall he a discharge to the said receivers for so much of the said di/oidends so deposited. Where dividends have been thus deposited and a party desires to obtain any of them, he should pre- sent a petition showing that they belong to him on shares standing in his name ; and adding a list of the unclaimed dividends. The order will be, that the clerk withdraw and pay to the petitioner, on the latter producing to the former an affidavit that he is the original stockholder entitled to the dividends, that the shares stiU belong to him, and that he has 220 CORPORATE BODT. BANK. not assigned, transferred or pledged his interest in such stock or dividends ; and, a certificate of any- one of the trustees that the person producing such affidavit is the person entitled. This was a course directed on the petition of Lewis Lay and others, In the matter of the United Inswrwnce Convpcmy of New Yorh, 6th November, 1837. MS. While the New York Code expressly exempts from its provisions so much of chapter 8, part 3, of the Kevised Statutes as relates to proceedings by and against corporations and public bodies having cer- tain corporate powers, and by and against officers representing them and joint-stock companies (§ 4'71), it nevertheless states that the court can appoint a Receiver in the cases provided in the Code and by special statutes when a corporation has been dis- solved, or is insolvent, or in imrmnent dcmger of in- solvency, or has forfeited its corporate rights : § 244, sub. 4. And the Code has express provisions which authorize actions to be brought by the attorney- general in the name of the people of the State whenever the legislature should so direct against a corporation, to vacate or annul an act of incor- poration or an act renewing the existence of a corporation, on the ground that such act or re- newal was procured on some fraudulent suggestion or concealment of a material fact: §429. Also, authorizing an action, by the attorney-general in the name of the people of the State, on leave granted by the Supreme Court or a judge thereof for the purpose of vacating the charter or annulling the existence IlfSURANCE COMPANY. ASSOCIATION. 221 of a corporation, other than municipal, whenever it shall offend against the provisions of the acts cre- ating, altering or renewing it ; violate law so as to forfeit its charter by abuse of powers ; forfeit its privileges or franchises by failure to exercise its powers ; whenever it shall have done or omitted any act which amounts to a surrender of its corporate rights, privileges and franchises ; or, shall have exer- cised a franchise or privilege not conferred by law : § 430. And if it shall be adjudged that a corpo- ration has, by neglect, abuse or surrender, forfeited its corporate rights, privileges and franchises, judg- ment is to be rendered that the corporation be excluded from such corporate rights, privileges and franchises, and that the corporation be dissolved : § 442. And when such judgment has been ren- dered, the court will have power to restrain the cor- poration, " to appoint a receiver of its property," and to take an account and make distribution thereof among its creditors, as are given in article 3, title 4, chapter 8, of the third part of the K. S. (of the voluntary dissolution of corporations, 2 E. S. 466.) Corporation suspending business for a year. Although a corporation may keep up its annual elections and maintain its forms of corporate organi- zation, it requires something more to make out its continuation in business. Thus, where the board of directors of The New York Jackson Marine Insurance Company resolved that the Company should cease 222 CORPORATE BOOT. BANK. to take risks after a certain day, and directed the executive officer to cancel all policies and liquidate all outstanding liabilities as speedUy as possible, and ' for more than a year after that day no new risk was taken, except that two outstanding policies were extended, pursuant to their provisions : it was de- creed that, although the annual elections had been held, and the form of its corporate organization maintained, it had suspended its ordinary and lawful business for more than a year, and that the court had authority to appoint a receiver under the pro- visions of the statute (1 E. S, 1S2, § 9), Matter of the Jackson Insurcmce Oo.^ 4 Sandf. Ch. E. 559. See also, Ooiw"0 v. Horace Gra/y arid others fjH^fm. Pract. Eep. 166. There, the corporation ceased to exist, and the president and principal stockholders assumed to use the property as their own. The court, under the circumstances, said there was no other remedy for the creditors but to file their biU and ask for a receiver. Cha/rging dwectors^ &c. mid making them p&rsondU/y Uahle. Any creditor of a corporation, who seeks to charge the directors, trustees or other superintending offi- cers or the stockholders, on account of any liability created by law, {a) can file an equity complaint for (a) See the character of these Habilities, in the statute relative to moneyed corporations : \ R. 8. 589. See also, Laws of 1830, chap. 71 ; also Safety Fund Act, Laws of 1829, chap. 94. IKSURANCE COMPANY. ASSOCIATION. 223 that purpose in the court of chancery ; and the court can enforce such liability ; 2 R. S. 464, § 45. The court can proceed thereon as in other cases ; and, when necessary, may cause an account to be taken of the property and debts due to and from such corporation ; and appoint one or more re- ceivers, who will possess, all the powers conferred upon and be subject to all the obligations imposed on receivers in cases of voluntary dissolution of corporations : lb. § 46. Corporation not paying taxes. Where a moneyed or stock corporation refuses or neglects to pay the taxes imposed upon them, the attorney-general is to file a complaint in the Supreme Court against the company for the discovery and sequestration of its property. And the court, on the filing or on the coming in of the answer, will order such part of the property of such company to be sequestrated as he may deem necessary, for the pur- pose of satisfying the taxes in arrear, with the costs of prosecution ; and the court can also, in their discretion, enjoin such company and its officers from any farther proceedings under their act of incorporation; and likewise, order and direct such other proceedings as it may deem necessary to compel the payment of such tax and costs : 1 R. 8. 406, §§ 21, 22. This power of sequestration naturally carries with it the propriety of a receiver's being appointed. 224 CORPORATE BODY. BANK. Insv/rcmce compa/nies rendered insolvent lyy the great jvre in New Yor\ (on the lUh and 11th December^ 1835.) The great fire in New York was the cause of many of the insurance companies becoming insol- vent ; and an act was passed, for the more convenient adjustment of their affairs : Act of the 18^A Jcmua/ry^ 1836, chwp. 3. It authorized the directors of any- such insolvent company to appoint three of their number to be receivers of its estate and effects and to distribute the same according to law : Ih. § 1. This was to be done, through a declaration to be filed ; and when the proper formality in regard to it was through, such three persons would be vested with the estate, real and personal, in possession and in action, of the corporation and have all the powers and authority conferred and be subject to all the obligations and duties imposed upon receivers xmder any law of the State ; and be entitled to such com- pensation as the chancellor might deem reasonable, not exceeding, in any event, that allowed by law. And the court of chancery were to have the same control and jurisdiction of such receivers and the same power of removal for misconduct and of sup- plying vacancies, as the court possesses in relation to receivers ; and might require them to give security for the faithful accounting for all moneys and effects which should come to their hands : II. 'i. It was to be the duty of such receivers, as soon as they could ascertain the amount of any claims against the corporation, to give certificates thereof; and, in case IlfSUEANCE COMPANY. ASSOCIATIOlf. 225 it exceeded two thonsand dollars, they were, upon request of the claimant, to give certificates for ali- quot parts, not less than one thousand dollars each. Also, to certify expected dividends upon the cer- tificates (although the assets might not have been realized in cash); and which certificates were be negotiable. The receivers were to indorse the payments of dividends upon them : Ih. 3. They were to appoint times for meetings of claimants, the bringing in of claims, the payment of dividends and for any other purposes of their appointment, on such notice as the court of chancery shoiild direct : Ih. 4. All claims, not adjusted, were to be submitted to reference ; and if actions or suits were brought after such reference was ordered, then the suing party was to recover no costs thereunder : Ih. 5. The court of chancery had power to restrain all proceed- ings against the corporation on the petition of the receivers : Ih. 6. The latter might require claimants to be examined under oath before the first or senior judge of the county and compel them to produce their books : lh.\. They were also authorized to shift insurances from their corporation, by procuring a similar insurance elsewhere and might offer the same to a claimant, on condition of the cancelment thereof: Ih 9. If the directors did not apply for receivers within thirty days from the passage of the act, it was lawful for a stockholder or claimant to do so. In case receivers had been already ap- pointed under any laws then in force, the receivers under this act were to be substituted in their place : Ih. 10. 15 226 CORPORATE BODY. BANK. By an act passed February 2Yth, 1837, (chap. 40,) the time, limited to the receivers for making a final settlement and dividend of the assets, was extended to one year; but they were, from time to time, to declare and pay dividends out of the assets as they should come to their hands, reserving such sum as might be necessary to meet claims outstanding against such receivers and their necessary charges and disbursements. And, by the statute of the 20th February, 1838, (chap. 42,) the time was again extended for a year from the twenty-seventh day of February, one thousand eight hundred and thirty- eight. Although the receivers under this act (and the amendatory acts) were not appointed by the court of chancery, the 'legislature intended that they should be subject to the control of that court, in the same manner as receivers of insolvent corporations appointed by the court of chancery under the provisions of the 41st section of the article of the Revised Statutes relative to proceedings against cor- porations in equity ; and they possessed all the pow- ers of receivers thus appointed : 2 R. S. 464, § 42. The remedy of the receivers or of any creditors, who might be dissatisfied with such order, was by an appeal : In the matter of the Receivers of the Globe Insiira/nce Oompcmy, 6 Paige's C R. 102. And in this case (of the Globe Insurance Compa/riy^ Chan- cellor Walworth gave directions as to the duties of the receivers in the settlement of the claims of cred- itors and in the distribution of the fund. A receiver of an insolvent corporation, appointed INSURANCE COMPANY. ASSOCIATION. 227 under the act of the 18th of January, 1836, or ap- pointed by the court of chancery under the provi- sions of the Revised Statutes relative to proceedings against corporations in equity, was bound to offset a hquidated debt due to the corporation against an unliquidated debt due from the corporation to the same person ; in the same manner as trustees of insol- vent debtors are bound to offset cross-demands aris- ing from mutual credits as well as from mutual debts. In such cases, the right of set-off was confined to hquidated debts or to such as might have been offset in a suit at law between the original parties ; but it also extends to all mutual credits, arising, ex con- tractu^ between such original parties : Holhrooh v. Tlie Receivers of the American Fire Insurance Com- pmy, 6 Paige's C. E. 220. Corporation having a judgment against them^ with an execution unsatisfied. A receiver (a) may be appointed to take charge of the property and effects of a corporation, whenever a judgment at law or a decree in equity is obtained against any corporation, incorporated under the laws of the State of New York, and an execution has been returned unsatisfied in part or in the whole. The petition is to be made by the person obtaining such judgment or decree or by his representatives : 2 R 8. 463, § 36. {a) The statute uses the word receiver only. The section relating to insolvent banks speaks of "one or more receivers." 228 COEPORATE BODY. BANK In a case of this kind, a receiver will not be appointed on an ex-parte application and without giving the corporation an opportunity to be heard. But upon filing of the petition or complaint, duly, verified, showing the recovery of a judgment against the corporation and that the execution issued there- on to the proper county has been returned by the sheriff unsatisfied, the court will direct an order to show cause, at a future day, why the prayer of the petition should not be granted and that a copy of the petition and order be served upon the proper officers of the corporation the usual time before the day appointed for showing cause. And the cor- poration will, in the mean time, be restrained, by injunction, from selling, assigning, transferring or incumbering the property or eifects of the corpora- tion : Devoe v. The Itliaca and Oivego Railroad Co.^ 5 Paige's C. E. 521. The provisions of the statute contemplate an equal distribution among all the creditors, without refe- rence to the time in which their respective debts accrued, although the creditor, upon whose appli- cation the receiver may be appointed, has actually proceeded to judgment and execution against the company : Lowene v. The A^nerican Fire Insurance Company, 6 Paige's C. K. 482. No creditor is entitled to any preference in payment over another, unless he has obtained a specific appropriation or an equi- table lien upon some particular part of the fund : De Peyster v. The American Fire Insurance Company, 6 Paige's C. R. 486. INSURANCE COMPASTY. ASSOCIATION. 229 Practice where a corporation lias a judgment against tTiem^ witli an execution unsatisfied. The following will serve as a precedent of a peti- tion to sequester tlie property of a company, having an execution unsatisfied and for the appointment of a receiver. Supreme Court. To the Justices of the Supreme Court. The petition of J.W.,W. P. P., > and J. A., co^nplainants or r plaintiffs in this suit or action. ' Pespectfidhj shoioeth : That on the day of - they recovered a judgment in the S. C. of the city of Nefio Yor\ against the M. I. Company of New Yor\ for the swm of % / and cm the same day the said judgment was duly docketed; and a writ of execution was thereupon and on the sa/me day duly issued upon the said judgment., directed and delivered to the sheriff of the city amd county of Netv Yorh^ returnable on the day of noiv last past. That the said writ was., on or about the return day thereof., returned hy the said sheriff into the office of the cleric of the said S. Court of the city of New Yorh, with his return indorsed thereon " no goods^ chattels^ " lands or tenements.^'' And that tlie action at law., on which the said judgment was founded., was hr ought to recover tlie a/mov/nt of a policy of insurance under- written hy the defendants and iea/ring date the day of . [If the company should have attempted 230 CORPORATE BODY. BANK. to move for a new trial or to set aside the judgment for any cause, here put the matter forth ; and show the application failed and that the judgment and ex- ecution remain unsatisfied and unaffected.] That the whole of the said sum of inoney last mentioned^ to- gether with all the interest accrued tliereon^ is justly a/rid truly d/ue to them^ over and ahove all just credits thereon iy way of set-off or otherwise. That the said The M. I. Company of New York is an irworporated company ; and were dul/y incorporated hy an act of the Legislatwre of the State of New Yor\ entitled^ '■'•An act to incorporate the M. I. Oompcmy of New " Yorh^'' passed the day of in the yea/r / that the said company were incorporated for the pwpose of insioring marine rislcs, inland navi- gation and transportation. That the said act further provided.^ in substance., that the corporation therehj created should have full power and authority to make insurance upon vessels^ goods., wares and merchandise., freight., bottomry., respondentia., interest, inland navi- gation and transportation and all other marine risks and also to lend money on bottomry and respondentia ; cmd to do amd perform all necessary matters and things connected with those objects or any of them. And it was further., in substance, enacted, that the capital stock of the said corporation should be % , which slumld be divided into shares of % each ; and that tJie wliole of the said shares should be sub- scribed and cwt/iially paid before the said corporation should be allowed to commence business. And it was fu/rther, in substance, enacted, that it should be laioful for the said corporation to purchase and hold so INSURANCE COMPANY. ASSOCIATION. 231 much real estate as should he necessary and conve- nient for the transaction of its business / and also to tahe and hold any real estate or securities, bona fide mortffoffed or pledged to the said company, either to secure the payment of any debt that might be due to it and also to purchase on sales made by vw^tue of any judgment at law or any oi'der w decree of a court of equity or otherwise to receive and take any real estate in payment or towards satisfaction of any debt pre- viously contrcwted and due to the said corporation • a/nd to hold the same until they cotdd conveniently sell and convert the sa/me into money w other personal property : provided ahoays that it should not be law- ful for the said corporation to deal or use or employ any part of their stock, funds or m.oneys in buying or selling cmy goods, wares, merchandise or commodi- ties whatsoever or in the trade or business of an exchange or stock broker or in the pv/rchase or sale of any stock or funded debt whatsoever created or to be created by or under amy act of the United States or of any pa/rticular State ; nor to emit any notes or hills or make any contract for the payment of money, except under the seal of the said corporation ; and all such notes amd contracts should, to all intents and purposes, be taken to operate as specialties at law ; but it should, nevertheless, be lawful for the said cw- poration to purchase and hold any such stock or funded debt as lojst aforesaid for the purpose of vest- ing any pa/rt of their capital stock, funds or moneys the/rein, instead of inwesting the same in and upon a/ny real secwrity ; and also to sell and t/ransfer the sa/me a/nd again irmest the same or any pa/rt thereof 232 CORPORATE BODY. BANK. in such stock or fwnds whenever and as often as the exigencies of the said corporation or a due regard to the safety of its fwnds should require / amd also to mahe loans of its ca/pital stock or funds in ionds and 'mortgages or personal secwrity ; and tJie samie to call in and reloan on like seau/rity as the occasion might require : provided that nothing contained in amy pa/rt of that act shoidd he const/rued to authorize the said corporation to use and enjoy any hanking powers w privileges whatsoever. And it was further., in sub- stance., enacted., that that act should he and was thereby declared to he apmhUc act., and that, the same be con- strued in all courts and places benignly and favora- hl/y for every beneficial purposes therein intended., as hy the said act., reference thereunto or um,to the printed statute hook being had., will m,oi'e fully and at large appear., a/nd to which your orators beg leave to refer. And tliese plaintiff s fu/rther show., that shortl/y after the passage of the said act the said compcmy com- menced business under and by virtue of the said act of incorporation / and transa/ited stcch their business in the city of New York., where their office was and still is kept. And these plaintiff s further show., that they are informed and beli-eve, that the said company has., for years last past and upioa7'ds., suspended the lawful and ordinary business of the said corpm^a- tion ; and they are further informed and. believe that a large portion of the capital stock of tlie said incor- poration, which amounted to % , stUl remains in the control or possession of the said company, its agents or officers. That these plaintiff s are informed and believe that INSURANCE COMPANY. ASSOCIATION. 233 the whole of the capital stock of tlie said company was svbsorihed for and was paid in hy the subscribers, partly in money and partly in checks, notes or other seawrities / but your petitioners are ignora/tit what amount or port/ion of the said checks, notes or securi- ties were collectable or were actually collected. That subsequent to the making of the policy of insuroMce of yowr petitioners on which the action at law herein- before mentioned was brought, the said The M. I. Oompany of Neio York, its officers or agents have sur- rendered up, ti'ansferred and re-delivered to the said stockholder's or some of them, or have canceled or dest/royed 'many of the said checks, notes or other secu- rities without receiving payment thereof, otherwise ib/in by taking, in lieu thereof, the stock of the said stockholders for the payment of which the said notes, checks or other securities toere given • thereby attempt- ing to relieve the said stockholders from paying the amount of the sha/res subscribed for by them respect- ively. That, independently of the claims upon the said stockholders, the said The M. I. Company of New York, its officers, trustees or agents, have in their possession, or within their cont/rol a large amount of property, both real and personal, including choses in action and evidences of debt to a large amount : which couU not and cannot be reached under the process of the said the S. Court of Nev) York. And these plaintiffs show, that there are, at pres- ent, as they aA-e informed and believe, no persons who will admit themselves to be officers or directors of the said company, or who will admit themselves, at this time, to have any charge or management of thepyi'op- 234 CORPORATE BODY. BANK. eriy or concerns of the said company, amd, therefore, the preservation and safety of the same are endan- gered ; that I. G. (7., the late president of the said company, is deceased, and J. D. W., the late secreta/ry or assista/nt secreta/ry thereof, has removed from the city of New York, as your petitioners are informed and believe. These plaintiffs, therefore, demand judg- ment of sequest/t^ation of the stock,prop- erty, things in action amd effects of the said corwpa/ny ; and that one or more suitable persons may he appointed re- ceivers of the same, with the powers and authority vested in receivers of the propertoj and effects of corporations under and hy virtue of the statutes in such case made and pi^ovided ; amd that these plaintiffs may have a suffi- cient a/mount of the said property amd effects appropriated and applied to tlie ])ayinent of their aforesaid judgment and interest and the costs of this pro- ceeding or for such other amd fwrther order and relief as these plaintiffs, under the circumstances, are entitled to. And that, in the mea/n time, the said The Mohawh Insurance Company, its officers and agents may be restrained ojnd enjoined by injunctian order from exercising any of its corporate rights, pi'ivUeges or powers, and from collect- ing or receiving any debts or demands. INSURANCE COMPANY. ASSOCIATION. 235 and from paying out or in any way transferring or delivering to any per- son a/ny of the moneys^ property or effects of such corporation v/ntil the further order of this cowt. And, (&c. [Usual Jurat.] Additional Jurat. In the matter of the '] M. I. Company V of New York. J City amd Oawnty of New Yor\ ss. F. B. O. of the city of New York, attmmey and cowasellor at law, helng duly sworn, doth depose and say, that he is the attorney on record in the action at law in which the judgment in the foregoing hill of complaint mentioned was recovered ; that the said judgment was regularly docketed on the day and yea/r in that behalf in the foregoing petition specified; that a writ of execution teas issued on the said judgment and returned toholly unsatisfied, as therein stated ; that the proceedings in the foregoing petition men- tioned to hawc- heen had in the action at laio therein referred to, occwrred at the times and in the manner in the said petition specified. And this deponent fu/r- ther saith, that the said M. I. Company of New York, foTi- yea/r s last past and upwards, have suspended their ordinary and lawful business as he is informed and verily believes. Sworn before me, \ this day of 18 — . I / 236 CORPOEATE BODY. BANK. Form of oedek on tlie petition. At a court, &G. Present, &c. In the matter of the 'petition of J.W.,W.F. R. cmd J. A. fat^ the appointment of a re- ceiver of the property, funds and effects of the M. I. Com- pany of New York. A petition, duly verified, homing heeti presented to this court, showing, amongst other things, that judgment at law had ieen obtained hy ike peti- tioners, J. W., W. p. p. and J. A., against the M. I. Company of New Ywh, being a cmporatimi incoi'- porated under the laws of this State; and that a writ of fieri facias had been issued thereon and re- twned by the sheriff of the city and county of New Yorh, to whom the same was directed, wholly unsat- isfied; and showing further, in substance, that the said company had remained insolvent for one whole yean' / and for that period of time and upwards have suspended their ordinary lawful business ; and set- ting forth the particular facts and circumstances of the case: and praying foi' the appointment of a recei/oer to take charge of the property, funds, claims and effects of the said company or for stich other order and relief as might be proper in the premises ; crnid proof of due service of a cqpy of the said petition having been made ; whereupon the said incorporated company, by J. A., Psq., their attorney, appeared INSURANCE COMPANY. ASSOCIATION. 237 and did not deny the insolvency of the said company and the suspension of its lawful cmd ordinary busi- ness as aforesaid ; and thereupon^ on motion of Mr. F. B. CI, attorney for the petitioners^ it is oi'dered, adjudged and decreed, that the stoc\ property, things in action, claims, fum,ds and effects of the said The M. I. Cmnpany of Neio Yorh be atid the samie hereby are sequestrated. And it is hereby ordered, that it be referred to JSsguire, residing in the city of New YorTc, as referee, to appoint a receiver of the same, who shall have power to collect, sue for and recover the debts amd demands that may be due a/nd the property and rights that may belong to the said company. And it is further ordered, that the said referee take from the said receiver a bond, with the requisite securities, in the penal sunn of ten thousand dolla/rs, conditioned for the faithful performance, by the said receiver, of the trust reposed in Mm and that he shall obey such orders amd directions as he may, from tinte to time, receive from this court in relation to the said, t/rust — and a/icount for and pay and de- liver over, as he may be directed by this ccmrt, all the moneys, property amd effects of the said company which shall come to his hands as such receiver. And it is further ordered, that the said receiver shall possess all the powers a/nd amthority covf erred and he subject to all the obligations and duties imposed upon receivers in and by wrtides second and third of tide 4, of chapter 8, of part 3, of the Revised Statutes of the State, including all the power amd authority conferred by law upon trustees to whom an assign- ment of the estate of insolvent debtors may be tnade, 238 CORPORATE BODY. BANK. pv/rsucmt to the provisions of chapter five of ike sec- ond pa/rt of the Revised Statutes aforesaid. And it is further ordered, that the directors^ clerhs, attorneys amd other agents and servants of the said compa/ny and each amd every of them^ under the direction of the said referee, disclose and deliver over, on oath, all the moneys, property and effects of the said com- pany in their possession or within their power, or under their control or in the possession, within the power or under the control of any en- either of them or in which the said company home any interest, in- cluding all real property amd the title deeds thereto, and all boohs, papers amd memoranda ; and all evi- dences of or securities for any debts or claims due, owing or belonging to the said company or in which the said company home any interest. And that they also assign or deliver over to the said reqeiver, under the direction of the said referee, all public or private stock or stocks belonging to the said company • and that they also disclose, assign and deliver over to the said receiver, on oath and um,der the direction of the said referee, all moneys, effects, property, choses in action, securities, stocks and evidences of debt which home heretofore belonged to the said company ami have at any time been assigned or delivered up by the said company or any officer or agent thereof to its stockholders or to the subscribers to the capital stock of the said company or any of them or on their behalf in settlement or attempted settlement of any claims or demands against them, either or any of them, for the amount of any shares in the capital stock of the said company subscribed for or belonging INSUEANCE COMPANY. ASSOCIATION. 239 to any such stockholders or subscribers. And tlid!t they also disclose^ assign and deliver over to the said receiver, on oath and under the direction of the said referee, all moneys, effects, property, choses in action, secwrities, stocks and evidences of debt which have heretofore belonged to the said company and have been assigned by the said company or any officer or agent thereof, in contemplation of the insolvency of the said company. And it is fwther ordered that the said, receiver mid referee apply to this court, from time to time, for directions in the premises, as they or either of tliem may deem necessary. And it is further ordered, that the said referee have power to compel the appearance of and to examine, under oath, wit/aesses touching the property, fu/nds, claims and effects of the said company, and to compel the produc- tion of all boohs, papers, memoranda, and vouchers in any wise relating to or touching the same. More pa/rticularly of Bamking and Insuramce Cor- porations. The term " moneyed corporation," will be found to be extensively used in the Revised Statutes ; and it may be well to give its definition : " The term " ' moneyed corporation,' as used in this title, shall " be construed to mean every corporation having "banking powers or having the power to make "loans upon pledges or deposits, or cmthorized by law to make vnswrances .•" 1 E. S. 599 ; and see, The Mutual Inswance Company of Buffalo v. Supervi- sors of Erie, 4 Comst. 577. 240 CORPORATE BODY. BANK. By chapter 164 of the Laws of 1851, § 4, all the powers and duties of the comptroller in relation to banks, banking associations and bankers, devolved upon the Superintendent of the Bank Depm'tment A receiver will be required of the estate, prop- erty, chattels, and credits of a moneyed corporation or association, whenever proceedings are carried out under or in connection with any of the following facts or circumstances : 1. Where (as in cases of general corporations) a majority of its proper of&cers voluntarily apply for a dissolution of the corpora- tion on account of having discovered that its stock, property and effects have been so far reduced by losses or otherwise that it will not be able to pay all its just demands or afford reasonable security to those who deal with it, or where for any reasons it shall be deemed beneficial to the interests of stock- holders that it should be dissolved : 2 K. S. 466 ; (a) 2. Whenever a judgment at law or decree in equity shall have been obtained against any corporation and an execution issued thereon shall have been returned unsatisfied in part or in whole, or where, on satisfactory proof, an execution, although not re- turned, cannot be satisfied. (V) 3. Whenever an incorporated company shall have remained insolvent for a whole year, (c) 4. Whenever for one whole (a) The forms vre have heretofore giyen in cases of voluntary disso- lution of corporations, can 'be used on a voluntary dissolution of a bank. (5) 2 R. S. 463, § 36 ; and Act to enforce the responsibilities of stockholders, &c., 1849, ch. 226, p. 340, § 6. (c) 2 R. S. 463, § 38. INSURANCE COMPANT. ASSOCIATION. 241 year it shall have neglected or refused to pay and discharge its notes or other evidences of debt, (a) 5. Whenever, for one whole year, it shall have sus- pended the ordinary and lawful business of such corporation, (b) 6. Whenever any corporation hav- ing banking powers, or having the power to make loans or pledges or deposits, or authorized by law to make insurances, shall become insolvent or unable to pay its debts, (c) T. Whenever any such corpo- ration shall have violated any of the provisions of its act of incorporation, (d) 8. For neglecting to make quarterly reports (e) ; and whenever any incorporated bank or banking association located and doing business in the city of New York shall neglect to publish the weekly statement required by the act of April 15, 1853 (ch. 250, p. 539, § 1). 9. Where a creditor has a demand exceeding $100, arising upon a debt or liability which was con- tracted after the first day of January, 1850, and the payment of which has been refused ; and a judge, on a hearing, shall determine that the corporation " is not clearly solvent." (/) 10. On an application of one or more stockholders owning stock to the amount of one tenth of the capital paid in, on the ground of insolvency or imminent danger of it, and where, through verified facts, a justice shall deem it necessaiy or expedient, in order to prevent fraud, undue influence or injustice to creditors. 11. Where (a) 2 R. S. 463, § 38. (5) Ih. (c) li. (i) li. (e) Laws of 1847, ch. 419, p. 519. (/) Act of 1849, ch. 226, p. 340, § 7. 16 242 CORPOEATE BODY. BANK. a banking association or an individual banker, doing business under the act " to authorize the business of " banking," shall refuse to submit books, papers aqd concerns to the inspection of the Bank Commis- sioners, (a) Charters and renewals of charters, since the pas- sage of the revised statutes having reference to pro- ceedings against corporations, are generally made with a provision rendering them subject to such proceedings. One receiver has been appointed for two banking institutions, even where they held the antagonistical positions of debtor and creditor. Thus, the United States Trust Company having been appointed receiver of the Knickerbocker Savings Institution, brought a suit as such against the Knickerbocker Bank, claiming that |115,000 were due by the lat- ter to the former, while the bank disputed $49,000 of that claim. The Trust Company was subse- quently appointed receiver of the Bank also, and applied to the court for instructions. The court held that there was no impropriety in making the Trust Company receiver of both institutions; and that the Trust Company, as the receiver of both the Bank and the Savings Institution, and thus repre- senting both debtor and creditor, had a right to apply to the court for instructions : Jn the matter of the Kniokerhocker JBa/iik^ 19 Barb. S. C. Rep. 602. Any purchaser from the receiver of a banking corporation of any chose in action belonging to the (a) Act of 1835, ch. 260, § 190, and act of 1848, ch. 368, p. 11. INSURANCE COMPAlfT. ASSOCLA.TION. 243 assets of the corporation, may prosecute the same in his own name in all cases where, by law, the same could be prosecuted in the name of such receiver. Banking or Insurance Company lecoming insolvent or molating its charter. Where the officers of a banking association, enter- taining an honest expectation of going on with its business and paying its debts, pledge its assets to raise money for that purpose, such an act will not be void even though the institution is under pressure and may, probably, be at the time, actually insolvent. Thus, the North American Trust and Banking Com- pany, under the pressure of great embarrassments and probably at the time actually insolvent, but its officers then entertaining an honest expectation, in the exercise of a reasonable intelligence, of going on with its business and paying all its debts, pledged a large portion of its assets to raise money to meet its necessities. Held^ that such pledge was not void under section 9 of the act to prevent the insolvency of moneyed corporations, as made by it " when " insolvent or in contemplation of insolvency, with " intent to give a preference to any particular cred- " itor over other creditors of the company." The pledge in this case was by an assignment to trustees of bonds and mortgages, to the amount of more than a million of dollars, to secure the payment of the bonds of the company made payable many years after their date, with semi-annual interest ; and 2M COEPORATE BODY BANK. the trust deed empowered the trustees to receive payment of the principal and interest of such of the bonds and mortgages as should be paid or collected, and to re-invest the moneys so received by them, and to hold such new investments as a security for the ultimate payment of those who should become the holders of the company's bonds issued under and secured by such trust deed. Hdd^ that such trust deed was not void, as made with intent to hinder, delay or defraud creditors. Nor was the same void because it contained a trust to repay to the company such surplus moneys and to restore such securities as might remain in the hands of the trustees after the final payment of the bondholders. The statute mak- ing void conveyances, &c., in trust for the use of the person making, the same, applies only to conveyances primarily for the use of the grantor, and not to in- struments for other and active purposes, where the reservations to grantor are incidental and partial. The case of Goodrich v. Dawns (6 Hill, 438), so far as it may be regarded as holding the contrary, over- ruled: Ourtis and other v. Leamitt^ receive^-, c&c., Court of Appeals, 1857. And in the same case it was decided that associations incorporated under the act to authorize the business of banking, have capacity to borrow money as incidental to the banking busi- ness and to the powers expressly granted. Also, that prior to June 3d, 1840, such associations could law- fully issue time paper to secure a debt for moneys loaned, with or without the corporate seal, provided such paper was not intended or calculated to circu- late as money. INSURANCE COMPANY. ASSOCIATION. 245 Prior to the Code, proceedings against corpora- tions were taken by bill or petition. It is a question whether a complaint now must not be used: for, although proceedings against corporations as men- tioned in the Kevised Statutes, are not affected by the Code, § 4*71, yet it declares that all forms of pleading heretofore existing are abolished: §140; and that the first pleading on the part of the plain- tiff is the complaint: § 141. The complaint may be filed by the attorney- general, in behalf of the St9.te, or by any cred- itor or stockholder : Ih. 40. The process of injunction will issue upon proof of any one of the facts above mentioned : lb. And the safety-- fund act has given the commissioners under it the power to file a bill or petition : 1 K. S. 2d ed. 607, 610, § 18; amendatory act: lb. 614, § 6. They have the power to do so, not only in cases of insolvency or violation of charter, but also where the corporation allows an amount of notes or bills to be loaned or put in circulation as money exceeding twice its capital stock then paid in and actually possessed, or where its loans and discounts, at any time, exceed twice and a half of the amount of its capital stock so paid in and possessed, or where the corporation shall neglect to make any annual payment to the treas- urer of the State (as required by the act) for the space of three months after the time when the same ought to have been made, after being notified of such delinquency by the comptroller, or shall have lost one half of its capital stock paid in, or suspended the payment of its bills in specie for ninety days, or 216 CORPORATE BODY. BANKS. shall have refused to allow the officers of such cor- poration to be examined upon oath by the commis- sioners in relation to the affairs and condition of the corporation : Ih. 611, § 28. Upon a complaint filed against a corporation to declare its dissolution, under the thirty-eighth sec- tion of the article of the revised statutes relative to proceedings against corporations in equity, the plain- tiff may apply for an injunction to restrain creditors from proceeding at law to obtain satisfaction of their debts, and to allow them to come in and make them- selves parties to his suit : MicMes v. The Rochester City BaM\ 11 Paige's Ch. Kep., p. 118. • The corporation is a necessary party to a com- plaint to declare the dissolution of such corpora- tion, and to have its property and effects distributed among its creditors and stockholders : Ih. It is a question, whether a receiver appointed by the court in such an action and in a case not pro- vided for by the forty-fifth section of the article of the R. S. relative to proceeding against corporations in equity, will have the statutory powers of receivers of moneyed corporations, or only such powers as the court of chancery can confer upon receivers appointed in ordinary suits in that court ? Ih. The cases of the Bank Commissioners v. The Bank of Buffalo ; The Same v. The City Bamk of Buffalo^ and The 8a/me v. The Commercial Bamk of Buffalo, 6 Paige's C. R. 497, came before the court upon charges which showed violations of their char- ters. However, the commissioners left it to the dis- cretion of the chancellor to determine whether the INSURANCE COMPANY. ASSOCIATION. 2i7 application to appoint a receiver of the property and effects of tlie banks should be allowed, or the tempo- rary injunction dissolved and the banks permitted to resume. The latter course, under conditions, was allowed by the chancellor. In these cases, it was decided that, upon an application by the bank com- missioners against a bank, which had become insolv- ent or had infringed its charter, it was not necessary for them to state, in their petition, that all the com- missioners met and consulted together as to the pro- priety of making such application. It is sufficient if the petition is presented in the names of all the com- missioners : Ih. 504. The general provisions of the statute, relating to receivers of insolvent corporations and of those which may have violated their charter (2 K. S. 463,) is taken from the act of the 21st April, 1825, ch. 325, § 17 ; and the reported cases, that apply to the latter act, may be referred to in connection with the present statutes. However, under the law of 1825, the receivers were strictly common-law receivers \ such as are usually appointed by a court of chan- cery between party and party and to protect the fund during litigation ; who have no powers except such as are conferred upon them by the order for their appointment and the course and practice of the court. Now, receivers appointed under the provisions of the present statute (relative to insol- vent companies and those that have infringed their charter, &c.) are — unless restricted and controlled by the court — absolutely vest'ed with all the prop- erty and effects of the corporation ; and have full 248 CORPORATE BODY. BANK. power to sell and dispose of the whole, at their discretion, and to distribute the proceeds among the stockholders, after paying the debts owing by the company. It is, in effect, a final order in the cause.; and unless altered or revoked, operates as a virtual dissolution of the corporation. It is not a common- law receivership to protect the fund pending the litigation ; but the receiver is a statutory assignee, vested with nearly all the powers and authority of the assignee of an insolvent debtor : Verplcunck v. The Mercantile Insv/ramce Gompomy of New York, 2 Paige's C. K 453. The power now given does away with the doubts upon the jurisdiction on breaches of trust. (See Attorney General v. TTtica Insuranfwe Oompamy, 2 J. 0. E. 371, 384 ; She v. Bloom, 5 lb. 366 ; S. G. on appeal, 19 J. R. 456 ; Bevisors^ Notes, Part 3, No. 8, p. 30.) In The matter of the Framklin Ba/rik, 1 Paige's C. R. 85, an application was made by a creditor, through a petition, for an injunction and receiver, on the ground of the insolvency of the bank. A temporary injunction was granted ; with an order to show cause, at a short day, (two days from the time of the presentment of the petition) why the prayer of the petition should not be granted. Copies of the petition and order were directed to be served on the president or cashier and on the attorney general. On the day for showing cause, the counsel for the bank did not deny the alleged insolvency ; and an order was made for a master to appoint a receiver. The form of the order (which was settled by Chan- INSURANCE COMPANY. ASSOCIATION. 