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Popper v. Supreme Council of the Order of Chosen Friends

61 A.D. 405 Court N.Y. App. Div. English

Delivered by Goodrich, P. J.:

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Majority

p. 405
Emanuel Popper, Respondent, v. The Supreme Council of the Order of Chosen Friends, Appellant.

Headnote

A receiver may be appointed in the State of New York of the property therein of a foreign corporation, notwithstanding the appointment of a receiver in the foreign State', and sections 1810 and 1812 of the Code of Civil Procedure do .not affect the inherent power of the court.
Where a foreign corporation doing business in the State of New York becomes insolvent and goes into the hands of a receiver appointed in the foreign State and the assets of the corporation in the State of New York are in danger of being dissipated by litigation and of being unequally applied to the payment of the claims of creditors, a creditor of the corporation residing in the State of New York may maintain, on behalf of himself and all others similarly situated, an action to have the assets of the corporation in the State of New York brought into court and a receiver thereof appointed, to the end that such assets may be equally distributed among the persons entitled thereto.
Sections 1810 and 1812 of the Code of Civil Procedure do not interfere with the inherent power of the Supreme Court to appoint a receiver of the property of the corporation as distinguished from a receiver of the corporation itself.
Appeal by the defendant, The Supreme Council of the Order of' Chosen Friends, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Suffolk on the 21st day of February, 1901, upon the decision of the court, rendered after a trial at the Queens County Special Term, overruling a demurrer to the complaint.
Howard H. Morse \Thomas Oooper Byrnes with him on the brief], for the appellant.
William B. Maihot, for the respondent.

The complaint alleges these facts.: The plaintiff, a resident of this State, is the beneficiary named in a certificate of membership which was issued by the defendant, in 1885, to Henrietta Popper, the wife of the plaintiff. She continued a member of the defendant until her death in 1900. Due notice'of her death was given to the defendant, but the claim has not been paid.

The defendant is an Indiana corporation having subordinate lodges and carrying on business in this State. It became insolvent

p. 406
' and a receiver was appointed by a court of Indiana. The receiver claims the right to the possession of the assets of the corporation in this State.

Other' parties having claims against the. order have commenced actions ánd obtained' attachments against the assets in this State. These assets consist of moneys on deposit in banks and moneys due from subordinate councils, and are in danger of being dissipated by litigation and of being unequally applied to payments of the claims ' of creditors.

The plaintiff, on behalf of himself and others similarly situated, asked that the funds of the defendant in this State may be brought into court and a receiver appointed so that the funds may be equitably distributed among the claimants entitled thereto.

The defendant appeared and demurred on the ground that the court has no jurisdiction of the person of the. defendant or the subject of the aótion and that the complaint does not state facts sufficient to constitute a cause of action. The demurrer being overruled, the defendant appeals.

■ In Glines v. Supreme Sitting Orde r of Iron Hall ( 20 N. Y. Supp. 275 ; S. C., 21 id. 543); Mosher v. Supreme Sitting of Iron Hall ( 88 Hun, 394 ), and in Glines v. Binghamton Trust Co. (68 id. 511 ), the right of the plaintiff to maintain, an action of this character is recognized. In People v. Granite State Provident Assn. ( 41 App. Div. 257 ; affd., 161 N. Y. 492 ), this court,, speaking-through Mr. Justice Cullen, recognized the jurisdiction of the court over the general assets of a foreign coi-poi-ation within this State and.the power of the court to distribute them. It is true that, the action was brought by the Attorney-General, under section 1810, subdivision 3, of the Code of Civil Procedure, but this does not affect the question under consideration. We are not now" concerned with the question of the distribution or disposition of the. funds in the manner adopted in that case, but simply with the question of jurisdiction and whether the complaint states facts sufficient to constitute a cause of action.

There is a manifest distinction between a receiver of property of a corporation and' a receiver of the corporation. In this action the plaintiff asks for the former only, in order to prevent waste of assets. The power to appoint a receiver of the property of a corporation is

p. 407
inherent in the Supreme Court, and was recognized in Hegewisch v. Silver ( 140 N. Y. 414 , 420).

Sections 1810 and 1812 of the Code of Civil Procedure do not interfere with this power, and if they did, it might well be that they would be unconstitutional as infringing the ancient jurisdiction of the court. (Canst, art. 6, § 1.) See, also, Beach on Receivers (2d ed.), section 3, where the author speaks of the distinction suggested and refers to instances where ancillary receivers are appointed in a jurisdiction other than that wherein the original receiver was appointed.

• It seems quite clear that the'complaint states a condition of facts which may require the equitable intervention of the court to secure equality of payment of claims due creditors of the defendant corporation residing in this State, by preventing priority through attachments and judgments.

The interlocutory judgment should be affirmed.

All concurred.

Interlocutory judgment affirmed, with costs.

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