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Hall v. Holland House Co.

12 Misc. 55 Court General Term, English

Delivered by Bischoff, J.

Contents

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p. 55
James T. Hall, as Receiver, Respondent, v. The Holland House Co., Appellant.
(New York Common Pleas,
General Term,
April, 1895.)

Headnote

The courts of this state have power, on the application of stockholders of an insolvent foreign corporation doing business and having assets in this state, but no officers empowered to hold such assets, to appoint a . receiver of such corporation for the purpose of preserving the assets within their jurisdiction for the protection of domestic creditors.
A receiver so appointed represents only the domestic creditors of the corporation, and in an action brought by him a claim against the corporation which was acquired by the defendant and did not mature until after the receiver’s appointment is not available as a set-off or counterclaim.
Appeal from a judgment of the General Term of the City ■ Court of New York which affirmed a judgment rendered by the court at Trial Term, without a jury, in favor of the plaintiff.
Action by the receiver appointed in this state of a corporation created by the laws of New Jersey, upon a demand for work, labor and services rendered, and materials furnished by said corporation, at the instance and request of the defendant.
. Defendant sought to recover by way of counterclaim or set-off a demand transferred to it before the commencement of this action.
Samson Lachmam and Theodore Ba/umeister, for respondent.
Joseph 1C ling, for appellant.

Upon the trial it was admitted that on September 27, 1893, there was due and owing from the defendant to the James T. Hall Company, a corporation created by the laws of New Jersey, $589.85, with interest, for work,

p. 56
labor and services rendered, and materials furnished at the defendant’s instance and request. It was further admitted that in an action determined by this court, wherein Edward K. Milligan and James T. Hall were plaintiffs, and the James-T. Hall Company was defendant, the plaintiff herein, on October 11, 1893, by an order of that date, was appointed temporary receiver, and by judgment recovered November 1, 1893, permanent receiver of all the assets of said corporation which were within this statd, and that the plaintiff in each instance had duly qualified as such receiver. The contention thereafter was with reference exclusively to the defendant’s counterclaim, and claim of set-off, of an admitted debt of the James T. Hall Company to one Mary J. Van Doren, which arose upon a promissory note, and was acquired by the defendant before the commencement of this action, but subsequent to October 11, 1893, and1 which did not mature until October 16, 1893. The learned trial justice ruled against the allowance of the counterclaim and set-off, and directed judgment for the plaintiff in the amount conceded to be due and owing from the defendant.

The validity' of the plaintiff’s appointment as receiver is attacked upon this appeal. From the judgment roll of this court, however, which, though it was not in evidence upon the trial, we are permitted to consider in support of the judgment appealed from (12 Am. & Eng. Ency. of Law, 183 ; Dunham v. Townshend, 118 N. Y. 286 ; Baylies’ NewTr. & App. 161, and cases there collated), it conclusively appears that the action was prosecuted by certain stockholders of the James T. Hall Company, an insolvent foreign corporation doing business and having assets within this state, but no officers empowered to hold such assets. Abundant authority appears for the intervention of the courts of this state in such cases to preserve the assets within their jurisdiction for the protection of domes•tic creditors by means of the appointment of a receiver. Code Civ. Proc. § 1810, subd. 3; id. § 1812; 8 Am. & Eng. Ency. of Law, 408; 20 id. 275; High Receivers, § 305 et seg.; Redmond v. Hoge, 3 Hun, 171 .

p. 57
No error js to be predicated of the refusal of the learned trial justice to allow the debt of the James T. Hall Company, assigned to the defendant, as a counterclaim in this action. The Code of Civil Procedure (§§ 501, 502) enables a defendant, sued in an action on contract, to avail himself of any other cause of action also arising on contract and existing at the time of the commencement of the action as a counterclaim, but the defendant’s cause of action must be one against the plaintiff or the person whom he represents, or for whose benefit the action is brought. Obviously the cause of action here urged as a counterclaim was not one against the plaintiff, and since the plaintiff, as receiver, represents only the domestic creditors of the James T. Hall Company, it was not one against the person or persons whom the plaintiff represented, or for whose benefit the action was brought. Osgood v. Ogden, 4 Keyes, 70, 85 ; Decker v. Gardner, 124 N. Y. 334 .

“ Equality in the payment of debts by a receiver is the rule of law, unless by diligence, or for some special reason, a preference is declared of one creditor, or of One class, over creditors generally” (Clark v. Brockway, 3 Keyes, 13, 14; 1 Abb. Ct. App. Dec. 351 ), and the appointment of the receiver relates back to the time of the commencement of the action brought to that end. Id.; 22 Am. & Eng. Ency. of Law, 310, and cases collated in note 1. In the case at bar the defendant’s demand was not acquired by it, and did not mature, until after the plaintiff’s appointment as receiver on October 11, 1893, both events being after the maturity of the James T. Hall Company’s demand against the defendant. As an equitable set-off, therefore, the defendant’s demand was not available, because its allowance as such would operate to prefer the defendant, as well as its assignor, over the creditors of the James T. Hall Company. Clark v. Brockway, supra ; Van Dyck, as Recvr., etc., v. McQuade, 85 N. Y. 616 ; Fera v. Wickham, 135 id. 223; High Receivers, § 249.

Judgment appealed from should be affirmed, with costs.

Bookstaver and Giegerich, JJ., concur.

Judgment affirmed, with costs.

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