249 cellor Walworth) appears at length in the report of the case. A receiver can be appointed without any previous reference. This was done in the case of The Attorney General v. Tlie Bank of Columbia, 1 Paige's C. R. 511 ; 8. G. on appeal, 3 Wend. 588. In order that the attorney-general may obtain an injunction and receiver, it is not sufficient for him to allege, in general terms, that he believes a particular bank to be insolvent and unable to pay its debts. He must state the facts and circumstances upon which that belief is founded ; and if they are such as to raise a fair presumption of its insolvency or, as it is commonly expressed, to make out a primorfaoie case, and are uncontradicted or unexplained by the bank, the fact of insolvency is proved within the meaning of the act. The act requires that the insol- vency shall be proved ; but it does not direct in what manner. It does not say, it shall be proved by two witnesses ; nor, that the proof shall be direct and positive ; nor, that circumstantial evidence shall be insufficient or inadmissible. It leaves the matter at large. It must be proved to the satisfaction of the conscience and judgment of the judge, according to the established rules of evidence and the course and practice of the court ; Judge Suth&rlamd in Bank of Golvmibia v. Attorney- General, supra. It is not necessary, for the purpose of insuring the safety of the funds of the bank in the receiver's hands, that such receiver's security should be equal to the aggregate amount which will probably pass through them. Such a regulation would have the 250 CORPORATE BODY. BANK. effect of exluding from sucli an pffice tliat class of men who would be most likely to execute the trust with intelligence and fidelity,' The character of the receiver, as a man of business and integrity, is much more important than the amount of the security which he may be required to give. The chancellor may compel him to pay into court or to distribute the fund among the creditors of the bank whenever it shall amount to any particular sum ; and, in that way, prevent an accumulation of assets in his hands which shall exceed the amount of his security. He may be required to report weekly or monthly, so as to keep the court constantly informed as to the state of the trust fund : Ih. It would be an indiscretion in the court to appoint an officer of an insolvent bank to the situation of receiver : Ih. We have seen, by the case of the Franhlin Bamh^ supra, that the first proceeding (after subpena and temporary injunction) upon an application against an insolvent bank, is an order to show cause, at a short day. This is the correct practice, as well against such a bank as against a corporation that is charged with having violated its charter : unless special cir- cumstances render a different course of proceeding proper ; Verplanck v. Mercantile Insurance Corrvpany of New Yor\ 2 Paige's C. R. 438. It would amount to a condemnation and the depriving a company of its chartered privileges unheard, to grant a receiver or general injunction ex parte : Ih, A receiver of an insolvent insurance company is on the same footing and has the same powers as INSURANCE COMPANY. ASSOCIATION. 251 a receiver of an insolvent bank or a corporation infringing its charter : having the powers, authority, duties and obligations by law possessed by or im- posed upon trustees or assignees of insolvent debtors. He has the right to settle all claims against his corporation ; and to enable him so to do, he is authorized to examine any person on oath in relation to such claims. It is his duty to allow all claims against the corporation, in behalf of persons claiming to be debtors, which he shall be satisfied are justly due. But he should not allow any claim which the claimant could not have recovered against the corpo- ration, either at law or in equity, if he had sued for the recovery of the same. In this respect, the receiver acts as guardian of the rights of all parties interested in the fund ; and he has no right to allow a claim which is not a proper charge upon that fund, with- out the consent of all who are interested in having such claim rejected. If the receiver disallows the claim, and referees are appointed, although the receiver may permit those for whose benefit the defence against the claim is made to manage that defence, this must be done under the direction of the receiver ; and there cannot be a compromise without his consent : Attorney-General v. TJie Life Insv/r- cmce Qompany^ 4 Paige's C. E. 226 ; and see McEvers V. Lawrmcs^ 1 Hoffman's Ch, R. 172, 175 ; Taknage V. Pell, 3 Seld. 328. Where a receiver of an insolvent corporation is nonsuited or beaten at law, the party succeeding should petition the court for an order requiring the receiver to pay the costs out of the funds 252 CORPORATE BOOT. BANK. in his hands. This was done in Camp v. The Re- cei/vers of the Niaga/ra Bcmh, 2 Paige's C. E. 283, where the receivers continued an action which had been commenced by the bank ; and were non- suited. " Although," said the chancellor, " the " suit against the petitioner was commenced under "the direction of the officers of the bank, and " was at issue before the appointment of the receiv- " ers, yet, as the receivers elected to go on with that " suit for the benefit of the fund, it is equitable that " they should pay the whole previous costs, as well " as those which accrued after they assumed the con- " trol of the suit (Masse v. Gillelan, 1 Paige, 644). " If the receivers did not think it for the interest of " the creditors to run the risk of having the costs " charged upon the fund, they should have aban- " doned the suit, and then the petitioner would only " have been entitled to share ratably with the other " creditors. The petitioner is entitled to his costs " down to the time of the nonsuit, to be paid out of " the fund in the hands of the receivers, unless they " have some legal claim to off-set. For the purpose " of this application, I must presume the nonsuit was " right ; and that the claim for which that suit was " brought, was actually barred by the statute of lim- " itations. The petitioner is not entitled to the costs " of making up the record and issuing an execution " against the bank. That was an unnecessary and " useless expense. He knew that the company w^ in- " solvent, and that all its property, of every descrip- "tion, was in the hands of officers of this court. " Any attempt to enforce the collection of the costs. INSURANCE COMPANY. ASSOCIATION. 253 " by execution, against the property in tlie hands of " the receivers, would have been punishable as a " contempt. An order must be entered authorizing " and directing the receivers to pay the costs of the " petitioner, down to and including the entering of " the nonsuit, out of the funds in their hands ; but, " under the circumstances, he is not entitled to the " costs of this application." Where a bank is proceeded against, and the court deems it a case for a receiver and such bank appeals, the court will not appoint a receiver pending such appeal, where no evidence is furnished to show that the funds are unsafe in the hands of the then officers ; especially where the court of last resort would soon be likely to meet and decide the case. If, in the mean time, any interested party should show that some- thing further was necessary to be done for the safety of the fund, the court could then act : The Attorm^ey- General v. Banh of Columbia^ 1 Paige's C. E,. 511. The safety fund act has a provision relative to a final dividend and to the receivers applying for and obtaining, from the comptroller of the State, now jfrom the superintendent of the bank department, (») a sum sufficient to pay off and discharge the debts ; and the order to authorize it must also set forth : — 1. The total amount of debts against the corporation, ascertained and established by the court, including lawful interest thereon ; 2. The net amount of mon- eys derived from the property and effects of the cor- ifl) Act of 1851, ch. 164. 254: CORPORATE BODY. BANK. poration and applied, under the direction of the court, towards the satisfaction of such debts; and 3. The total amount of moneys then requisite to pay- off and discharge the said debts. Upon the receiv- er's filing with the (comptroller of the State) super- intendent of the bank department a copy of the order, duly certified by the proper officer, and counter- signed by (the chancellor) a justice of the supreme court, it becomes his duty to draw his warrant on the treasurer in favor of such receiver; and the money paid, upon such warrant, is to be paid out by the receiver, under the direction of the (court of chancery) supreme court to the several creditors of the corporation. If the bank fund should be insuf- ficient to satisfy all the debts, a sum sufficient to meet the residue is to be paid out of the first mon- eys that shall thereafter come to the treasurer's hands : Act of 2d April, 1829, ch. 94,. p. 167, §§ 9, 10, 11. A receiver of an insolvent corporation is bound to off-set a liquidated debt due to the corporation, against an unliquidated debt due from the corpora- tion to the same person, in the same manner as trus- tees of insolvent debtors are bound to oflfeet cross demands arising from mutual credits as well as from mutual dpbts. In such cases, the right of set-off is not confined to liquidated debts or to such as might have been offset in a suit at law between the original parties ; but it also extends to all mutual credits, arising, ex cont/ractu^ between such original parties : SoTbrodk v. The Receivers of the American Fire Insurance Company^ 6 Paige's C. E, 220. INSURAIirCE COMPANY. ASSOCIATION. 255 A receiver -will not be appointed of a banking company, upon the charge of fraud and corruption in the control and conduct of the election of direct- ors, where there is no charge of fraud or abuse in the ordinary pecuniary concerns of the institution : Ogdm V. J5^, 6 J. C. R. 160. The application here was made before answer. The author knows, that in one case, at least, the receiver of an insolvent bank got up all the notes of the institution he could, and gave certificates of the amounts to holders ; and it may be well in all cases to do so ; but the receiver had better word the cer- tificates so as to check their negotiability and thus prevent speculation. It is believed that, in some instances of insolvent institutions, the chancellor has required holders to swear that the securities under which they claim belonged to them originally and had not been bought up under price and through a spirit of speculation. PracUce whsre ianhing or insurance company he- comes insolvent or violates its cha/rter. As we have seen, a creditor or stockholder, as weU as the attorney-general and commissioners, may file a bill, complaint or petition against an insolvent bank, or against one violating its charter. I 256 CORPORATE BOOT. BANK. Form of petitiok : Svjpreme Cowrt. To the Justices of the Supreme Cowrt. ThepeinMon of G. -S., of, cfec, ^ a creditor amd stockholder of the A. Banh of the ciPy ^ of New Yorh, MespectfuUy showeth : That the said A. Bank of the city of JVew York is a corporation, homing la/nkin^ powers ; and was incorporated under the act, c&c, amd is sub- ject to and embraced by the provisions of the Revised Statutes of the State of New York, entitled, " Of pro- ceedings against corporations in Equity ^ That the said A. Bank of the dty of New York, shortly after it was duT/y incorporated, went vnto operation in the said dty of New York ; a/nd has, almost down to the present time, there continued its operations and hamh- ing powers, by issuing hills, disGOuMing notes a/nd ca/rrying on all ordinary bariking operations. And your petitioner further shows, that he is a stockholder and also a creditcyr of the said bank, holding arid owning, in his own name, a/nd being his own prop- erty, shares of the said A. Bank of the city of New York I amd also holding notes of the said ba/nk to a large amount, i. e. to % and upwa/rds. And yowr petitioner fwrther shows, that the bank has met with heavy and severe losses / that there a/re many hea/oy creditors of the said banh • that many of their notes a/re still in circulation / that the funds and re- sowrces of the said bank are not adequate to meet the INSURANCE COMPANY. ASSOCIATION. 257 engagements of ilie said hank as the same become due / and tliat^ if the said hanh should continue to pay the different claims of the several creditors of the said bank as they a/re presented^ many may receive theftdl amount of their claims, but others will meet with a loss greater than would be experieno&l if the property and effects were all collected by receivers and equitably divided among the creditors of the said bank • that the said bank owns and is possessed of estate, funds, effects and choses in action to a large amount ; and that, if the same should be improperly trcmsferred or assigned by the directors of the said bank, it toould be to the great injury of your petitioner and other areditors and stockholders. And your petitioner fur- ther shows, iliat [here set fortL. further facts whicli lead conclusively to the insolvency.j And your petitioner shows and charges that the said the A. Bank of the city of New York has become insolment and wnaile to pay its debts : Your petitioner, as such creditor and stockholder of the said A. Sank of the city of New York, therefore prays that this court will grcunt unto your petitioner an injunction order en- joining and rest/raining the presi- dent, directors and company of the said A. Bank of the city of New York, their and its officers, coun- selors, solicitors, cashiers, clerks, and agents, from exercising amy of its corporate rights, pyrivileges or fraiv- chises and from collecting or receiv- 17 258 CORPORATE BODY. BANK.- ing any debts or demcmds / amdfrom paying out or^ in amy way^ trans- ferring or delivering to a/wy person^ any moneys, properi/y or effects of such hamh, until this honorable court shall otherwise order. And that one or more receivers may he appointed to take charge of the propert/y mid effects of the said A. Bank of the city of New York; cmd to colUct, sue for and recover the debts and demands that may be due cmd the property that may belong to the said hank; and so that such receiver recover and be subject^ in all respects, to the control of this court ; and have the same powers and authority, ob- ligations and duties as attach to receivers appointed in cases of the voluntary dissolution of a corporor tion ; and all such other powers, rights and liabilities as attach by statute, OT' for such other or further order as the court may see fit to grant. And, &c. (Jurat ; iu the usual form.) Should the court consider the petition sufficiently strong in its facts, it would, most likely, grant an order to show cause and a temporary injunc- tion.(<») (a) As was done in the case of the FranJclin Banh, although that occurred before the revised statutes. INSURANCE COMPANY. ASSOCIATION. 259 Order to be entered ; At a Special Term, &c. Present, c&c. (Title.) In the matter of tJie A, Banlc \ of the city of New Yorh. i On reading and filing the petition of G. JB., a shareholder and creditor of the said the A. Bank of the city of New Yor\ setting forth, among other things, that the said hank is imable to pay its debts ; and other facts, showing that the said hank must he insolvent ; and on m,otion of Mr. J. R., of counsel for the petitioner : it is ordered, that the said A. Bank of the city of New York and its officers show cause before this cowrt, at, c&c, on, c&c, at — o''clock in the forenoon of that day or as soon thereafter as counsel can be heard why an injunction should not issue and a receiver he appointed agreeably to the prayer of the saidpetition. And that a copy of this order and of the said petition he forthtoith served o-n the president or cashier of the said bank and on the attmrney-general • a/nd that, in the mean time and until the further order of this court, the said A. Bank of New York and its officers he and hereby are enjoined from paying out, t/ransferring or otherwise disposing of the money, property or funds of the said hank or from receivhig •payment of pr transferring or assigning a/ny note, bill or other evidence of debt or any sum of money or demand due or owing to the said hank, except so far as to receive payment of tlie same in specie or in the 260 CORPORATE BODY. BANK. hills of hanks in the city of New York, other than the hills of the said A. Bank of New York. There is no fixed rule for tlie amount of security whicli a receiver of a banking institution shall give. In The matter of the Mtypire Oity Bank, 10 Howard's Pr. Eep. 498, Justice Eoosevelt observed: " My duty, " it seems to me, whether disagreeable or otherwise, " is perfectly clear — to declare this bank, in the sense "of the Statute of 1849, insolvent, and to appoint a " receiver of its property and effects. The United " States' Trust Company, and several highly respect- " able individuals have been nominated to discharge " the trust. As no mere personal obligation can be " equal to the mortgages and public stocks, to the " amount of one million of dollars, pledged as security " by the Trust Company, and as that institution has "been created by law, among other objects, for the " express purpose of meeting such' requirements, I " can feel no hesitation in m9,king a selection between "the nominees. Private preferences, in this as in " most other judicial acts, must yield to public con- " siderations. No man, and the counsel of no man, " has a right to complain that he or his particular "friend is not appointed a receiver, especially where " the assets, as in these bank cases, to be entrusted " to his responsibility, are counted not by tens, but " by hundreds of thousands. There are absent par- "ties interested as well as those who are present " — minors too, as well as adults ; and those who "rely, and have a right to rely, exclusively and " without professional intervention, on the care and " vigilance and unbiassed judgment of the court. INSURANCE COMPANY. ASSOCIATION. 261 " I make these remarks, not so much with refe- " rence to anything that has occurred in these im- " mediate proceedings, as with reference to some "incidents in the action of a kindred institution " lately before me. In that case, the individual bond " of the applicant, fortified by three sureties, in the " penalty of $50,000, was tendered in connection with " the request of several creditors and stockholdei's, "as an all-sufficient and undeniable basis for the "appointment, and no other creditors or stock- " holders, it was said, objected to the nomination. "But no public notice had been given, and, for "aught that appeared, a large number of persons, " entitled to be heard, or at least to be considered, " had no knowledge of the proceedings. This bond " was accompanied by the affidavits, not of the prin- " cipal, but of the three sureties, declaring themselves "to be worth, one, fifty thousand, and the others " each twenty-five thousand dollars, over and above " all debts and liabilities. One of the two last, how- "ever, whose name was before me in a list of the " assets of another bankrupt institution, appeared to "be a defaulter in the shape of overdrafts to the " amount of from one to two hundred thousand dol- "lars. And the gentleman subsequently proposed " as a substitute in his place, although justifying in " the sum of $50,000 ' in real and leasehold estate' " added, by implication, that the property was sub- "ject to 'incumbrances thereon,' and that this, in his " opinion, was its value ' over and above ' them. It "was suggested, in answer to these objections, that " a clause should be inserted in the order directing 262 CORPORATE BODY. BAKK. " tlie receiver, from time to time, to deposit all sums " of $5,000 and upwards in tlie Trust Company. " But what additional safeguard is there in such " a provision ? Does not every order appointing a " receiver contain, by implication, if not expressly, a " direction that all the funds, when collected, shall " be kept in some safe depository ? " The law, in requiring, as it does, proper ' secu- '"rity'from a receiver in these cases, assumes that, " although directed, he may not do his duty, and " that it is only in such a contingency that security "is of any importance. And it dispenses with this " pre-requisite in the case of the appointment of the " Trust Company, only because ' its whole capital, " ' stock, property and effects are, by law, made ab- " ' solutely liable for such deposits, in preference ' to " all other liabilities. " A like order must, therefore, be entered in this " case (to be drawn up and submitted for settlement) " as in that of the Knickerbocker and Suffolk banks." "We give, in a note, a copy of the order as settled and entered, (a) ((i)At a special term of the Supreme Court of the State of New York held at the City Hall of the city of New York, the twenty-ninth day of January, one thousand eight hundred and fifty-flre. Present Hon. James J. Roosevelt, One of the Justices of the said court. In the matter of the Empire City Bank. An application having been heretofore made to the above-named Justice of this Court by George H. Purser, a cred- INSURANCE COMPANY. ASSOCIATION. 263 In the case of tlie Mechanics' JBanhing Association (September, 1857,) a judge required a bond from tlie receiver in $50,000 with, two sureties, each justi- fying in $100,00J. iter of the Empire City Bank, a joint-stock association for banking purposes, issuing bank notes to circulate as money, for an order declar- ing the said bank insolvent and for the appointment of a receiver of the same and for an injunction restraining the said bank from the exercise of any of its corporate rights in pursuance of the act of the legislature of the State of New York, entitled "An act to enforce the responsibility "of stockholders in certain banking corporations and associations as "prescribed by the constitution, and to provide for the prompt pay- "ment of demands against such corporations and associations," passed April 5th, 1849 ; and subsequent applications having also been made by other creditors of the said bank ; and it appearing to the said Justice that the said George H. Purser was, at the time of his said application, a creditor of the said bank having a demand against the same exceeding one hundred dollars arising upon a debt contracted since the first day of January, one thousand eight hundred and fifty ; that the payment of the same had been refused by the said the Empire City Bank and that more than ten days had elapsed since the said refusal at the time of the said application. And it further appearing to the said Justice that the Union Bank and the American Exchange Bank in the city of New York, were creditors of the said Empire City Bank and had similar demands against the said Empire City Bank, arising in like manner and that payment of the said demands had been in like manner refused and that more than ten days had elapsed since the said refusals respectively ; and it further appearing to the said Justice that Isaac Frost and others were also creditors of the said The Empire City Bank and that they had ob- tained a judgment against the same and that an execution against the property of the said Empire City Bank had been returned unsatisfied ; and it further appearing to the said Justice that other executions against the said The Empire City Bank could not be satisfied out of any prop- erty of the said bank, and certain accounts of the assets and liabilities of the said bank having been exhibited to the said Justice and Abraham M. Binninger, the President, and Robert T. Creamer, the Cashier of the said bank, having been examined on oath before the said Justice touching the condition of the said bank ; now, on filing the several applications and petitions of the said creditors ^nd the several answers 26rl: CORPORATE BODY. BANK. The court can appoint a receiver or receivers at any stage of proceedings against an insolvent bank ; of the said bank thereto ; and on taking the said examinations of the said ofBcers of the said bank and other testimony herein ; and on hear- ing Mr. Charles Tracy, of counsel for the said bank, and Mr. J. M. Mason, of counsel for the said applicant George H. Purser, and Messrs- Piatt, Gerard & Buckley, attorneys for Isaac Frost and others, and Mr. Henry Hilton, of counsel for the American Exchange Bank, the said Justice doth determine that the said association is not clearly solvent ; — whereupon and on motion of Mr. J. M. Mason, of counsel for George H. Purser, it is hereby adjudged and decreed that the said Justice, by virtue of the power and authority in him vested, doth adjudge and declare that the said The Empire City Bank is insolvent. And it is further ordered, that the United States Trust Company of New York, a corporation created under and by virtue of the Act of the Legis- lature of the State of New York, passed April 12, 1853, be and the same hereby is appointed the receiver of all .and singular the estate real and personal, chattels real, moneys, debts, things in action, equitable interests, securities, property and effects whatsoever and wheresoever of or belonging to or held in trust for the said bank or in which the said bank has any right, title or interest, and also all bonds and mort- gages, deeds, writings, leases, muniments of title, books of account, things in action and effects of the said The Empire City Bank. And it further appearing that the said The Empire City Bank had executed an instrument, bearing date, the twelfth day of January, one thousand eight hundred and fifty-five, purporting to be an assignment in trust of all the assets of the said bank to Smith Barker, James Conner and Charles S. Tappan, and that the said alleged instrument of assignment is in contravention of the Statutes of the State of New York, it is hereby further ordered, adjudged and declared that the said alleged instrument of assignment is utterly void and of no effect. And it is further ordered that the said The Empire City Bank and its ofBcers, servants and agents and the said Smith Barker, James Conner and Charles S. Tappan, the said alleged assignees, deliver over to the said receiver all and every the said estate, real and personal, chattels real, moneys, securities, property and effects, bonds, mortgages, deeds, writings, leases, muniments of title, books of accounts, vouchers and other evidences of debt under the direction of Stephen Cambreleng, of the city of New York, counselor at law, who is hereby constituted referee for that purpose ; and that they also, under the direction of the said referee, execute and deliver INSITEANCE COMPANY. ASSOCIATION. 265 ■ but it is most likely to take place at the time of showing cause against the above order, when a per- manent injunction can also be embraced. Oeder of reference for receivers. At a court, &c. Present, (&c. In the matter of the A. Bank ) of the city of New Yorh. ) On reading and filing the petition of G. B., of, (&G., a o^editor and shareholder of the to the said receiver aU necessary and proper deeds and assignments as the said referee shall direct and require. And it is further ordered that the said receiver be vested vrith all the powers, duties and obligations of receiver according to the laws of this State and the rules and practice of this court ; and have full power and authority to inquire after and take possession of all and every such property and effects ; and for that purpose to examine the ofBcers of the said bank and the said assignees and such other persons as may be necessary and proper, on oath, before said referee, from time to time as said referee may direct and require. And it is further ordered that the said receiver take charge of the property and effects of the said bank ; and collect, sue for and recover the debts and demands that may be due and become due to the said bank and all property that may belong to the said bank. And that the said receiver be, at all times, subject to the control, direction and order of this court in the premises. And it is further ordered that the said The Empire City Bank and its ofBcers be restrained and enjoined from exercising any of the corporate rights of the said bank or any rights or privileges granted to it by law ; and that the said The Empire City Bank and its ofBcers, servants and agents and the said Smith Barker, James Conner and Charles S. Tappan be restrained and enjoined from collecting and receiving any debts or demands due to the said bank and from paying out or in any way transferring or delivering to any person any of the money, property or effects of the said bank, excepting as is allowed and directed by this order and as shall be allowed and directed by the further order of this court. 266 COEPOEATE BODY. BANK. said A. Bank of the city of New Yor\ alleging amd setting forth the insoT/vency of the said lank and praying for am, injunction and receiver or receivers under the provisions of tJtose pa/rts of the Revised Statutes of the State of New York, entitled, " Of pro- ceedings against corporations in equity /" amd this cowrt homing granted a temporary injunction order in the premises amd embracing an order to show cause on this day, why am injunction order should not issue pursumnt to the prayer of the said petition and one or more receivers of the estate, funds and effects of the said A. Bamk of the city of New York he appointed; and after hea/rim^g Mr. J. B,., of coun- sel for the said petitioner [and after reading affida- davits on the part of the said bank and its officers, and hearing Mr. J. J. in support of such affidavits and in opposition to the said petition], it is ordered, adjudged and decreed, and this court, Try virtue of the power and anithority vested in it hy the provisions of the statutes aforesaid, doth order, adjudge and decree, that one or more receivers he appointed to take charge of the property and effects of the said A. Bank of the cit/y of New York and to collect, sue for and recover the debts and demands due, and the property belong- ing to the said hank, who shall, in all respects, be sub- ject to the control of the court. And for tliat purpose, it is also ordered, that it he referred to C. D., residing in the city of New York as referee to examine and ascertain wJio are or is a suitable person or (a) per- (a) It will be peen that, under the provisions of the statute relative to the voluntary dissolution of corporations, any of the directors, INSURANCE COMPANY. ASSOCIATION. 267 sons to he a/ppomted the receivers to take charge of the property and effects of such hanh and to collect^ sue for and recover the debts a/ad demands that may he dm and the property that may helong to such hanh^ with other powers^ liabilities and rights and for the purposes amd pursuant to the statutes in that case made and provided ; and of how many persons the said receivers should consist / and it is further ordered, that he report the na/mes of the swreties, who may he proposed for the said persons respectively, am,d as to the fitness and sufficiency of the said pro- posed sweties to gi/oe bond, with the person or persons who may he appointed receivers, as aforesaid, in the swm of $50,000 / (a) a/nd that he report thereon with oR convenient ■ speed. And the preliminary injunc- tion order heretofore gra/nted is contirmed.. On the coming in of tlie report, tlie oedbk for the receivers and a permanent injunction will run as follows : At a court, &c. Present, &c. (Title.) On reading the report of S. G., Esquire, refe/ree herein, hearing date the dm] of , made trastees or other officers or stockholders are eligible fqr the appoint- ment of receivers ; but that there is no provision in regard to directors, &c., of an insolvent bank. (a) This was the sum fixed by the court in the case of the Frank- lin Bank: 1 Paige's C. R. 85, 268 CORPORATE BODY. BANK. pursuant to an order of this covjrt in the above mat- ter^ lea/T'ing date the day of • , whereby it was^ among other things^ referred to, c&c., to examine and aseertavn, &g. [here recite the order]. By which repo7't it a/ppea/rs that the said referee had been attended by counsel touching the tnatters so referred in and by the said order, mid that A. £., of, die, were proposed by the president, directors a/nd com- pany of the N. I. Bank of the city of New TorJs and by others and. that they a/re fit and proper per- sons for such receivers ; and that J. H., of, &g., and P. H., of, &g., are offered as sv/reties for the faithful discha/rge of their trust as receiver's ; and that they are and each of them is of sufficient ahility and fully competent to become such sureties in the sum of fifty thousand dollars / and the truth of the several matters stated in the said petition being satis- factorily proved to this cov/rt : it is this day ordered, and this court, in pu/rsuance of the directions of the statute in such case made and provided, doth, by this injunction order, e'ryjoin and resti^ain the said A. Bank of the city of New York and its officers, agents, solicitors, attorneys and servants and each and every of them from exercising any of its corporate rights, pyrivHeges, or franchises and from collecting w re- ceiving any debts or demands and from paying out or in any tvay t/ransferring or delivering to any person any moneys, property w effects of such bank until the further order of the court. And it is fv/r- ther ordered, that the said A. B., c&c, be and they are hereby appointed receivers of and to take charge of the property and effects of the said A. Banh of the city INSURANCE COMPANY. ASSOCIATION. 269 of New York ; and to collect^ sue for and recover the debts a/nd demands that may he due and the property that may helong to the said hank ; hut they shall, in all respects, he subject to the control of the court. Such receivers shall he vested with all the estate, real and personal, of such hank, from the time of their havinig filed the security hereinbefore required ; and shall he 1/rustees of such estate for the benefit of the creditors of such hank and of its stockholders. Such receivers shall have all the power and authority con- ferred hy law on trustees to whom an assignment of the estate of insolvent debtoi^s may be made, pursuant to the provisions of the fifth chapter of the second part of the revised statutes and of all other statutory powers and enactments touching hanking corporations or associations. If there shall he any sum remaining due on any share of stock subscribed in such company, the receivers shall immediately proceed and recover the same, unless the person so indebted shall he wholly in&ol/oent I and for that purpose may file equity com- plaints or may commence a/nd p^'osecute am action at law for the recovery of such sum, withoiot the consent of any creditors of such hank. The said receivers, immediately on their appointment, shall give notice thereof, ■•ohich shall contain the same matters required hy law in notices of trustees of insolvent debtors ; and, in addition thereto, shall require all persons holding any open w subsisting contract of such hank to present the sa/me in writing in detail to such re- cei/vers at the time and place in such notice specified / , which shall he published for three weeks in the state paper and in a newspaper printed in the county where 270 CORPORATE BODY. BANK. the prinaipal place of conducting the husiness of such banh shall have been situated. And all sales, assign- ments, transfers, mortgages amd conmya/nces of any pa/rt of the estate, real or personal, inchiding thvngs in action of emery such hamk made after the filing of the petition for an im,ju/nction or injunction order and a receiver or receivers (i. e. after day of last) inpayment of or as a security for amy existmg or prior debt or for any other consideratmn amd ., of counsel for the complainant (and Tiearvng Mr. K F. in opposition^ it is ordered, that a receiver of the estate and effects of the special or limited pa/rlmership of 8. & B. he appointed. And, with that view, it is also ordered, that it he referred to 8. C, Esquire, as referee to appoint such receiver, who shall he consid- ered as fully appointed aiid. vested with aU pouters from the moment the referees repoi^t of approval amd the receiver'' s hond (with swreties and approval^ a/)^e filed. And it is hereby ordered, that the said referee he at Uh- erty to examine the said defenda/nts, J. A. 8., <&c. (the general and special partners'), as to the copartnership stock, pyi'emises, outstanding dehts and effects, from the time the firm hecame insolvent and the property and effects came into their hands or the hands of any of them or into their possession or power or under their control / and that they do, under the direction of the said referee, aTid on oath, if required, deliver over to such person so to he appointed receiver, all and every the said copartnership stock, premises, outstand- ing dehts and effects, together with all hooks amd INSUEAIfCE COMPANT. ASSOCIATION. 355 papers relating thereto. And in case there shall he occasion to put any of the debts in suit for the recov- ery thereof^ the same is to he done after an order of ike court to prosecute has heen ohtained and on notice to the person whose ^name is to he used • and such person so to he appointed^ is to make use of the names of the plaintiffs and defendants or either or any of them as counsel may advise for that pwrpose^ who a/re to he indemnified therein out of the said estate and effects. And the plaintiffs and defendants are hereby restrained from receiving any debts due or to become dm to the said firm', and also restrained from alien- ating^ disposing of or removing any of the utensils or dead stock belonging to the trade or business of the pofrt/nership. And it is also ordered that the person so to he appointed receiver do^ without delay^ sell and twrn into money such parts of the copa/rtnership estate wnd effects as shall not consist of money. And like- wise it is ordered^ that he do pay the debts due and to become due from the said pa/rtnership. And also that the person so to be appointed receiver do, from time to time, annually, pass his accounts, fie invento- ries, finally account and pay and deliver such effects and balcmces as the rules, practice or court may dvreot. CHAPTER VIII. 9 MORTGAGOR AND MORTGAGEE. Where circumstances make it probable or appa- rent that mortgaged premises are not a sufficient security, it will be well, in a complaint, to allege the inadequacy of tlie amount due tlie holder of the mortgage ; and, pray for a receiver. It is to be understood that such an officer wiU not be appointed on a mere allegation that the mort- gaged premises are not an adequate security " for " all just encumbrances thereon :" Warner v. Gouv- verneur''s £Jxecutors, 1 Barb. S. C. R. 36. And so in the case of The Sea Insurance Co. v. Stebbins, 8 Paige's C. R. 565, it was decided that in a petition for the appointment of a receiver of mort- gaged premises in a foreclosure suit, the plaintiff must state that the premises are not of sufficient value to satisfy his debt and costs and that the mortgagor or other person who is personally liable for the payment of the mortgage-debt is irrespon- sible or is unable to pay the expected deficiency. He must also show who is in possession of the mort- gaged premises : as a receiver can only be appointed where the person in possession of the mortgaged premises by himself or his tenants is a party to the suit: lb. MORTGAGOR AND MORTGAGEE. 357 In a complaint for redemption, it will be well to insert a prayer for redemption. In Ba/rlow v. Gains^ 8 Beavan, 329, the court refused to grant a receiver at the hearing in a suit to redeem, there being no prayer asking for one in the bill. Where the application for the appointment of a receiver is made for the first time in the cause, it must be heard in court ; but where the application is only to supply the place of a receiver already appointed and whose office has become vacant by death or otherwise, it may be made in chamber^: Grote V. Bing, V. C. Stuart, Dec. 9th, 1852, L. I. ; 9 Hare's Chan. Rep. Appendix p. L. In Aberdeen v. Oliitty^ 3 Younge & Coll. 379, a receiver was appointed before answer in the case of an equitable mortgage, by deposit of title deeds. And upon the bill of an equitable mortgagee, leave was given to serve the defendant, the mortgagor, before appearance, with notice of motion for a receiver (the bill not asking for an injunction) ; and the order was made, upon affidavit of service, for the appointment of the receiver, with liberty to the parties to propose themselves according to the notice : Meadon v. Sealey^ 8 Hare's Chan. Rep. 620. Two things are to be considered in connection with obtaining a receiver of mortgaged premises. First, the power to obtain one where the property is an inadequate security and the whole amount is due, even where the rents and profits have not been expressly pledged; and second, the non-appointment of one, where the debt is not due and no pledge made of rents and profits. All this is to be found 358 MORTGAGOR AND MORTGAGEE. in the case of the Brnik of Ogdenshwrg v. Arnold, 5 Paige's C. K. 38. The chance of obtainment of a receiver is strength- ened, where the mortgagor or other party in posses- sion is liable for the debt and is insolvent : Wa/rner V. Gouverneur's Execwtors, 1 Barb. S. C. E. 36 ; 8. P. in Astor v. Tv/rner^ 2 Barb. S. C. E. 444, where it is also said, that although an owner of an equity of redemption is, at law, entitled to the rents and profits until a purchaser has a right to possession, yet, on an anticipated deficiency, the appointment of a receiver would operate as a lien on such rents and profits. And the like doctrine (on the pre- sumption that all the mortgage money is due) will be found in Lofsky v. Maujer, 3 Sand. C. E. 69. Although a complainant, in a foreclosure suit, may be entitled to a receiver of rents and profits pending the suit, where the premises will not bring sufficient to pay debt and costs and where the party who is personally liable is irresponsible, yet the appoint- ment of such a receiver will be dispensed with if a defendant, in possession of the mortgaged premises, gives security to account for rents and profits, as the court may direct, in case there should be a defi- ciency on the sale under the decree : Sea Insurance Co. V. StebUns, 8 Paige's C. E. 565. In case a defendant, in a foreclosure suit, is in pos- session of the mortgaged premises by his tenant, who is not a party, the possession of such tenant cannot be disturbed by the appointment of a receiver ; but he may be ordered to attorn to the receiver and to MORTGAGOR AND MORTGAGEE. 359 pay the rent to him : Sea Insv/rance Co. v. Stehhrns^ 8 Paige's C. E. 565. Where mortgaged premises can "be sold in parcels so that a sale of part will satisfy the debt in arrear with costs, and the entire debt is not payable, a receiver will not be appointed over the entire prop- erty ; Quincy v. Cheeseman^ 4 Sand. Chan. E,. 405. In cases where mortgaged premises are sold under a decree of foreclosure, if the accruing rent becomes payable between the day of sale and the time when the purchaser will be entitled to the possession of the mortgaged premises by the terms of the decree and thp practice of the court, such rent belongs to the owner of the equity of redemption and not to the purchaser at the master's sale : Astor v. Turner., 11 Paige's Chan. E. 436. Where mortgaged premises are so situated that they cannot be sold in parcels, a receiver of the rents will be appointed on a part only of the mortgage debt falling due, provided the other requisite facts be made to appear, namely, the insufficiency of the premises in value to pay the debt and costs and the insolvency or irresponsibility of the party personally liable to pay the debt: Quincy v. Clieeseman, 4 Sand. Chan. E. 405. A mortgagor cannot, by forestalling costs, avoid the consequences which will attach on the appoint- ment of a receiver. Thus in Lofsky v. Maujer., 3 Sand. C. E. 69, previous to the appointment of a receiver, the owner of an equity of redemption by purchase from the mortgagor, had received, from his tenant a note for rent which had accrued and a 360 MOETGAGOB AND MORTGAGEE. mortgage on personal property executed by a friend of the tenant, for its further security ; but no actual payment had been made : Held^ That there was no merger of the rent ; that the landlord's right to dis- train continued ; and that the receiver was entitled to the unpaid rent in preference to the owner of the equity of redemption. Where a receiver happens to continue and receive rents after being ordered to be discharged and pay them to a mortgagee in possession, his (the receiv- er's) possession will be considered that of such mort- gagor ; thus, a receiver was appointed by the court of an estate which had been mortgaged to A. By a decree dated in December, 1827, the receiver was ordered to be discharged, and pay the balance in his hands to A. The receiver continued to receive the rents until 1830, but paid them over to A, and, after that time, the rents were paid by the tenants to A. Held^ that the possession of the receiver after Decem- ber, 1827, was the possession of A, and that, there- fore, A had been in possession from that time : Hor- loch V. Smith, 11 L. J. (N. S.) Oh. 157 ; S. C, 6 Jur. 478. A mortgagee has no title to the rents of mort- gaged premises which have been paid into court by a receiver appointed in a suit for establishing the will of the mortgagor ; notwithstanding that, after the appointment of a receiver, he gave notice to the tenants to pay the rents to him. He ought to have followed up that notice by a motion to discharge the receiver ; Thomas v. Bridgstocke, 4 Kuss. Ch. K. 64. MORTGAGOR AND MORTGAGEE. 