Opinion
01-13-1904
DOTY v. AUDITORIUM PIER CO.
G. A. Bourgeois, for appellant. Norman Grey, for the appellee receiver.
Suit by Ezra C. Doty against the Auditorium Pier Company. From a decision of a receiver appointed for the defendant, an insolvent corporation, disallowing a claim of C.
J. Kelly, a creditor of said pier company, as a preferred claim for work and material furnished for bracing and repairing the said pier, he appeals. Reversed.
G. A. Bourgeois, for appellant.
Norman Grey, for the appellee receiver.
REED, V. C. It is admitted that C. J. Kelly entered into an agreement on April 10, 1900, with the Auditorium Pier Company to furnish labor and materials for bracing and repairing the pier, and that he was to receive $1,750 for a stated portion of the work, and for the rest was to receive a proportionate compensation for the work done. Kelly's bill, less $500 paid, is $2,036.67 and interest. On August 21, 1900, Mr. Wilson was appointed, by this court, receiver of the pier company, with a rule returnable September 4th that the creditors should show cause why his appointment should not be made permanent. Mr. Wilson's bond as receiver was approved August 24th, and on September 4, 1900, he was made permanent receiver. On October 25, 1900, Mr. Kelly filed in the clerk's office of Atlantic county a lien claim for the amount of his said bill. The claim was filed against the pier company as builder and owner. No summons has been issued upon the claim. Later, under a rule that creditors present their claims to the receiver, Mr. Kelly, on October 30th, filed with the receiver a claim, of which the following is a copy:
Auditorium Pier Co. to C. J. Kelly, Dr.
| Driving 72 pilings as per contract | $1,750 00 |
| "28" and bracing | 666 67 |
| Furnishing and driving 8 pilings | 120 00 |
| Total | $2,536 67 |
| Or | 500 00 |
| Balance | $2,036 67 |
To this bill there was appended an affidavit respecting the veracity of the account, and attached to the bill there was a copy of the agreement under which the work was done and the materials were furnished. The bill is not contested, so far as the execution of the work done or the amount charged. It is admitted that the debt to the amount claimed is due to Mr. Kelly. The point contested is whether such debt should be paid prior to other debts of other creditors claiming no lien. It is not questioned that the debt of Mr. Kelly is one for which a lien could have been imposed upon the property of the pier company, and that this lien would have taken precedence over the other proved debts in the hands of the receiver. The point made against the lien is that Mr. Kelly has not taken the requisite steps to perfect his right to such a lien. It is first objected that the claim was filed against the pier company as owner; that no summons was issued within four months after it was filed. It is also objected that the claim presented to the receiver was that of a general creditor, and not that of a preferred creditor.
Respecting the first point, it is said that at the time the lien was filed Mr. Wilson, the receiver, and not the pier company, was the owner of the property. In support of this point section 68 of the corporation act (P. L. 1896, p. 299) is invoked, by force of which the legal title of property vests in the receiver. Whether the receiver was the owner, in the sense of the mechanic's lien act, who should be named as such in the lien claim, need not be decided. If there was this technical defect in the claim, it was one amendable by an order of a justice of the Supreme Court. If it were necessary, permission could now be given to the claimant to make that application for such an amendment, and for such other orders as the delay in issuing summons and entering judgment may have made necessary. But I do not deem this essential. Had the receiver allowed the claim as a lien upon the money in his hands, I think no one could have successfully challenged his conduct. In Demott v. Stockton Paper-Ware Mfg. Co., 32 M. J. Eq. 124-131, there was nothing done after the filing of the lien claim. The received adjusted the claims. It was held that the claimant need not pursue his claim to judgment unless required to do so by the receiver; that the same diligence was not required of such claimant after a decree of insolvency as before such decree; that it was one of the purposes of the insolvent act to save costs of litigation and depreciation of the property which would arise from the delay incident to the settling of the status and claims of incumbrancers. In this case it may be remarked that the liens seem to have been filed against the corporation as owner after the appointment of the receiver. In Ennis v. Eden Mills Paper Co. (N. J. Err. & App.) 48 Atl. 610, this doctrine was approved by Chief Justice Depue in delivering the opinion in that case for the Court of Errors. The Chief Justice proceeded to say that the policy of the law in this state is that all controversies concerning the indebtedness of insolvent companies and liens upon its property shall be disposed of in the Court of Chancery. In that case judgment had not been entered on the lien claim within the statutory period. Nevertheless, because of the fact that the property had gone into the hands of a receiver, it was held that the lienor was relieved of the duty of prosecuting his lien claim to judgment within a year from the issuance of the summons. Now, while the receiver in this case, instead of recognizing the lien, and adjusting the amount of the debt, has decided against the right of the lien, nevertheless, as no demand was made upon the claimant to pursue his remedy at law, I think that the power of decision and the duty to decide equitably was not varied by this difference of conditions. The right to lien was perfect. A lien was actually filed, possibly defective in an immaterial point. The debt was due. It was a lienable debt. It is one which this court, with all the facts before it, should allow,unless it is defeated by the form in which the claim of Mr. Kelly was placed before the receiver.
The claim does not mention that a right of priority of payment is demanded. The claim, however, shows that it was for work done upon and materials furnished to the reparation of the pier, for which an inchoate lien arose. Such a lien had been filed within the statutory period. From these two facts appeared the right to impose a lien, and an effort to impose a lien manifestly supposed by the lienor to be effective. Under these circumstances the form of the claim constituted no waiver of the claimant's right to his lien. Nor do I see that he is estopped from claiming his right from the fact that the property has been sold free of all incumbrances. There is nothing to show that the existence or nonexistence of a lien upon the property affected or could affect in the least degree the price brought at the sale.
I am of the opinion that the decision of the receiver should be reversed, and that the claim of Mr. Kelly should be first paid.