Ferguson v. Toledo, Ann Arbor & North Michigan Railroad

Majority

p. 352

John Ferguson, Appellant, v. Toledo, Ann Arbor and North Michigan Railroad Company, Defendant, Impleaded with Ann Arbor Railroad Company, Respondent.

Headnote

Agreement by a railroad “ to pay all outstanding débü and claims against said receivership ”— it does not embrace a claim not presented to, or allowed by, the. receiver— collateral attach on an orden' of another court—the remedy is. by intervening in the action therein.

In an action brought against the Ann Arbor Railroad Company to recover the amount of a judgment obtained by the plaintiff against the Toledo, Ann Atbór and- North- Michigan -Railroad Company, itappeared- that an action was brought against the Toledo, Ann Arhor and North Michigan Railroad Company .and a-receiver of its property appointed therein; that the action resulted in a final order which recited, “that the outstanding claims and demands against the receivership * * * were * * * in excess óf the outstanding 'current assets and choses in action of the receivership by a large amount exceeding the . cash balance in the hands of the receiver, * V .* and that said, The Ann Arbor Railroad Company has undertaken and agreed to pay all outstanding debts and claims against said receivership.”

The order directed the receiver to turn over to the Ann Arbor Railroad Company ' the property which vested in him as such receiver tinder his original appointment, “ or which * * * accrued' to him as such receiver during the pending of such receivership.” .

Meld,, that the terms of the order measured the extent- of the obligation incurred by the Ann Arbor Railroad Company, and that, as it did not appear that the plaintiff’s claim had ever been presented to, or allowed by, the receiver, or that it had, in any way, become “ an outstanding debt or claim against said receivership,” the plaintiff was not entitled -to recover;

That the plaintiff could not, in this action, attack the validity of the order made in the United States court, but that, his remedy was by intervening in the suit in which the order was made.

p. 353

Appeal by the plaintiff, John Ferguson, from a judgment of the Supreme Court in favor of the defendant, Ann Arbor Railroad Company, entered in the office of the clerk of the county of New York on the 15th day of October, 1902, upon the decision of the court, rendered after a trial at the New York Special Term, dismissing the complaint upon the merits.

John M. Bower, for the appellant.

Lewis S. JLaslam, for the respondent.

The action is by a judgment creditor of the Toledo, Ann Arbor and North Michigan Railroad Company (hereafter referred to as the old company) against such company and the Ann Arbor Railroad Company (hereafter referred to as the new company), to recover the amount of a judgment entered in the office of the clerk of the Court of Common Pleas for New York county in August, 1894. The complaint was dismissed, and from the judgment so entered the plaintiff appeals.

We deem it unnecessary to refer in detail to the facts presented in this voluminous record, thinking as we do that there is a legal feature which is controlling and requires the affirmance of the judgment. The action was to obtain from the new company the payment of the judgment which the plaintiff had secured against the old company, and the theory upon which the plaintiff builded was that there had been paid into the receiver’s hands moneys which were applicable to the payment of the claims of the general creditors of the old company, and which by the receiver had been turned over to the new one. The purpose sought, therefore, was to charge the new company to the extent that it had received moneys which were applicable to the payment of the debts of the old.

Whether the receiver was originally appointed in a judgment creditor’s action brought against the old company, and subsequently by the order extending the receivership became also the receiver of the bondholders in the foreclosure suit on the mortgage is immaterial so far as concerns its being obligatory upon him to obey the orders .of the court which had made him receiver and whose officer he was.

p. 354

The receiver is not a party, and it cannot be seriously disputed but that it was his duty upon applying for his discharge to dispose of the funds and assets in his hands as directed by the court; and we think it equally true—because the order is binding and controlling on all until directly attacked and set aside — that the extent of the obligation which was incurred by the new company to whom the funds and assets were directed to be turned over, is to be found in the order which gave to that company the possession of such funds and assets.

We are obliged to assume that when the order discharging the receiver and requiring the funds to be turned over was made, the court had before'it the question as to what- should be done with ■ the property in the hands of the receiver and thus, incidentally, was involved the question as to whom such property belonged. If in the suit in the United States, court in which these orders were made, it could be assumed (which it cannot be) that'the judge in making a’ disposition of the property had fallen into error, such error could' not be corrected in this action nor in any collateral way. could the validity of the orders as made be assailed. As long, therefore, as the final order made in the suit in the United States court stands, it is binding upon all and cannot in any collateral way be attacked, but the remedy of any person aggrieved thereby is by an intervention in the suit in which the order was made and an application to-the court or judge making the order.

We are brought, therefore, to a construction of the final order in the. consolidated causes of the United States Circuit Court. From the recitals of that order it appears that it was shown to the court “ that the outstanding claims and demands against the receivership * * * were * * * in excess of the outstanding current assets and choses in action of the receivership by a large amount exceeding the cash balance in hands of the receiver * *' * and that said, The Ann Arbor Railroad Company (new company) has undertaken and agreed to pay all outstanding debts and claims against said receivership.” And it further appears from the order that the receiver was thereby directed to turn over to the new company the property which vested in him as such receiver under his original appointment “ or which * * * accrued, to him as such receiver during the pending of such receivership.”

p. 355

We think the terms of the order are clear and explicit requiring the turning over of all the property in the receiver’s hands to the new company subject to the agreement made by such company that it would pay all the outstanding debts and claims against the receivership. This was the extent of the obligation imposed by the order on the new company, and to secure the application of any of the funds or property which were thus turned over to the new company, it would be necessary for the plaintiff to show that he bad a claim against the receivership. This is not pretended, for what the plaintiff has is merely a judgment against the old company which was never presented or allowed by the receiver and which in no way, so far as appears from this record, ever became “ an outstanding debt or claim against said receivership.” This, without considering the many other objections that could be urged at this late date against granting to the plaintiff any such relief as in this action he seeks, is sufficient, we think, to warrant our concurring in the disposition made by the learned judge at Special Term, in dismissing the complaint. For the reason given, therefore, and for others that might be assigned, we think that the judgment appealed from must be affirmed, with costs.

YanBbunt, P. J., Ingeaham, McLaughlin and Hatch, JJ., concurred.

Judgment affirmed, with costs.