361 On the staying of proceedings in a foreclosure suit, where there is a receiver, (by payment of amount due with costs,) moneys in such receiver's hands wUl belong to the person who was in posses- sion when the receiver was appointed ; Pmjnter v. Carew^ 1 Kay's Reports, App. xxxvi. A first mortgagee in possession cannot, by pur- chasing up a third mortgagee, shut out the second mortgagee for ever ; and a receiver will be ap- pointed where he does not show satisfactorily that something is still due on his first mortgage. Thus, A B, third mortgagee, took possession and then bought up the first mortgage. Having retained possession many years and received a considerable sum, a receiver was appointed against him on the application of the second mortgagee, the affidavit of A B not satisfactorily showing that anything re- mained due on the first mortgage : Hiles v. Moore, 15 Beavan's Rep. 1Y5. A mortgagee having the legal estate is not en- titled to a receiver appointed by the court, although the tenants may be numerous and the rents difficult to collect : Stwrch v. Yowng, 5 Beavan's Rep. 5 57. CHAPTER IX. RECEIVERS TNDER THE NEW YORK CODE OF PRO- CEDURE. JUDGMENT DEBTOR. CREDITOR AND DEBTOR. EECEITEE GENERALLT TXNDEE THE CODE. GENERAL REMARKS ON SECTIONS CONNECTED WITH SUPPLE- MENTARY PROCEEDING^. PRACTICE UNDER SUPPLE- MENTARY PROCEEDINGS. ORDER FOR A RECEIVER. BOND OF A RECEIVER. ACTIONS BY THE EECEIVEE. HIS SELLING DOUBTFUL DEBTS. ORDERS FOR A RECEIVER TO PAY OFF JUDGMENT DEBTS. JUDGMENT creditors' SUITS GENERALLY. JUDGMENT CEEDITOEs' SUITS AGAINST A FEAUDULENT ASSIGNMENT. JUDG- MENT creditor's suit against fraudulent JUDG- MENT. INSOLVENT ASSIGNEE. DEBTOR COERCING creditor. receiver's POWERS AND RESTRICTIONS UNDER JUDGMENT CEEDITOE's SUIT. Meceivers generally under the Code. Old principles and practice touching the appoint- ment of receivers in general cases, are scarcely affected by the Code. Such appointments can only, as heretofore, be obtained through a direct notice or an order to show cause, unless where there are circumstances demanding immediate action. RECEIVERS UNDER THE NEW YORK CODE, ETC. 363 Old rules and practice will still govern, where they are not inconsistent with the Code or have not been expressly abrogated : § 469 of Code. Forms of pleadings are prescribed by the Code (although it is difficult to say how far many complaints under it are not bills in equity)', but pleadings are neither part of the rules nor of the practice : Allen v. Smillie, 1 Abbotts' Pr. R 35Y. The Code of Procedure of the State of New York has widened the power of parties to apply for a receiver ; while it recognizes old principles and practice sufficiently for all beneficial purposes. Heretofore, the application for a receiver was almost always made on the part of a complaining and not a defending party. Now, before judgment and on the application of any, " either," party, who establishes an apparent right to property (a) which is the subject of an action and which may be in the possession of an adverse party, and the property or its rents and profits are in danger of being lost or materially injured or impaired, a receiver may be appointed: § 244, Subd. 1. The above section has reference to disputes touch- ing rights, claims or ownership to property or estate, and not to actions where ownership originally or through a trustee is admitted ; for, there, money or other things capable of delivery may be ordered to (a) It may be well to remember that the term " property," used throughout the Code, coyers real estate as well as personal property : §464. 361 RECEIVERS UNDER THE NEW YORK CODE. be directly deposited In court or delivered to the party,-wlio, through such admission, is entitled : § 244. The grounds for a receiver, under the above § 244, sub. 1, are but an echo of old principles, namely, pro- tective possession. But what is to be meant hj an " ojpparent right " is not very clear. A plaintiff claims and will have, on the face of his pleadings and depositions, an apparent (^prima fade ?) right, and so may the defendant, and all this is likely so to appear until the end of a trial. Nor do we observe more clearness in " when he estahliahes " an appm-mt right ; because, it is difficult to get at the establish- ment of right until we come to certainty embraced by a judgment. The code also allows the appointment of a receiver " after judgment, to carry a judgment into effect:" Ih. subd. 2. A power to this extent is used by courts having general equity jurisdiction. And, after judgment, a receiver can be had : 1. To dispose of property according to the judgment. 2. To preserve it during the pendency of an appeal; and, 3. When an execution has been returned unsat- isfied and the judgment debtor refuses to apply his property in satisfaction of the judgment: § 244, subd. 3. The Code has not taken away the right of a judg- ment creditor under 2 R S. 173, §§ 38, 39, to com- mence an action against a judgment debtor and his assignee, to set aside a fraudulent assignment and obtain a receiver. The § 299th of the Code, touch- ing " supplementary proceedings," does not render it necessary for the creditor, before proceeding to re- JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 365 cover property alleged to have been fraudulently- transferred by his debtor, to procure tlie appoint- ment of a receiver and have the suit against the fraudulent assignee instituted by and in the name of the receiver. The provisions of that section are con- sidered as being confined, in its operation, to cases where proceedings supplementary'to execution have been instituted under the provisions of the Code em- braced by Chapter II. '•'•Proceedings Sv/pplemental to the Execution : Goodyear v. Betts, Y Howard's Pract. Rep. 18Y, and see Gatlin v. Doughty^ 12 How- ard's Pract. R. 459. Still, the provisions of the Code have lessened the length of pleadings in such a form of action under the R. S. by rendering discovery therein unnecessary : Oatlin v. Doughty^ supra ; and if there should be any oppression in resorting to this form of suit or action where the summary proceed- ings, pointed out by the Code, would be more proper, the court has a remedy in its own power in the disposition of the costs, as, in such actions, costs are in its discretion: lb. There is nothing in the chapter of the Code as to " proceedings supplement- ary to execution " which shows that it was intended to do away with the old remedy : lb. A receiver appointed under the Code, does not stand merely in the place of the debtor. While he represents the interests of the former, he also repre- sents those of the creditors. He is a trustee for all parties ; and is bound to apply the ejffects of the debtor faithfully to the payment of the debts accord- ing to their Ipgal or equitable priorities ; and if any thing remains, to restore it to the debtor or his 366 RECEIVERS UNDER THE WEW TORK CODE. grantee. It is true that lie lias no power to set aside legal and valid acts of the debtor ; but, such as are illegal and forbidden by law, he can success- fully assail. It has been decided by a single judge of the su- preme court of New York, that a simple contract creditor, on a claim not disputed, before resorting to and exhausting his remedy by judgment and exe- cution, may interfere with and arrest the disposal of his debtor's property, by having an injunction and the appointment of a receiver and call him and his assignees to account for any alleged fraud or illegal- ity in its transfer ; and thus effect, in one suit, what formerly required two to accomplish : Mbtt v. Dimn, 10 Howard's Pract. R. 225. But, with all proper respect, we are inclined to question the soundness of this decision. , General Remarks on Sections connected with Snp- plemento/ry Procee^iings. The 292d section of the Code embraces : 1. The right of a judgment creditor, who has an execution returned unsatisfied in whole or in part at any time after the return has been made, to an order (from a judge of the court or a county judge of the county to which the execution was issued or a judge of the Court of Common Pleas for the city and county of New York, when the execution is issued to such city and county) requiring the judgment debtor to appear and answer concerning his property before such judge, at a time and place specified in the JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 367 order, "within tte county to whicli tlie execution is issued. 2. After the issuing of an execution and without reference to its having been returned, an order can be had, requiring the judgment debtor to appear at a specified time and place to answer concerning property which he unjustly refuses to apply towards the satisfaction of the judgment. This order is to be founded on proof, by affidavit, of a party or otherwise, to the satisfaction of a judge residing in the same county as the debtor, of such unjust refusal. 3. An examination, under both these heads (1 and 2) of witnesses and of the judgment debtor, as a witness, " in the same manner as a witness." 4. An immediate arrest and a dispensing with any preliminary order can be had, on proof by affidavit or otherwise to the satisfaction of the judge, that there is danger of the debtor's leaving the State or con- cealing himself, and that there is reason to believe that he has property which he unjustly refuses to apply to such judgment. Also an examination on oath. While, if it should appear that there is danger of his leaving and of such unjust refusal so to apply his property, he is to give an undertaking, with one or more sureties, that he will attend from time to time, during the pendency of the proceed- ings and' not dispose of property not exempt from execution. In default of such undertaking, he is to be committed to prison, by warrant, as for a con- tempt. 5. And no judgment debtor can be excused from 368 RECEIVERS UNDER THE NEW YORK CODE. answering any question on the ground of its tending to convict him of a fraud (while any answer cannot be used against him criminally). In cases (under 1) where an execution has been returned unsatisfied in whole or in part, it wUl be necessary to show affirmatively by the affidavit on which the order is to be founded, that an execution has issued and been returned unsatisfied. Such afifidavit should also show other facts upon which jurisdiction vests, and these are not to be deduced by inference or presumption ; as, for instance, the nature of the claim on which the judgment was founded and that the execution was one against property : The People v. Hvlbert, 1 Codp Reporter, New Series, '75. When the examination is had and property ia thereby discovered, and other judgment creditors have instituted proceedings supplemental to exe- cution, a notice of motion for a receiver had better be served on them as well as on the judgment debtor ; but there will be no necessity to serve a copy of the defendant's examination on any person : Todd V. GooJce, 1 Code Reporter, N. S. 324; S. C. 4 Sand. 694. Although the Code is silent as to the time when the judgment creditor shall be deemed to have acquired a lien on his debtor's equitable effects, still, it seems that such lien would attach from the time of the order for his examination under this (292) section — in fact, that it should be construed to give the creditor the same lien which he acquired under the former practice by the commencement of a suit JITOGMENT DEBTOR. CREDITOR AND DEBTOR. 369 by creditor's bill : Porter v. Williams^ 1 Code Re- porter, K S. 144. In cases (under 2) of unjust refusal to apply prop- erty, tbe design of the Code appears to have been to authorize the appointment of a receiver, without any reference to the return of the execution : The People V. Hvlbert, 1 Code Eep. N. S. 75. 4. As to arrest, (under 4,) this may be ordered by any judge without reference to his residence or judicial district or the residence of the debtor. It would be idle to confine it to a judge residing in the county of the debtor, when the latter is in his flight to another State and is passing through another county. Hence, the warrant requires the sheriff of any county where such debtor may be, to arrest and bring him before such judge, that is, the judge who issued the warrant ; Wilson v. Andrews, 9 Howard's Pr. R. 39. In a case of such arrest, the judge may appoint a referee to take the examination of the judgment debtor: lb. And a receiver may be appointed, based upon facts disclosed on an examination of the debtor brought up on a warrant. The 298th section of the Code, authorizing the appointment of a receiver, is general in its provision and extends to this kind of case; the object of the warrant is to secure the defendant from absconding and thus to coippel an examination. If the facts be such that a receiver is necessary to complete the remedy, he may be appointed as well 24 370 EECEIVEES UNDER THE NEW YORK CODE. upon an examination under a warrant as under an order : Wilson v. Andrews, supra. The Code evidently contemplates tliat judgments should be satisfied under the " supplementary pro- ceedings," without resort to a receiver, wherever it can be done by and through the action of the judge and an examination of the debtor ; and sections 294 and 297 would seem to have reference to this : see The People v. Hulbert, 1 Code Eep. N. S. 77 and The People v. King, 9 Howard's Pr. K. 97. Still, the wording of § 297 is broad and. will cover cases where a receiver may be used as a medium to have the property of 'the judgment debtor " applied towards the satisfaction of the judgment." In Pwter V. Williams, 1 Code Eep. N. S. 144, it was decided that the order that the debtor's property should be applied, towards the satisfaction of the creditor's judgment, made pursuant to the 297th section, has the effect of itself and without an assignment by the debtor to divest his title and to vest it in the receiver. And such an order places the property under the control of the court : lb. The section (298) which allows a judge to appoint a receiver under supplemental proceedings, is not very clear or explanatory. It says: "The judge " may, also, appoint a receiver of the property of the " judgment debtor, in the sam& manner and with the, " like authority as if the appointment was made by " the court according to § 244." Now, that section (244) does not direct in what " manner" a receiver is to be appointed ; it only mentions cases and periods in which he may be appointed ; while the JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 371 words " witli the like authority," when coupled with the fact, in the same sentence, of an authority in the judge fully to appoint, are almost senseless. Perhaps the codifiers construed the word " author- "ity" as synonymous with/orce. Before such an appointment of a receiver, the judge is to ascertain, if practicable, by the oath of the debtor or otherwise, whether any other supple- mentary proceedings are pending against him ; and in that case, the plaintiff therein is to have notice of all subsequent proceedings in relation to the re- ceivership : II. This is taken from the 194th rule of the late court of Chancery. (») The Code appears to be silent as to the way in which the judgment creditor should commence his proceeding under this section. (a) Rule 194, (In Chancery.) It shall be the duty of the master to whom the appointment of the receiver is referred, in any such suit, to ascertain, if practicable, by the oath of the defendant or otherwise, whether any other suit has been commenced against the debtor. If any other suit has been commenced, the complainant therein shall have notice to attend before the master, and shall likewise have notice of all subsequent proceedings in relation to'l.he said receivership, before the master or the court, in like manner as if he were a party to the suit in which the receiver is appointed; and he may except to the report or apply to the court for directions to the receiver, in like manner. Where another suit is commenced after the appointment of a receiver, the same person may be appointed receiver in such subsequent suit and shall give such further security as the mas- ter executing the last order shall direct. He shall also keep a separate account of any property or effects of the debtor which have been acquired since the commencement of the first suit, or which may be assigned to such receiver under the appointment in the last cause. 372 RECEIVERS UNDER THE NEW YORK CODE. The debtor should liave notice of the proceeding : Kemp V. Ha/rding^ 4 Howard's Pr. R, 198 ; and see Z>o?T V. Moxon, 5 ii. 29. The order appointing a receiver, pursuant to the 298th section, has the effect of itself and without an assignment by the debtor to divest his title and to vest it in the receiver. The order creates an officer to take charge of it : Porter v. Williams^ 1 Code Reporter, N. S. 144; S. C. 5 Howard's Pr. R. 441. So that, any attempt by the debtor to divest or pass off his property, after the date of such order, would be futile. He can do nothing to divest the lien which his creditor had obtained by the order, and it renders after-instruments ineffectual :. S. C. on appeal, 5 Selden, 142. No more than one receiver of the property of a judgment debtor is to be appointed : § 298. The judge may, by order, forbid a transfer or other disposition of the property of a judgment debtor, not exempt from execution, and from any interference thereof: § 298. The order appointing the receiver had better have a clause to that effect inserted therein. By section 299, it is declared, that if it appear that a person or corporation alleged to have prop- erty of a judgment debtor, or indebted to him, claims an interest in the property adverse to him or denies the debt, such interest or debt is to be recov- erable only in an action against such person or cor- poration by the receiver. And the judge may, by order, forbid a transfer or other disposition of such property or interest until a sufficient opportunity JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 373 be given to the receiver to commence tlie action and prosecute tte same to judgment and execution ; while such order may be modified or dissolved (by the same judge) at any time, on such security as he may direct. There is nothing pointed out as to how the fact of property in third party's hands or a denial of debt is to be made to " appear " before the judge. And the very next section (§ 300), although in- tending to connect itself with it (with the 299th), — " the judge may, in his discretion, order a reference " to a referee agreed upon or appointed by him, to " report the evidence or the facts," is not clear ; for, as, the receiver is expected to prosecute the action to judgment, it may very well be that the case would come before a jury and not before a referee ; because a person or corporation claiming an interest in property or denying a debt would have a right to a jury trial on " the evidence and the facts :" § 253. This 299th section is intended to cover cases under the different sections of the code touching "proceedings sv/ppletnentairy to the exe'cution^'' so that, in all such cases, the receiver only can bring action to recover property from persons and corporations, where they are in possession of it or are indebted to the judgment debtor and yet claim an interest adverse to him or deny indehtedness : Goodyem^ v. -Beto, 7 Howard's Pract. R. 18Y, and see Todd v. Orooke^ 4 Sand. S. C. R. 694 ; and Edmonston v. M'Loud, 19 Barb. S. C. R. 856. Still, this does not do away with the old right of a judgment creditor to commence an action in the nature of a creditor's 374 RECEIVERS UNDER THE NEW YORK CODE. bill, against his debtor and a fraudulent assignee and obtain a receiver : Goodyear v. Belts, supra. This section, while it naay take in all receiverships under the proceedings supplemental to the execu- tion, is restricted to those : Ih. / and see the con- cluding paragraph of Wilson v. Atidrews, 9 How- ard's Pract. E.. 45. The issuing of a second execution is not a waiver of supplementary proceedings commenced against the defendant, after the return of the first execu- tion unsatisfied : LilUendahl v. Fellermwn, 11 How- ard's Prac. Kep. 528 ; and see Salt v. Lamson, 4 Sand. S. C. K. TlS, referred to there. While we have remarked on the effect of an order for a receiver, under particular sections, it will be well to say, in connection with all the sections of the code connected with supplementary proceedings, that when a receiver, who is appointed (under any section) has perfected his appointment, .all the real estate and personal property of the judgment debtor vests in such receiver by virtue of the order of the appointment, without the necessity of receiving from the debtor an assignment of his estate and properties. " By the § 298 of the Code of 1849," says Justice "Willard, in Porter v. WiUiams, 5 Sel- den, 142, " the receiver appointed under supple- " mentary proceedings possesses the like authority " as if the appointment were made by the Court, " according to § 244. By the last-named section, " the court are authorized to appoint receivers and " grant the other provisional remedies, according to " the then prevalent practice. The act of April 28th, JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 375 " 1845 (Laws, 90 and 91), enacts that any receiver " appointed by virtue of an order or decree of tte " court of chancery, may take and hold real estate " upon such trusts and for such purposes as the court " may direct, subject to the farther order or direction " of the court. And the second empowers receivers " so appointed by an order or decree of the court of " chancery to sue in their own name for any debt, " claim or demand transferred to them or to the pos- " session or control of which they are entitled as such " receivers. The chancellor, in Wilson v. Wilson (1 " Barb. Ch. K 594), thought the act of 1845, was not " broad enough to transfer the title of real estate to " the receiver, by the mere order of the court and " without an actual conveyance from the party to the " suit in whom such legal title was vested. But I "think that since the Code, no such conveyance is " necessary to vest the legal title in the receiver, and "that real and personal property are, in this respect, " placed upon the same footing. " The sections before cited provide for the appoint- "ment of receivers of the property of the judgment " debtor, etc. Sec. 464 enacts that the term ' prop- " ' erty,' as used in the Code, shall include ' property "'real and personal,' and §§ 462 and 463 define " what is meant by ' real property,' and by ' personal " ' property.' "The first is declared to be co-extensive with " lands, tenements and hereditaments, and the other " to include money, goods, chattels, things in action " and evidences of debt. " Before the Code, it was settled that the order 37d RECEIVERS UNDER THE NEW YORK CODE. " apiDointing a receiver, when tlie appointment was "completed, vested in Mm all the property and " effects of the debtor, subject to the order without " an assignment : Mann v. Pentz^ 2 Sand. Ch. E. " 25*7 ; Wilson v. Allen^ 6 Barb. 542. These cases " speak only of personal property ; and, doubtless, " the real property did not, before the Code, pass by " such order, and was only directed to be conveyed " under peculiar circumstances : Scouton v. Bender^ " 3 How. Pr. R. 185 ; 6 Barb. 602, per Harris, J. " But, since the Code, I think the order has the like " effect upon the debtor's real estate as upon his per- " sonal estate ; and that the whole, by force of the " order, vested in the receiver when the appointment " is completed. The language of the Code effectu- " ally removes the difficulty which the chancellor "suggested in Wilson v. Wilson {.supra). It puts " real and personal property in the same category. " The statute of frauds affords no objection to this " view. It is there enacted (2 R. S. 134, § 6) that " no estate or interest in lands, etc., shall hereafter " be created, granted, assigned, surrendered or de- " clared, unless by act or operation of law, or by " deed or conveyance in writing, subscribed by the "party, etc, or by his agent, &c. It was competent " for the legislature to remove that impediment to "conveyances or to declare what act or operation " of law should work a transfer of title. They seem " to have done so, by giving a legislative definition " to the word ' property' so as to embrace real as well " as personal property." It was decided by the court of appeals, in the JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 377 above case oi Porter v. Williams, 5 Selden, 142, as we have before remarked, that a receiver, appointed by a judge in proceedings supplementary to execution, and without having received any assignment or con- veyance from the judgment debtor, could maintain an action to set aside an assignment of real and per- sonal property made by the debtor in fraud of his creditors. " The act," observed the court, " which the receiver " seeks to avoid in this case, was an illegal act of the " debtor. The object of the action is to set aside an " assignment, made by the debtor, with intent, as is " alleged, to defraud the creditor under whose judg- "ment and execution the plaintiff was appointed " receiver and the other creditors of the assignor. " Such conveyance was void at common law, and is " expressly forbidden by the statute (2 R. S. 137, "§ 1). It is void as against the creditors of the " party making it, though good as between him and " his grantee. The plaintiff, representing the inter- " ests of the creditors, has a right to invoke the aid " of the court to set aside the assignment. He stands, " in this respect, in the same condition as the receiver "of an insolvent corporation or as an executor or " administrator ; and, like them, can assail the ille- " gal and fraudulent acts of the debtor whose estate " he is appointed to administer." This decision is in conflict with and upsets the cases of Seymour v. Wilr S071, 16 Barb. S. C. Rep. 294, and Hayner v. Fowler, a. 300. In the former of these cases, it is declared that a receiver (under supplemental proceedings) cannot bring an action to set aside a prior assign- 378 RECEIVERS UNDER THE NEW YORK CODE, ment or conveyance of the debtor as fraudulent ; and that the remedy in such a case is by an action on the part of the creditor against the assignee. Practice v/nder Sit^lementa/ry Proceedings. It is a common thing to enter very unsatisfactory orders for the appointment of a receiver, leaving it, therefore, necessary to make future applications and to cause the receiver to guess at the extent of his powers, and which have obliged judges to make decisions that might have been avoided, had the orders been sufficiently full and definite. Much trouble will be saved by the entry of an ample order, covering the provisions contained in the YGth rule. We here give the form of such an order. Its length will be compensated for by the powers it covers and the saving of trouble in the future. Order for a Receiver^ umder supplementary proceed- ings. (Title.) An order hawing heen heretofore made hy me^ the undersigned justice of the above court^ pursua/ni to the provisions of the Code having reference to sup- plementary proceedings in relation to tlie property of the defendant^ 0. D. and lie hawing ieen examined as to the sa/me^ I do hereby order iliat JE. F. he and he hereby is appointed a receiver of the property of the said defendant; but such receiver^ before entering JUDGMENT DEBTOR. DEBTOR AND CREDITOR. 379 vpon the execution of Ms duties^ sTiall execute to the people of the' State of New Yorh a lond^ with suffi- Gimt sureties^ to he ly me a/pproved^ in the penalty of % , conditioned (in proper and sufficient words^ to perform his duties as such receimer^ and that the said JE. F. on filing such hond in the office of the clerh of 6e lyy force of this order and of the said hond vested with the property of the said G. D. and invested with all the rights and powers as recevver according to law. That^ when so appointed^ Hie said receiver shall have power to sue far and col- lect all dehts^ demands and rents helonging to the said d^enda/nt^ and to compromise and settle such as are unsafe or of a dovhtful character. He may sue^ in the name of the dehtor.^ where it is necessary or proper fw him to do so, hut tlie said receiver will not, in his accounts, he allowed for the costs of any action brought hy him against an insolvent from whom, he is unable to collect his costs : unless such action is brought hy order of the court or hy the consent of all persons inter estsd in thefumds in his ha/nds ; and the tenants of the real estate of the said defendant are to attorn to such receiver or the latter may, when necessa/i'y, apply for and obtain an order that any of such ten- ants attorn and pay rents to him / and such receiver may make leases from time to time as may be neces- sa/ry,for a time not exceeding one year. And it is hereby made the duty of the said receiver, witlwut wnreasonable delay, to convert the property of tJie said defendant into mon£y / but he is not to sell any real estate without special order, although he may sell desperate debts cmd doubtful claims to personal prop- 380 RECEIVERS UNDER THE NEW YORK CODE. erty at public auction^ giving at least ten days' pMic notice of the time and place of such S'ale. And I also order that the su/m of % , he allowed to the plaintiff for costs of this proceeding ; and that the said defendant, C. Z>., be and he hereby is enjoined and restrained from making any disposition of or interfering with his property until fv/rther order. New York, the day , 18 — . Although it is common to make a receiver's bond to and in favor of the clerk of the court, and this is good, yet the fluctuations in practice may even change clerks into something else or raise the ques- tion as to what particular name might have to be used in case a bond had to be put in suit ; and, therefore, we should advise that the instrument be made to the people ; indeed, we consider this as the / most proper. Receiver's Bond wnder Supplementary Proceedings. Know all men by these presents, that we, A. B., of, &c., G. JD., of, (&c., and K F., of c&c, are held and firmly bound unto the people of the State of New YorTc, in the sum of , lawful m.an£y of the United States. For tvhich payment, well and truly to be made, we bind ourselves respectivdy and our respective heirs, executors and administrators, estate and effects, firmly by these presents. Sealed Ijoith our seals. Bated the day of , 185—. Whereas, by an order dated the daif of •■ , 185 — , made in a certain action in the JUDGMENT DEBTOR. DEBTOR AND CREDITOR. 381 Court of, (&c., wherein G. H. was plaintiff and I. J. was defendant, lyy , Esquire, a justice of the said court, the above houmden A. B. was appointed receiver of the property of the said I. J. (a debtor by judgment in said action). Now, the condition of this obligation is such that, if the above bou/nden A. JB. shall faithfully discharge his duties as such receiver, under Statute, Code, Rules a/nd Practice, and otherwise perform his office in all things according to the true intent and meaning of the said order, then this recognizance to be void or else to remain in full force. Sealed a/nd delivered, in the \ presence of ) City, CownMj, and State of New Yorh, ss. C. D. and E. F., the above obligees, severally make oath and say, and f/rst the said C. JD. for himself smih, that he is a resident and holder within the State of New Yorh, and worth the sum of dolla/rs after all his debts and liabilities are paid and satisfied. And the said E. F.for himself saith, that he is a resident and holder within the said State, and worth the surni of , after all his debts amd liabilities a/repaid and satisfied. Sworn to, this day of ■ ■ 18 — , before me, This bond is to be acknowledged in like manner as deeds of real estate ; the justice is to indorse his approval, and it is then to be filed : Hule 71. f}' 382 RECEIVERS UNDER THE NEW YORK CODE Actions by the Receiver. It would seem to be a question under the Code, whether a Eeceiver should bring actions in his own name ? By § 111, every action must be prosecuted in the name of the real party in interest (except when brought by an executor, administrator or trus- tee of an expressed trust). Rule '76 of the Supreme Court declares, that every Receiver of " the debtor," (meaning, no doubt, "judgment debtor," although no prior rule shows what is here meant) shall, unless restricted by special order, have general power and authority to sue for and collect all the debts, ., and also E. F., as receiver of the property of the said G. D.^ say that at a special term of the Supreme Gourt of the State of New Yorlc, held at the Gity Hall in the dty of New Yorh, on the — day of , 18 — , before , Fsquire, a justice thereof in am, action wherein A. B. was plaintiff a/nd the said G. D. was defendant, on proceedings svp- plementa/ry to the execution issued and returned in such actdon, this plaintiff, F. F., was, by the said justice, appoimied receiver of the property of the said 384 RECEIVERS TINDER THE NEW YORK CODK C. B. • and thereafter amd before the commencement of the present action^ game his bond required by the said order^ as such receiver^ approved by the said justice^ which bond, with such approval, a/re on file in the said Supreme Court and were so there prior to the commencement of this action ; and thereupon this plaintiff, M F., became vested, under rules amd prac- tice and by force of the wording, and under the said order, with the property of the said 0. D., and with power to com/mence this action. That, &c., &c., &c. And these plaintiffs demand, and especiaJkj this plaint/iff E. F., as such recevver of the property of the said C. D., dematids judgment, &c., &c. The case of Porter v. WilUamis, to which we have before referred (pp. 3Y6, 377), shows that a receiver, appointed under supplementary proceedings, can bring an action to set aside an assignment of real and personal property made by the debtor in fraud of his creditor. We have procured a copy of the com- plaint there used, and insert it in a note, (a) {a) Supreme Court. William A. Porter Richard F. Clark and John L. Williams. The plaintiff complains of the defendants and shows to the court that heretofore, and on or about the 27th day of February last past, the Dutchess County Iron Company duly recovered a judgment in this JUDGMENT DEBTOR. CREDITOR AND DEBTOR 385 It will be observed that tbe action is there brouglit in the sole name of the receiver. This court in their favor as plaintiffs in such action, against the defendant, John L. Williams, who was defendant on such judgment for the sum of five hundred and eight dollars and thirty-two cents, which said judg- ment was duly docketed and the judgment roll in same duly filed in the ofBce of the clerk of Columbia County on the 27th day of February last past, as will more fully appear by reference to the same. That on the 28th day of February last past, an execution upon said judgment was duly issued against the property of the said John L. Williams to the Sheriff of the County of Columbia, that being then and ever since and still the County of the residence of the said John L. Williams, which said execution was afterwards duly returned by said Sheriff in the Clerk's office m said County, unsatisfied in whole or in part. That after the return of such execution as aforesaid, proceedings supple- mentary to such execution in behalf of the plaintiffs in such judgment were duly instituted against the said John L. Williams, in accordance with the provisions of the Code of Procedure in such case made and provided, under and by virtue of which proceedings and by an order duly made therein, the plaintiff in this action was duly appointed receiver of the property, estate and effects of the said John L. Wil- liams, with the usual powers in such cases made and provided and conferred, under and by virtue of an order made in said proceeding by Hon. Ira Harris, one of the justices of this court, and bearing date the 4th day of April, 1850. That the consideration on which such judg- ment was recovered accrued prior to the 1st day of January, 1850, as plaintiff is informed and believes, and so alleges. That on the 5th day of January, A. D. 1850, and for a long time prior thereto, the said John L. Williams had been the owner of and had in his possession a large amount of property, both real and per- sonal, and had due to him divers amounts of money from divers indi- viduals, as well as promissory notes and other instruments for securing the payment of money, more than sufficient in amount to pay and satisfy the claim for which the aforesaid judgment in favor of the Dutchess County Iron Company aforesaid was recovered. That on or about the 5th day of January last past, and while the said John L. Williams was so possessed of such property (as aforesaid), he, the said John L. Williams, on or about the fifth day of January, A. D. 1850, by an instrument under his hand and seal executed and delivered to the 25 386 RECEIVERS UNDER THE NEW YORK CODE. does not conflict with, what we have just above said in regard to our idea that in actions by a receiver defendant, Richard F. Clark, a certain instrument of assignment and trust, bearing date the day and year last aforesaid, a copy of which said instrument is hereto annexed, and marked Schedule A, and which said copy this plain tiflf prays may be referred io by him and taken as a part of this his complaint. That upon the execution of the said instru- ment as last aforesaid, he, the said Richard F. Clark, took possession of all the real estate of him, the said John L. Williams, together with certain of his personal property, books of accounts, claims and demands, notes, evidences of debt and choses in action, and has ever since that time, and still does pretend to hold the same, and to be entitled to hold and sell and convey the said property and collect the said ac- counts, claims, demands and notes and other evidences of debt, for the purposes in said instrument mentioned, and has sold a portion of said property and collected a part of said accounts, claims and demands and notes, and paid over a portion of the avails thereof in accordance with the terms of said instrument. That the whole amount of the aforesaid judgment in favor of the said Dutchess County Iron Company, and against the said John L. Williams, is, as this plaintiff is informed and believes, and so alleges, still due and unpaid, except as hereinafter mentioned. That this plaintiff has become under and by virtue of the said order so made as aforesaid and still is the receiver of the - property, estate, effects and choses in action of the said John L. Williams, and has duly executed the security as such receiver, required in and by the aforesaid order so made as aforesaid by the Hon. Ira Harris, and filed the same in the office of the clerk of the county of Columbia. And this plaintiff alleges and insists and submits to the Court that the aforesaid instrument so made and executed as aforesaid to the said Richard F. Clark by the said John L. Williams, is fraudulent and void as against the creditors of the said John L. Williams, and particu- larly as against the aforesaid judgment in favor of the said Dutchess County Iron Company, and as against this plaintiff as such receiver as as aforesaid. That the same is so fraudulent and void inasmuch as there is not a sufficient description therein of the real estate of the said John L. Williams, to pass the title to such real estate, and that no title to any of the lands hereinafter mentioned passed by the execution of the aforesaid instrument to the said Richard F. Clark, and that said JUDGMENT DEBTOE. CREDITOR AND DEBTOR. 387 to recover debts due to the debtor the actions would be best brought ill the names of both receiver and Clark did not acquire any title or interest in any lands or real estate of which the said John L. Williams was seized at the time of the execution of the aforesaid instrument. That the said instrument is also void, and was made with intent to hinder, delay, and defraud the creditors of the said John L. Williams of their lawful suits, debts, and demands, and was made so to hinder, delay, and defraud the aforesaid Dutchess County Iron Company in par- ticular. That at the time of the execution of the aforesaid instrument by said Williams to the said clerk, he, the said John L. Williams, was seized and possessed of certain real estate, situate in the town of Ancram, Columbia county, consisting of the following, to wit : one farm, usually called the Silvernail farm, containing about one hundred and eighty- seven and one-half acres. Another tract of land containing about two hundred and thirty-eight acres, and consisting of a tract of about one hundred and four acres, usually called the Kisselbrack farm ; a track of about one hundred and two acres called the Tamarack Swamp, and another track of about thirty-two acres, lying in one body. Another lot'Containing about one hundred and thirty-two acres, usually called the drowned lands, and another lot of land usually called Plass Hill lot, containing about eighty-two and one-half acres. And that he was also seized and possessed of a house and lot situate in the first ward of the city of Hudson, on the south side of Warren street, being the same premises in which the said Williams resided and transacted his business as a merchant. All of which said real estate, he, the said Clark, claims has passed to him under the said instrument so executed to him by the said John L. Williams as aforesaid. That a portion of said real estate is advertised for sale by the said Richard F. Clark, and that said Clark claims and exercises as plaintiff is informed and so believes, full power, authority and control over all of the aforesaid property, both real and personal, and the effects and choses in action of the said John L. Williams, and claims to dispose of the same as in and by said instrument is provided, and as this plaintiff is informed and believes and so alleges will so dispose of the same, un- less prevented by the order of this court, and to the great injury of this plaintiff as such receiver as aforesaid. Plaintiff further shows that as he is informed and believes and so alleges the fa<;t to be, after the issuing and return of the execution as 388 RECEIVERS UNDER THE NEW YORK CODE. debtor. There is a distinction. A receiver is a trustee, and in that capacity he itiay very well sue above set forth and described, and on or about the 11th day of April instant, another execution against the property of the said John L. Wil- liams was issued upon the aforesaid judgment to the sheriff of the county of Columbia. That at the time of the issuing of the same, Sam- uel Bryan was indebted to the said John L. Williams in the sum of one hundred and ninety-one dollars and thirty-five cents or about that amount, on account for groceries and merchandise sold by said Wil- liams to him, the said Samuel Bryan, prior to making of the aforesaid assignment by the said Williams to the said Clark, and which said account is one of the demands due to said Williams which said Clark claims to be entitled to collect and receive as such assignee as aforesaid. That the said Samuel Bryan, upon the issuing of the execution last aforesaid, paid or caused to be paid to the said sheriff the whole amount of the said account, that is to say, the aforesaid sum of one hundred and ninety-one dollars and thirty-flve cents, and took the receipt of the said sheriff therefor, which said sum has been applied by the said sheriff upon the aforesaid execution last aforesaid named. That before the payment of such sum to the said sheriff by the said Samuel Bryan, an indemnity in behalf of the said Dutchess County Iron Company had been executed to the said Samuel Bryan, to hold harmless the said Samuel Bryan, of and from all liability in consequence of such payment to the said sheriff. That said Clark, as plaintiff is informed and believes and so alleges, still claims the right to enforce the payment of the same to him from the said Samuel Bryan, notwithstanding the payment so made to said sheriff as aforesaid, that in case the said payment so made by said Sam- uel Bryan to said sheriff, is a good and valid payment, and is properly applied on said execution, then the balance of the amount of said judg- ment after the payment of said sum of $191 35 after allowing for sheriff's fees is all that is due on the same, but if such payment is not properly made or applied, then the whole amount of such judgment remains due and unpaid. The plaintiff, therefore, prays that an order may be made restraining him, the said Clark, from granting, selling, assigning, disposing of or in any manner interfering or parting with all and every of the aforesaid property either real or personal, which shall or has come to his hands, or which he claims under and by virtue of the aforesaid deed of assignment in trust, or the avails or the rents, issues^ and profits of the same, which has or shall come to his hands, and also JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 359 to set aside an iag;trument which creates a cloud of fraud and so get quiet possession of property which appears (by virtue of the Code) to vest in him, while the commencement of an action for money on from collecting, selling, assigning, paying over, or in any manner part- ing with any of the books, accounts, notes, choses in action, equitable interests, money or effects of the said John L. Williams, which have or shall come to the hands of the said Olark, or which he claims under or by virtue of the said deed of assignment or the avails thereof, and from col- lecting or in any manner interfering with the same. Plaintiff further prays that the aforesaid deed of assignment so exe- cuted as aforesaid to the said Richard F. Clark may be decreed and adjudged to be void, and that the same may be set aside, and that the said Richard F. Clark may be adjudged and decreed to transfer and deliver to this plaintiff all the property, estate, money, choses in action, accounts, interests and effects of the said John L. Williams, or the avails which have or shall hereafter come to the hands of the said Clark as such assignee as aforesaid. And that the aforesaid judgment of the Dutchess County Iron Company and all costs which have subsequently accrued under the same in the appointment of this plaintiff as such receiver as aforesaid or otherwise, may be satisfied and paid out of such property, interests and effects, or thS avails of the same ; and that the defendant, Richard P. Clark, may be adjudged to account for all the property, money, interests and effects of every name and nature which has or shall come into his hands as aforesaid, or for such further or for such other decree or judgment as to the court may seem meet and proper. Plaintiff further prays that the said Richard P. Clark may be enjoined also from proceeding to collect the amount of the aforesaid account so paid as aforesaid by said Samuel Bryan to said Sheriff in manner as above described, and that the said money so paid as afore- said may be adjudged and decreed to have been properly paid and applied upon the said judgment and execution. EDWARD P. COWLES, Plaintiff's Attorney. (Sworn to by the receiver, and a confirmatory afiSdavit of the attorney for the plaintiff annexed.) 