Opinion
09-26-1888
HOOKE v. MERCER WIRE CO.
James Buchanan, for motion. Peter Baches, contra.
Motion to attach for contempt, made by certain creditors of the defendant company, against parties taking possession of property in the hands of a receiver.
James Buchanan, for motion. Peter Baches, contra.
BIRD, V. C. In this case a receiver was appointed and ordered to take charge of all the assets of the defendant company. He did so. One of the principal assets of the concern was a wire-mill, in which was a steam-engine, used therein for the purpose of supplying the power required to conduct the business of the concern. This engine was taken from its possession, and removed from the premises by one of the directors of the defendant company, several weeks after the appointment of the receiver. This engine rested in and upon a brick foundation, which was let into the ground about three feet. Certain of the creditors of the company informed the receiver what had been done, and requested him to take steps to reclaim the engine; but the receiver said that he did not know that he had any right to it, and refused to act in the premises. The receiver allowed the matter to rest there. He did not come to the court for instruction; but, on the contrary, by his conduct, apparently acquiescing, seemed to invite the action of the parties claiming the engine. The receiver so refusing to move for the recovery of the engine, the creditors have come in by their petition, setting up the facts, as above stated, and charging that the said engine is a part of the assets of the said company, and alleging that the said persons who had taken the engine were guilty of contempt of the court, and should be punished therefor, and also required to return the engine and place it in its former position. An order to show cause was granted; and the persons named therein come in, and say that the engine was not the property of the company, and never had been, although it was in the possession of it. They allege that one Thorpe entered into an agreement with the company to sell the engine to it, on the express condition that the title thereto should not pass until the engine was paid for.
It may justly be observed, in reference to the case as made by this insistment of the respondents, that, if nothing else appeared, they fail to show any justification for their action, even after giving to them the benefit of the receiver's indifference, if not acquiescence. For nothing is better settled than that the receiver has and enjoys to the fullest extent all of the rights of property, of every character, which the corporation, over whose estate he is placed in charge, possessed. Now, it being conceded that the defendant company, having purchased this engine on the conditions named, no one will dispute but that it had the right to secure the title absolutely, by paying the amount due according to the contract. Nor at this day will any one say that the receiver had and has not the same right, in this particular, that the company had at the time of his appointment. Hence the receiver had the right to perform the contract which the company had entered into, and thereby make the engine an available asset of the corporation. But, in addition to the foregoing, the petitioners come in by affidavits in rebuttal, and show that the originalvendor sold said engine to one of the respondents only a few days before he thus forcibly removed the same out of the reach of the receiver. They also show that the said vendor frequently said that he has been paid $300 on account of the engine, and had a guaranty for the rest of the purchase money. According to this proof, one of the respondents was the guarantor, and was the same person to whom the engine was sold.
The way the case comes before the court, I think the first inquiry is, has the court the right to proceed? Were the receiver here asking aid, the way would be plain. Or were these creditors here on an appeal from the judgment of the receiver, the path of duty would be equally clear, under the statute. But there is nothing before the court to show that the receiver has taken any judicial action in the premises whatever. All that is disclosed is that the receiver, when called on, refused to act. Therefore, is the simple refusal of the receiver to act enough to warrant such an appeal? Is not the action of the receiver, in every such case, judicial? And must there not be a record before there can be an appeal? I am led to the conviction that the statute contemplates this. The eighty-second section of the corporation act, Revision, provides: "In case any such company or person or persons whatever shall think themselves or himself aggrieved by the proceedings or determination of the said receiver in the discharge of his duty, it shall be lawful for the party aggrieved to appeal to the chancellor, who shall, in a summary way, hear and determine the matter complained of, and make such order, touching the same, as shall be equitable and just; and the chancellor, in the execution of the powers and authority under this act, is hereby vested with all the jurisdiction and power which is lawful for the court of chancery to exercise in suits depending in that court, and may proceed according to the rules, principles, and practices of that court, except when otherwise directed by this act." Now, I am fully convinced that the intent of the statute is to clothe the receiver with full power to act in every such case, either with or without the advice of the court first had, but the action is to be by the receiver, whatever the particular method of procedure may be. I cannot but consider that this case most fitly represents the comprehensive scope of the statute, and the vast extent of the powers conferred on the receiver. In my judgment, it was the duty of the receiver to formally pass on this claim by these creditors; but this he could not do, within the purview of the statute, until a petition or claim, in the nature of a petition, had been presented. As the creditor files his claim for money due on a note or book-account with the receiver, so any one interested in the recovery of any of the assets which he conceives belongs to the defendant company, but which the receiver neglects to pursue and collect, he should file his claim with the receiver, and procure the action of the receiver on the point in issue. Then, should he refuse, he should be required to record such refusal in his minutes, from which an appeal is contemplated by the act. But it is said that this receiver has already refused to act. It does not appear that he has refused to act, after having been called upon to act by such petition presented to him. And if, in such case, he should refuse to act, the court can then be called on to compel him to act, or to give him directions; and, in case he should decline to act, the court could discharge him, and doubtless would. This course, I think, is altogether more compatible with the just administration of the act than for the door to be thrown open for every creditor to enter the court as a petitioner, on the simple refusal of the receiver to act. To summarize: (1) The receiver is the officer of the court, and is supposed, on that account, to represent the interests of all persons, and to be able to conduct all controversies in the interests of justice. (2) Being such officer, he is regarded as being indifferent between all parties concerned, and able to judge of such controversies summarily, uninfluenced by passion or interest, and thereby facilitate the administration of the assets of the corporation committed to him. (3) Because of these things, the receiver should be requiredto act, in the first instance, in the spirit and according to the true meaning of the act, and in case he, being called on by petition for that purpose, refuses to proceed, then the aid of the court should be invoked, not directly against the supposed contemnor or trespasser, but against the receiver, praying that he might show cause why he should not proceed in the premises. (4) In a very broad sense, the receiver is regarded as acting for and on behalf of the court, and his act is regarded as the doing of the court. Now, before the court is made to suffer for the imputation which inevitably follows from certain omissions or commissions of its officers, the court should have an opportunity of moving directly against its agent with respect to such acts of omission or commission, without the complication of any other issue. (5) It is very illogical to appoint a receiver under this act, whose powers are so comprehensive and so adequate for every such circumstance or emergency, and then to allow him to stand by, with indifference, and permit others to institute proceedings for the recovery of the assets of the insolvent company. (6) If creditors may be allowed to take the place of receivers in such case, the door will be wide open for strife and discord between them. I do not believe that the receiver in this case intended to disregard his duty. I am pursuaded that he must have been very erroneously advised as to his rights and duties in the premises; not, it may be, as to where the title to this property may really be, but as to the course he should have pursued to ascertain the truth about the case. And now, since he is an officer of the court, the path of duty is plain. Realizing, as I do, that every such question should be conducted in the name of the receiver, for the benefit of all concerned, I shall advise an amendment of the prayer of the petition to the effect that the receiver be directed to proceed in this matter as law and justice may require, and that, without further delay, an order do issue directed to him to show cause why he should not proceed herein. This course removes all possible doubt as to the right of the court to consider the case.
I have no doubt but that the petitioners were right in presenting their petition, but I think the prayer should have been as above indicated. The petition will therefore stand as the basis of the order above indicated. Whatever other questions have been presented, or may arise for consideration, will be disposed of hereafter.