Weber v. Wallerstein — 111 A.D. 700

Majority

p. 700

Henry Weber, Respondent, v. Edward Wallerstein and Others, Appellants.

(No. 2.)

Fourth Department,

March 7, 1906.

Headnote

Receivers.—-when not appointed in action to recover corporate assets.

"When the allegations of the complaint in an action by a stockholder to recover: ■ corporate aSséts alleged to have been fraudulently converted, are all made upon information and. belief, a receiver pendente lite should pot be appointed when the answering affidavits .specifically deny the allegations of the complaint and state facts which exculpate the defendants from misconduct.

p. 701

Appeal by the defendants, Edward Wallerstein and others, from ap order of the Supreme Court, made at the Oneida Special Term and entered in the office of the clerk of the county of Oneida on the 8th day of June, 1905, appointing a temporary receiver of the defendant corporation, Edward ^Wallerstein & Company.

Theodore Baumeister, Frank Gardner and Samson Lachman, for the appellants.

Edwin H. Risley and Henry M. Love, for the respondent.

The respondent has commenced this action as a stockholder of the corporation of Edward Wallerstein & Co., charging that its assets haye been fraudulently diverted, and seeks to have them restored to the corporation.

This court has held the complaint states the cause of action mentioned (Weber v. Wallerstein, No. 1, 111 App. Div. 693 ). The allegations of the complaint are all set forth on information and belief. A motion was made by the plaintiff upon the complaint and the demurrers' thereto for the appointment of a temporary receiver of the corporation. The defendants appeared and by affidavits positively denied the charges of fraud and the dissipation of the corporate assets. In addition the entire transactions which are set out in the complaint on information and belief are explained in these affidavits, and if the facts are correctly stated therein, the defendants are exculpated of the misconduct imputed to them.

In this situation there should be no receiver appointed pending the action, or at least until there is some' urgent necessity for that drastic remedy. The statement of a cause of action alone does not warrant the granting of this relief. The receiver is authorized to take possession and control of all the corporate assets, and his incumbency will necessarily oust the corporation of the management of its affairs. Something beyond the mere unsupported statement of the plaintiff made on information and belief in the general allegations of a complaint should appear to warrant the appointment where the allegations are explicitly denied, (Kieley v. Bar

p. 702

ron & Cooke H. & P. Co., 87 App. Div. 317 ; Platt v. Elias, 101 id. 518.)

The order should be reversed, with ten dollars.costs and disbursements of this appeal, and the motion denied, with ten dollars costs.

All concurred.

Order reversed, with ten dollars costs and disbursements, and 'me.tion''denied, with ten dollars costs.

Cases cited

Kieley v. Barron & Cooke Heating & Power Co. 87 App. Div. 317 N.Y. App. Div. 1903-11-06 p. 702