390 KECEIVERS UNDER THE NEW YORK CODE. a debt, may (as we have observed, under such Code) raise a question of interest in the subject. If the goods of a judgment debtor have been fraudulently assigned and the fraudulent assignee is made a party to an action against such debtor and is irresponsible, the proper course, where such as- signee claims to be in possession of the property, is to have the receivership extended to him and to obtain an order that he, as well as the judgment debtor, deliver over properties. Under the Y6th rule of the supreme court, the receiver has power to sell desperate debts at public auction, on giving at least ten days' public notice. Form of such notice. Cowt. A. B. against a D. Notice. The undersigned receiver will sell, through O. W., auctioneer, at the Merchant^ Ma- change in the Gity'of New Yo7'\ on the day of , atVi d'cloclc noon, to the highest Udder, for cash, the following debts and claims : A debt of % against for merchandise sold in the month of 18 — . The promissory note of, c&c. (describing it). A claim against, &c. (describing it). New Yorh, ' , 18—. K F., Becei^er. JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 391 The Code of Procedure is silent in regard to proceedings of receiver, creditor and debtor after^ the appointment of the former; nor is there any printed rule as to the way in which any one should act when the receiver is put in possession of prop- erty. A receiver — this is a general principle — should take no other active steps than those which have reference to the possession and protection of prop- erty, and cannot, properly, make any application to the court, save in those directions. He must leave the parties, the one to obtain payment and the other to get back all proper balance after his creditor is legally satisfied. The receiver, however, should stand ready to give such certificates to either party as may be required to sustain all needful motions. It is very probable that a justice, when the receiver has funds enough to pay in a single and simple case, w6uld by one order, settle and direct the sum to be paid to the creditor and his attorney, the amount of commissions and fees to be retained by the receiver and payment of balance to the debtor, and therein direct that the receiver should take receipts on the back of the order and that such receipts should be a discharge for ever. We here give a precedent for such an order : Order for a Receiver to pay off a judgment debtoi\ (Title.) It appearing to my satisfaction^ under swpplementr ary proceedings that the defendant^ 0. Z>., is indebted 392 RECEIVERS UNDER THE NEW YORK CODK to the plaintiffs on the judgment herein in the sv/m of % , with interest frmn the day of 18 — , and that , receiver herein has money sufficient to satisfy the samw : I do hereby order the said receiver on hawing tendered to him a satisfac- tion-piece [properly acknowledged^ of such judgment, to pay its amount with running interest, and cancel the said judgment / also pay the plaintiff, on his receipt or that of his attorney % fw his costs / that he, the said receive)^, retain % • for his cliarges and commissions ; and that he deliver and pay all balance of moneys and effects in his hands to the said defendant. And that he take receipts for all he shall so pay, upon a certified copy of this order, which shall he a full discharge, and he adding, also, thereon, a receipt for his otvn commissions and charges. That he file the same with the clerk where his bond was filed • arid that the said clerk thereupon ca/ncd the receiver'' s said bond and deli/ver the same ■ to him. Cases, as we have shown, or rather the Code, through the adjudication of cases, decides that the receiver becomes vested with the real estate by force of the order of appointment. How far the payment, through a receiver, of a judgment, may, of itself, be sufficient in effect to throw off this vesting and carry back all estate to the debtor, may, per- haps be a question ? It would be best, at any rate, in the order which directs payment, to require the creditor to leave a satisfaction-piece with the re- ceiver, whose duty it should be to file and cancel JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 393 tte judgment. As the vesting of the realty in the receiver is but the vesting in a mere trustee, and for a purpose thus accomplished, the satisfying the judg- ment may be well considered as sufficient to cause a reversion of the property unapplied to the debtor. The form of order last given might be used in a case connected with real estate but otherwise ordi- nary in its circumstances. Although a justice will feel induced to carry through a case before him in chambers wherever it can be done without a reference {Hollister v. SJiaf- ford^ 1 Code Rep. N". S. 120), yet the time of judges and courts is not to be taken up with matters which a referee might very well accomplish ; and the Code has encouraged, as it would seem, that cases under supplementary proceedings should go before a referee, § 300. So that, in proceedings where a receiver is extended over two or more cases, a refer- ence might be had, whenever he has funds to satisfy one or more creditors in full, or has, to a certainty, got together all avails. It is believed that he cannot be compelled to pay a mere dividend, and, therefore, not be required to account and pay in cases under summary proceedings, so long as he has property stiU to collect or turn into money, with a view to pay in full. No doubt, on proper complaint, based on affidavit and motion, he could be compelled to account and be required to expedite collections, or even be re- moved, for he is an officer of the court. When a receiver has been extended and he has moneys enough to pay the first creditor, a motion 394 RECEIVERS UNDER THE NEW YORK CODE. might be made by the latter, based on a certificate from the former, of amount of cash in his hands and a notice to the after-judgment creditors over whose claims he has been extended: Toddy. Orook, 4 Sand. 694. And upon the coming on of the mo- tion; the judge might adjudge judgment under the following form of order : Order for an extended Receiver to pay off the first judgment and to continue Ms duties. (Titles of all the actipns.) It appearing to my satisfaction^ under supplemen- tary proceedings, that receiver therein.^ has suf- ficient moneys in hand to pay off A. B., plaintiff in the first action : I do hereby order the said receiver ., on having tendered to him a satisfaction-piece (jyi'o- perhj acknowledged)., to pay off the judgment in such fi/rst action, amcmnting to $ , with interest from the day of , and cancel su^h judgment ; also pay the said plaintiff A. £., on his receipt or that of his attorney, $ for his costs. Thqt the receiver take a receipt, as well for the omiount he shall so pay on satisfying such judgment, as for such costs, on the back of a certified copy of this colder ; and that he, the said receiver, be continued in his duties as to other actions over which he has been extended. And where a receiver lias collected enough to pay off all or more than one judgment creditor whose case was covered by his receivership, then could JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 395 come a motion on the part of the plaintiff in any one of the cases for a reference, based on his affida- vit, the certificate of the receiver as to amounts on hand, and on notice to the other creditors. The following might be the form of order on a motion to pay off all the plaintiffs : Order for cm extended Receiver to pay off several judgments^ according to priority. (Titles of all the actions.) It appea/ring, under supplementary proceedings Tierein^i that the receiver^ , has moneys sufficient to satisfy all the judgments of the respective plaintiffs : I do hereby order that a reference he had to , o/, tfic, who^ as referee^ shall ascertain the amount of such respective judgments amd their priorities ; that the said receiver, under the direction of the said referee, on having satisfaction-pieces tendered to him (^properly acknowledged^, pa/y the amownts so ascer- tained and cancel the judgments of record ; amd also pay the sum of % as costs to each of the said plaintiffs, A. B., C. D., E. F. ; that he, the said re- ceiver, pay the referees fees, amd also retain such reasonable amount for his own commissions and charges as the referee shall name and endorse upon a certified copy of this order. Also, that the receiver take receipts for all he shall so pay to the plaintiffs and referee, upon the back of such certified copy, which shall be a full discharge. That he file ths 39 1) RECEIVERS UXDER THE NEW YORK CODE. same with the clerle where his hond was filed^ and that the -said derh thereupon cancel the receiver'' s last hond and deliver up the same to him. Judgment Creditors' suits generally. Althougli the Code of Procedure of tlie State of New York, by compelling a personal examination of a judgment debtor before a judge, has done away "with a discovery of funds through bill and an- swer, yet it has not destroyed the right of a judg- ment creditor to reach, through an equity action, estate, property and choses in action fraudulently assigned, covered or held, nor to upset a fraudulent judgment. As this is so and as, in several States, where courts have chancery and equity powers and pro- ceedings, the filing of bills by judgment creditors are as broadly worked as they were in the late court of chancery of the State of New York, we shall go on to give much of the matter on this subject which appeared in the first edition of our work and carry down decisions to the present time. The case of Hodden v. Spader^ in the court of errors of the State of New York, 20 John. K. 554, and those of Taylor v. Jones^ 2 Atk. 600, and Edgell V. Haywood^ 3 ib. 352, in the English court of chancery, show that after a party has proceeded to judgment and execution at law, he may, by the aid of' a court of equity, reach property in the hands of a third party or in the power or under the covert JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 397 control of the debtor wMcli was not in itself liable to execution ; and see Candler v. Pettit, 1 Paige's C. K. 168 ; Weed v. Fierce, 9 Cow. 722 ; Lewis v. ZaiicK, 2 Sim. 388. And the Revised Statutes have, in distinct words, given this remedy : " Whenever " an execution, against the property of a defendant, " shall have been issued on a j udgment at law and " shall have been returned unsatisfied, in whole or " in part, the party suing out such execution may file " a bill in chancery against such defendant and any " other person, to compel the discovery of any prop- " erty or thing in action, belonging to the defendant, " and of any property, money or thing in action due " to him or held in trust for him ; and to prevent "the transfer of any such property, money or thing "in action, or the payment or delivery thereof, to "the defendant, except where such trust has been " created by or the fund so held in trust has pro- " ceeded from some person other than the defendant " himself. " The court shall have power to compel such dis- "covery, and to prevent such transfer, payment or "delivery, and to decree satisfaction of the sum " remaining due on such judgment, out of any per- " sonal property, money or things in action belong- " ing to the defendant, or held in thrust for him, with " the exception above stated, which shall be discov- " ered by the proceedings in chancery, whether the "same were originally liable to be taken in exe- " cation at law or not:" 2 R. S. 174, § 41, 42. And there is also an express authority to file a bill when, a fraudulent judgment has been confessed, 398 RECEIVERS UNDER THE NEW YORK CODE. wMch. we shall refer to again, in an after part of this chapter. It will be apparent that such an officer as a re- ceiver must generally be required under the above statute ; and the appointment has been of daily occurrence. It has been declared to be a matter of course where the equity of the complaint is not denied upon the hearing of the application : Blood- good V. Ola7% 4 Paige's C. E. 574. The case of Corning v. White, 2 Paige's C. E. 567, (1831,) ap- pears to be one of the first in which a receiver is directly mentioned upon an ordinary judgment creditor's bill- filed under the statute. (a) "The "receiver," said the chancellor, "is an officer of the " court who takes the property and holds it subject " to the equitable claims of all parties ; and after " payment of the debt of the complainants, he will " be directed to bring the surplus into court, to be " paid over to whoever may be entitled to the same." And again : " A receiver must be appointed to re- " ceive the said property, choses in action and effects, " to convert them into money and to apply the same " in satisfaction of the judgment and costs. There " must also be a reference to a master, residing in "the county of Onondaga, to appoint a proper " person as receiver ; and to take from him sufficient " surety for the execution of his trust. And the " defendant must disclose, assign and deliver over, " on oath, to such receiver, under the direction of (a) The case of Edmeaton v. Lyde was before the passage of the Revised Statutes. JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 399 "sucli master, all such property, clioses in action. " and effects and the proceeds of sucli as liave been " received and collected by him since the commence- "ment of this suit. The receiver is to have the " usual power to compromise and collect the debts " and convert the property and effects into money " and to apply the same in satisfaction of the com- " plainant's debt and costs. And either party is to " be at liberty to apply to the coui't, on petition, for " such further directions in the premises as may be " necessary." , In all these cases of bills to reach the equitable property of debtors, on an execution of law returned "unsatisfied, it is the duty of the complainant, within a reasonable time after he has obtained an injunction, restraining the defendants from collecting their debts or disposing of their perishable property, to apply to the court and obtain the appointment of a receiver or make some other provLsion for the col- lection of the debts and the preservation of the pro- perty ; otherwise the injunction should be dissolved so far as to enable the defendants to preserve it themselves : Oshorn v. Heyer^ 2 Paige's C. R. 342. An application for the receiver on a judgment creditor's bill may be made before answer : Blood- ■ good V. Clar\ 4 Paige's 0. E.., 574 ; and it has be- come a common practice to move for a receiver, on a judgment creditor's bill, immediately after a sub- pena has been served. However, the vice-chancellor of the first circuit did not sanction the practice, unless a copy of the bill has been served : Hart v. Tims, 3 Edwards's V. C. Rep. 226. Nor would he 400 RECEIVERS UNDER THE NEW YORK CODE. allo-w a receiver to be moved for until tlie appear- ance day in the subpena lias passed. There is a large class of cases where voluntary deeds by insolvents, in favor of wife and children, have been set aside. In sach cases, a receiver could be obtained where he was wanted. Most of the re- ported cases of this kind have been decided without the necessity of a receiver. Where a judgment is recovered in a court of lim- ited jurisdiction, as, for instance, in the court of common pleas, with an execution returned unsatis- fied, the plaintiff may file a creditor's bill, founded on such return, although the defendant resides and has property in some other part of the State : Legget V. Hopkins^ (before the chancellor) 20th March, 1838 ; but this will not hold where the judgment is in the supreme court and the plaintiff files the ordi- nary bill to obtain satisfaction of a debt out of pro- perty of the defendant which could not be reached by execution at law. The debtor is presumed to have property where his residence is fixed ; and an execution issued to and duly returned by the sheriff of that county, would be prima facie evidence to this court that the legal remedy was exhausted: Child V. Brace, 4 Paige's C. R. 309. But, where a judgment creditor's complaint is filed to remove an obstruction, fraudulently or inequitably interposed to prevent a levy or sale, as, for instance, an invalid assignment, there the court will allow a receiver of the property embraced thereby and being within the bailiwick of the sheriff to whom the execution was directed, although an execution may not have JUDGMENT DEBTOR. CREDITOR AND DEBTOR. 401 issued to the very county wliere a defendant resided ; but no receiver or injunction will be had on such parts not within the county from which the execu- tion really did issue. Thus, in 8cholefield and otliers V. Hull and others^ before the chancellor, 6th August, 1839, the defendants, Edward Hull and William Hull, had been partners in the city of New York as hardware merchants; and made an assignment of their stock in New York. They both resided at the time in Brooklyn. The complainants had issued their execution to the sheriff of the city and county of New York ; and on the strength of his return and with a view to set aside the assignment for fraud, they filed their bill. An injunction had been obtained ; and the vice-chancellor, on a motion, upon bill and answer, granted a receiver of all the estate and effects of the debtors and refused to dissolve the injunction. On appeal, the chancellor said : " There " is a technical difficulty, however, in this case which " does not appear to have been adverted to in the " court below, which renders the decision erroneous, " so far as relates to that part of the assigned pro- " perty which was not bound by the complainants' "judgment and which was not a proper .subject of " sale upon the execution issued to the sheriff of the " city and county of New York. The complainants " have not exhausted their remedy at law against " the appellants so as to authorize them to proceed " against the latter in this court to reach their equi- " table interests and choses in action generally. It " appears by the bill that the judgment was in the " supreme court, so' that the execution might have 26 1.02 JUDGMENT DEBTOR. been issued thereon to any county in tlie State, and yet it is issued to tlie sheriff of New York only, "without any averment in the bill that both or either of the defendants resided there at the time the execution issued. On the contrary, it suffici- ently appears from the bill itself that one of them, at least, was residing at Brooklyn from the time of making the assignment ; and that he had household furniture there which was a proper subject of sale on the execution — the assignment thereof being void. And by the answer it appears that both defendants lived there. The complainants, there- fore, were premature in filing their bill to reach any property, except that as to which they had acquired some claim by virtue of the lien of the judgment or of the issuing the execution (jRead v. Wheaton, in chancery, July 19, 1839). The only claim which the complainants have upon the as- signed property is, as to the real estate upon which their judgment was a lien, as to which this bill is properly filed to set aside the assignment as fraud- ulent and to restrain the assignees from selling-it to a bona-Jlde purchaser and as to that which would have been reached by the execution issued to the city of New York if it had not been fraudulently withheld from the sheriff under and by virtue of the fraudulent assignment, or rather by color thereof The order appealed from must, therefore, be modified so far as it authorizes the appointment of a receiver as to any other property or the pro- ceeds of the sa],es of any other property than the real estate and the goods which were in the store CREDITOR AND DEBTOR. 403 " in New York at the time the execution was issued "to the sheriff of that city. And the injunction " must be dissolved unconditionally so far as relates "to any other property or the proceeds thereof, " whether included in the assignment or otherwise. "Neither party is to recover costs as against the " other, upon this appeal ; and the proceedings are " to be remitted to the vice-chancellor." With regard to the point that a plaintiff must exhaust his remedy before he files a bill, it may be well to mention the cases of Congdon v. Lee^ before the vice-chancellor of the first circuit : 3 Edwards's V. C. Eep. 304. An order for a receiver had been obtained : and it required the defendant to transfer and deliver over all his property. On the reference, the defendant was examined ; and it appeared, by his testimony, that the defendant had no property except certain lots of land in the city of New York (bound by the judgment). The master called on the defendant to sign a deed of this real estate to the receiver ; but which the defendant, under the advice of counsel, refused to do. A motion was then made for an attachment. The affidavits read in opposition fuUy showed that, at the time of obtaining their judgment and filing their bill, the complainants knew of this real estate, the defendant having, sev- eral times, pointed it out and offered it to them. The vice-chancellor refused the motion for an attach- ment, on the ground, as is believed, that the com- plainants had not exhausted their remedy at law. The latter appealed; and the chancellor reversed the order below, without, however, going at all into 404 JUDGMENT DEBTOR. the points raised by counsel ; deciding solely on the ground tliat so long as the order appointing the receiver and directing the defendant to assign " all his property and estate" remained unaltered, he would not look into the merits or demerits — it was enouo-h that the defendant had refused to do what the order enjoined ; but the defendant had liberty to move for a stay of proceedings until a motion in the court below could be made for a vacatv/r of the order appointing the receiver. The defendant ap- pealed from this decision to the court of errors, instead of moving in the court below ; and the appeal is still pending. Should the court of dernier resort consider that the matter embraces a mere point of practice, the defendant will not be able to get into the merits (a) : Rowley v. Van Benthuysm, 16 Wend. 369. By the practice prior to the Code, a debtor was compelled to execute a formal assignment to a re- ceiver, in a creditor's suit, even though he swore he had no property : Ohipmcm v. Sabbaton^ 1 Paige's C. K. 4T ; M,tzburgJi v. EvervngJiam, 6 idem^ 29. The vice-chancellor of the first cu'cuifc (August, 1839), notified the bar that the orders generally taken for receivers in cases of judgment creditora' bills were too broad ; and although it might be true that a defendant would be compelled to make a general assignment where the order was general, yet the most proper form was that the master should appoint a (a) The author has been unable to trace this case to an ultimate decis- ion, and thinks it must haye been compromised. CREDITOR AND DEBTOR. 405 receiver of only so mucli and such part of the debt- or's property as would be sufficient to pay the com- plainant's debt, with interest and costs. On an application to his Honor, Chancellor Walworth, upon this point, the author understood that there had been no decision by him precisely upon it; but that it was a matter of discretion in the court to direct the assignment to a receiver to embrace the entire property of the defendant or only so much as was necessary to satisfy the judgment, and that there was no good reason, in general, for requiring him to make a sweeping assignraent. Also, that the chancellor had allowed defendants to give security for the payment of the judgment or to bring the money into court. In Oshorn v. Heyer^ 2 Paige's C. E.. 342, the court pointed out the course to be pursued, in regard to a receiver, where more than one judgment creditor's biU was filed ; and the matter was afterwards fixed by a rule of the court, so that there would be no more than one receiver (provided neither fraud, collusion nor impropriety were connected with his appoint- ment : Chancery Rules, 193, 194). This, in fact, is the English practice of "extending" the receiver over another suit : Thackaberry v. OJiristian, 1 Ho- gan, 109. It may be here observed, that a receiver in a judg- ment creditor's suit holds the property and effects of the debtor for the benefit of all creditors who have commenced or shall commence similar suits during the continuance of his trust, to be disposed of accord- ing to their legal or equitable priorities : JRule , 193 in Chancery. 406 JUDGMENT DEBTOR. The court, by reference or otherwise, ■will ascer- tain, if practicable, by the oath of the defendant or otherwise, whether any other suit has been com- menced against the debtor. If any other suit has been commenced, the plaintiff therein is to have no- tice to attend before a referee, and must likewise have notice of all subsequent proceedings in relation to the said receivership, in like manner as if he were a party to the suit in which the receiver is appointed ; and he may except to reports or apply to the court for directions to the receiver in like manner. "Where another suit is commenced, after the appointment of a receiver, the same person may be appointed re- ceiver in such subsequent suit, and in that case he will have to give such further security as the court shall direct : Ohanoery Rule 194 ; and see an after branch of this chapter : " Receiver's powers and " restrictions under judgment creditor's bill." It may happen that the defendant is called before two referees or masters in separate suits and where each complainant is trying to get a receiver. Al- though this may occur, yet the defendant cannot object to be examined by either. In SitchcoGk v. 8t. John, MS., before the chancellor, 8th March, 1839, an order was had for a receiver in a first suit, and a summons, from Master Ruggles, was served on the defendant. This bill was filed before the vice- chancellor of the first circuit. Another bUl, by a different complainant, was filed before the chan- cellor ; and an order also had for a receiver. The solicitor in this last suit obtained a summons from Master Cambreleng; but the defendant dechned CREDITOR AST) DEBTOR. 407 being sworn or examined, " on the ground that a " summons for the same purpose had been pre- "viously served on him requiring his attendance " before another master in the city on a similar ref- " erence in another cause." The master (Mr. Cam- breleng) certified the fact ; and a motion was made thereon for an attachment. The chancellor directed the attachment to issue, unless the defendant should attend before the said master within ten days after service of a copy of the order and submit to such examination on oath as the said master shouLd direct, in conformity with the order of reference, and pay the complainants ten dollars for the costs of their motion. As to the extent to which a debtor could be ex- amined touching property, before the passage of the Code, see Fitzhurgh v. Everingham^ 6 Paige's C. E. 29. Where the examination of a judgment debtor has been completed, it is not right to oblige him to undergo another general examination. The best course will be for the party, who requires an addi- tional examination, to satisfy the of&cer that the questions are material, necessary and proper. These questions should be propounded in writing and laid before the officer ; and after this is done and he is satisfied they are material, necessary and proper, he can grant a summons and restrict the matter of the reference to these questions : Per V. O. M-Coun^ in Stwrr et d. v. Morange. (MS. 24th Sept., 1839.) A mere right of action of a judgment debtor for a personal tort, as for assault and battery, slander or 408 JUDGMEXT DEBTOR. malicious prosecution, cannot be reached by a cred- itor's bill. Nor will it pass to tbe receiver under the usual assignment by tbe defendant : Hudson v. Flets, 11 Paige's C. K. 180. But tbe rigbt of action of the judgment debtor for an injury to property to which his creditor had a right to resort for the payment of his debt and by which injury such property is destroyed or dimin- ished in value, is a chose in action which may be reached by a creditor's bUl and applied in payment of the complainant's debt : II). A receiver will not be appointed in a creditor's suit where it appears from the bill itself that the plaintiff's remedy at law has not been exhausted : Starr v. Raihhone^ 1 Barb. Supreme C. Rep. TO. Judgment Creditor'' s Suit against Fraudvlemt Assignment. The court has gone a great way in granting re- ceivers in creditors' suits where the debtors have made assignments and the assignees have not had an actual and permanent change of possession. In Hart v. Acker., before the chancellor, 3d April, 1838, it appeared that a store of dry goods in the city of New York, had been assigned for the general benefit of creditors. One of the assignees took possession and helped to make out an inventory; but the debtor, for a short time after the assign- ment, aided in retailing the stock in the store, although he accounted to his assignee. The answer of the defendants denied all fraud ; and showed that CREDITOR AND DEBTOR. 409 every thing had been done in good faith. But the chancellor said : " It is very evident, from the " answers of the defendants, that there has been no " actual change of possession of the property as- " signed and no good reason is given which could " excuse the leaving of the property under the con- " trol of the insolvent assignor. This is, therefore, " under the provisions of the Revised Statutes, con- " elusive evidence of fraud in the assignment. Be- " sides, this court has frequently decided that it is a " breach of trust, on the part of an assignee of a store " of goods for the benefit of his creditors, to carry " on the store for the purpose of retailing out the " goods, instead of disposing of them at once at their " fair value and distributing the proceeds among the " creditors without any unreasonable delay ; espe- " cially in the city of New York, where goods may " readily be sold at auction for their real cash value. "The creditors, whose debts are due, are entitled " to their money as soon as it can be fairly raised " by proper sale of the goods on hand, without a " great and unnecessary sacrifice ; and the assignee " has no right to delay them by retailing them for " the purpose of making the most of the property " by retailing it out on credit in order to benefit the " assignor. It is not necessary, therefore, in this " case, to inquire whether the assignment was abso- " lutely inoperative, for any other reason. " The application for a receiver is, therefore, " granted ; and a reference to a master must be " made in the usual form in 'such cases." This suit was compromised. 410 JUDGMENT DEBTOR. In Scholefldd and others v. HiM et «Z., wliicli arose in 1838 (Jf/Sl), there had been a formal delivery of a stock of goods to assignees, but the debtors were allowed to remain in the store with the goods and re- tail them under a written power from the assignees, which made them agents with a salary. It was dated the same day as the assignment, {a) At the time of the assignment, the debtors had a lease of the premises in which their stock was contained; but it did not appear to have been made over to the assignees. These assignees denied all fraud, and averred, very strongly, that the debtors were honest ; that the creditors were benefited by having the debtors remain to get rid of the stock as agents of the assignees ; and that one or other of the assignees (a) The following is a copy of the authority : " Whereas the store of "goods and dehts of E. & W. H. have been assigned to J. B. C. and " J. H. And whereas it is necessary that we should employ some per- " sons to take the care, charge and management of the said business; " and we having full confidence in the integrity and capability of the " said E. & W., do hereby agree to allow them the sum of one hun- " dred and fifty dollars each, for each month they shall be so employed " in our said business, to be paid to them from the estate assigned to us. " And we further agree to permit the said E. & W. to employ such " clerks and other persons as they may find necessary to collect their " debts and to sell and dispose of the goods and property now on hand " and to pay such debts as we are now responsible for ; provided always " that the whole business shall be managed under our joint direction as " we may, from time to time, advise and direct ; and also that a full and " regular statement of all money received and paid out by them be ren- " dered to us once every month during the continuance of their appoint- " ment. It being expressly understood that the business of the firm is " to be brought to a close and the debts collected and paid as soon as it " can be done to the best advantage of the creditors of the said firm. " Dated this 20th day of May, 1837. (Signed) J. B. C, J. H." CREDITOE AND DEBTOR. 411 was almost daily at tlie store. One of the debtors continued to post and keep the books, while the other acted as salesman. The answer of the assign- ees was very full ; and, on comparing it with the answer filed in Hart v. Acker ^ supra, many of the denials were very similar. On a motion, upon bill and answer, for a receiver and a cross-motion to dis- solve the injunction, the vice-chancellor refused the latter and allowed the former. An appeal was taken to the chancellor, who, inter alia^ said : " " there really cannot be a doubt, under the provis- "ions of the Revised Statutes, that the assignment " was fraudulent and void as against creditors. Al- " though there was a pretended delivery of the goods " in the store, it is evident that there was no such " actual and continued change of possession as the " statute contemplated. By a reference to the an- "swer of the appellants, it wUl be seen that the " assignors had a lease of the store, in which the "goods were, for a term of years, ending in 1840 ; " and there is no pretense that this lease was as- " signed to Clark and J. Hull (the assignees). The "goods, therefore, remained in the store of the as- "signors, over which they continued to have the " legal as well as the actual control. And as to the "public, the business appeared to be carried on by " them in the same manner as it had been previous " to the assignment. It appears to be an assignment " of all the property for the benefit of certain pre- " ferred creditors whose debts were not, generally, "then due, and under an agreement with the as- " signees that the assignors should have the manage- 412 JUDGMENT DEBTOR. " ment and control of the property as before, and " the right to retain large salaries out of the business " or the proceeds of the assigned property for their "own support in the mean time. If transactions of " this character are to be sustained by courts of jus- "tice and bankrupt debtors can be permitted to " make such arrangements with their assignees as the " tacit conditions upon which they are to be pre- " ferred, the honest but unfortunate creditor will be " placed completely at the mercy of theii^more for- " tunate debtors, who wUl hereafter be permitted to "live in ease and affluence upon the proceeds of that " property which ought, in justice, to be applied im- " mediately to the payment of their honest debts. " The vice-chancellor was, therefore, clearly right in " supposing the assignment to be fraudulent and " void." The circumstance of a want of change of posses-' sion is also taken notice of in Butler v. Stoddard^ before the chancellor, l^tJi April^ 1838. The com- plainants were judgment creditors of the defendant Stoddard ; and their execution against him had been returned, unsatisfied. The bill was filed to reach his property and choses in action ; and to set aside an assignment thereof, made to the defendants Thur- ber and Townsend, as fraudulent. While the com- plainants were proceeding in their suit at law against Stoddard for the recovery of their debt, he made an absolute assignment of his store of goods, inven- toried at cost prices at about four hundred and thirty-six dollars ; and of all his debts and choses in action of the nominal amount of twelve hundred CREDITOR AND DEBTOR. 4^3 and nine dollars ; of which debts, according to tlie testimony of the witnesses, about eight hundred and seventy-five dollars were good and collectable. The consideration of this assignment, which was absolute on its face, was a debt due from Stoddard to the purchasers for about seven hundred dollars. And Stoddard, after the execution of the bill of sale, was left in the possession of the store of goods and of the notes and accou«its, to sell the goods and collect in the debts for the sole benefit of Thurber and Town- send ; they paying him a reasonable compensation out of ther^^ame for his services. Chancellor Wal- worth gave the following decision : " Upon a careful " examination of the answers of the defendants and " the evidence in this case, I think the conclusion of "the vice-chancellor that the assignment of Stod- " dard's property was not fraudulent, was erroneous. "Independent of the legal presumption of fraud, " arising from his continuance in possession after the " execution of the absolute bill of sale, I think the " amount of property assigned was, at its fair value, " much more than sufficient to pay the debt due to " the purchasers. The case would have been some- " what different if Townsend and Thurber had taken " the property in absolute satisfaction of their debt " and at their own risk or if they had taken an " assignment of the property in trust for the other " creditors, after securing to themselves a preference " in payment out of the same. But, as I understand " the transaction, the bill of sale to them was abso- " lute, so as to give them the full benefit of all the " property and debts assigned if the amount reali^ied 414 JUDGMENT DEBTOR. " therefrom should be more than the amount of their " debts, but to be applied to the extinguishment of " their debt pro tanto only if the proceeds of the " assignment should for any reason turn out to be " less. As the nominal amount of the goods and " debts assigned was more than double what was " actually due to Thurber and Townsend, I can see " no reason for the making of an absolute sale and " assignment of all this property t^ them without " any risk of loss on their part, unless it was upon " some secret or implied understanding between the " parties to that transaction to keep the surplus from " other creditors and for the benefit of Stoddard. " Besides, there never was, in fact, any change of " possession of the assigned property, untU after the " issuing of the complainant's execution : as the " nominal appointment of the seller, as the agent of " the buyers, to retain the possession and retail the " goods and collect in the debts for them, without " any visible change in the mode of doing business " at the store, was not a change of possession, within " the intent and meaning of the statute on this sub- " ject. The sale must be accompanied by an actual " and continued change of possession, as well as a " nominal and constructive change or the transaction " will be deemed fraudulent as against creditors. " And a construction which would allow the vendor " or assignor of a store of goods to continue in pos- " session thereof and to retail them out as the agent " of the purchaser or assignor, would render this " statutory provision, for the prevention and detec- " tion of frauds, a mere nullity. CREDITOR AND DEBTOR. 415 " For these reasons, the decree of the vice-chan- " cellor must be reversed, "with costs ; and a decree " must be entered declaring the assignment from " Stoddard to Thurber and Townsend fraudulent and " void as against the complainants. But, as the com- " plainants had no lien on the goods as against other " creditors until the issuing the execution or upon " the debts and choses in actipn of Stoddard until " the filing of the bill in this cause, the moneys re- " ceived by Thurber and Townsend before the filing " of the bill, for debts collected before that time or " for goods sold before the complainants obtained a " lien thereon by the issuing of their execution, the " defendants Thurber and Townsend have a right to " retain such moneys in part payment of their debt. " But they must account to the complainant for the " value of the goods on hand at the time of issuing " the execution, as the complainants, by reason of " this fraudulent assignment, were prevented from " reaching those goods by their execution. The " complainants are also entitled to all the debts and " choses in action which had not been collected and " actually paid over to Thurber and Townsend at " the time of the commencement of this suit. The " defendants must, therefore, account for any moneys " received by them, either from Stoddard or any " other person since that time, on account of such " debts or which may have been received by Stod- " dard as their agent. It must, therefore, be referred " to a master to take an account accordingly, allow- " ing interest as shall be just. The master is, also, " to appoint a receiver, to whom the defendants are 416 JUDGMENT DEBTOR. " to assign and deliver over, on oath, under the di- " rection of the master, the notes, book accounts " and other demands remaining uncollected, with the " usual powers to such receiver. The master is, also, " to take an account of what is due to the complain- " ants for principal and interest on their judgment. " And the question of costs and all other questions " and directions are reserved until the coming in and " confirmation of the report." This case of Butler v. Stoddart^ went to the court of errors ; when the decision of the chancellor was af&rmed: 20 "Wendell, 507. The vote, however, was 12 and 12. (a) The importance of the princi- ples involved in the case make it desirable to give the full opinions of such of the judges and senators as delivered them in writing. The cause was de- cided in the December session of 1838. By Mr. Justice Bronson : " Within the two and " a half centuries which have elapsed since the legis- " lature first came to the aid of the courts for the (a) For affirmation. Justices Bronson and Cowan, Messrs. Edwards, Hunter, E. P. Livingston, Paige, Spraker, Sterling, Tallmadge, Wager and Young — 12. For reversal. The President, Messrs. Dickinson, Furman, Hawkins, Hull, Huntington, N. Johnson, Jones, Lee, H. A. Livingston, Nicholas and Verplanck — 12. On a subsequent day. Senator Tallmadge who had voted for affirm- ance, moved a resolution asserting the legal principles laid down by Senators Verplanck and Dickinson ; and stated that he had voted for the affirmance, on account of the particular facts of the case and not from any difference of opinion as to the law from that held by those senators. After discussion, Mr. Tallmadge withdrew his resolution, as it appeared to have been the settled rule of the court not to re-open a case when thus decided. CREDITOR AND DEBTOR. 41Y "suppression of frauds against creditors, there has "never been a time when this transaction could "stand the test of a judicial investigation. The " badges of fraud attending and following the sale " are plain and decisive ; and the respondents, who " are judgment creditors of Stoddard, are well enti- " tied to the relief which has been granted by the " court of chancery. 1. The assignment was made "'for and towards,' and not in satisfaction of the " debt. The appellants allege in their answer that " it was taken in satisfaction ; but this is a new gloss " put upon the transaction when . they were called " into court ; it is not the language of the written con- " tract. 2. It was a sale of all Stoddard's property ; " and the value of the property was nearly double " the amount of the debt of the appellants, Thurber " and Townsend. The goods included in the assign- "ment amounted to $435 89, and the debts, exclud- " ing all that were either ' bad ' or ' doubtful ' to "$878 43, making, in all, $1,314 32. The debt,.on "account of which "the sale was made, was only " $675 00. The respondents are merchants ; they " agreed on the value of the goods at the time the "assignment was executed, and they cannot now " change the character of the transaction by urging " that they got only the remnant of a country store ; " and besides, nothing but argument is offered : there " is not a word of proof that the goods were not of " the full value agreed upon by the parties at the " time. We are not at liberty to speculate in such " a case, but must decide according to the pleading " and proofs. "Without going any further, we have 27 418 JUDGMENT DEBTOR. " here sufficient evidence of a secret trust between " the parties, injurious to third persons. The sale " was absolute ; the property greatly exceeded in " value the amount of the debt, and no provision " was made for other creditors. Thurber and Town- " send might legally secure a preference to them- " selves, but they had no right to go beyond that, " and stand in the way of others. The assign- " ment was directly calculated to hinder, delay " and defraud creditors, and was void, within the " express words of the statute. 3. The sale was " made pending a suit brought by the respondents " for the collection of their debt. The vendees " knew before the sale that the respondents were " creditors of Stoddard, and they do not deny " that they knew of the pendency of the respond- " ents' action before the ''assignment was executed. " 4. There was no change of possession : the prop- " erty remained in the hands and under the control " of the vendor, and he was permitted to act as " owner, as fully after the sale as he had done " before : and what is very remarkable, no explana- " tion whatever of this cogent evidence of fraud is " attempted in the answer. What we heard on the " argument, about the probability of bad roads on " the 8th day of March, when the assignment was " executed, was matter of argument only ; the ap- " pellants have offered no such excuses in their " sworn answer. Continued possession in the ven- " dor, after an absolute sale of goods, when whoUy " unexplained, has always been held, not only prima- " facie, but conclusive evidence of fraud as against' CREDITOR AITD DEBTOR. 