Opinion
May Term, 1897.
T.F. Conway, for the appellants.
Rowe Van Kirk, for the respondents.
H.D. Hoffnagle, for guardian ad litem.
The appointment of a receiver pendente lite rests very largely in the discretion of the Special Term, and while this court has the right to review the exercise of that discretion it will not interfere with it unless it clearly appears that the Special Term has mistakenly exercised or abused the discretion vested in it.
In this case the term of the copartnership has expired by its own limitation; the partners manifestly do not desire to continue business as a copartnership; representatives of five-sixths of the interests in such copartnership requested the appointment of a receiver, and since the commencement of this action and before the making of the motion wherein the receiver was appointed, another action has been commenced by persons having interests in such copartnership, as part owners, asking for an accounting and settlement of the partnership affairs.
Under these circumstances, and the other facts appearing in the record before us, it seems to me that the discretion of the Special Term, in appointing a receiver, was properly exercised. It is also within the power of the court to authorize the receiver to continue business for the time being, so as to hold it together and keep its good will until an opportune time arrives for its sale without any unnecessary sacrifice.
And while the terms in which that power is vested in the receiver in this case are somewhat broad, at the same time it must be borne in mind that it is something still entirely within the control of the court, and if the receivership is unduly prolonged the court may, at any time, direct him to close up the business and dispose of the property.
It seems to me, however, that that portion of the order which authorizes the receiver to prosecute and defend, without the further order of the court, all actions brought or about to be brought, by or against said copartners, or any of them, pertaining to said copartnership business, and to retain the plaintiffs' attorneys and counsel, or other attorneys and counsel, as he may deem advisable, is improper, and its presence in the order was probably overlooked by the justice holding the Special Term at which the order was made.
The rule requiring leave to be obtained of the court before the receiver can either sue or be sued, is in order to prevent any unnecessary waste of the assets in the receiver's hands in unnecessary litigation, and contemplates at least some investigation by the court as to the propriety of the commencement of such suits before permission is granted; and to authorize in advance the commencement of suits without any knowledge of what they are for, or of the necessity thereof, is a complete nullification of the rule and exposes the estate to the very thing that the rule was intended to guard against, and is improper practice. That portion of the order should be stricken out, and the order as so modified and corrected should be affirmed, without costs to either party of this appeal.
All concur.
Order modified as per opinion, and as so modified affirmed, without costs to either party.