4I9 " creditors and purchasers : there is no case to the "contrary in the books. But it is said that the "vendees made the vendor their agent; that the "possession of the agent is the possession of the " principal. This is not a new device to get round " the statute, but if it succeed this will be a new " and most fortunate era for fraudulent debtors. " They can place their goods beyond the reach of " creditors, and still retain the beneficial enjoyment, " provided the friend who takes the transfer will " declare the vendor his agent. Such an attempt to " cheat the law cannot succeed. In Sands v. Cod/wise^ " 4 Johns. 693, the question related to real estate, " where possession is much less important than it is " in relation to personal property. Yet this court "thought it strong evidence of fraud that the " grantor continued after the sale to exercise acts of "ownership by selling and leasing lots. The re- " mark of Kent, Ch. J., in that case, in relation to " the allegation that the vendor acted as agent of "the vendee, is not wholly inappropriate to the " case at bar : ' The attempt to screen these con- " ' stant, essential and conclusive acts of ownership, " ' under the authority of an agent, is a shallow arti- " ' fice, destitute even of the merit of plausibility.' " There must be an actual and substantial change of "possession: a divided enjoyment, which leaves the " vendor to appear to the world as owner, will not " answer. In Paget v. PercJia/i^d, 1 Esp. K. 205, the " plaintifife, on taking a bill of sale of a Mrs. Spen- " cer, who kept a public house, put a third party in " possession. But it appearing in evidence that the 420 JUDGMENT DEBTOK. " vendor had been permitted to sell liquor in the "usual way of her trade, Lord Kenyon held the " sale void as against creditors, and nonsuited the "plaintiffs. In Wa/rdall v. Smith, 1 Camp. 332, " the assignee put a servant in possession, but the " assignor still continued to carry on the business. " Lord EUenborough said it was a mere mockery to " put in another person to take possession jointly " with the former owner of the goods. He added,. " that a concurrent possession with the assignor is " colorable. There must be an exclusive possession " under the assignment, or it is fraudulent and void " as against creditors. These decisions were made " under the statute 13 Eliz., ch. 5, which we long " since enacted. But we now have a new additional " provision on this subject, which ought to be con- " elusive with those whose business it is to adminis- " ter, not to make the laws. Our present statute " requires in terms, an ' immediate delivery and an " ' actual and continued change of possession ' of the " thing sold. Until this law is repealed, we are not " at liberty to say that a mere constructive posses- " sion in the vendee, and especially one which leaves " the vendor to act as owner, will defeat the claims " of a hoTia-fide creditor. The property was not " only left in the possession of the vendor, and he " permitted to act as owner, but there was a secret " trust between the parties or one not appearing on " the face of the assignment, that the vendor should " have the possession and derive a personal benefit " from the enjoyment of the property. The answer '' states that Stoddard was to act as agent for the CREDITOR AND DEBTOR. 421 ■" vendees and to receive a fair compensation for "his services. He acted a little more than three " months, and within that time sold goods and col- " lected debts to the amount of only $122 — a sum " which could not be more than ' a fair compensa- " ' tion for his services.' Practically this was a trust ^'that Stoddard should continue to carry on the " business as usual and put the money in his own '" pocket. " This transaction exhibits nearly all the signs and "marks of fraud which are mentioned in TwynSs " cdse^ as well as a disregard of the important advice "given by Lord Coke on that occasion as to the " proper mode of taking a gift or conveyance in sat- " isfaction of a debt : 3 Coke, 80. "II. I have noticed several objections to the val- " idity of this transfer, because they were presented " by the case, and I was not at liberty to pass them "by. But I desire to examine the transaction a " little further, on the single ground that there was " no change of possession. " This is not a mortgage ; it is an absolute bill of "sale, and continued possession in the vendor is "utterly inconsistent with the deed. There was " nothing in the nature or situation of the property " or the circumstances of the parties, to prevent an " immediate change of the apparent ownership. In " such cases, it has been held, with great uniformity, *" both in this country and in England, that the sale " is fraudulent and void as against creditors. In " Twyne^s case^ 3 Coke, 80, which arose soon after " the parsing of the statute, 13 Eliz., it was one of 422 JUDGMENT DEBTOR. " the principal badges of fraud, that the donor con- " tinned in possession and used the goods as his own ; " and Lord Coke, in his advice to the donee, says : " ' presently after the gift, take possession of the " 'goods, for continuance of possession in the donor " is a sign of trust.' In Buckncd v. Roiston, Prec. " in Ch. 287, Sir .Edward Northby said, it had been " ruled forty times in his experience at Guildhall, " that if a 'man , sold goods and still continued in " possession as visible owner of them, such sale was " fraudulent and void as to creditors, and that the " law had always been so holden. The same thing " was held by Lords Kenyon and Ellenborough in " the cases already cited, and was solemnly adjudged " in Ednjoa/rds v. Ha/rben, 2 T. K. 587, when BuUer, J., " declared the unanimous opinion of all the judges, " that unless possession accompanies and follows the " deed, it is fraudulent and void. He said the prin- " ciple never admitted of any serious doubt. In '■'■Hamilton v. Russell^ 1 Cranch, 310, the Supreme " Court of the United States laid down the same " doctrine. Marshall, Ch. J., said, that fraudulent " conveyances, which are made to secure to a debtor " a beneficial interest, while his property is protected " from creditors, wUl be most effectually prevented " by declaring that an absolute bill of sale is itself " a fraud, unless possession accompanies and follows " the deed. Such was also the opinion of Tilghman, " Ch. J., in Dawes v. Oope^ 4 Bin. 265. This rule " was somewhat extended in Stiirtevant v. Ballard^ " 9 Johns. 337, and applied to a case where there " was an agreement, in the bill of sale, that the CREDITOR AND DEBTOR. 423 " vendor should have possession for three months. " The enjoyment by the vendor was not inconsistent " with the face of the deed ; but Kent, Ch. J., said,. " ' Delivery of possession is so much of the essence " ' of the sale of chattels, — that an agreement to per- " ' mit the vendor to keep possession, is an extraordi- " ' nary exception to the usual cause of dealing, and " ' requires a satisfactory explanation.' The sale was " declared void. The cases in which it has been " held, that possession in the vendor did not neces- " sarily render the sale void as against creditors, de- "pend upon special and peculiar circumstances. " Many of them are collected in a note of the learned " reporter to the case of JBissell v. Hopkins^ 3 Cow. " 189. They are cases of mortgages and conditional " sales, where possession in the vendor was consistent "with the deed, or where there were special and " satisfactory reasons, growing out of the nature and " situation of the property or the circumstances of " the parties, for omitting to change the apparent " ownership. They do not conflict with the general " rule, that an absolute sale without a change of " possession cannot be upheld, where creditors are " concerned. The distinction taken by the courts " between absolute and conditional sales, only served " to change the mode in which fraudulent debtors " attempted to place their property beyond the reach " of creditors, while they still retained the beneficial " enjoyment ; and mortgages took the place of abso- " lute bills of sale. These were sometimes upheld, " and sometimes they were overthrown ; in some of " the cases it was said, that fraud was a question of 424 JUDGMElfT DEBTOE. " law for the court — in others, that it was a question " of fact for the jury. Some judges were of opinion " that continued possession in the mortgagor was " only prima fade evidence of fraud, while others " thought it well nigh conclusive. This state of " things rendered the chances about equal that a " fraudulent debtor, after all means of coercion by " imprisonment were abolished, might set his cred- " itors at defiance with impunity. For these evils, a " remedy was most wisely, and, I think, successfully " attempted in the late revision of the laws. The " legislature not only re-enacted the statute of 13 " JEliz. ch. 5, declaring void all conveyances made " with the intent to hinder, delay or defraud cred- " itors, (2 R. S. 137, § 1,) but they made an entirely " new provision, covering the whole ground of con- " troversy. 2 B. 8. 136, § 5. This section abolishes " all distinction between mortgages and absolute " sales, and places them both on the same footing. " It then declares that the sale or assignment, unless " accompanied by an immediate delivery and fol- " lowed by an actual and continued change of pos- " session, shall be presumed fraudulent and void as " against the creditors of the vendor. This presump- " tion becomes conclusive evidence of fraud, if the " vendee cannot make it appear that the sale or aa- " signment was made in good faith and without any " intent to defraud. Notwithstanding this new and " very explicit enactment, the courts have been " strongly pressed to go back to the law of personal " mortgages, as it stood previous to the year 1830 ; " but they have steadily followed the plain and CREDITOR AND DEBTOR. 425 " practical rule given by the statute, and held, that " there must, in all cases, be a change of possession, " unless there be something in the circumstances of " the case rendering the change impracticable. This " construction, if, indeed, there be any such thing as " construction, where the language is unequivocal, is " fortified by the seventh section, which expressly " exempts from the operation of the rule, contracts " of bottomry or respondentia and assignments and " hypothecations of vessels and goods at sea or in "foreign ports. These exceptions go very far to " prove the extent of the rule which the legislature " intended to establish by the fifth section, Nothing " can take a case out of the operation of this statute, " unless the attempted explanation relate to the pos- " session of the property. Although the sale be " made openly, before witnesses, and upon good and " sufficient consideration, the answer of the statute " is, unless there be a change of possession the sale " should be presumed fraudulent and void as against " creditors. The statute means as much as this, or " it means nothing. Any other interpretation blots " out the fifth section, and leaves us upon the re- " enactment of the statute, 13 Eliz. ch. 5. "I need not refer to the cases on this subject " since 1830. It is sufficient to say, that it is fully " settled, so far as the repeated and uniform deci- " sions of the supreme court can settle any question, " that there must, in all cases, when practicable, be " a change of. possession, or the transaction cannot "stand. Nothing short of such a rule can effect- " ually reach the evil against which the statute was 423 JUDGMENT DEBTOR. " directed : and that rule, as I have elsewhere had " occasion to remark, is one of a most salutary tend- " ency. Those who have been most conversant " with courts of justice, must, I think, agree in this " opinion ; and will, I trust, be among the last who " will consent to abandon the act of 1830. But " it belongs to others to say, whether the statute " shall be repealed ; and I will not trespass upon " their jurisdiction. " I am of opinion that the decree of the chan- " cellor should be affirmed." By Mr. Justice Cowen : " Butler, M'Donough & " Co. of Utica, being creditors of Simeon Stoddard, " of Lowville, brought their suit against him in Jan- " uary, 1834, and recovered judgment in May term, " for about $700, upon which a Jl. fa. was issued, "but was returned nulla iona. Pending the suit, " on the 8th of March, Stoddard, by bill of sale of "that date, sold and assigned all his goods and "choses in action, with some trifling exceptigns, " to Thurber and Townsend of Utica, which sale and " assignment were expressed in the bill, to be to- " wards payment and satisfaction of a debt of $6*75. "June 18th, Butler, M'Donough & Co. filed their " bill to set aside the sale. It is alleged by the bill, " and admitted by the answer, and established by " evidence, that there was no actual change of pos- ' " session, either as to the goods, or the notes, ac- " counts or other evidences of the choses in action, "until several months after the execution of the " assignment. Upon such a state of facts, it cannot "be denied that the sale aod assignment were, CREDITOR AND DEBTOR. 427 <■'■ prima facie^ fraudulent and void, in respect to tlie "complainants and Stoddard's other creditors, nor " that, in the language of the statute, such posses- " sion of Stoddard ' shall be conclusive evidence of " ' fraud, unless it shall be made to appear on the " ' part of the persons claiming under such sale and " ' assignment, that the same was made rQ good faith " ' and without any intent to defraud such creditors.' " (2 R. S. YO, § 5, 2d ed.) Thurber and Townsend " claim that they have established good faith, as the " statute requires, by the facts set up in their an- " swer, with that of Stoddard. These are, that their " claim of $6Y5 was honestly due, and that Thur- " ber took the bill of sale in satisfaction, being in- " formed at the time that Butler, M'Donough & " Co. had brought their action ; that Thurber and "Townsend left the goods, &c., in possession of " Stoddard, as their agent, to sell and collect, &c., "and agreed to pay him a fair compensation for "his services. That he continued to act as such "agent, from the 8th of March till the 13th of " June, just before the bill was filed against them, " when they took the undisposed residue of the "goods, notes and accounts into their own posses- " sion. That the goods were, at the time of sale, "put down in the inventory at S435 89, being the " cost price, and were correctly estimated ; though " they believed they should not be able to dispose " of them at the prices annexed. That the debts " assigned amounted to $1,209 33 ; but they were "unable to state what portion might be made " available. In the course of about three months, 428 JUDGMENT DEBTOK. "Stoddard sold goods to about $77, and received, "on notes and accounts and for goods sold, $122. " All fraudulent intent was denied. They knew " Stoddard to be insolvent. It was agreed by the "counsel for the appellants, and in this all the "books concur, that one main step towards over- " coming the legal presumption of fraud is to satisfy " the mind of the court that there was a necessity "or, at least, a plain propriety in leaving the "goods and choses in action in the possession and " under the control of this debtor, after he had ab- " solutely sold them : and several cases were read, " which deny that they can be arbitrarily left, or, "upon considerations of the vendor's own conve- "nience or necessity. For this, there are two "reasons: one, that such an act is out of the " ordinary course of business ; and another, that "it adds little to the security of the creditor; " it being stiU in the debtor's power, either secretly "to convert the goods to his own use, or sell " them to a hana-fide purchaser and use the avaUs, " thus throwing the creditor back upon the same " imperfect personal security, to which hardly any " thing can be added without an immediate change "of possession. The matter is still worse where " the debtor is allowed to retain the goods for the *' express purpose of selling them, and receiving the " avails under an agreement that he shall account " for the money. The debtor openly keeps the " property, sells it, and puts the money in his "pocket, leaving the creditor to sue his insolvent " depositary precisely as before, for the original CREDITOR AND DEBTOR. 429 "debt. It was said in argument, that the goods " could not well be removed to Utica, as the March "traveling was probably bad. The sworn answer "does not give that reason. Had it been so, and "there was no other place of deposit, nor sales- " man at LowvUle, it might have formed a reason- " able excuse for a few days. No difficulty of that "kind existed, when it was found, in June after, " that this bill was to be filed ; and yet, probably, " the roads were settled some time before. Nor is it " said that this 400 or 600 dollars' worth of goods " could not as well, and certaialy with much more "safety to Thurber and Townsend, the creditors, "have been deposited! and sold, if there was a " necessity for such sale, at Lowville, by some re- " sponsible person ; and that, too, in the language " of the answer, for a fair compensation. The same " remarks are, in a great measure, applicable to the " choses in action. All are left with a man entirely " irresponsible, either for the money actually col- "lectedor for losses through carelessness or fraud. "It is said the claims were numerous, of small " amounts, the debtors scattered in their residences, "and Mr. Stoddard, from his acquaiatance with "them, better able than any other to promote vol- " untary or forced collections. All this might have "been so. It is taken up as but matter of conjec- " ture ; and we are still left to suppose that there " might have been other men of business at Lowville, "possessing nearly the same advantages. If the " transaction were honest, a little information from " Stoddard would have supplied every deficiency in 430 JUDGMENT DEBTOR. " a neighboring agent, probably more efficient, and " certainl^r more responsible. No attempts' were "made to find other depositaries or other agents. " Stoddard continued in possession some three " months, when all the choses in action, as well as " the goods were taken into the actual possession of " Thurber and Townsend. No commissions, no spe- " cific compensation for Mr. Stoddard's services were " stipulated. He was left to keep his own accounts, " and make his own deductions for expenses ; nor " were the goods, etc., received in satisfaction, if we " are to take the written recital in the bill of sale as " evidence. That states the assignment to have been " for and towards the discharge of the debt. The legal " effect would be only to discharge so much of the " debt as Mr. Stoddard should pay over ; and, as '" between him and his vendees, the expressed pur- " pose could not easily be contradicted. " It was said in argument that the possession was " changed to the vendees within the legal rule that " the possession of the agent is that of the principal. " This would be to contradict by construction the " words of the statute, which demands an actual " change. ■ The possession of every vendor after sale " is constructively the possession of the vendee ; and, " at least, the argument furnishes an answer to the " evidence of fraud which can always be raised by " the parties, clothing the possession with a contract " of agency. " Taking the history of this transaction from the " answer itself, it appears to me there is an air of " looseness, generality and contradiction about it at CREDITOR AND DEBTOR. 43I " war witli the idea that the parties were using Mr. " Stoddard's means in good faith and with an honest " view to the rights of his other creditors. I think " they should at least be put to show so much, in " order to overcome the stern inference of fraud which " the law raises against them. The strength of the "presumption is measured by the adjudged cases, " the result of which was well expressed by Mr. Jus- " tice Bronson in Randall v. Qoo\ 17 Wend. 56 : " 'Where the property is of such a nature that there " ' may be an immediate change of possession ; that " ' change must be made or the law will pronounce " ' the transaction fraudulent as against creditors and " ' subsequent purchasers.' I have sought in vain "through this answer for materials, which would " take this case out of the rule thus laid down. It " is true, the answer negatives generally all intent to " defraud : but the denial stands by the side of an "admitted specific fact, which, being unexplained, " the law has, in terms, declared incompatible with " such a denial. The defendants produced no wit- "nesses, although their answer was put in issue by a " replication, and proofs were taken on the part of " the plaintiffe. By these, it appears, pretty satisfac- " torily, that the available debts assigned were not " far from $900 in gross amount, which, added to the " goods as valued by both Thurber and Stoddard, "$435 89, make an aggregate of nearly double the " debt they were assigned to satisfy. It is said the " price of goods, as fixed by the schedule, is not con- " elusive. With deference, I should think it very " indiscreet in this court to conclude against it. Mr. 432 JUDGMENT DEBTOR. " Thurber was a merchant, valued the goods at cost^ " and swears in his answer that they were correctly " valued. So do the other defendants ; and this "derives confirmation from Harding and Norton, " the witnesses. All is sought to be overturned by " the general fact that they were ' the remnant of a " ' country store.' "We are asked, with emphasis " what merchant would not rather have cash for his "debt? To answer the question, we are brought " back to the value of the remnant, which is abun- " dantly estabhshed by the best evidence ; and no " one can deny that it is possible for a remnant to be f of the value admitted by the parties on oath. The " expense of collecting the debts was neither averred " in the answers, nor established by other proof. In "addition to Stoddard's conceded insolvency, jt " appears he was dependent for a livelihood on the " business which he had nominally transferred, and " added to his own were the necessities of his family. " He might, very naturally, infer that Thurber and "Townsend would have no objection to his retaining " the excess beyond their debt, and he was left to " regulate that according to the dictates of his own " conscience ; for they could enforce no collection " against him. The offer of Thurber and Townsend, " after being threatened with a suit, to surrender the " fund on being paid their own debt, was accompa- " nied with the alarming general addition, that the " expenses they had incurred should also be paid. " If such a proposition, in any shape, were admissible " to defeat a right of suit already attached, it could " not but be known that the expenses incurred by an CREDITOR AND DEBTOR. 433 " agency sucli as this might seriously detract from " the value of the fund. The surprise is rather that " they should have refused to take the goods at their " own valuation with the money already collected, " and allow the balance to be managed by persons " so deeply interested as the complainants, in making " the best of it for the benefit of all concerned. Ad- " mitting that the debt due to Thurber and Town- " send is correctly stated in the bill of sale and that "the agency of Stoddard was publicly known " (though there is but faint evidence of the latter), "yet these are slight circumstances when weighed " against those of an opposite tendency. Altogether, "so far from establishing good faith in the purchase " of these goods and choses in action, to my mind the "presumption of fraud, arising from Stoddard's pos- " session after the sale, is considerably strengthened " by the other facts in the case. " My conclusion is, therefore, that the decree of " the chancellor should be affirmed." After a brief statement of the case, Mr. Senator Verplanck proceeded as follows : " The history of Our law, respecting the rights of " creditors in relation to the property of their debtor " sold, assigned or mortgaged to him, but remaining " in his possession and under his control, is remark- " able. It presents a perpetual struggle between a " general rule of policy, intended to cut off the pos- " sibility of fraudulent or collusive sales, prescribing, " either legislatively or judicially, that every sale, " assignment or mortgage, unaccompanied by change " of possession, should be held fraudulent in the eye 28 434 JUDGMENT DEBTOR. " of the law and void as against creditors ; and on " the other side, the obvious hardship and injustice " of numerous particular cases, where the innocent " and even benevolent intention of the party was " manifest and the legal presumption of fraud ap- "peared inequitable, oppressive, contrary to the " truth of the case and the moral feelings of those " who must apply and enforce the law. Thus it "happened here and in England, that whilst the " courts and the books laid down the rule broadly " and often applied it strictly, that ' unless possession " ' accompanies and follows sale or mortgage, it is " ' fraudulent and void,' (in the words of J. BuUer, '■'•Edwards v. Harber^ 2 T. E. 587, adopted and in- " corporated in our own statute,) yet first, case after " case and thence class after class of exceptions was " exempted from the rule, until with us there were "no less than twenty-four distinct grounds of ex- " emption ; such as the kind of sale, purchase under " execution, distress for rent, necessity, convenience, " the custom of trade, the distance or situation of " place, the relation of parties, motives of humanity " or friendship, and special circumstances of various " kinds more or less definitely defined, (all enume- " rated by Judge Co wen, 3 Oow. R. 190.) " In the revision of our own statute law, it was " attempted to settle all these doubts and discrepan- " cies by positive legislation and strict definition. " Accordingly the learned revisors, returning to the " strict pohcy of the old law and the doctrine laid " down in Edwards v. Harher^ recommended that " ' all sales or mortgages not accompanied by an CREDITOR AND DEBTOR. 435 " 'immediate delivery and followed by an actual and " ' continued possession, should be void against tlie " ' creditors of tlie vendor ;' and this without any ex- " ception, and excluding all explanation : see Bevi- " sors' Eq>ort, 3 B. 8. 657, 2d edit. "But the same considerations of natural equity " which had so often indue ed courts to break in upon "the legislative and judicial rules of legal policy, " had again equal weight with the legislature, so " that in adopting the section recommended by the ''revisors, they added, at the end, a clause of excep- " tion, enabling the person claiming under the sale " or assignment to rebut the legal presumption of "fraudulent intention by positive evidence of the "good faith of the transaction. It was accordingly " enacted first, nearly in the strong and comprehen- "sive language of the revisors, that every sale of " goods and chattels and every assignment by way "of mortgage or security, 'unless the same be " ' accompanied by an immediate delivery and be fol- " ' lowed by an actual and continued change of pos- " ' session, shall be pronounced to be fraudulent and " ' void as against creditors or subsequent purchasers, " ' and shall be conclusive evidence of fraud.' Then " the legislature, of its own motion, added the ex- " cepting and qualifying clause, ' unless it shall be " ' made to appear on the part of the person claiming " ' under such sale or assignment, that the same was " ' made in good faith and without any intent to de- " ' fraud such creditors or purchasers.' This question " of fraudulent intent, a subsequent section enacts, " shall be a question of fact and not of law ; which 436 JUDGMENT DEBTOR. " is a legislative declaration of what lias of late been "judicially held to be the sound law. " These enactments were thought to have settled " the law conclusively, and so they appear to have " been considered by Chancellor Kent, in his Gom- '•'■ mentaries^ who, after giving the history of the " fluctuations of legal decisions, adds, ' The New " ' YorTc Mevised Statutes have put this vexed question " ' at rest, as to the eflfect of non-delivery on sale or "'assignment:' 2K. C. 529. But this legislation has " merely afforded a new and remarkable proof of the " imperfection of human language, and the impossi- " bility of settling any great rule of law for the com- " plicated affairs of human life, by the general lan- " guage of a statute or the provisions of a code. " The volumes of our reports and still more the " actual litigation of our inferior courts and the " doubts and difficulties of men of business, as well " as of their professional advisers, give ample demon- " stration that the law, clearly as it would seem to " be enacted, is still fluctuating and doubtful. " The decisions in this State, since the statute of " 1830, have, it seems to me, been more in the spirit " of the learned revisors than in that of the enacting " sovereign power. They have, I think, gone to lay " down the legal rules, necessarily general and arti- " ficial, to govern the decision of the particular ques- " tion of intent which is expressly declared to be one " of fact ; and they have tended to confine the qual- " ifying and excepting clause of the statute, allowing " exculpatory evidence to the narrow limits of abso- " lute necessity of continued possession. CEEDITOR AND DEBTOR. 437 " As between the official revisors and the revising "legislature this was an open question. The re- " visors were induced, by considerations of public " policy, to propose a strict and undeviating univer- " sal rule which would exclude all possible fraud, " even at the expense of occasional hardship and " severity towards innocent parties. The legislature " endeavored to adopt that rule, with such a modi- " fication as might prevent its hard and inequitable " operation in special cases. Weighty arguments " and high judicial authorities might be urged for " either view of the question. But these are no " longer applicable. It is not the question of legis- " lative policy that courts have now to examine, but " that of pure statutory interpretation. Upon this " the older decisions may throw some light, but the " history of the enactment itself is a surer guide to "the meaning of the legislature, if indeed, it has " not been clearly expressed in the language of the " statute. " As these decisions are all recent, not yet wrought " into the body of our law, nor familiar to the knowl- " edge and practice of men of business, and as none " of them have been made or adopted in this appel- " late court, I shall not consider them in detail, but " am satisfied to consider the subject as res integra " here, and to examine the statute as it stands in the " books, without considering the late decisions of " our own courts as of binding force, and regarding " the older ones as important, chiefly as they point " out the intention and explain the language of the " statute. 438 JUDGMENT DEBTOR. " The language of the statute has something of " contradiction, indicating the double parentage of " the two portions of the section ; and this may " explain the fact of the very different interpreta- " tion given to it by learned judges from that of the " mass of business men who are to be governed by " it. The absence of a change of possession it is " said, ' shall be presumed fraudulent and to be con- " ' elusive evidence of fraud.' Now, a conclusive " presumption is defined to be ' a legal rule not to " ' be overcome by any evidence that the fact is " ' otherwise,' like the presumption of payment, for " instance, under our statutes of limitation. No " contradiction or explanation is admissible or, if " admitted, would be of any avail. It is the pre- " sumptio juris et de jv/re of the civilians, which in " their language, '■ prohationem contra/riam, Tiaud ad- " ' mittit ;' and such was probably the meaning of the " revisors. But as the law was actually enacted, it " goes on expressly to allow that the only conclusive " presumption in question may be repelled by posi- " tive proof to the contrary. " The presumption of fraud, then, (though from " some of the language of our courts I should think "they viewed it otherwise), must be considered " only as a presumption of fact — a legal evidence " of fraud, conclusive in the absence of contradict- " ory testimony, but open to refutation. It is only, " as Lord Mansfield defined the legal presumption " of a grant raised by twenty years' enjoyment to " be, ' such a presumption that, unless contradicted " ' or explained, the jury ought to believe it.' Here, CREDITOR AND DEBTOR. 439 " the whole burden of proof is thrown upon the " claimant under the sale, and he must ' make it " ' appear' that he acted in good faith. I think the " words require that it should not be a matter of " inference that he did so act, but that he gave such " external eoidence of good faith in that transaction " as its nature would admit, " It is, then, strictly, under our statute, a question " of fact, such as a jury may judge of, and must " alone do so, if the question comes before a court " of common law ; and any decision going to sub- " stitute an abitrary rule of general policy, or of " legal presumption to the evidence itself, must be " unsound. " If, then, there be positive evidence of a fair and " full consideration paid — of reasonable motives for " not requiring delivery, such as may and do sway "honest men — for instance, filial, or parental, or " brotherly affection, or the convenience and usage " of business — ^together with that publicity which " excludes the idea of intended evasion of law or " holding out false credit — all the requisitions of the " statute seem to me to be fully complied with, in " the strictest agreement with its letter, and in " perfect conformity with its spirit, intention and " policy. "In the present case, Thurber and Townsend, " merchants of Utica, received from Stoddard, a vil- " lage retailer in another county, who was indebted "to them, an assignment of the remnants of his "goods and of numerous small outstanding debts "due him, from two dollars upward, 'for and to- 440 JUDGMENT DEBTOR. " ' wards the payment and satisfaction of said debts.' " Stoddard was left in possession as an agent to sell " the goods and collect the debts for the benefit of " the assignee, with a reasonable compensation. " The question now is, whether the assignment " be void against a subsequent judgment creditor. " If it be so, it must either be from the presumption " of fraud declared by the statute, or from the " excess of value of the goods and debts assigned " above the actual amount of the debt due, giving " proof of actual fraudulent intent. The Chancellor " has decided against the validity of the assignment " on both grounds. " The vice-chancellor (Judge Denio), who first " heard the case, thought otherwise. I agree with " his view of the value of the assigned assets, $1,200 " of debts, more than one fourth confessedly bad " and the rest scattered among an hundred individ- " uals or more, about a thinly settled country, aU " requiring some trouble and delay, many some " actual expense in collecting, together with $430 " worth of goods, the refuse of an old stock, and " valued at cost, not at New York, but at prices at " a secondary neighboring market, and goods, too, " which would scarcely bear the expense of trans- " porting to a place where they might be sold with " less trouble and delay, might well be considered " as hardly an equivalent, if at ^11, to discharge a " cash debt of $635. I assent to all the reasoning " of the vice-chancellor on this point as conclusive. " Besides, the offer of the appellants before suit to " give up the property, on payment of the debt, CREDITOR AND DEBTOR. 441 " wMcli was rejected, shows the estimate placed by " all parties on the property assigned. On them, at " least it ought to be conclusive. Nor is the very " trifling amount of goods sold and debts collected " by the agent during three months, a slight addi- " tional circumstance to show the difficulty of real- " izing the assigned assets. " Secondly ; as to the legal presumption of fraud- " ulent intent prescribed by the statute, I conceive " the evidence of such intent, arising from want of " a change of possession, to be repelled. " 1st. By the legality of the assignment ^er se for "a hona-fide debt, of assets of double value, though " of a large nominal amount. " 2d. By the strong proof of the publicity of the "assignment, and the employment of Mr. Stoddard "as a mere agent, as appears in the cross-examin- " ation of every witness. Such publicity has always " been held one of the strongest evidences of good "faith, even from the time of Lord Coke, who in " Twyne^s case, when this principle of fraudulent " intent was first asserted, points out secresy as a " mark of fraud. " 3d. By the necessity of. the case : the leaving " the goods in Stoddard's possession, and the debts "to be collected by him for a time, being appa- " rently essential to the realizing of any considerable "amount from them. An agent at Lowville was " necessary, and he was probably the best. "From all these considerations, I think the ap- " pellants have given the external proof required by " law to repel the presumption of fraud and made 442 JUDGMENT DEBTOR. " it appear ' that tlie transaction was in good faith "and without any intent to defraud creditors or " purchasers.' " I am, therefore, of opinion that the vice-chan- " cellor was correct in dismissing the complainant's " bill and that the decree of the chancellor should " be reversed." By Senator Dickinson : " This is an appeal from " the decree of the chancellor. The facts are as " follows : Simeon Stoddard, one of the above ap- " pellants, a merchant at Lowville, in the county of " Lewis, being indebted to Thurber and Townsend, " of Utica, in the sum of about $725, and being "in failing circumstances, at the request of Thur- "ber and Townsend, on the 8th of March, 1834, "paid them in cash $50, assigned them his notes "and accounts, which nominally amounted to " $927 83, and the balance of his stock of goods, " which, at cost prices, amounted to $435 89, being " all his property. Stoddard at the same time was "indebted to the respondents, Butler, Livingston " & Co., in the sum of $688 40. They prosecuted "their debt to judgment and execution and then "filed their bill before the vice-chancellor of the " fifth circuit to set aside the assignment by Stod- " dard to Thurber and Townsend as fraudulent " and void. The vice-chancellor dismissed the " bill ; but upon appeal to the chancellor by the "complainants he reversed the decree of the vice- " chancellor and set aside the assignment as fraud- " ulent ; and the defendants have appealed to this " court. In this cause, two leading 'questions are " presented. CREDITOR ASD DEBTOR. 443 "First. Was tlie transaction actually fraudulent " and designed to hinder, delay and defraud cred- " itors ? Second. "Was it such a transaction as the "law "will declare fraudulent, however honest the " intention of the parties ? The stating part of the "bill is sufficiently comprehensive to justify the " special interrogations under it : and the answers " of the defendants, being responsive to the bUl in "the absence of proof, the complainants are pre- " eluded from calling the truth of such parts of the " answer in question. We may therefore regard the '■^iona fides of the transaction between Stoddard " and Thurber and Townsend as established, for "they severally deny all fraudulent intention and " every secret trust. It is insisted by the respond- " ents that the amount of property transferred by " Stoddard to Thurber and Townsend was so grossly " disproportioned to their debt as to be in itself " strong, if not conclusive evidence of fraud ; and if " we are to look at the footings of the figures and " not the source from whence they are derived, the " position is a true one. No rule is better settled " than the one, that a failing debtor has a I'ight to " prefer one creditor to another, but he cannot con- " vey more property to one creditor than is reason- " ably necessary to satisfy the debt ; and if he does, "fraud will be inferred from that circumstance " alone. But in the application of this rule, we are " to take the real and not the nominal value of the "property. This was an insolvent, broken-down " concern. By examining the inventory no one can " find any other than the mere odds and ends — the 444 JUDGMENT DEBTOR. " veriest refuse of a country store ; amounting, it ia " true, at fair cost prices, to $435 89. But what " mercliant ever sold, or expected to sell, his entire "remnants at cost? The notes and accounts trans- " ferred amounted nominally to $1,219 28 ; of these " debts $681 05 were estimated good, $19*7 38 col- "lectable, $96 37 doubtful and $234 23 bad. Who- " ever has had occasion to wind up a concern of this " kind needs not to be reminded of its delusions. " Let him carefully calculate the inroads upon his "schedule made by removals, set-oflPs, litigations, " costs and time and expenses, and he will not un- " frequently find himself the sufferer, even if he had " received them as a gratuity. But here we are not " left without evidence of the most satisfactory char- " acter of the value of the goods and debts assigned. " It is admitted by the stipulation of the parties that " before the bill was filed Thurber and Townsend " offered the complainants ' that they, the said Thur- " ' ber and Townsend, would give up to the said " ' complainants all the property and demands and " ' choses in action which they received under the " ' assignment, except such goods as had been dis- " ' posed of and such notes and accounts as had been " ' collected, and for those they would account, pro- " ' vided they, the complainants, would pay the de- " ' mand due from the said Simeon Stoddard to the " ' said Thurber and Townsend with interest and " ' the expenses they had incurred or secure the " ' same to be paid in a reasonable time,' which said " offer the complainants refused to accede to. "The respondents have given their judgment of CREDITOR AND DEBTOR. 445 "the value of this property by refusing to accept " this offer ; but they now ask this court, upon this " point, to believe that which they evidently did not "believe themselves. If they had believed this "property worth enough to pay both debts after "this offer, they would scarcely have entered the " court of chancery for the mere purpose of vindi- " eating justice. Besides, if they had supposed there "was any considerable surplus, they could very " easily have framed their bill to have reached it. " I see nothing, therefore, from this view of the case " from which we can reasonably infer fraud. But it " is said, the goods and debts were left in the posses- " sion of Stoddard by Thurber and Townsend, and " that for this reason the transfer should be adjudged " fraudulent and void. I am disposed to view the "goods and debts after the transfer as in the pos- " session of Thurber and Townsend. At the time of "the transfer the goods were inventoried, and a " schedule of the debts was made, and Stoddard was " hired as an agent, to be paid a reasonable compen- " sation for his services, to collect the debts and sell " the goods. The goods were left in the same store, " but the witnesses say that they understood Stod- " dard had assigned his goods, etc., to Thurber and " Townsend, and was acting as their agent. It seems " to me that the possession of the agent honestly and '''■ bona fide, was the possession of the principal. In " my opinion they were under no obligation to con- "vey the goods to their home, nor remove them " across the street, nor hire a stranger to be their 446 JUDGMENT DKBTOE. " agent and to take charge of their business. The " leaving of the goods upon the same premises and " under the agency of Stoddard was, I admit, evi- " dence of fraud, and requires a satisfactory explana- " tion. This the complainants have seen fit to call " forth from the defendants themselves upon oath ; "and, in my judgment, it fully rebuts any presump- " tion of fraudulent intent. But I come now to the " second and most important point in this cause, for " all purposes of which I shall treat the question as " if the goods had been left in Stoddard's possession. "The question which is then presented is one of " much interest in the history of our jurisprudence. " It early engaged the attention of the courts of En- " gland and has been most fully reviewed in this and " in most of the States of the Union. The diversity " of opinion — entertained not only by the profession, " but by learned judges, and the supposed contra- " dictory position of authorities justifies a review of " the leading cases both in this country and in En- " gland, and I apprehend we shall find less conflict " of authority than has generally been supposed ; nor " has the doctrine been changed, but is now substan- " tially, as it always has been since the law of the " Twelve Tables of Rome. The common law of En- " gland was based upon the civU law ; and the stat- " utes of 13 and 27 Elizabeth^ the first of which " referred to creditors, and the other to purchasers, " were but declaratory of the common law. The " same has been held the common law in this coun- "try; and the statutes of Elizabeth were substan- " tially re-enacted here, and, with trifling variations CREDITOR AND DEBTOR. 44.7 "have found tlieir way into our Revised Statutes. " The earliest adjudged case wMcli arose upon the "subject of fraudulent assignments was Twyne^s "case. This was a criminal proceeding in the Star "Chamber against Twyne, under the statute of 13 "Elizabeth, for making and publishing a fraudulent "gift of goods. One Peirce, being indebted to "Twyne and also to 0, C brought a suit against " Peirce to recover his debt ; pending which ^uit, " Peirce made a secret deed of gift of all his goods " and chattels, real and personal, to Twyne, notwith- " standing which Peirce 'continued in possession of " 'the goods, and some of them he sold, and he shore " ' the sheep and marked them with his own mark.' " C prosecuted his suit to judgment and execution, " and the question was, whether the deed from Peirce " to Twyne was fraudulent and of no effect ; and it " was resolved by Sir Thomas Anderson, keeper of " the great seal and the whole court of Star Cham- " ber, that the deed or ' gift,' as it was called, was "fraudulent. 1st. For the reason that the gift was " general, not excepting his apparel or any thing of "necessity. 2d. The donor remained in possession " and used them as his own, and traded -and traf- "ficked with others. 3d. It was made in secret. " 4th. It was pending the suit. 6th. The donor's "possession was evidence of a fraudulent trust. "6th. The deed contains that the gift was made " honestly, truly and hona fide. The first five alle- "gations seem to have been well taken, but how the " deed could be rendered void by the allegation that " it was honest and bonafide^ it is perhaps difficult to 448 JUDGMENT DEBTOR. " determine. This case seems to have been decided "upon the ground that the possession of Peircej " treating the property as his own, and trading and " trafficking therein, was evidence of a secret, fraud- " ulent trust. This, the court say, is evidence of an "agreement that the donor should deal favorably " with him in regard to his poor estate ; that it shall " not be called honafide^ because it is a sign of trust. " In the case of Panafoot^ who being indicted for " recusancy, for not coming to divine service, with " intent to defeat the queen of what might accrue to " her, made a gift of all his goods for a feigned con- " sideration, and after grave deliberation by all the " barons in the Exchequer Chamber, this convey- " ance was held to be void. " In the case of Stone v. Grubham^ 2 Bulstrode, " decided by Lord Coke previous to 1656, a distinc- " tion was taken between an absolute and a condi- " tional sale : his Lordship saying, ' When the con- " veyance is conditional, continuance in possession " after this shall not be said to be fraudulent, and " this is very clear.' But in Ryal v. Roller^ 1 Atk. " Eep. 165, Mr. Justice Burnet, in construing the "statute of 13 Eliz. says, 'There is no distinction " between sales absolute and conditional ; courts of " equity and juries are to consider upon the whole " evidence whether the conveyance was made with " a view to defraud or not ,' and, he adds, ' when the " goods or deeds have been left with the vendor so " notoriously that there could be no design to defraud, " this has never be looked upon as fraudulent.' In " Cadogcm v. Kennett, Cowper's Rep. 435, Lord CREDITOR AND DEBTOR. 449 " Mansfield says, ' A fair voluntary conveyance may " ' be good against creditors notwithstanding it is " ' voluntary. The circumstance of a man's being in- " ' debted at the time of his making a voluntary con- " ' veyance is an argument of fraud. The question, " ' therefore, in every case is, whether the act done is " ' a hona-fide transaction, or whether it is a trick and " ' contrivance to defeat creditors. The statute ought " ' not to be so construed as to make innocent parties " ' suffer.' In Leonard v. Baker ^ 1 Maule &, Sel- " wyn, 255, it was held, 'that as the assignment was " ' notorious in the neighborhood, and the creditor " ' claiming had notice of it, it was not void.' In " Waikins v. JBirch^ 4 Taunton, 823, Lord Mansfield " says, ' Can we say that a person who has bought " ' goods under an execution may not let them to the " ' former owner of them ? No case has gone so far " ' as that.' "Mr. Shepherd, in his Touchstone^ p. 65, in his " commentary upon the statute of Elizabeth, in " speaking of deeds of conveyance, says, ' All such " ' as are made hona-fide and upon good consideration " ' are not to be accounted fraudulent by this statute ; " ' but if, hanging a suit, a deed is secretly made and " ' the vendor continues in possession, it is void.' " Sta/rMe, in his Treatise upon Evidence^ says, ' When " ' fraud may be collected from the instrument itself " ' or from the deed, coupled with extrinsic circum- " ' stances and the situation of the parties, it is a " ' question of law arising from the facts so found ; " ' but when it depends upon intention, the existence " ' of that intention must be found by the jury :' 2 29 450 JUDGMENT DEBTOR. " StarUe^s Ev. 4tli part, 616, 617. In Kidd v. Raw- " linson, 2 Bos. & Pul. 58, Kidd bid off Andrews' " goods at sheriff's sale, and left them with. him. In " this case Lord Eldon says, ' If Kidd had lent money "'to Andrews to buy these goods and had then " ' taken a conveyance of them as security for his " ' debt, arising out of the mere act of lending the " ' money ; leaving Andrews in possession of the " ' goods would not have been a fraudulent act ;' and " ISuller^ in his Law of Nisi Prius, 258, says, ' But " ' yet the donor continuing in possession is not in " ' all cases a mark of fraud, as when a donee lends " ' his donor money to buy goods and, at the same " ' time, takes a bill of sale of them for securing the " ' money.' But the case of Edwards v. Harder, de- " cided in the court of king's bench in the reign of "G-eorge III, 2 Durnford &, East, 587, seems to " have been invoked as authority for almost every " variety of decision upon this subject. This decision " has been seriously questioned, both in the court " where it was pronounced and in this country ; but " if we except the distinction it takes between sales " absolute and conditional, I am unable to discover " any thing in the opinion of the court inconsistent " with the plainest principles of justice and law. " The case has been misunderstood as well by those " who have arraigned it because of its extraordinary " vigor, as by those who have claimed its authority " for a principle which it does not contain. The case " presents the following facts : Mercer was indebted " to Edwards, the plaintiff, in the sum of £22 18*. " 6^., and also to Harber, the defendant, in the sum CREDITOR AND DEBTOR. 45I " of £191. On the 29tli Marct, 1786, Mercer gave " to Harlber a bill of sale of all his goods, &c., in his " house at Lewes, specifying the articles. The bill " of sale was absolute on its face, but there was a " verbal agreement that Harber might take the " goods and sell them at the end of fourteen days, "refunding the surplus money. The goods were " left with Mercer, but one corkscrew was delivered " ia the name of the whole. The goods remained in " the possession of Mercer until his death, which "took place Yth April, 1786; and on the day fol- " lowing Harber entered and took possession of the " goods and sold them under his bill of sale. Ed- " wards prosecuted him as executor, in his own name. " At nisi prius, a verdict was rendered for Edwards, " subject to the opinion of the court, in pronouncing " which Buller, Justice, cites the case of Bamfoi'd v. " Baron^ decided by the same court at a previous " term, but which case was touching an assignment " made for the benefit of such creditors as would " sign a deed of composition within a certain time ; " and says in that case the court; were unanimously " of opinion that unless the possession accompanies " and follows the deed, it was fraudulent and void. "But in. pronouncing the judgment of the court iu " the case then at the bar, he cites the case of Stone " V. G7'ub}iam with approbation ; and says, ' The " ' court there held that an absolute conveyance or " ' gift of a lease for years, unattended with posses- " ' sioD, was fraudulent ; but if the deed or convey- " ' ance be conditional, there the vendor's continuing " ' in possession does not avoid it, because, by the 452 • JUDGMENT DEBTOE. " ' terms of the conveyance, the vendee is not to ■ " ' have the possession till he has performed the con- " ' dition. Now here the bill of sale was on the face " ' of it absolute and to take place immediately, and " ' the possession was not delivered, and that case " ' makes the distinction between deeds or bills of " ' sale which are to take place immediately and those " ' which are to take place at some future time. For " ' in the latter case the possession continuing in the " ' vendor till that future time or till that condition " ' is performed, is consistent with the deed, and such " ' possession comes within the rule, as accompanying " ' and following the deed ;' and he adds that which " I trust, no one is disposed to controvert : ' This " ' cause has been argued by the defendant's counsel " ' as being a case in which the want of possession is " ' only evidence of fraud and that it was not such a " ' circumstance, per se^ as makes the transaction " ' fraudulent in law ; that is the point which we " ' have considered, and we are all of opinion that if " ' there is nothing but the absolute conveyance, " ' without the poslession, that, in point of law, is " ' fraudulent.' The late Chancellor Kent, in his " commentary upon the English cases, 2 KenHs Gom- " mentwries^ 520, says, 'The conclusion from the re- " ' cent English cases would seem to be, that though " ' a continuance in possession by the vendor or " ' mortgagor be prima facie a badge of fraud, yet " ' the presumption may be rebutted by explanations " ' showing the transaction to be fair and honest, and " ' giving a reasonable account of the retention of " ' possession. The question of fraud in such cases CREDITOR AND DEBTOR. 453 " ' is not an absolute inference of law, but one of " ' fact for a jury.' In the case of Hamilton v. Mus- " sell^ decided in the Supreme Court of the United " States, 1 Cranch, 310, Robert Hamilton executed "to his brother, Thomas Hamilton, 4th January, " 1800, an absolute bill of sale of a slave ; Robert " Hamilton continuing in possession, Russell, a " judgment-creditor of Robert Hamilton, caused the " slave to be taken in execution in July, 1801, and " was prosecuted by Thomas Hamilton, who claimed " the slave under the bill of sale. No excuse or " explanation whatever was given or attempted ; " and the jury, very properly, returned a verdict " for the defendant. In pronouncing the decision of " the court upon a motion for a new trial, the chief "justice reviews the leading English cases, adopts "the reasoning of Buller, Justice, in Edwards v. " Harber^ and concludes by saying, ' This court is " ' of the same opinion. We think the intent of the " ' statute is best promoted by that construction, " ' and that fraudulent conveyances, which are made " ' to secure to a debtor a heneficial interest, while " ' his property is protected from creditors, will be " ' more effectually prevented by declaring that an " ' absolute bill of sale is of itself a fraud, unless " ' possession accompanies and follows the deed. "The statute of Virginia, construed in this case, "was the same as the statute of 13 and 27 Eliza- " heth, and with the exception of the artificial distinc- " tion taken by the court between absolute and con- " ditional sales, which, if it ever existed, has been " abolished by the Revised Statutes, the conclusion 454 JUDGMENT DEBTOR. " of the court is in accordance with principles for " which I contend. I admit, most fully, that where " there is ' nothing but the absolute conveyance with- " ' out the possession, that, in point of law, is fraudu- " ' lent ;' and also that ' fraudulent conveyances which " ' are made to secure to a debtor a beneficial inter- " ' est, whUe his property is protected from creditors, " ' is of itself a fraud,' whether the possession accom- " panies the deed or not. A bill of sale, whether " absolute or conditional, intended to secure to the " debtor a beneficial interest and protect his prop- " erty from creditors, is clearly fraudulent ; nor wUl " the fact that the possession accompanies the deed "make it honest and honafide. In the same court, " in the case of Phettiplace v. Sayles^ 4 Mason's Ee- " ports, 322, Justice Story says, ' Where a party, who " ' is owner, sells personal property absolutely and " ' yet continues to retain the visible and exclusive " ' possession, the law deems such conduct a con- " ' structive fraud upon the public' To be fraudu- " lent in law it must be such a transaction as is " necessarily at war with good intentions and against " good faith. But here, again, the abstract proposi- " tion only is decided, whether an absolute sale of " chattels is prima facie void, unless the vendee take " actual possession. The question whether the party " was not at liberty to explain the reasons why the " vendor continued in possession, not being presented " to the court. This doctrine has undergone a most " thorough and able review in the State of Massa- "chusetts. In the case of Brooks v. Powers^ 15 " Mass. Kep. 244, one Witt sold to Brooks a yoke of CREDITOR AND DEBTOR. 455 " oxen, continuing in possession. Powers, a creditor " of Witt, caused the oxen to be levied on by attach- " ment. Brooks brought trover and obtained a ver- " diet for the value of the oxen ; and upon a motion " by the defendant for a new trial, on the argument " of which all the ancient and modern cases were " cited, the Chief Justice says : ' It has been con- " ' tended in this case that the possession of the '' ' vendor of personal chattels after the sale is con- " ' elusive evidence in favor of creditors, that the sale " ' was fraudulent ; or rather that it is itself a fraud. " ' But we are all of opinion, that although it is evi- " ' dence of the strongest kind, it is not conclusive. " ' The vendee may, notwithstanding, upon proof that " ' the sale was hona fide and for valuable considera- " ' tion and that the possession of the vendor, after " ' such sale, was in pursuance of some agreement not "'inconsistent with honesty in the transaction, hold " ' under his purchase against creditors ; and so it has "'been often decided in this court, as well as in " ' England.' In the same court, in the case of JBm't- "lett V. Williams^ 1 Pickering's Mass. Eep. 295, Put- " nam, Justice, says : ' It is certainly a general rule " ' that the possession must accompany and follow " ' the deed, and that the possession of the vendor, " ' after the bill of sale unexplained, would render " ' the conveyance void as against ci'editors, but such " ' a possession may be explained and may be per- " ' fectly consistent with justice.' The same doctrine " has been held in New Hampshire. In Homer v, " Lowe, 2 New Hampshire , Reports, Mr. Justice " Woodbury says : ' In fine, possession of property 456 JUDGMENT DEBTOR. " ' being retained by tbe vendor after a sale is not " '•per se fraud ; but in the language of Lord Mans- " ' field, being only evidence of fraud, may be ex- " ' plained. The whole circumstances should be " ' submitted to the jury, anH from all parts of the " ' transaction taken together, it should be determ- " ' ined, whether the contract of sale was or was not " ' fraudulent in the concoction of it.' In Gohurn v. '"'' Pickering^ 3 New Hampshire Reports, 425, Ch. " Justice Richardson, in declaring the opinion of the " court, says : ' After a most attentive and careful " ' examination of the books on this subject, we have " ' not been able to entertain a doubt that the true " ' rule to be deduced from all the adjudged cases is, " ' that when the sale is absolute, possession and use " ' of the goods afterwards by the vendor is always, " ' unexplained, conclusive evidence of a trust.' In " this case, all the English cases were cited and re- " viewed ; and the court, in concluding their opinion, " hold what I believe always has been, is now and " ought hereafter to be the law, viz : ' that such pos- " ' session in the vendor may always be explained, "'but if not explained, is adjudged fraudulent in " ' law.' It was further held by the same court, in " Ash V. Savage^ 5 New Hampshire Reports, 545, " that ' when a chattel has been mortgaged, posses- " ' sion by the mortgagor may, in some cases, be " ' evidence of fraud, but is never a fraud in law or " ' conclusive evidence of fraud.' The leading cases " in Connecticut seem to indicate a more rigid rule " than has obtained in most of her sister States, with- " out, perhaps, intending to convey the doctrine far- CREDITOR AND DEBTOR. 457 " ther. They recognize, and, I think, partially extend " the case of Edwards v. Harber ; but in Potter- v. '■'■Smithy 5 Conn. Reports, 201, Chief Justice Hosmer " adopts the reasoning of the Supreme Court of this " State in the case of Sturtevant v. Ballard, 9 Johns. " Eeports, 337. In North Carolina, where this class " of cases has been elaborately reviewed, it was held, " in the case of Vicks v. Kegs, Haywood's North Car- "olina Reports, 126, that 'the property ought to " accompany and follow the deed ;' ' but (says Judge " ' Taylor in delivering the opinion of the court), "'I cannot agree that the property going otherwise " ' as to its possession than the deed points out, is " ' absolutely fraud.' In the case of Trotter v. How- '■'■ ard, Hawks' North Carolina Reports, 322, Judge " Hall, in delivering the opinion of the court, after " citing the case of Edwards v. Harher, says : ' The "'statute of Elizabeth declares, that all convey- " ' ances made with intent to defraud creditors, shall " ' be void and of no effect ; and whether a convey- " ' ance comes within the operation of the statute, " ' whether it is made with intent to defraud cred- " ' itors or not, is a question of fact, which, under all " ' the circumstances of the case, properly belongs " ' to a jury to decide. It is a matter of fact and " ' not a question of law.' In South Carolina, in the " case of Terry r. Eelden, 1 S. C. Reports, 573, in " speaking of the rule that possession must accom- "pany the deed, and the difficulty and injustice of " maintaining it, the court say : ' In other instances " ' the strong arm of the law has been able to " ' enforce the rule for a time, but even this engine 458 JUDGMENT DEBTOR. " ' becomes powerless, when opposed to the will of " ' a whole community, and the rule is only remem- " ' bered for the injustice it has done. A wise " ' lawgiver should therefore inquire, whether the " ' rule proposed even to give effect to a correct " ' principle is calculated to promote justice and " ' the happiness of mankind. An improvident " ' or unfortunate child or parent or a beloved " ' friend has become embarrassed, his whole for- " ' tune is inadequate to the demands upon him, " ' and a sale is the only alternative : superabund- " ' ant wealth enables you to gratify your good " ' feelings in holding out relief to him and perhaps " ' a numerous family. Is the law so cold and un- " ' feeling, so stern and inflexible that you shall not " ' leave to his use one article of property which he " ' before owned, but an insatiable creditor may lay " ' his hands upon it ? I think not. This case is " ' highly colored, but in principle I cannot distin- " ' guish it from any other when the transaction is " ' honest. Those who maintain the opposite side " ' of the question, predicate their argument on the " ' facility for practicing frauds through this means " ' and the difficulty of tracing them out ; and I " ' agree there is much truth and good sense in the " ' argument. But the security is found in a jury " ' drawn from the atmosphere of the transaction ; " ' and the suspicion of the law throws the burthen " ' of proof upon the purchaser.' After citing a "number of cases in support of this doctrine, he "concludes: 'It is the voice of mankind, repu- " ' diating a policy at war with their feelings and CREDITOR AND DEBTOR. 459 " ' one wliich courts of justice mucli respect.' The " same doctrine was most emphatically maintained " in the case of Smith v. Henry ^ 2 Bailey's South "Carolina Reports, 119 — the court saying 'The " ' jury ought to be charged, that possession in the " ' vendor is primorfacie evidence of fraud and " ' leave the explanation to them.' In Tennessee, "White, Justice, in the case of Bagan v. Ken- " nedy, 1 Ten. Eep. 100, held ' whether there " ' be fraud or not, the jury must determine from " ' the evidence. The law considers various cir- " ' cumstances as evidence of fraud : as when a bill " ' of sale is made secretly and not in the usual way ; " ' when a suit is pending against the person con- " ' veying ; when made by one relative to another " ' or when the person making it uses the property " ' afterwards as his own ; and, when a bill of sale on. " ' its face is absolute and is not followed by a pos- " ' session of property it is void.' In Virginia, in the " case of Alexander v. Duneole^ 2 Mumford's Vir. "Rep. 341, the district judge held, that 'an abso- " ' lute conveyance of personal estate, when the " ' party making it retains possession, is void as to " ' creditors even without other evidence of fraud ; " ' though' (he says) ' this appears to be carrying the " 'matter too far and, perhaps, agreeable to ancient " ' determination, it would have been better to have " ' considered it as evidence of fraud connected with " ' other circumstances.' This decision was sustained " and affirmed by the high court of appeals ; but it " should be borne in mind that there was no explan- " ation offered or given why the vendor retained 460 JUDGMENT DEBTOR. " possession. In Snyder v. Qree^ 4 Leigii's Rep. 547, " in reviewing the doctrine, the pi'esident of the " court of appeals says : ' Can it be, that in these " ' various transactions, so common in the concerns " ' of life, that the purchaser is affected with con- " ' structive fraud ? I think not. The mischief of " ' the rule would be greater than the frauds at " ' which it is aimed, if it be/ permitted to insinuate " ' itself into such transactions as these ;' and he " adds, ' On either side there is an evil to be avoided, " ' and the most common transactions of life and the " ' ordinary cases of personal estate will be tram- " ' meled and embarrassed if our sole care is directed " ' to the protection of creditors and purchasers who " ' ought to protect themselves.' In Kentucky, in the "case of Wash v. Medley, 1 Dana's K. Eep. 269, Chief " Justice Robertson says, ' The fact that no visible " ' alteration in the actual possession accompanied " ' and followed the deed, cannot be deemed per se " ' fraudulent. It was a fact proper for the consid- " ' eration of a jury.' In Baylon v. Smitliefrs, 1 Lit- " tie's K. Rep. 112, the court held, ' that on an abso- " ' lute bill of sale, the vendee must take possession or " ' it would be deemed fraudulent ; but if the bill of " ' sale was conditional, the question of fraud must be " ' decided by the jury from the facts of each particu- " ' lar case.' In Pennsylvania, the court seem to have " adopted the most rigorous construction of the " English rule, which is summed up by Ch. Justice " Tilghman in Domes v. Cape, 4 Binney, 258, as fol- " lows : ' When the deed contains an absolute, im- " ' mediate assignment, it is necessary that the pos- CREDITOR AND DEBTOR. 461 " ' session should accompany and follow it, otherwise "'it will be fraudulent under the statute, 13 Eliz., " ' and indeed at common law. But when the deed " ' or conveyance is conditional or to take effect at " ' some future time, the retaining of the possession, " ' according to the intent of the deed, is not fraudu- " ' lent.' In the early decisions of the courts of this "State, it was held that the continuance of the "vendor, in possession was only primorfacie evi- " dence of fraud and was a circumstance which "admitted of explanation. But in Sturtevant v. '■'■Ballard, 9 Johns. Rep. 337, it seems to be "supposed that the rule, contended for by the "respondents in this case, has been sanctioned. "This was the case of a sale by a blacksmith of " his tools, to a merchant, partly for cash and partly " in payment of a precedent debt ; the bill of sale "containing an agreement that the vendor should " continue in possession of the tools three months. " These tools were seized by a creditor upon execu- "tion. In this case, in the contest between the "vendee and the creditor, Kent, Ch. Justice, ex- " pressly says : ' There is no case which sanctions " ' such a sale as the one in the present instance, for " ' here no reason whatever appears for withholding " ' delivery of possession, and the sale must, there- " ' fore, be considered in judgment of law as fraud- " ' ulent and void against the creditor ;' and he adds, " by way of conclusion, ' we may, therefore, safely " ' conclude, that a voluntary sale of chattels, with " ' an agreement, either in or out of the deed, that " ' the vendor may keep possession, is, except in spe- 463 JUDGMENT DEBTOR. " ' cial cases, and for special reasons, to be shown to " ' and approved by tbe court, fraudulent and void " ' as against creditors. This is clearly not one of " ' those cases ; and the defendant is, therefore, enti- " ' tied to judgment.' This case, I apprehend, does " not go the length which many seem to have sup- " posed. Chief Justice Kent places the decision " upon the ground that ' no reason whatever appears " ' for holding delivery of possession, and therefore " ' the sale must be considered void.' And the de- " cision is precisely what the Revised Statutes now " declare to be the law. He does not decide, nor " assume to decide what particular facts and circum- " stances should be proved, by way of explanation, " but he clearly admits that the possession in the " vendor after sale may be explained, for he pro- " ceeds upon the ground that ' no reason whatever ' " was shown in that case. This whole doctrine " passed under the able review of the late Chief " Justice Savage, in the case of Bissd v. Hophins, " 3 Cowen, 166. This case was argued at great " length, and with distinguished ability, and most of " the ancient and modern cases were cited. The " chief justice, in alluding to the opinion of the " court ia Sturtevant v. Ballard^ says : ' The learned " 'judge no doubt intended to say here, as in Bar- " ' row V. Paxton (5 Johns. Rep. 261), that posses- " ' sion continuing in the vendor, is oxAj prima facie " ' evidence of fraud, and may be explained. The " ' question in every case is, whether the act done is " ' a hona-fide transaction, or whether it is a trick " ' and contrivance to defeat creditors ; the possession CREDITOR AND DEBTOR. 463 " ' by the vendor of personal chattels after the sale, " ' is not conclusive evidence of fraud. The vendee " ' may, notwithstanding, upon proo£ that the sale " ' was hona fide and for a valuable consideration and " ' that the possession of the vendor, after such sale, " ' was in pursuance of some agreement not inconsist- " ' ent with honesty in the transaction, hold under " ' his purchase against creditors.' This decision has " been affirmed by the decisions of the same court " in Jennings v. Garter^ 2 Wendell, 449 ; Divver v. " MLaugUin, 2 Wendell, 596 ; and in Hall v. 5^^;!- " tle^ 8 Wendell, 375, the late chief justice again "reviews at length the leading cases, and again " declares that ' possession by the vendor after the " ' sale is only prima-facie and not conclusive evi- " ' dance of fraud,' and he avers that no case can be "found which holds a different rule. The case of " Hall V, Tuttle arose and was tried at the circuit "before the Revised Statutes took effect, but was " argued and decided afterwards, and the chief jus- "tice cites the provisions of the Revised Statutes " applicable to the question and declares that the " provisions are the same as the stat. of 13 Elizabeth, " which statute was declaratory of the common law. " In a learned note annexed to the case of Bissel v. " Hopkins by the then reporter but now Mr. Justice " Cowen, it is said : ' The details or circumstances " ' which shall constitute fraud, like those of usuiy, " ' or the degree of neglect which shall render a " ' man liable in an action on the case, seem to mock " ' the efforts of a general rule, and must be ranged " ' forever without the line which divides the prov- 464 JUDGMENT DEBTOR. " ' ince of tlie court from that of the jury. The law " ' may declare that fraud shall vitiate the sale, but " ' as the devices by which that fraud is to be com- " ' passed and disguised may be various, so the evi- " ' dence, by which it is to be established or repelled, " ' must frequently vary with the cases as they arise.' " Some judges have started with a high-toned rule, " that unless a change of possession follows imme- " diately, it is not only evidence of fraud, but per " se makes the sale fraudulent and void. But " these learned judges were embarrassed with nu- " merous exceptions in the outset, and when the late " Ch. J. Kent made an effort, in Sturtevant v. Bdlr " lard, to introduce the same rule, as far as possible, " into the jurisprudence of this State, he found it " encumbered with the following exceptions, which " he enumerates ; and after reviewing the cases at " length, the reporter adds : ' But whichever way the " ' decisions may tend upon the question of possession " ' in the vendor, after a voluntary, direct and abso- " ' lute bill of sale, so far as the stat. Eliz. is concerned, " ' no doubt can be entertained at this day that a " ' continued possession in the mortgagor of chattels " ' is not per se evidence of fraud.' I have thus " sought to consider all the leading ancient and " modern decisions upon this subject previous to " the Revised Statutes, for the purpose of exhibit- " ing in a condensed form what the law has been, " and of correcting, by force of authority, the belief " that the courts had ever entertained a rule which, " in its application, must always be harsh and in- " equitable. The supreme court, in some recent CREDITOR AND DEBTOR. 465 " decisions have, I am compelled to admit, virtu- " ally established a new, and, I may add, severe. " rule for their government, but whether it is sought " to be maintained by the current of authority or • "by some supposed new provision of the Revised " Statutes, does not very clearly appear. I have " already shown what the law has been ; and if, " as I have supposed, it has not been changed by " the operation of the Eevised Statutes, it seems to " me clear that the reasoning of the supreme court, "in the cases of Doane v. Eddy^ 16 Wendell, 522, " and of Randall v. Cook^ lY Wendell, 54, are not " upheld by the sanction of authority. In the case " of Boane v. Eddy^ the case of the traveling preach- " er ; although the mortgagee offered to prove at the " trial that the mortgage was given for a valuable " consideration, in good faith and without any intent " to hinder, delay or defraud creditors and offered, "as explanation, why the mortgagor retained the " possession, that he was a circuit or traveling preacher " of the Gospel and that the horse, the subject of "the controversy, was absolutely necessary to the " prosecution of his calling ; yet the plaintiff was " nonsuited upon the trial ; and the supreme court, " in a learned opinion delivered by Mr. Justice Bron- "son, (the chief-justice dissenting,) refused to set " aside the nonsuit, and held, that the proof offered " was insufficient to justify possession in the vendor " and that such possession was, admitting all the facts " proposed to be given in evidence to be true, con- " elusive evidence of fraud. In the case of Randall " v. Goo\ the only reason given by the vendee, why 30 466 JUDGMENT DEBTOR. tlie vendor retained possession was, that the vendor wished to use the horses; and this 'transaction,' says Mr. Justice Bronson, ' is fraudulent in law, the ' sentence is written in the statute book and neither ' courts nor juries are at liberty to disobey the ' mandate.' The reason for retaining possession in this case was certainly very slight and might well be adjudged unsatisfactory by a jury; but with great deference to the high authority opposed, I have been unable to find any sentence in the stat- ute book which virtually condemns without a hear- ing, which separates conduct from motives for the purpose of passing judgment upon both or which executes with its sword before it has weighed in its balances. The statute pronounces judgment only in cases where the mortgagor or vendor con- tinues in possession without explanation. The 5th section oi 2 Revised Statutes^ 136, is as follows, ' Every sale of goods made by a vendor of goods ' and chattels in his possession, or under his control, ' and every assignment of goods and chattels by ' way of mortgage or security or upon any condi- ' tion whatever, unless the same be accompanied ' by an immediate delivery and be followed by an ' actual and continued change of possession of the ' things sold, mortgaged or assigned shall be pre- ' sumed to be fraudulent and void as against the ' creditors of the vendor or against the creditors of ' the person making such assignment or subsequent ' purchasers in good faith : and shall be conclusive ' evidence of fraud, unless it shall be made to ' appear, on the part of the persons claiming under CREDITOR AND DEBTOR. 4gY " ' sucli sale or assignment, that the same was made " ' in good faith, and without any intent to defraud " ' such creditors or purchasers.' This section of the " statute, I apprehend, leaves the law where it found " it. It places absolute and conditional sales upon ''the same ground and declares possession in the "vendor conclusive' evidence of fraud, unless or " rather until explained ; or in other words, it throws " the burthen of proof upon the vendee or person " claiming under such sale, to show ' that the same " ' was made in good faith and without any intent to " ' defraud such creditors or purchasers.' But this " question of intent is by no means left for the de- " cision of the court, nor is it to be regarded as dis- " puted territory between the court and jury. The " 4th section of title 3 of the stame chapter, 2 M. 8. " 137, declares that ' the question of fraudulent in- " ' tent, in all cases, shall be deemed a question of " ' fact and not of law.' In addition to this clearly " defined intention of the legislature, as to the valid- " ity of bills of sale or chattel mortgages when given " in good faith and without any intent to defraud " creditors or purchasers, it is worthy of remark that " the last act passed by the Colonial Legislature of " New York was to provide for the registry of chat- "tel mortgages; and that the legislature, in 1833, " with a view to correct abuses, passed an act re- " quiring them to be placed on a file in the several " towns where the mortgagor should reside. While " it is certain that the question of fraudulent intent " is one of law, where the vendor retains possession "and no explanation is offered, it is equally clear 468 JUDGMENT DEBTOR. " tliat the question of intent, when an explanation " is offered, is a question of fact. The former is the " prerogative of the court, and the latter that of a "jury. It is only necessary for the person claiming, " under such sale, to show, ' that the same was made " ' in good faith, upon sufficient consideration and <' ' without any intent to defraud ;' and of the intent " and good faith the jury are the exclusive judges. " This ' sentence is written in the statute book, and " ' courts are not at liberty to disobey its mandate.' " It is undoubtedly the province of the court to pass " upon the evidence offered in this, as in all other " cases, as to its relevancy and admissibility ; but <' when they have instructed the jury that the law " pronounces the transaction fraudulent, unless they " are satisfied that the evidence rebuts all presump- " tion of fraudulent intent, they have discharged " their oflSce, and it is for the j ury and not for the " court to say whether the transaction was fair and " without intent to defraud. The benefits of this " salutary rule may be as effectually destroyed by " its misapplication, as by refusing to acknowledge " its existence. If courts are to acknowledge the " abstract principle merely and then destroy its " practical utility, by laying their hands on every " transaction which would ordinarily come within " its provisions, and thus subvert the very spirit " and intention of the statute, the sooner it is ab- " rogated entirely the better. The statute, to my " understanding, offers its protection to honesty and " fair dealing in all cases when it is so pronounced " by the solemn verdict of a jury, but the rule will CREDITOR AND DEBTOR. 4.QQ "prove an idle delusion, if courts so construe tlie " statute as to sweep away the only matter fitted for " their consideration. In short, I am unable to dis- " cover what power the statute has given the court " to determine what particular facts shall or shall not " be sufficient evidence of honest intention ; nor do I " hesitate to declare, that any facts, which impress " the human mind with a conviction that the sale " was honest and bona Jide, and was not designed as " a mere trick to cover property for the purposes of " defrauding creditors, should be submitted to the "jury. While such evidence should be subjected to "the severest scrutiny, the jury have a right to pass " upon it ; and if against the presumption of law and " the numerous indicia of fraud, they pronounce it " honest and bona Jide, their verdict ought to be con- " elusive. Neither the legal nor the moral code " should be administered for the sole benefit of cred- "itors. They become creditors by their own voli- " tion and have abundant means for their own pro- "tection, nor can I consent to place the general "creditor upon a superior footing to him who fur- " nishes his poor neighbor with a cow to nourish his " children or a team to sow his crops or gather in " his harvest. It is an idle dream to suppose we can " advance the cause of morals by establishing a rule " which ministers to the mercenary passions at the "expense of the benevolent affections or that the " fountain of justice will send forth purer streams if " they are forced to flow through artificial channels. "The principles of law are but the enlightened and "just conclusions of a moral people, pronounced by 470 JUDGMENT DEBTOR. " their own tribunals ; and when the law seeks to " erect a standard of its own and ceases to exert its " attributes in administering to the public good, the " same hand which upholds it will not fail to divest " it of its power to oppress. Sacred Scripture has " declared, that the poor we have always with us ; " but whether the recent current of decisions is cal- "culated to give force to this divine declaration, by "compelling each to possess, exclusively, his own " property, upon pain of its forfeiture, or to contro- " vert its truth, by declaring all personal chattels " left with another, from the purest motives of char- " ity, his own, it is perhaps difficult to detennine. I " have never been able to learn from those who con- " tend that leaving property in the possession of the " vendee, is, in all cases, conclusive evidence of fraud ; " at what particular moment the right of property " passes from the true owner, by operation of law, " and becomes forfeited to the creditor ; nor have I " been advised at what interesting period facts cease " to be availing and are swallowed up in this rapa- " cious principle of law. In Randall v. Cook^ Mr. " Justice Bronson says : ' Had it been declared fifty " ' years ago that if a man conveyed his personal '"chattels and still kept them himself, under any " ' pretense whatever, the transaction should be " ' deemed absolutely fraudulent and void as against " ' creditors and purchasers, it would have saved an " ' incalculable amount of time and money which has "'been expended in the litigation of questions of " ' this kind ; and it would, moreover, have rendered " 'a most important service to the cause of good mor- CREDITOR AND DEBTOR. 471 " ' als, by removing all temptation to tlie numberless " ' frauds which have been committed, for the pur- " ' pose of placing property beyond the reach of legal "'process.' While I acknowledge the force of rea- " soning adopted by the learned judge, I am com- " pelled to remark that if, at the same time, the law "had laid its interdiction upon all human inter- " course, as to exchanges or purchases of property, "the same results would have been produced and "with about equal justice and propriety. If, fifty " years ago, the law had laid aside its metaphysical " subtleties and revealed itself in its own simplicity " and purity ; if it had, regardless of form, pro- "nounced appropriate judgments upon honesty and "fraud, it would have won more by its justice than " it has terrified by its power. There cannot well "be two -standards of truth and morals — the one for " courts of justice and another to govern men in " their ordinary intercourse. If, by the inquisitions "of the judicial crucible, a transaction both honest " and fair may be alloyed until it is dishonest and " fraudulent ; by the inverse power of transmutation, " a fraud may be refined until it is equivalent to hon- "esty and truth. If truth may then become con- " structive falsehood, by the same rule falsehood may " become constructive truth. " It was said by coun- "•sel upon the argument of this cause, that the rule " contended for by the appellants would tend to pro- " duce and encourage litigation and multiply suits " for the benefit of the legal profession, while the " reverse would be productive of great principles of " utility and economy. It may be said with equal 4:72 JUDGMENT DEBTOR. " propriety, that if our system of jurisprudence was " exchanged for the arbitrary laws of the East; if our " courts and juries were dispensed with and justice " measured out by the nod of the lawgiver and exe- " cuted by the bastinado and bow-string, our admin- " istration of justice would be more summary as well " as more economical ; and the services of the legal "profession might be altogether dispensed with. " This being an appeal from chancery, it is our duty, " as a court of equity, to pass upon both the law and " the fact. The law has been already discussed ; " and although leaving the goods in the possession of "Stoddard was conclusive evidence of fraud until " explained, I am disposed to regard the hcma fides " of the transaction as abundantly established by the " pleadings, or rather by the answer, which is evi- " dence. It is fully established that the assignment " was not made for the purpose or with the intent to " hinder or defraud creditors, but in payment of an " actual subsisting debt, and that the property was " left with Stoddard, as the agent of Thurber and " Townsend, for the sole purpose of closing up the busi- " ness for their benefit, without dissruise or conceal- " ment. This, in my j adgment, ought to satisfy a "jury of the fairness and honesty of the transaction " and that the assignment was not made for the " purpose or with the intent to hinder or defraud " creditors, which, under the view I have taken, is " all that is necessary. I discover nothing in this " matter at war with law, equity or good morals. "I am, therefore, for reversing the decree of his CREDITOR AND DEBTOR. 473 " Honor the Chancellor and of affirming the decree " of the vice-chancellor of the fifth circuit." (a) (a) The following cases, embracing the question of fraudulent trans- fers and assignments, are to be found reported since the Revised Statutes went into operation : Armstrong v. Byrne, 1 Edwards's V. C. Rep. 79; LentilTiony. Moffat, lb. 451 ; Mills v. Levy, 2 lb. 183 ; Ebne y. Woolsey, lb. 289; Taylor v. Mills, lb. 318; Corning y. White, 2 Paige's 0. R 567 ; Ames y. Blunt, 5 lb. 13 ; Waterlmry v. Sturtevant, 18 "Wendell's R. 353 ; Van Wyek v. Seward, lb. 375 ; Hone v. Hen- riqnes, 13 lb. 240 ; ., if required hy the pur- chaser, join in the said conveyance or assignment, as the said referee may direct ; and that the said A. B., as such receiver, and also the said defendant, C. D. (if required to join in such conveyance or assign- inenf) shall stipulate therein that the purchaser he at liberty to use their or either of their names if he shall deem it necessary, in any suits or proceedings in relat/ion to the subject matter of the said sale, he giving to the said receiver and to the said A. B. such indemnity against the costs of any such suits m'' pro- ceedings as may he directed hy this court previous to the commencement of any such suits or proceedings. An advertisement,, bearing the title of the suit, may easily be framed from this order. We have inserted one in relation to the sale of debts at page 152, ante. A receiver is not to be allowed for the costs of any suit brought by him against an insolvent from whom he is unable to collect his costs, unless such suit is brought by order of the court or by the con- sent of all persons interested in the funds in his ■ hands : Rule 76. At p. 137, ante, will be found a precedent of a petition and order to bring an action, with accompanying remarks. He may sell desperate debts and all other doubt- ful claims to personal property, at public auction, giving, at least, ten days' public notice of the time 488 JUDGMENT DEBTOR. and place of sucli sale ; see the form of an advertise- ment for the sale of bad debts, page 155, ante. It has reference to a special application ; but requires the slightest alteration, if any, to make it conform to a case under the YGth rule. The receiver is to hold the property and effects of the debtor for the benefit of all the creditors who have commenced or shall commence similar suits during the continuance of his trust, to be disposed of according to their legal or equitable priorities. He must give security sufficient to cover the whole property and effects of the debtor, which may come into his hands by virtue of his office. He cannot pay over the funds in his hands to the parties or to any other person, without being spe- cially authorized to do so by an order or decree of the court. Where a suit is not ended, a party and not the receiver should apply to pay over funds in the hands of the latter. Nor can a receiver, in a judgment creditor's suit, be discharged from his trust without a special order to be obtained upon a written consent of all the parties interested in the property in his hands or upon due notice of the application. One of the latter chapters, containing the final accounting and discharge, should be examined m connection with this passage. Where another suit is commenced after the ap- pointment of a receiver, the same person may be appointed receiver in such subsequent suit ; and must give such further security as the master ese- CREDITOR AND DEBTOR. 489 cuting the last order shall direct. "Where he does not or cannot give the additional security, he will be discharged altogether, with his expenses : Smith on Receivers^ 192. He must keep a separate account of any property or effects of the debtor which have been acquired since the commencement of the first suit or which may be assigned to him under the appointment in the last cause: Old QJianeery Rule 194. Besides the above powers, defined by express rule, a receiver in a judgment creditor's suit has the authority and rights, so far as they can apply, that attach to receivers generally ; and for these we would refer to p. 113 ante. Although a judgment debtor takes the benefit of the insolvent act after his creditor has filed a bill, yet the assignee under the act has a right only to the surplus, after payment of the complainant's debt. The defendant, after the service of the in- junction, can only make an assignment subject to the prior equity of the complainant. A receiver will hold the property of the judgment debtor in trust for the creditors who file bills before the debtor has actually made an assignment under the act : Oorning v. White, 2 Paige's C. R. 567, By the 195th Rule of the New- York Chancery, an injunc- tion would not, ordinarily, prevent a judgment debtor from taking the benefit of the act ; but the very spirit of that rule and the principles connected with judgment creditor's bills, keep the priority of payment with the suing creditors. A receiver should not sell too much of the debt- 490 JUDGMENT DEBTOR. or's property. Tq Wardell v. Leavenworth, 3 Ed- wards's V. C. Eep. 244, a receiver tad been ap- pointed on a judgment creditor's ' bill ; and as two other suits, of the same character, were afterwards commenced, the receiver became a receiver also in the latter cases. About one thousand dollars, in all, were due on the different judgments. The receiver had advertised the property assigned to him for sale by public auction. The defendant swore that the property, so assigned, was truly worth, at least, sixty thousand dollars over and above all liens, claims or set-oflfe on the same ; and its value was somewhat confirmed by an accompanying affidavit. The vice-chancellor had granted a preliminary order, requiring the receiver to show cause why the sale should not be stayed. On the motion to show cause, the receiver explained, by his affidavit, that the principal part of the property was in mining stock and he had no means of knowing the value of it. Vice-Chcmcellor M'-Ooun considered that, as the amount of the property in the hands of the receiver was sworn to be large and much more than sufficient to satisfy the judgments, it would be discreet in the receiver to forbear selling by public auction for the present ; and he was directed to stay such sale until the further order of the court. Although a plaintiff gets a decree or judgment, yet it may happen that the receiver is not able to pay him off, owing to a prior plaintiff having held back and not put his suit into decree ; leaving the re- ceiver in doubt how much to retain for him. In such a case, it is not for the receiver to move in the CREDITOR AND DEBTOR. 49 1 matter. It is presumed that tlie active plaintiff might present a short petition or affidavit to the court (on notice and service of a copy on the inact- ive party) and move the court for a reference to a master to report how much should be retained by the receiver and compel the latter party to run the risk of its being enough or ask the court that such sleeping party speed his suit to a decree within a certain time, and if not, then, on proof of service of order to be made and time elapsed and application to the court, the plaintiff be paid without reference to priority between them. It may also happen that, while the defendant allows one party to take a decree pro confesso, he may be litigating against a prior plaintiff. In such a state of things, it would seem hard that the plain- tiff, having the decree, should be delayed until the fight is through in the other suit ; and it is thought that a reference could be had, on motion and affi- davit or short petition, for a master to report what amount should be kept in the hands of the receiver to meet the ultimate result of the prior suit and to add whether enough would remain to pay the party who had the decree. And so that an order be had to that effect on the coming in and confirmation of the report. All this would have to be done on notice and summons to the other party. Ajppoini/memt of a Receiver^ hefore An»we?\ The plaintiff has a right to apply for a receiver after appearance and before an answer. It is no 492 JUDGMENT DEBTOR. sufficient defence to sucli an application to say, tliere may not be any property to protect and take care of: as the plaintiff proceeds at the peril of costs if there should be none. If there should be nothing for the receiver to take, the defendant cannot be injured by his being appointed : Bloodgood v. (Jlar\ 4 Paige's C. E. 577. It is, however, to be gathered from this case, that the motion is subject to be met by a denial of the equity in the bill — not by a mere denial of property, {Fit'zhurgh v. M)eringh(mi 6 Paige, 29) : but by something which would go to destroy the conclusiveness of the judgment. And even the bringing of a writ of error will not, neces- sarily, stay proceedings in this court : Bradt v. Kirh- patrick, 7 Paige's C. R. 62. And the court wiU not go into the validity of the judgment. The court of law, wherein it was obtained, is the proper tribunal to uphold or set it aside : Hone v. Wbolsey, 2 Edwards's V. C. Reports, 289. The motion for a receiver, before answer, must be on notice ; and the vice-chancellor of the first circuit decided, not to allow of a receiver in this stage of the cause, unless the defendant had been served with a copy of the bill : Mart v. Tiim, 3 Edwards's V. C. R. 226. In that case, subpena had been issued and served personally; and, soon afterwards, the complainant served on the defendant a petition for a receiver. No copy of the bill had been served. TTie Vice-OhanceUor : "The established and, I con- • " sider, the better practice in these cases is, to serve " a copy of the bill on the defendant personally or "on his solicitor, before moving for a receiver, in- CREDITOR AND DEBTOR. 493 " stead of presenting a petition, stating what the bill " contains, &c. Here, the defendant has never seen the " bill ; and his affidavit shows that this proceeding " has been precipitated against him without neces- "sity or any other previous notice of the amount of " the judgment or how much he was required to pay, " although he swears he would have paid forthwith " if he had been notified. I suppose the complain- " ant, as a matter of strict right, was at liberty to file " this bill ; and that the defendant must pay the " costs of it, as well as the amount of his judgment ; " but, under the circumstances disclosed in the de- " fendant's affi.davit, I am not disposed to accelerate " proceedings which are not in conformity with the " usual practice and which are shown to be entirely " unnecessary and, at the same time, calculated to " swell the amount of costs. I, therefore, deny this " motion for a receiver ; and leave each party to bear " his own costs." On a motion for a receiver before answer, the defendant may meet the application by affidavits or can read an answer as an affidavit and show that he has, bmia fide, assigned his property for the benefit of creditors. In such a case, the complainant will be entitled to a receiver of the debtor's estate and effects not covered by the assignment ; but will not be allowed one against the assignee. If the complainant should be unaware of any such assignment until the time that he makes his motion and be still desirous of pursuing the suit, it will be weU to take a receiver restricted to the unassigned 494 JUDGMENT DEBTOR. property, and amend his bill by making tbe assignee a party: Mulea 43, 190, in GTiancery. And where the complainant is aware of such an assignment and charges it to be void, and that the assignee is insolvent and such charge of insolvency is not denied, a receiver will be allowed him as to the assigned property. But where the assignee meets the motion and denies the insolvency by answer or af&davit, the receiver will be denied as to the as- signed property ; and., generally, with costs to the assignee : but without costs as to the debtor. The motion for the receiver and order consequent thereon should embrace so much and such parts of the debtor's property as the court may deem suffi- cient to satisfy the complainant's debt with interest and costs* We also refer to the general practice on the appointing a receiver, p. 76, ante^ as containing instructions for the usual couree before a master or referee and the form of assignment heretofore given, in a case where the defendant has to assign over all his estate, p. 101, coupled with those forms which will be found in the chapter of general practice, may prove sufficient as precedents. And the order for the receiver might be in the following form : At a Courty &c. Present^ &g. [Title.] On reading and filing notice of motion for a re- ceiver and affidavit^ showing due service^ as well of such notice as of summons and copy of complaint on the defendant herein • On motion of Mr. , CREDITOR AND DEBTOR. 495 of counsel for the plaintiff and [no one appear- ing to make opposition,] it is ordered^ that it he re- ferred to S. C. Esquire^ of the city of Neiv Yorh, as referee, to appoint a suitable person, as receiver in this cause, of so much and such part of the estate, property, chases in action and effects of the said 0. D., defendant herein, as will he sufftcient to satisfy the judgment of the said plaintiff mentioned in his complaint, with interest and costs, and as such judgment was dochetted in the court of on the day of , 18 — . And that such master take from such receiver the necessary a/nd usual security, and file the sofms in the proper office. And it is further ordered, that, on the filing, as well of the secwrity as of the report of the said master of such appointment, the said report shall stand confirmed j and the said receiver be vested with all his rights and powers loithout further order. And the said defendant C. D. is hereby ordered to appear before the said referee and as&ign, convey, transfer and deliver over to such receiver, on oath and under the direction of the referee, the said part of his said estate, property, choses in action and effects aforesaid / with all vouchers and papers re- lating thereto ; as well as, from time to time, produce such boohs and papers and submit to such examin-Or tion as the said referee shall direct in relation to the • property or effects which he is directed to assign and deliver ove)'. And- also that the plaintiff be at liberty to exa/mine witnesses before the said master in rela- tion to the real estate, leasehold, chattels real and per- sonal a/nd equitable interests, things in action and 496 JUDGMENT DEBTOR. effects of the said defendcmt G. D. ; and also as to any matter charged in the said complaint and not admitted hy the said defendant on such examination, aforesaid^ so far as it may he necessary to carry out the effect and object of this order. And it is also ordered^ that the recevver^ when so appointed., shall ha/ve general power and anthorit/y to sue for and col- lect any of the debts., demands and rents belonging to the said defendant C. D.., which m,a/y be assigned or delivered over to him ; and to compromise and settle such as are unsafe or of a doubtful character. He may also sue in the name of the debtor where it is necessary or proper for him to do so ; but the said receiver will not^ in his accounts., be allowed for the costs of any suit h'ought by him against an insolvent from whom he is unable to collect his costs., miless such suit is brought by order of the court or by the consent of all persons interested in the funds in hi^ hands. And the tenants of such real estate of the debtor C. D. as may also be assigned or transferred to the said receiver are to attorn to such receiver or the said receiver may., when necessary., apply for and obtain an order that any of such tenants attorn and pay rents to him. And such receive^' is hereby per- mitted to make leases from time to time, as may be necessa/ry., of any such real estate., for a term not ex- ceeding a year. And it is also hereby made the duty of the said receiver., without any unreasonable delay., to convert all the personal estate and effects tvhich may be assigned or delivered over to him into money ; but lie is not to sell any reed estate without the special order of the court; although he may sell desperate CKEDITOR AND DEBTOR. 497 debts and all other dmiHfxd claims to personal prop- erty at public auction^ giving^ at leasts ten days^ pidilic notice of the time and place of such sale. And the said referee shall also proceed herein^ to ascertain whether a receiver be already appointed of the estate and effects of the said defendant ; and if there should be and the referee appoints him to be also the receiver herein^ then all the rights and powers herein shall attach to such present receiver. The proceedings on the reference will be as before. In referring tbe matter to a master to appoint a ■ receiver, the chancellor made it a practice to let the reference go to a master residing near the defendant and did not, necessarily, give it to an officer whose office was near tbe home of the plaintiffi In Coley V. Ha/rt^ MS. the defendant lived near Pough.- keepsie ; and the complainant, as well as her solicitor, resided in New York. The court would not refer the matter to a master in the latter place, but required the order to be filled up to one in Pough- keepsie, unless the complainant would agree to pay the expense of the defendant's traveling to attend the reference. Payment. One thing is to be borne in mind: that the re- ceiver cannot pay any party until an order of court has been obtained; "He shall not," says JRule 193, in Chancery, " pay over the funds in his hands to " the parties or to any other person, without being 32 498 JUDGMENT DEBTOR. " specially authorized to do so by an order or decree " of this court." And, wh.«re more than one bill has been filed and he is receiver in more than one suit, he must keep a separate account of any property or effects of the debtor which have been acquired since the com- mencement of the first suit or which may be assigned to such receiver under the appointment in the last cause : (Mule 194, in Chancery.) It may be safely said that where an answer is put in, which goes against the right of the plaintiff to recover the amount of the judgment, no order can be had for payment until after a decree. In the late case of Hubbard v. Guild^ 2 Duer, 685, it was decided that, when judgment creditors have • acquired a lien upon a fund in the hands of a re- ceiver, the court will not, on their petition, make an order upon the receiver to satisfy the judgment out of the moneys in his hands until a decree has been made in the action in which the receiver was appointed and notice has been given to all other creditors interested in the distribution of the fund. But in order to protect the petitioners, an order will be made upon the receiver forbidding him to make any payments out of the fund without notice to the petitioners to institute such an action against the receiver and other parties, as they may be admsed. CREDITOR AND DEBTOR. 499 One Mil or complaint filed and defendant signs a consent that plaintiff he paid. In sucTi a case, it is believed that all the plaintiff has to do is to move, in open court, on such consent, without adding an afl&davit of his own, to show that the amount of the judgment is due to him : for this he has before done in his complaint, as well as added that such complaint is not filed by collusion : JRule 189. The following may be the form of such a consent : It is Jiereby consented tliat the receiver pay the plaintiff the amount of his judgment.^ set forth in the complaint., with interest and taxed costs / and that a motion may be made., i?i open court, to that effect. The court ought to know that there is but this complaint filed, before any order is granted on the consent; and his Honor, Chancellor Walworth, kindly suggested to the author that a reference might be avoided, by the better and cheaper mode of a cer- tificate of the receiver that he had received no notice of any other complaint being filed and an affidavit of the defendant that he had not been served with a subpena (summons) in any other suit. On obtaining such consent, certificate and affidavit, a motion will be made ; and the following can be the form of order to be entered. 500 JUDGMENT DEBTOR. At a Court, c&c. (Title.) Present, &c. On reading and filing a consent, wTiereby it is agreed that, c&c. [here recite the consent ;] and on reading and filing the certificate of A. B., the receiver in this cause, as well as an affidavit of the defendant JE. F. / and on motion of Mr. , of counsel for the plaintiff : it is m^dered, that the said A. B., the receiver appointed in this suit, pay to the plaintiff or his attorney, on the receipt of either of them and on receiving a satisfaction-piece of the judgment set forth in the hill, the amount of such judgment, with interest from the day it was docTcetted and costs of this suit to he taxed — as the said judgment is for- the sum of $ and was docTcetted on the day of 18 . And when such payments shall have heen ftdly made hy the said receiver and proper receipt or receipts taken, then and from thenc^orth this suit is to he considered as discontinued, settled and satisfied. The attorney for the complainant obtains a certi- fied copy of this order. He then makes out and adjusts his costs ; and must file the adjusted bill. He takes from the clerk of the court a certificate of the filing and amount of the bill ; attends on the receiver with such certificate, satisfaction-piece and certified copy of order, and indorses on the latter a receipt for the amount due on the judgment, and on the certificate a receipt for his adjusted costs. Although there may be only one bill filed, and a , CREDITOR AND DEBTOR. 501 balance, after paying off tlie plaintiff, be left in the hands of a receiver, yet it cannot be necessary to burthen the order with any reference to it. This is a matter in which the defendant alone is interested ; and should come up on his petition. We shall revert to his course hereafter. Or it might come up on the application of the receiver to account and be discharged. Where ithere are more complaints than one, a consent could hardly be allowed ; for it might be a means of giving a second plaintiff a preference over a first ; and the right accrues from the time of filing the bill: Corning Y.White, 2 Paige's Ch. K. 567. And such first plaintiff is first paid, even though he may not have been diligent in prosecuting his suit to a decree. Several complaints and defendant consents they shall all he paid off. I take it, that in such a case there could no objec- tion to make out one consent, embracing the titles of all the suits, and that such consent (varied so as to embrace all) might be handed to counsel in any one of the cases to move on it, although it would be most proper to giye the order to the counsel, attorney or solicitor of the oldest plaintiff. This moving on one consent, which would embrace different suits, might not be tolerated in proceedings of a different character, but here, there is but one fund, one receiver, one defendant, one object. Costs would be saved, and no injury done. 602 JUDGMENT DEBTOR. The CONSENT might be thus varied : (Titles.) It is Jiereby consented tliat the receiver pay the plaintiffs in all the above suits the amounts of their respective judgments setfm^th in their hills ^ according to the priority of such bills, with interest and taxed costs • and that a motion may be made in open cmi/rt to that effect. The course suggested by ChanceHor Walworth, in the last section, p. 499, to save a reference, can be adopted here : by a certificate from the receiver and an affidavit from the defendant. The order we have also above given may form the basis for payments here ; and the only addition need be in the title, so as to embrace all the suits, and that the receiver pay off the different plaintiff s according to the priority of their bills. When the receiver has paid off all the plaintifis, taken receipts as before, and thus performed the duty for which he was 'appointed, he can present a petition to account and be discharged. A subse- quent chapter, as to accounting, will give sufficient instruction for the receiver on this head. BiU or complaimt and answer or bill, or complaint answer and proofs. A cause, in this stage, generally involves either the question of right to enforce any judgment or as to what amount is due under it. The decision, on the first ground, may cause the court to dismiss the CEEDITOR AND DEBTOR. 503 Ibill or decide, as in the latter case, that all or some- thing is due. If the whole be decided by the court to be due, the decree or judgment shcTuld be formed for its payment. Where the amount due is not certain, a reference should be had to ascertain and report on it, and which might also embrace a direction to ascertain whether a receiver has been appointed. There is hardly a necessity to give a precedent, as the refer- ence would, most likely, be coupled with the taking of some accounts and be specially settled or dictated by the court itself. On the coming in and confirmation of any such report, the court would adjudge as to the specific , amount ; and the receiver would pay on receipts. A receiver vested with the title to property, real and personal, under a decree or judgment of the court in a suit to reach the effects of a judgment debtor in the hands of third parties, (which decree directs that the defendant delivers such property to the receiver under the direction of a master, that he be put in possession of the real estates, that the ten- ants attorn to him ; that he receive the rents and income, pay taxes and assessments, redeem from sales for taxes, e restrained from receiving o?" collecting any part of the outstanding personal estate and effects of E. F., the testator [or intes- tate] in the pleadings mentioned ; and from receiving or collecting any part of the debts due and owing in respect of the business or concern carried on by the said U. F. up to the time of his death and afterwards by the said defendant, G. D. ; also [if the suit be against an executor and there is real estate] from receiving or collecting any part of the freehold and leasehold estate of the said E. F. and from letting or man- aging the same or interfering therewith or with any part of the said testator's estate or effects until this court maJce other order to the con- trary. EXECUTOR. ADMINISTRATOR. TRUSTEE. 529 the masters of this court') ^ residing in the city of New Yorh (as referee)^ to apjpoint a proper person [where there is real or leasehold property] to receive ike rents and profits of the said testator ^ E. F^s free- hold and leasehold estates and to collect and get in the said testator's [or intestate's] outstanding personal estate and the debts due or owing in respect of the said testator'' s hu^ness or trade of a merchant carried on h/ him up to the time of his death and afterwards hy the said defendant^ O. Z>., such person to he appointed receiver first giving security to he approved of hy the said referee (master') to he answerable for what he shall receive^ duly file inventories and to account and pay and deliver over what he receives under the rules cmd practice a/nd as the court may^ from time to time^ direct. And the tenants of the said estates are to attorn and pay their rents in ar- rear and growing rents to such receiver^ who is to he at liberty to let and set the said estates from time to time^ hut not for a further term than one yea/r at a time, save wader the special order of the cou/rt. And it is also ordered, that the said referee (master) be at liberty to examine the said defendant, G. D., as to the estate, stock, debts and effects of the said JS. F., in his hands, possession or power or under his control; and that he the said C. D. do, under the direction of the 'Said referee (master') and on oath, if required, deliver over to such person so to he appointed receiver, ail and emery the said estate, stock, debts and ■effects and the mwniinents, books, vouchers cmd papers re- lating thereto. And in case there shall he occasion to put any of the debts in suit for the recovery thereof, 34 630 EXECUTOR. ADMINISTRATOR. TRUSTEE. the scrnie is to ie done after cm order of the con/rt to prosecute has leen obtained amd on notice to the per- son whose nam.6 is to he used; (a) and such person so to he appointed recewer is to make use of the name of the pa/rty for that purpose and who is to he in- demnified therein out of the said estate and effects. And it is also ordered^ that the person so to be ap- pointed receiver do pay the debts due from the deceased in the order requi/red hy the statutes relating to execu- tors amd administrators. And it -is also orde/red^ that the person so to be appointed receiver do, from time to time^pass his acco^i/nts^file inventories amd pay and deliver over effects and halamces as the rules, practice and cowrt may direct. Where a receiver is appointed of a fund pendente Ute, as, for instance, during the contest about a will in an ecclesiastical court, it will not be necessary to bring to hearing the mere suit in wMch the receiver was appointed. Thus, a claim was filed for the appointment of a receiver of personal property ^e?^- dente Ute. The plaintiff was sole executor and res- iduary legatee under a will made in England dated the 24th of June, 1843, and the defendants were the executor and sole legatee under a will made in France, and dated the 26th of January, 1848 ; and the right to probate was in contest in the ecclesias- tical court. It was referred to a master to appoint a receiver ; and the moneys paid in by the receiver were directed to be invested and accumulate. The (a) Merritt t. Ly(m, on appeal, 16 Wend. 410. EXECUTOR. ADMIIJISTRATOR. TRUSTEE. 53I master reported a balance due from tlie receiver. The claim was then set down for hearing. The vice-chancellor inquired for what reason the case was brought to a hearing ; and observed that he did not know of any instance of a case of this kind having been brought to a hearing in a suit by bill. There was at present no personal represent- ative of the deceased person whose estate was the subject of the proceedings. No instance of such a case was referred to by counsel, but the plaintiff and defendants desiring that an order should be made, the court directed that the receiver should be continued, and the costs of the plaintiff and defendants taxed and paid out of the fund in court, and the residue invested and accumulated, subject to the further order of the court. Where trustees are disputing amongst themselves and some of them ask for a receiver upon the alleged ground of exclusion, the court will not grant it before hearing, provided the point of exclusion depends upon the main question in the cause. Thus in the case of Willis v. Oorlies, 2 Edwards' V. C. Eep. 281, which involved the difficulty between " Orthodox " and " Hicksite " in the Society of Friends, a bill was filed by some of the trustees against others who were inimical in opinion ; and the point in the cause was as to which party had a right to the meeting-house property. A motion for a receiver was made before answer. The defend- ants, as trustees, and forming a certain committee, had the present possession, and assumed the exercise of rights in those capacities. " Believing them- " selves," said the vice-chancellor, " to be the right- 532 EXECUTOE. ADMINISTRATOR. TRUSTEE. " ful trustees and managers, they take care to pre- " serve tlie property as their own ; and there is " neither proof nor allegation before me of the dan- " ger to it from acts of waste or destruction by the " defendants or any apprehension of injury in conse- " quence of the property being in their possession or " under their control pending the litigation. Nor " is it alleged that the defendants are irresponsible " men and unable to make good the loss of rents to " the complainants, if they, the defendants, should " be decreed to account for the rents which they " may, in the mean time, receive. Under circum- " stances like these, it appears unnecessary to ap- " point a receiver ; nor wOuld such appointment be " consistent with the principles by which this court " is governed. Chancellor Kent has remarked that " the exercise of the power of appointing a receiver " must depend upon sound discretion, and in a case " in which it must appear to be fit and reasonable " that some indifferent person should take charge of " the property, for the greater safety of all the par- " ties concerned : Verplanch v. Oaines, 1 J. C. E.. 58. " The court looks to the security and preservation " of the property, and ought not to interfere pend- '' ing the litigation, when the plaintiflfe' right is not " perfectly clear and the property itself or the " income arising from it is not shown to be in dan- " ger. This was considered, by Chancellor Sanford, " to be the true principle which should govern the " court in the exercise of its discretion upon these "motions; Orphan Asylum v. M'-Cartee, 1 Hopk. '' Eep. 429 : and it is acknowledged to be the rule " in several of the English cases, that there must be EXECUTOR. ADMINISTRATOR. TRUSTEE. 533 " some evil actually existing or some evidence of " danger to the property or a strong special case " of fraud in the defendant clearly proved to induce " the court, in this stage of the cause, to take the " property under its care ; Hugonin v. Basely, 13 "Ves. 105; Mid^leton v. Dodswell^ ib. 266; Lloyd " V. Passingliam, 16 ib. 69. In another case, in the " Irish chancery, it has been observed that such an " interference is, to a certain extent, giving relief — ■ " in fact, depriving defendants of a present use and " enjoyment of the estate and, so far, a decision pro " tempore against them ; and, therefore, without some "strong necessity, the court ought not to do any " act to disturb the existing possession until, from a " view of the whole case and by a regular adjudica- " tion, it can pass upon the right : Houlditch v. Lord " DonegaM, 1 Beatty's Eep. 402. " It has been urged in argument, upon the pres- " ent motion, that this is a case in which a difficulty " has occurred among trustees who were vested with " the legal title and that a portion of them are ex- " eluded by their co-trustees — and this is such an " abuse as to require the immediate interference of " the court in respect to the safety of the property ; " and that the defendants, who were trustees, should " have applied to this court for directions or by bill "of interpleader, instead of assuming to act for "themselves in making conveyances of the prop- " erty to others and which they could not lawfully " do. Whether this be so or not depends altogether "upon the main question, namely, which is the " monthly meeting entitled to stand as cesttds que 534 EXECUTOR. ADMINISTRATOR. TRUSTEE. " trust of the property ? And if the one whicli the " defendants represent is entitled, it had the power, " according to the trust, of declaring such of the trus- " tees as were not in unity with it incompetent to serve " and of appointing others in their place ; while a " refusal on the part of such disqu§,lified trustees to " convey to others so appointed would, of itself, " have been a breach of trust. Hence, to say there " has been an improper exclusion and an abuse of " the trust in this respect on the part of the defend- " ants, acting under the authority of a monthly meet- " ing, is to determine the question. " After all, it comes back to the only inquiry " which I apprehend can be made in this stage of " the cause : is there danger to the property — ^in " other words, is there evidence of fraud in obtain- " ing the possession or any special circumstances to " render it necessary for the preservation of the " property pendente Ute or proper in the exercise " of a sound discretion, for the interference of the " court in this summary manner ? " As there is scarcely a color or pretense for this " application on any of the above grounds, I must " refuse it, with costs." Although a trustee mixes trust funds with his own, yet this alone is not sufficient for the appoint- ment of a receiver, especially where it is not alleged that the fund is in danger, nor denied that the trustee keeps accounts: Orphan Asylums. M' Car- tee, Hopk. 429, where a receiver, under such circum- stance, was refused, although one of the trustees consented to the motion. EXECUTOR. ADMINISTRATOR. TRUSTEE. 535 Where the breach of a bond was the point in litigation, a motion was made for a receiver of rents and profits, received by trustees and embraced by the bond; but the trustees consented to pay the rents and profits into court and the chancellor refused to appoint a receiver : Preble v. Boghurst, 1 Swanst. 309. While a trustee of rents is wanted, the court can appoint a receiver : Rogers v. Ross^ 4 J. C. R. 388. There is no case in which the court appoints a receiver, merely because the measure can do no harm ; and still less when the trustee is such under the appointment of a testator: lb. A husband contracted for a lease of some premises and he afterward induced the trustees of his mar- riage settlement, who held moneys for the separate use of his wife, without power of anticipation, to act in breach of their trust, and to purchase the prop- erty. The property was conveyed to the trustees, and by a deed executed by the husband and wife it was declared that it should be held for their in- demnity and on the trusts of the settlement. The husband laid out very considerable sums of money in building and repairs, and with the consent of the wife was permitted to receive the rents. After some years, disputes arose; the trustees insisted on re- ceiving the rents, and proceeded at law to enforce their rights ; whereupon the husband filed a bill against the trustees and' his wife, claiming a lease under the agreement, and asking for a sale of the property, and for the application of the produce, first, in replacement of the trust funds, and after- 536 EXECUTOR. ADMINISTRATOR. TRUSTEE, wards in reimbursing the plaintiff his outlay. A motion for a receiver was refused with costs : Wiles V. Cooper, 9 Beavan's Kep. 294. On the marriage of Sir N. and Lady G. two set- tlements were executed ; by one, a sum of stocks and estates in "W., the lady's property, were con- veyed to trustees in trust for her for life, with re- mainder in trust for the children of the marriage ; and, by the other, Sir N. granted out of his estates a rent charge to Lady G. for life. She, after her husband's death, fraudulently obtained a transfer of the stock, and sold it out, and afterwards she as- signed her life interest in the estate in W., and the rent charge, to A., for valuable consideration but with notice of the fraud. Held, that the rents of the estate in W. and the rent charge were liable to be applied to replace the stock ; and a receiver of them was granted before answer : Woodyatt v. Gres- ley, 8 Simons' Eep.. 180. A receiver has been refused in regard to money in the hands of a corporation, who were trustees of it to lend to the poor and had made interest of it and also had not applied a part of it, for some years, to the purposes for which the charity was given : Attorney General v. Tlie Mayor, <&c., of Stafford, Barnardiston, 33. Where a trust has devolved upon the court of chancery, the parties interested in the trust estate may apply to the court to have a receiver appointed to collect and preserve the rents and profits of the property until a new trustee is appointed : M' Cosher V. Brady, 1 Barb. C. R. 329. In this case, one of EXECUTOR. ADMINISTRATOR. TRUSTEE., 537 three trustees named in a will died and the other two refused to accept the trust. Where a conveyance has been made of a life in- terest in leasehold premises to a trustee out of the interest, proceeds or annual income, but the as- signor has entered into no covenant to pay, the court will not consider it a mortgage ; but still, will appoint a receiver and have the trusts carried out. Thus, A. being indebted to the plaintiffs in a sum of £400, and being entitled to a life estate in certain leasehold premises, conveyed by deed of the 21st Nov, 1837, his life interest therein to a trustee, upon trust, " out of the interest proceeds or annual rent "thereof," to pay the head rent to which the lands were subject, the premiums of insurance on a certain policy of insurance (which A. had effected upon his life, and which policy was assigned by a separate deed), and also to the said plaintiffe the said sum of £400, with legal interest from the date thereof, at the rate of £6 by the year, until the same should be fully paid off and discharged, and upon payment thereof, to reconvey the same to A. or his assigns. The deed did not contain any covenant for payment on the part of A. : It was Held^ upon the true con- struction of the deed of November, 1837, that the plaintiflfe were not to be coasidered as mortgagees, or entitled to a sale, but only to have a receiver and the trusts of the deed carried into execution under the direction of the court : Taylor v. Emerson^ 4 Drury & "Warren's Chan. Rep. 11 T. Where there are two trustees and executors, and one dies and the survivors refuse to act, the persons 538 EXECUTOR. ADMINISTRATOR. TRUSTEE. beneficially interested in tlie estate are entitled to the protection of this court and to a receiver. Thus, in Palmer v. Wight, 10 Beavan, 234, A and B were trustees and executors. A paid more than he re- ceived, in the expectation of repayment out of a mortgage forming part of the assets. A died and B refused to act. In an administration suit, a receiver of the moi'tgage was appointed against the repre- sentatives of A. CHAPTER XI. LUNATIC. INFANT. Luimtic. "Where a person is found to be a lunatic, the court usually appoints a committee of his person and es- tate ; and such committee has to give security ; SJiel- ford, 148. It has sometimes happened that a responsible and suitable person could not be found to take upon him- self the office of committee ; and in that case, a receiver has been appointed. If the lunatic has a relative or friend who would be proper to act as a committee, but who cannot give the requisite security, the court may appoint him the committee of the person and estate of the lunatic, with a restriction not to receive any sums of money, part of the lunatic's property ; and order a reference to a master to appoint a receiver : Mo pa/rte BillingTiwrst^ 1 Ambl. C. E. 104 ; and such receiver would have to give security, and be entitled to a salary like a committee : Mo parte Warren^ 10 Ves. 622. Mr. Shelford says (in his work on Lunacy, p. 146), that a receiver is not always required to give the 540 ■ LUNATIC. INFANT. same security as a committee ; and refers to the MS. case In re Squire^ where the receiver was to be appoifited, " first giving security to be allowed by " the master for what he should so receive and to " pay the same as the Lord Chancellor should direct." But there can be no good reason why the usual se- curity should not be given (namely, a recognizance, with two responsible persons as sureties, in double the amount of the annual rents and profits of the estates and of the outstanding property, for answer- ing and duly accounting under the rules and practice of the court), unless it be upon the idea that the appointment of a receiver in a lunacy case is but a temporary matter, as In the matter of Kenton^ below, or where his power in receiving is circumscribed, as In re Jones^ where valuable securities had already been deposited with the master; Shelford, 149, 150. ^he case Ex parte Warren, 10 Ves. 621, goes to the point that the usual security which is required from a committee, is to be given by a receiver. The course adopted in the case of Ex pa/rte Silling- hurst, 1 Ambl. 104, of appointing a receiver, would have to be pursued where a person, who had been appointed committee of the person and estate of a lunatic, refused the office : Ex parte BadcUff, 1 Jac. & W. 619. This applies to a refusal before consent or acting ; for a committee, who has voluntarily ac- cepted the appointment, cannot he discharged, with: out showing some valid excuse for declining the trust : In the matter of Lyle, 2 Paige's C. R. 251 ; and the same doctrine holds with regard to a re- ceiver : Smith V. VaugTian, Eidg. Ca. temp. Hardw. LUNATIC. INFANT. 54I 251. And it would seem tliat the expense of a re- ceiver is not to be incurred, in order that a person, who cannot give security, may "be appointed commit- tee : In re Frcmk^ 2 Russ. 460. A receiver will sometimes be appointed, where the committee resides at a distance from the estate : In re Seaman, Shelford, 149 ; and a receiver may be appointed, where the committee is infirm, although not resident at a distance or where the management is attended with considerable trouble : In re Birch, ih. While a commission or question of lunacy is pending, the court may take care of the lunatic's estate, by appointing a receiver. The case of Heli, 3 Atk. 635, goes only so far as to show that, " Lord " Hardwicke made a provisional order of the luna- " tic's effects." I71 the matter of Kenton, 5 Binney, 613 (Pennsylvania), a commission, in the nature of a writ de lunatico inquirendo, had issued ; and the inquest had found the party to be a lunatic. The inquisition had not been returned (the return day not being out). A motion was made for a receiver, on proof, by affidavits, that the estate was suffering and that there was no one to take care of it but the wife, who was addicted to intoxication. The court appointed a receiver until further order, directing security to be given by the receiver, and one good surety in one thousand dollars ; and ordered the bond to be made to the lunatic. It seems the act of April, 1845, in relation to the powers of receivers and of committees of lunatics and habitual drunkards, does not have the effect to 0i2 LUB-ATIC. INFANT. transfer the title of real estate to a receiver, by the mere order of the court and without an actual con- veyance from the party to the suit in whom such legal title is vested : Wilson v. Wilson, 1 Barb. C. E. 692. Where there is a receiver of a lunatic's estate and no committee, but one is required for the institution of a suit, a reference would have to be had to appoint such committee. On the coming in of the report, the ORDER would be : that the care and management of the estate of the said hinatic should he gra/nted to A. JB [the committee] for the time to come, until fw- ther order, without his giving the usual security ; and, wmder the circumsto/nces, a receiver of the said lunatic's estate liaving been appointed, it is fu/rther ordered that the said A B he restrained from receiv- ing any part of the property and effects of the said hinatic wntil further order : Hadcliff v. Carter, 1 C. P. Cooper's Reports of some Cases, etc., 253. During the chancellorship of Samuel Jones, Esq. (1827), the matter of George Washington Wallis, a supposed lunatic (MS.), came before him. Mr. G. W. Wallis had been a respectable merchant in the city of New York, worth considerable property, but had no relations or connections in the United States. His legal advisers had been David B. Ogden and James J. Roosevelt, jr.. Esquires ; and they presented a petition to the chancellor, setting forth the fact of their having been his legal advisers, of his unsound- ness of mind, as to his merchandise and other prop- erties, his being administrator for a large estate, the circumstance of his having no relatives in the coun- LITNATIO. INFANT. 543 try, and praying tlie cliancellor to make sucli order in the premises as the exigencies of the case required and as to him should seem meet. The chancellor directed the assistant-register, John L. Lawrence, Esquire, to be a provisional receiver of the estate and effects of the supposed lunatic. An order to this effect was entered in the assistant-re- gister's office on the twenty-third day of June, one thousand eight hundred and twenty-seven; and which order, after pretty fully reciting the petition, ran as follows : " And his Honor the chancellor, having duly con- " sidered the matter of the said petition, it is there- " upon ordered, adjudged and decreed, and his Honor " the chancellor, by the power and authority in him " by law vested for that purpose, doth hereby order, " adjudge and decree that the assistant-register of " this court be and he is hereby authorized, until the " further order of this court, to take possession of, " receive, collect and safely keep all and singular the " moneys, notes, bills, drafts, checks, securities, goods, " chattels, credits, books, papers, letters and all other "the estate, things and effects belonging to and " under the control of the said George "Washington " Wallis, whether in his own right or as administra- " tor with the will annexed of the said William Wal- " lis, deceased or otherwise howsoever ; and of the " rents, issues, income, profits and proceeds thereof; " and to appoint one or more agent or agents under " him, with such power as he may deem necessary in " the premises. And it is further ordered, that the " said assistant-register do forthwith cause an inven- 514 • LUNATIC. INFANT. " tory to be made of .the said property and effects " and file tlie same in tlie office of him, the said " assistant-register, for the inspection of all parties " interested therein. And it is further ordered that " the clerks and agents of the said George Washiag- " ton Wallis and all other persons in possession of " the said moneys, notes, bills, books, securities and " other things aforesaid do forthwith deliver the " same to the said assistant-register or to the agent " or agents appointed by him for that purpose, to be " by him safely kept for the benefit of all parties " interested therein, till the further order of this " court ; with power, nevertheless, to make sales of " such part of the personal property as may appear " proper to be sold and upon such terms as to price " and credit as he may deem safe and reasonable ; " and to make insurance against loss and damage by " fire or otherwise. And it is further ordered, that " the said assistant-register, out of any moneys or " property which may come to his hands as aforesaid, " do pay, for the support and maintenance of the said " George Washington "Wallis, such sum or sums of " money, not exceeding twenty dollars per week, as " to him, the said Assistant-register, may seem reason- " able and proper ; and also the just debts, if any, " due from him the said George Washington Walhs ; " and that any surplus moneys remaining in his, the " said assistant-register's hands, after defraying the " current expenses and payments arising in the "premises, be invested in such manner that the " same may accumulate till the further order of the '' court." LUNATIC. INFANT. 545 Contrary to the general rule, a receiver may be appointed of the estate of a lunatic on petition only, twithont any bill having been filed, as is requisite in other cases where the court of chancery appoints a receiver: Mb pa/rte Whitfield^ 2 Atk. 147. A solicitor to the commission will not be a proper person to act as receiver of a lunatic's estate, even though no one else may be wijjing to accept the ofSice ; for the court is extremely jealous of appoint- ing any person to be receiver whose duty it is to call the receiver to an account : Mopa/rte Pincke^ 2 Meriv. 452, By the act of April 28, 1845, receivers and com- mittees of lunatics and habitual drunkards, appointed by any order or decree, may sue, in their own names, for any debt, claim or demand transferred to them or to the possession and control of which they are entitled as such receiver or committee. And when authorized to sell such demands, the purchaser of the same may sue and recover therefor in his own name, but shall give such security for costs to the defendant as the court, in which such suit is brought, may direct. The control which the court has over its officers does not determine by the death of a lunatic ; and a receiver of his estate may be ordered to continue to act until the arrears of the rents and profits, due at the time of the decease of the lunatic, shall be paid and satisfied : Mc parte Clm'lce, Jac. 589. In the case of Mlicott v. Wa/rford, 4 Md. 80, the person who had been the lunatic's committee was, after her death, appointed receiver of her estate by 35 54:6 LUNATIC. INFANT. an order of tlie chancellor, in which power was expressly reserved to the court to modify or annul the same, to discharge the receiver and pass other orders, e of the loss, but where he has not so rightly con- ducted himself as to exonerate him from the loss, — where he has not so conducted himself as a prudent person would have done. Cases of this description must rest upon their own merits. But they are of great importance to the parties and to the court. Receivers might be very prone to EECEIVERS AM) SURETIES. 579 " extract a general rule amounting to a license to " neglect the strict line of their duty, if this judg- " ment had not been critically considered and if the " doctrines that appear to be held by the master of " the rolls had been confirmed." We look upon this case as sufficiently important to give here, in extenso, the reasons adduced by Lord Brougham (on the appeal) in support of his decision and also the corroborating opinion of Lord Lyndhurst, (3 Clark & Finnelly, 65.) Zord Brougham : " In this case, Richard White, being "appointed receiver of the rents of the estates of " Salway's executors, was required to find the usual "sureties, and he proposed William Adams and " James Burlton, who were approved of, but it after- " wards appeared that, in order to obtain the surety- " ship of these persons and particularly of William "Adams, he had come under an engagement that " the rents and profits of the estate should be paid " in to an account to be opened in the names of the " sureties, with Messrs. Prodgers, bankers in Lud- " low, and that the money in this account should " only be drawn out by checks to be filled up in the " handwriting of George Anderson, William Adams's " partner.. George Anderson used generally to at- " tend the audits, and received the rents, as White " collected them, and used to pay them into the " bank. Messrs. Prodgers were also the bankers of " the sureties, who kept, accordingly, their private " account with them, and the rents were carried to "the accounts of Adams & Burlton, the sureties. "The bank broke soon after "the panic of 1825-26, 580 LIABILITIES, ETC. OF ' and a loss of £1,464 was incurred. The account ' was tlien transferred, on the same terms and con- ' ditions, to the bank of Coleman ., on the day of , 18 — , % . Investment of such of the above \ properties as were capable of > present irmestrmnt. ) The above mortgage of c&c.^ still remains outstanding. The 30 shares of., c&c, remain as originally invested. The merchandise and stock in trade were sold on the day of and made % ; and this sum., with % received fw vtiterest on the aforesaid mortgage., c&c, c&g.., was paid in to the New Yorh Life Insurance and Trust Company to the credit of the receiver., where it rutnains. Income and Profits. The house cund lot.. No. c&c, lets for the yearly sum of $ ; but as there is a mortgage on the pre- mises of $ , at 7 per cent, and also the yearly sum of $ due for tames on the property., the clea/r income is only % . The mortgage from, c&c, yields a clear yearly in- terest of % . The New Yorh Life Insurance amd Trust Company allow an interest of $ per cent, on the above invested sum of % , mahing a yearly interest oft . A. L., Receiver. New Yorh, , 18—. 616 RECEIVER City^ OawnPy and State of New Yor\ ss. A. B.^ the receiver m the above action [or matter] being duly sworn, doth depose cmd say, that the above is a just amd true imoentory of the whole real and per- sonal estate at any time in his possession or com- mitted to his ca/re as such receiver • a/nd also trul/y shows the maivner in which any and all funds under his care and control, belonging to the said estate, a/re invested ; amd the whole of the income and profits of the funds w estate cmd of the debts, credits and effects, so fa/r as the same home come to the said deponents hnowledge. Sworn to this ' ) day of , 18 — . f , Commissioner of Deeds. [or any other officer authorized to take affidavits,] The same rule (the 154th of the New York Chan- cery) required that a receiver should annually there- after (from the time of the receiver's appointment) {a) so long as any part of the estate or the income or proceeds thereof remained in his hands or under his care or control, file, in the same office, an inven- (a) The author, on reading the rule, had some question as to the time from which a receiver's account should be annually rendered; and Chancellor Walworth was asked as to the proper construction. Mr. Barbour, his Honor's clerk, wrote: " In answer to your question as to " the construction of the IMth Rule, the Chancellor says, the inventory " is to be filed annually from the time of the appointment ; and the " Register informed me such ■^s the practice in his office." 8th Au- gust, 1839. ACCOUNTING. 617 tory and account, under oath, of Lis guardianship or trust and of any other property or effects belong- ing to the estate which he had since discovered and of the amount remaining in his hands or invested by him and of the manner in which the same was se- cured or invested ; stating the balance due from or to him at the time of rendering his last account and his receipts and expenditures since that time in the form of debtor and creditor. This account contained a recapitulation of the estate and effects ; and an account current, show- ing payments and receipts and balances on hand. Chancellor Walworth appi'oved of a form of an account (p. 169 of Rule Book), and although it has reference more immediately to an after account- ing, yet it forms a sufficient precedent for the first account. The following is a copy of it : In , &c. [Title.] A just and true iwoentory of the real and personal estate aTid effects in the above action {or matter') on the Z\st day of December^ 1832. 1832. Dec. 31. Balamxieof cashonhamdthis day^ $16 74 Robert Graaj's hond and mortgage on real estate^ which is well secured^ with interest at 7 per cent, from Z\st December, 1832. 350 00 Two hundred and forty shares of stock in ■ the Mohawh Bank, worth at par vahie, 1,200 00 618 RECEIVER Two sliares Albany arid Bern turn/pike stocky par value $1,000, but actually worth onl/y about . . . 300 00 A bond of G. Lmd and mortgage for $800, on unincumbered real estate, wTiich is well secwred, with interest at 7 per cent. Interest due from 1th March, 1832, 800 00 S. Drake's bond and mortgage for $910, on* unincumbered real estate, with interest at 1 percent. Int. due from 21th Ju1aj,1%^2, 910 00 J. Field'' s bond and ^nortgage for $700, well secwred on uni/acumhered real estate, with interest at 1 per cent. Int. due from \^th August, 1832, .... TOO 00 BaloMce of the legacy left to infant by John Miller, deceased, . . . 250 00 A cultivated farm in the town of Gha/rlton, in the comity of Saratoga, containing 110 acres, in good repair, under a lease for one yea/r,from 1st May, 1832, at an annual rent of $70, worth about 1,200 00 A dwelling house and lot of ground on Genesee street, in the city of Tltica, di- mensions of lot 'i^^ feet in depth, and 28 feet in width, under a lease for one year from the 1st of May, 18S2, at an annual rent of $180, payable quarter yearly, worth about, . . . 3,000 00 Estimated value of real o/nd personal es- tate, .... $8,726 74 A. B., Receiver. ACCOUNTING. 619 Account Cwrrent. The estate of A. H. an infant^ &c. [or, The estate in tlie above entitled action.] To A. B., jReceiver, Dr. 1832. May 2. To cash paid M. Low's hill for hoard and lodging., &c. $27 33 June 4. Dr. Jonei hill for medical attend- ance., . . . 9 lY Jukj 9. J. Fox^s hill for tuition^ . 13 21 Juhj 15. P. Storm in full for mortgage on farm, . . . 6,000 00 Aug.l^. Oashloaned on mortgage to A. £., 839 08 Aug. 11. 8. Maries' hill, hooTcs arid stationery, 17 36 Sept. lY. Collector for taxes on dwelling- house a/nd lot in Jltica, 19 22 " 29. G. BulVs hill for repairing dwell- ing house in Jltica, . . 43 19 Oct 12. S. Rider for repairing ha/rn in town of Cha/rlton, . 62 40 " 20. Postage on letter from A. B., 25 Nov. 6. D. Gra/fs hill for mercha/ndise, 33 29 Dec. 18. Wm. Lotfs hill for hoard and lodging, . . . 46 67 " 31. ^Sl Newland)s hill for himber used in repairing house and ha/rn, 15 44 " " Loaned Pohert Gay on his hond and mortgage on farm, 350 00 " " Commissions for receiving moneys since last a/nnual account., ex- elusive of capital received from previous immestments : — 620 RECEIVER 2 1 per cent on $1,000 00 25 00 \\ " " " 4,000 00 60 00 J " " " 1,563 98 n 11 Deo. 31. Do. for moneys paid out, excluswe of investments and re-in/vest- . ments : — 2^ per cent, on 1,000 00 26 00 \per cent, on 4,000 00 50 00 i " " " 637 54 3 18 " " Balance diie the estate., 16 74 $6,654 30 Contra. Or. 1832. Jan. 1. By hakmce due as by last annual account., . . . $27 32 Fd). 2. OasTi received one quarter's rent on dwelling-house in Utica, 45 00 Ma/rch 1. One yeai-'s interest on G. Lord''s hond and mortgage., April 1 5. Dividend on Moha/wk Bank stock., Ma/y 3. One yea/r's rent on fa/rm in town of Charlton, . " 8. One quarterns rent on house in JItica, June 12. L. Kerr''s note, principal, $73 00. Interest 1 yea/r, 3 months, 15 days, $6 59, . Jul/y 27. One year''s interest on 8. Brokers hond and mortgage Aug. 4. One quarter's rent on dwelling- house in Vtica, 56 00 73 60 59 00 46 00 79 59 63 70 45 00 AccouNxma g2i Aug. 19. One yea/r's interest on J. Field'' s hond a/nd mortgage^ . . 42 00 " " Cash for timber sold, J. Peters, 6,000 00 Sept. 2*7. Pa/rt of the amount of legacy to infant, hy John Miller's will, 50 00 Oct. 13. Amount of G. Lord''s note given for balance of last year''s interest on his mortgage, inchiding inr terest on note, . . . 23 19 Nov. 13. One quarter'' s rent on house in Utica, . . . 45 00 $6,654 30 A. P., Receiver. New Yorh, Pec. 2>lst, 18 — . City, County and State of New YorTc, ss. A. P., receiver in the above entitled action, being duly sworn, doth depose and say, that the above is a just and true inventory of the whole real and perso^ial estate amd effectsrof, &c., [or, embraced by the order appointing the said deponent receiver] so far as the same ha/ve come to his Tenowledge ; and a just a/nd true account of all the receipts amd disbursements on account of the said estate, [since this deponent rendered his last account current in this matter to this court.J Sworn to this ") day of , 18 — . f Pefore me, , Commissioner of Peeds, [or any other officer authorized to take affidavits.] 622 RECEIVER Where the receiver is appointed in respect to real estate only and merely to let it and receive the rents, an inventory can be made out in columns ; showing a short description of the different parcels of prop- erty ; the tenants' names ; , and, the annual rents. And when he files his annual account, he can keep up the same form with regard to a list or inventory, contained in seven columns as follows, (a) (adding, thereafter, a balance sheet properly sworn to :) {a) See precedents of such forms, Bennett's Master, Appendix, 48 ; 2 Grant's Ch. Pra. 397, 2d edit. ; Smith on Beceivers, 230. ACCOUNTING. 623 V, o On ^ ■to .1 Wh 1" || iS =0 ^ ;^ ^ V 5- 15a ■<:^ ^ SS 5 s P £ <. ^ §" ftq -s ^ -s '^ •i N 1 • fti =0 00 P § '"' h tl ^ ^ **■§ -4^ b ca ,. o. ,3 •° ag ■a <^aZ -S ^■X3 ?J EH" -« ^ 3 3 H XI •" 53 ■* CO 1"^ (SI CO CO (f) tr- io ^1 a» ^ ■d CO CD oq .§1 CO -* CO cq iO ^ «» «» Rs ^ ., of Brooldyn, in the county of Kings^ the receiver a/ppointed in this cause, has ne- glected to file an inventory of the estate committed to his care, as required hy the rules and practice of this cmi/rt : it is therefore ordered, that the said G. D., within twenty days after service of a copy of this order, file with the clerk of this court at, &g., the said inventory or accowit ; and pay to, c&c, $10, costs of drawing and entering this order and also all other proceedings thereon or that an attachment issue against him,. And it is further ordered, that a copy of this order he served on the said O. D., iy the deliv- ery of the same to him personcdly, or in case of his absence, to his wife or servant or some member of the family at his dwelling-house w pla/ie of abode ; and if the said G. D. shall neglect to comply with the terms of this order, the clerh is directed to certify such neglect to . this court on the day of to the end that an order for am, attachment ma/y he entered thereon. It is presumed that the further proceedings in such. a case would be similar to those adopted in England where a receiver has neglected to bring in or pass his accounts or pay in his balance, i. e., by proceed- ing against his sureties on their recognizance. In order to proceed against them, a petition must be presented, which should be personally served on the sureties or a notice of motion must, in like manner, ACCOUNTING. 627 be personally served. Whetlier tlie proceeding be by petition or motion, its object is to obtain leave to put the recognizance in suit against the sureties, for the amount reported due from the receiver and costs ; and unless the sureties show good cause, an order will be made giving the liberty asked for : Gray's Country Solicitor's JPract. 152 ; 1 SmitKs CI. Pract. 601. Final Accounting. The discontinuance of a suit does not discharge a receiver appointed therein. But it will entitle him to apply for his discharge and to have his account passed, so that he may pay over the balance, if any, in his hands and exonerate himself and his sureties, from further liability ; unless the interests of the defendants require that he should continue in the receivership, to protect their rights : Whiteside v. Pendergcist^ 2 Barb. Chan. Eeports, p. 4*71. When the duties of the receiver are at an end, whether by the termination of the sliit or by other means, an application should be made for his dis- charge from the receivership and that the recogni- zance of himself and his sureties may be vacated. In England, this is not done unless the receiver, prior thereto, shall have passed his final account and paid in the balance: Atkinson's Summary, 142. As we have no 'express rules in relation to accounting, it is believed that the petition for a discharge might contain a prayer that the receiver be allowed to account and be discharged on the coming in of the report upon such account and paying in the balance. 628 BEOEIVER The receiver can only be discharged on petition ; the court will not do it on further directions ; and it must be a special application: Gilbert v. Whit- marshy cited in 2 Mad. Ch. Pr. 298, 3d edit. A PETITION by a receiver to pass his accounts and to be discharged and his recognizance vacated will be in the following form : To, &c. In, c&c. [Title.] The petition of A. JB., receiver in the above cause, Showeth, That Try an order made in the above action, before, (&g., on the day of 18 — , it was ordered that it should be re- ferred to J. R., Esquire, a referee, residing &c., to ap- point [here recite the order to appoint the receiver] ; That in pursuance of the said m^der, the said referee, by his rlport bearing date the, &c., appointed your petitioner, A. B. to be such receiver ; who, thereupon, with N. 0. and M. P., his two sweties, entered into the recognizance usual in such cases and tooh upon himself the duties of the said receivership ; That your petitioner has filed his inventory and annual accounts in strict and ftdl confm^mity with the rules and 'practice of the court ; That the purposes for which your petitioner was appointed tlie receiver in this action have been answered and the duties of his office (save accoumting and being discharged) are at an end ; in consequence of [the complaint herein having been dis,missed — or, in consequence of the ACCOUNTING. 629 said commission of lunacy having been superseded — or, in consequence of a sale under the judgment in this action — or, in consequence of the plaintiff's demand having been paid off, &c.] ; 1 Tiat y mm- peti- tioner is^ therefore, desirous of passing Ms accounts ; paying in any halance ; ieing discharged / and having his a/nd his sureties'' recogniza/nce vacated : Your petitioner, therefore, prays that your honor will grant an order that your petitioner, A. B., as recei/ver in this cause, do pass his accounts, from the time of his appointment up to the period of receiving and paying the last item, hefore a referee residing in the city of New Yorh and so as therein to he allowed all just and proper costs, charges, fees, allowances, commissions and expenses ; and pay into court, to the credit of such action, the amount of halance in hanid as the same may he certified hy the said referee. And also that, on such payment heing made, the recognizance entered into hy the said A. B. with N. 0. and M. P. his sv/re- ties, he vacated — or for such other or further order as the court may see fit to grant. And, &c. [Jurat, in the usual form.] Copies of this petition would have to be served on all interested parties in the suit, with notice of the day on which it was to be moved in court. 630 RECEIVER And if there be no vital objection to tbe petition, the following form of oedee will answer : At a Court, &c. Present, &g. [Title.] On reading and filing the petition of A JB, the receiver in this action, whereby it appears that [here recite sufficient of the petition to show the appoint- ment ; matter of the suit or receivership being at an end ; and the prayer to have a final account and be discharged and recognizance vacated] ; and on read- ing and filing due proof of service of the said peti- tion on, &c., and after hearing Mr. , of coun- sel f 01- amd on lehalf of the said receiver ; and also Mr. , of counsel for, c&c. : it is ordered, that A. JB., as receiver in this cause, do pass his accounts hefore S. C, Esqidre, residing in the city of New Yorh, as referee appointed for that purpose, and so as to emhrace the whole of his receivership and com- mence from the time of his appointment • a/nd with that view he, the said A. JB., is to produce all neces- sary booles, papers and vouchei's before the said ref- eree / and [supposing there is real estate vested in the receiver] he is to reconmey the real estate hereto- fore conveyed to him to the said A. B., defendant, under the direction of the said referee. And it is ordered, that the said A. B.be allowed, by the said referee, 07i such accounting, all just costs, cliarges, fees, expenses, allowances and commissions, as well as all proper taxed costs, payments and referee's fees of the reference to account and be discharged and vacate ACCOUNTING. g31 recognizance ; and that the said A. B. do pay what the said referee shall certify to he due from the said A. B. on the halance of such account within a time to he specified hy the said referee in his report to the chamherlain of the city of New York [clerk] to the credit of this cause. And on filing the said referees report^ shx)wing that the said receiver has duly parsed Ms accounts and on such payment heing made [and sucli reconveyaBce executed] -it is ordered that the said A. B. he forever discliarged as such receiver^ and that the recognizance entered into hy the said A. B. and N. 0. and M. JP., sureties^ he vacated and the clerh shall thereupon cancel the said recognizance.{a) And the said referee^ hefore he commences on the mat- ter of the reference to pass accounts ^ shall he satisfied^ ly proofs that all necessary and pi'oper persons home leen duly or sufficiently summoned to appea/r hefore him on such reference. And the receiver is also ordered^ after he shall have passed his accounts^ to delwer over and deposit with the clerh of this com% at the City Hal\ cfec, all hooks., papers and vouchers in his possession relating to the said estate. When tlie attorney or solicitor for tlie receiver has furnished the referee with a certified copy of the order and obtained and served summons, the receiver will, on the return day of the summons, bring in his accounts in the form of debtor and creditor, indeed, (a) This is done by the officer of the court writing on the bond : Vacated puniumt to an order of the day of , 18 — . E. E, Clerk. 632 RECEIVER he will almost copy tis annual accounts as they are on file, from their commencement, and make annual rests and balances, and bring them down so as to embrace all payments and receipts, including com- missions from year to year ; also deposit with the referee all books and papers of the estate and his own vouchers, and these will bave to be verified by an AFFIDAVIT, in about the following form : Affidavit : Giiy^ County and State of New Yor\ ss. A. B., receiver in the ahove entitled action^ levng duly sworn, doth depose and say, ilutt the above is a just, full and Pi'ue inventory of the whole [real and personal] estate and effects embraced by this deponents said receiver- ship in this suit, so far as the same have ever come to his hnowledge and possession ; and also a just and true account of all the receipts and disbursements on accov/iit of the said estate tvhioh have been ever received or paid by this deponent or by any other person by his order or for his use. Also, tliat the several sums of money mentioned in tlie foregoing accounts to have been paid or allowed by him were actually paid or allowed by him, this deponent, for or on account of the said estate. And this deponent further saith, that he doth not hnow of any error or omission in the said foregoing accounts to the prejudice of any of the pa/r- ties in the said cause. Sworn, &c. An adjournment should then be had, to give par- ties the opportunity, in the mean time, to examine ACCOUNTING. 633 the account with the books and vouchers and to prepare charges and surcharges. Such charges and surcharges will have to be verified by oath as true, either positively or on information and belief. And any party, who shall not be satisfied with the accounts so brought in, will be at liberty to examine the accounting party on interrogatories as the referee may direct. A charge is an instrument charging the person with the receipts of all the sums appearing on his accounts ; and a sv/i^charge seeks to charge him, in a separate document, with sums not credited. The referees generally prefer oral examination, but should written interrogatories be found neces- sary, they would be in the following form : [Title.] Interrogatories exhibited on the hehalf of , lefore S. (7., Esquire^ referee^ to whom this action stands referred for the final Ojccounting and discharge of A. J?., receiver in this cause. First interrogatory to he put to the said receiver. Whether or not you or any or what person and persons by your order or for your use possessed or received a certain sum of (&c., Sc, &c. If yea., set forth when and from vjhom a/nd what you have since done with the same. Second interrogatory. Have or hath you or any and what person or per- sons by yoihr order or with you/r privity or consent 634 RECEIVER paid^ applied or disposed of^ cfec, c&c. If yea, set forth a full, t/rue and pa/rticular accotrnt, C&C. (&C. (&0. &c. The referee examines and approves of tlie form of the interrogatories and puts his certificate of allowance on them. And the answer to these inter- rogatories will be headed : [Title.] The answer and examination of A. B., the receiver, to the interrogatories exhibited on 'behalf of , and allowed by 8. 0., Esquire, referee appointed by this court, to whom this action stands referred for the final accounting and discharge of the said A. B. as such receiver. To the first interrogatory this examiina/nt saith, that he liath in the account under date, &c., according to the best of his ^knowledge, remembrance, informa- tion and belief, set forth, &c,, &c., &c. At the next meeting it is usual to hear objections by charge and surchai-ge, go over the matter of the items and compare the vouchers and documents with them. In England, the master does not require vouchers for sums under forty shillings sterling ; and Mr. V. C. Hoffman says, An " accounting party may " discharge himself on his own oath for sums not " over $20, and not exceeding in the whole amount " £100, which I take to be sterling, $444 44; but ACCOUNTING. 635 "he must swear unto whom paid, for what and " when ;" Hoffman's Master, 82. Where the receiver has had real estate conveyed to him and he is directed to reconvey, the deed will be without covenants and ia the character of quit claim, stating, in the recitals, the order for a receiver, appointment of the party conveying, and the order for him to pass his final accounts and to execute a reconveyance. The court has no jurisdiction to order, in a sum- mary way, the executor of a deceased receiver to bring in and pass his testator's accounts and pay the balance to be found due out of the assets : Jenhins V. Bryant, 1 Simons, 171. But where a receiver dies, his executor or administrator should petition the court to pass accounts, (^Smitli on Jieceivers, 191,) (a) have the recognizance discharged and a new receiver appointed. Where executors of a receiver apply to pass his accounts and pay a balance into court and it is so ordered, it will be well for them to do so forthwith and not risk the chance of circumstances which may debar them from complying at a distant day : Gor- don V. Badeock, 6 Beavan, 157. Thus, in 1812, the executora of a receiver applied to pass his accounts and pay in the balance ; and this was ordered : but, payment was not made. In 1841, they were ordered- to pay in the balance without interest ; and it was held that they could not object, the want of assets. (a) Where it is said that the court cannot make any order on his executor or personal representative to account, but such representative may apply. 636 RECEIVER The following miglit be the form of a petition by an executor or administrator of a receiver to pass accounts : To &G. In , &c. [Title.] The 'petition of G. D.^ execu-^ tor of tJie last will and tes- tament of A. B.^ [or ad- ministrator of the estate and effects of A. B.] late receiver in the above action^ deceased^ Showeth : That, hy am, order made in the ahove cause hefore, c&c, on the day of , 18 — , it was ordered, that it shoidd he referred to' J. JR., Esquire, residing, &c., to appoint, &g., [here recite the order to appoint the receiver] ; That in pursuance of the said order, the said referee, hy his report hearing date the, c&c, appointed A. B., of, &c., {since deceased^ to he such receiver • xoho, thereupon, loith his two sure- ties, entered into tlie recognizance usvxil in such cases and tooTc upon himself the duties of the said receiver- ship. That the said late receiver, A. B., departed this life on the day of , having first duly made his will and thereof appointed your petitioner sole executor • who duly proved the same in the office of the surrogate of, c&c, [or, having died intestate and your petitioner has been duly appointed by the ACCOUNTING. 637 surrogate of, &e., sole administrator of his estate and effects and the letters of administration stand unrevoked] ; That the said A. B. died lefore Ms receivership had ended and before he had finally accounted or been discharged therefrom • That yow^ petitioner is desirous of hawing his accownts passed and the recognizance given hy him vacated. Your petitioner^ therefore., prays that this court will grant an order that yov/r petitioner.1 G. Z>., as executor of the last will and testament of the said A. B., deceased., the receiver appointed in this cause., do pass the accounts of the said A. B. as such receiver lefore a referee., residing in, c&c, and that your peti- tioner pay into court., to the credit of this action or into the hands of a new receiver (as the court may., in such order., direef) such amount as the said referee shall certify to he due from the said A. B. on the balance of such ac- count. And also., that., on such pay- ment being made., the recognizance en- tered into by the said A. B.., with N. 0. and M. P., his swreties., be vacated. And also., that it be referred to the said referee to appoint a pi'oper person to be receiver of, &c., in the place and stead of tlie said A. B., with like powers or for such other or further order as this court may see fit to grant. And, &c. [Jurat in the usual form.] C38 RECEIVER Copies of ttis petition would have to be served upon all interested parties in the suit with notice of the day on which it could be jnoved in court. Form of oeder thereon : At a CoK/rt, &c. Present^ &c. [Title.] On reading and filing the petition of G. D.^ exe- cutor^ (&c., wherehy it appears that the said A. B. late receiver in this action died on the day of [here recite sufficient of the petition to show the death ; the character in which C. D. applies ; that the receiver had not finally accounted or been discharged ; and the gist of the prayer] ; and on reading and filing due proof of service of the said petition on, &c. ; and after hearing Mr. A. JV., of counsel for and on behalf of the said O. D., and Mr. G. M., of counsel for, c&c, consenting thereto : it is oidered that the said G. D., the execidor [or adminis- trator, &c.] of A. S., deceased, the receiver appointed in this action, do pass the accounts of the said A. B. as such receiver, before Mr. F. F., residing in the city of New York, as referee and so as to embrace the whole of his receivership and commence from the time of his appointment / and with that viefio he, the said G. D., is to produce all necessary boohs, papers and vouchers before the said referee. And it is ordered that the said G. B. be alloioed by the said referee, on such accounting, all such Just costs, , ACCOUNTING. 639 charges, fees, expenses, allowances and commissions as the said A. B. would have been entitled to as receiver were he living, as well as all proper taxed costs and payments and referee's fees of the reference to account and vacate recognizance; a/nd that the said O. D. do pay what the said referee shall certify to be due from the said A. B. on the balance of such account within a time to be specified by the said ref- eree in his report to the clerh of this court (or, to the chamberlain of the city of New York) to the credit of this action. And on filing the said referee's re- port, showing that the said receiver has duly passed his accou/nts, and an such payment being made, it is ordered that the recognizance entered into by the said A. B. and JV. 0. and M. P., sureties, be vacated and the clerh shall thereupon cancel the said recogni- zance, (a) And it is also ordered, that it be referred to the said referee to appoint a proper person of the estate &c. [whatever it may be], in the pleadings in this cause mentioned in the room and stead of the said A. B. deceased. And such new receiver, when fully appointed and his recognizcmce has been ap- proved and filed, shall have power, &c. [here it will be well to set forth his powers in extenso by copy- ing from the order under which the old receiver waa appointed]. And it is also ordered, that the party who applied for cmd woi'hed the reference under which the old receiver was appointed have the prefer- {a) This is done by the ofBcer of the court writing on the bond : Vaoated pursuant to an order of the day of , 18 — . H. W., Clerk. 640 RECEIVER ence of worhing svxihpart of this order as applies to a new receiver • and should Tie not use due diligence therein^ the referee shall be at liberty^ on the applica- tion of any other person being an interested pa/rty to the suit^ to commit to him the prosecution' of such part of the reference. And the new receimer shall pay the taaied costs of the reference for his appoint- ment and of all proper expertises attendant thereon out of the f/rst moneys that shall come to his hands and charge the same in his accounts, (a) And the said G. D. shall deliver over v/nto such new recei/ver all boohs^ papers and vouchefrs which were in the pos- session or under the control of ilie said late receiver., A. B., belonging to the estate over which he tvas receiver. The proceedings on this petition will be about . similar to those in ordinary cases of passing final accounts of a receiver ; which see p. 627 et seg, ante. An order has been made in a cause where the bill was dismissed, that the receiver should pass his accounts and pay the balance. It was, in the case of a bill filed by a purchaser against a vendor -for specific peiformance of an agreement. A receiver of the rents of the estate had been appointed in the progress of the suit. At the hearing, the bill was dismissed, with costs. The receiver had moneys in his hands belonging to the defendant ; and the (a) This order is so drawn that the representative of the old receiver can have the accounts passed and the recognizance vacated and then go free — leaving the parties in interest to work the appointment of a new receiver. ACCOUNTING. 641 latter (after the dismissal of the bill) presented a petition in the cause, praying that the receiver might be ordered to pass his accounts and that what should be found due might be paid to him the defendant. And the vice-chancellor made an order accordingly : Pitt v. Bonner^ 5 Sim. 577. A receiver cannot be compelled to account and show his books to a party in a suit. He is to ac- count to the court only. This was decided in Mus- grove v. Naeh : 3 Edwards' V. C. Keports, 172. In this case the defendants' rights were not adjudicated upon ; they had, however, succeeded in dissolving an injunction which restrained them from collecting rents. A receiver had theretofore been appointed ; and he had former rents in his hands. The defend- ants, by petition, not only asked to take the moneys which w:ere in such receiver's hands, but complained against the receiver for not having furnished them with statements, upon their asking him to account to them: Vice-ChaTicellor JifCoun said, that as the right of these defendants had not been finally passed upon and proof might be taken to disprove their answers, the money must remain in the hands of the receiver until hearing and decree. It would then be paid over. Also, that the receiver could not be compelled, in the middle of a suit, to account to a party. He is only to account under the rules and practice ; which are so definite that he cannot escape such accounting. That he is the officer of the court and not of the party. 41 643 RECEIVER Allowcmces to a receiver. A receiver is an officer of the court, and as such in the absence of legislation, the court has the authority to determine his compensation. The gen- eral mode of compensation is by a commission on the receipts and disbursements : Magee v. Cowper- thwaite, 10 Ala. 966. An order, special in its provisions and allowing the receiver the control of a specified sum for a par- ticular object, is not to be used as a sanction for charges above that amount. Such a consequence is not to attach to a special order ; and a receiver will not be allowed any extra expenditure : espe- cially where the transaction has turned out unprofit- able : Malcolm v. C CallagJian, 3 Myl. & Craig, 52. Where a receiver takes proceedings at law ; and then, under advice of counsel, abandons them and proceeds by another form, in which he succeeds, it seems, he will not be allowed the costs of the abandoned proceedings in his accounts : In re Mont- gomery y 1 MoUoy's Ch. K. 419 ; and where a re- ceiver takes upon himself to appeal from a decree in the suit wherein he was appointed and is unsuc- cessful, he will not be allowed the fees and expenses of it out of the fund in his hands : The Utica Insv/r- ance Go. v. Lyrwh, 2 Barb. Ch. E.. 573. A receiver, or other trustee, is not authorized himself to act as counsel in the business of his trust, so as to entitle himself to extra counsel fees for pro- fessional services beyond the allowances to attorneys, solicitors, INDEX. 721 ATTORNEY-GENERxVL, under Code, bringing action to annul, &c., charter of corporation, 220. ATTORNMENT by tenant to receiver, the court becomes landlord, 3. to a receiver and form of it, 127. tenant refusing to attorn, 128. after attornment, strangers not to disturb tenant, 129. B. BAD DEBTS, receiver selling same, 152. form of petition to sell, 152. form of order on petition to sell, 154. advertisement of sale, 155. sale and notice of sale by receiver of a dissolved corporation, 203. BANK INSOLVENT OR VIOLATING CHARTER, receiver to be ap- pointed, 245 et seq., 265. court can appoint receiver at any stage, 264. by whom the bill or petition can be filed, 255. petition against, 256. order to show cause, 259. injunction order, 262 (note a), 263, 267. receivers vested with the property and effects, 272. as to a receiver of a safety-fund bank paying its circulating notes, 278. receiver can be appointed without any reference, 249. case which the attorney-general must show to get a receiver, 249. security to be given by, and character of a receiver of the effects of an insolvent bank, 249, 260. an ofBcer of the bank should not be the receiver, 250, 714. powers of the receiver of an insolvent bank, 250. receiver nonsuited or beaten at law, the party succeeding should petition to be paid, 251. where there is an appeal from the order for a receiver, court will not appoint one pending the appeal, 253. provision in safety-fund act as to final dividend, 253, 279, set-off, 277, 278. there must be fi-aud in its pecuniary concerns to authorize a receiver, 233. 46 722 INDEX, BANK INSOLVENT OR VIOLATING CHARTER— continued. practice where banking or insurance company becomes insol- vent -or violates its charter, 255. petition thereon, 256. order on the petition and which embraces a temporary injunc- tion, 259. order of reference for receiver and a permanent injunction, 267. as to after powers and proceedings by the receiver, 272. banking association, &c., having judgment against it and exe- cution unsatisfied, 280. creditor having demand exceeding one hundred dollars, 280. application by stockholders holding one tenth of capital, 280. receivers under act of 5th April, 1849, 283, et seq. to report list of stockholders and apportion debts among them, &c., &c., 286. form of report of receiver to ground motion for reference to fix liability of shareholders for debts of bank, (appendix) 677. opinion of Justice Mitchell on the liability of pledgees of stock and shareholders for the debts of bank, &c., (appendix) 289, 686. order of apportionment and assessment on shareholders, (ap- pendix) 702. receiver or shareholder may appeal from such an order, 291. opinion or points for rules of the justices of the first and second judicial districts relative to specie-payments in con- nection with the act of 5th April, 1849, 292, 293. opinion of Justice Roosevelt (in connection with the same act) in the case of Livingston v. TTie Bank of New TorJc, (appen- dix) 709. And see Corporation. BID on property, receiver cannot, 161. BILL to be served before motion for a receiver on a judgment creditra's bill, 492. or complaint dismissed, order on the receiver to pass accounts and pay balance, 640. form of a bill against a limited insolvent partner, 850. amendment of, after motion for a receiver and before the argu- ment, effect thereof, 672. forms of prayers for receivers, 672, et seq. BOND of a receiver in general cases and form of it, 90, 91. if not filed in proper office can be done nunc pro tunc, 98. INDEX 723 BOND — continued. in litigation, receiver appointed of rents embraced by it, 535. of receirers of the effects of a corporation on « voluntary dis- solution, 192. c. CANCELING policies by a receiver, 159. CHANGE of possession of property, on assignments by judgment debtors, 408. CHARGES and subcharges on a receiver's final accounting, 633. CLAIMS against receivers of insolvent corporations, reference as to, 305. CODE OF PROCEDURE (of New York) ; under it a receiver can be appointed to carry a judgment into effect, 17. also, to preserve property pending appeal, 18. also, where a judgment debtor refuses to apply prop- erty, 18. under it, either party can apply for a receiver, 18, 363. it has no relation to insolvent corporations, 166. expressly authorizes attorney-general to bring actions to vacate or annul charters of corporations, &c., 220. of receivers generally under the Code, 362. it (the Code) has not taken away the right of a judgment creditor under the R. S. to commence action for setting aside fraudulent assignment and having a receiver, 364, 396. a receiver under the Code represents the interests of both creditor and debtor, 365. general remarks on sections connected with supplementary proceedings, 366. practice thereunder, 378. as to chancery rules touching receivers being still in force not- withstanding the Code, 608, et seq. COLLIERY, receiver of, 331. order for a manager or receiver of, 344. COMMISSIONS allowed to receivers on the voluntary dissolution of corporations, 176. to a receiver of a mutual insurance company, 302. to a receiver of a bank, 302. usually allowed to receivers ; and mode of calculating them, 643, 644, et seq. 724 INDEX. COMMITTEE, of a lunatic, where there is a receiver, 539. COMPLAINANT, a surety for the receiver, 94. COMPLAINT should be served before motion for a receiver in a judg- ment creditor's suit, 492. COMPROMISE of disputed or doubtful claims, power of receiver to do so, 160. CONSENT by judgment debtor (where one bill is filed) that his cred- itor be paid, 499. ditto, where there are several bills, 501. CONTINUANCE of receiver after suit ended, 20. CONTROLLING receiver, can only be done through order, rules and practice, 12. CORPORATION, a receiver of a corporation is not a purchaser, 4. as trustee under an original grant no receiver against, 36. insolvent or acting out of its charter, its officers not to be receivers, 68. a receiver of an insolvent corporation may maintain suit to avoid usurious transactions or illegal acts of its ofllcers, 141. generally, 163. power of the supreme court over directors, managers and other trustees and ofloers, 163. power over religious corporations, 1 65. a receiver cannot impeach or disaffirm the lawful acts of a corporation, 166. he should do all acts in his own name and not in that of the style of the corporation, 166. shareholders are not the parties to annul an act done in excess of authority, although the public officer might interfere, 167. payments made while a corporation is insolvent or insolvency contemplated are void, leT. suits by corporations do not abate by their dissolution but can be continued by receivers, 167. voluntary dissolution of a corporation ; and as to the petition for such dissolution, 168. any directors, trustees or other officers, on a voluntary dissolu- tion, may be receivers, 169. such receivers are vested with the property from the time of filing security, 169. powers of receivers of a corporation on a voluntary dissolu- tion, 170. they are to sue for shares of stock remaining due, and may file bills, 170. INDEX. 725 CORPORATION— continued. to give notice of their appointment, 170. effect of their appointment on all sales, assignments, transfers, &c., 170. form of notice, 170. effect of the appointment of receivers, 170. debtors are to account to receivers, 172. powers generally of the receivers, 172. receivers sued are to retain sufiBcient funds in hand,