Bouker Contracting Co. v. W. H. Callahan Contracting Co.

[1] The judgment creditor herein has obtained an order for the appointment of a receiver of the -judgment debtor, a domestic corporation. Thereafter a motion was made on behalf of the judgment debtor to vacate the order appointing a receiver. This motion was denied, and the judgment debtor now appeals from the order denying the motion to vacate the order appointing a receiver, and from the original order. The judgment creditor has" moved in this court to dismiss the appeal from the original order, on the ground that, although this order was made upon notice, it is still a judge’s order, made by a judge out of court, and is therefore not appeal-able. We need not now decide whether an appeal could be taken from tire original order, if no motion to vacate the order had been made. In this case, not only did the judgment debtor make such a motion, but the judgment creditor acquiesced in this practice, and the motion was submitted to the court without objection, and an appeal from that order is now properly before the court, and upon that appeal the question of the jurisdiction of the judge to make the original order is raised. The appeal from the original order is therefore concededly unnecessary, and should be dismissed, without costs.

[2] The judgment debtor now contends that the Code provisions in regard to the appointment of a receiver in supplementary proceedings do not apply to domestic corporations, for section 306 of the General Corporation Law, formerly section 1810 of the Code of Civil Procedure, specifically provides that “a receiver of the property of a corporation can be appointed only by the court, and in one of the following cases, * ' * * ” and a proceeding supplementary to execution is not one of the cases mentioned in that section. In the case of Rabbe v. Astor Trust Co., 61 Misc. Rep. 650 , 114 N. Y. Supp. 131 , this court squarely held that a justice of the court had power to appoint a receiver of a domestic corporation in supplementary proceedings. Since that time the justices of the City Court have properly felt bound by this decision, and have assumed jurisdiction to appoint receivers in similar proceedings. On the other hand, it appears that various justices of the Supreme Court have held that they had no such power. Under these circumstances, it is proper for us to reconsider the previous decision of the Appellate Term, and to refuse to follow that decision if, upon reconsideration,' we decide that it is erroneous.

Prior to the amendment of Code Civ. Proc. § 2463, by chapter 278 of the Laws of 1908, that section provided:

“This article does not apply where the judgment debtor is a corporation created by or under the laws of the state, or a foreign corporation specified in section 1812 of this act, except in those actions or special proceedings brought by or against the people of the state,” etc.

That section was interpreted by the Court of Appeals in the case of Logan v. McCall Publishing Co., 140 N. Y. 447 , 35 N. E. 655 , and the court stated:

“The only limitation upon the right to take proceedings supplementary to execution against any class of debtors is contained in section 2463, and this plainly does not embrace a foreign corporation doing no business and having no agency in this state.”

That limitation was stricken from section 2463, and this court consequently held that thereafter there was no limitation upon the right to take proceedings supplementary to execution, and that a receiver could be appointed in supplementary proceedings against even a domestic corporation. The correctness of this conclusion depends, I think, entirely upon the -determination of what the Court of Appeals meant by the words “right to take proceedings supplementary to execution/’ and whether such right includes the right to the appointment of a receiver.

Upon this question it seems to me very significant that the limitation contained in section 2463 previous to its amendment expressly referred only to “this article,” viz., article first of “Proceedings Supplementary to an Execution against -Property,”' title 12 of the Code. Article first is described as “Proceedings to compel an examination of the judgment debtor, and of his debtor or bailee,” and it includes a provision .for an “order requiring delivery of money or property to sheriff or receiver” (section 2447), and also a provision for an injunction against any person or corporation, but this article does not provide any method for the appointment of a receiver All the provisions in that regard are contained in article 2 of the same title. It would therefore seem that, when the Legislature removed the limitation which applied to article 1, it necessarily inferentially made all the provisions of that article applicable to proceedings against even domestic corporations, and there was no longer any limitation upon the right to take proceedings supplementary to execution against such corporation.

The right to take proceedings against such corporations does not, however, necessarily include a right to the appointment of a receiver in such proceedings, if the appointment of a receiver of the property of a domestic corporation for the benefit of a vigilant judgment creditor is contrary to the policy of our law or to the express provisions of statute. That the Court of Appeals in the case of Logan v. McCall Publishing Company, supra, had such a possible distinction in mind, clearly appears from its opinion. The court there stated:

“In this case it appears that the defendant is a foreign corporation, not doing business in the state, nor having any business or fiscal agency therein, or agency for the transfer of its stock; and by section 1812 of the Code ol Civil Procedure such a corporation is excluded from the operation of section 1810, providing for the appointment of receivers of the property of corporations.”

“The defendant was a nonresident. It was not a corporation specified in section 1812. The plain implication from section 2463 rendered it subject to proceedings supplementary to execution. The policy of the state does not preclude the creditor of such a corporation from obtaining a preference upon assets here.”

As I read the opinion in this case, the court clearly intended that, if the policy of the state does preclude the creditor from obtaining a preference upon assets here, then the court cannot appoint a receiver in supplementary proceedings. I think a fair reading of our statutes clearly shows that the policy of the state does preclude one judgment creditor from obtaining a preference upon the assets of a domestic corporation. Not only does section 306 of the General Corporation Law expressly provide limitations upon the appointment of a receiver of such a corporation, but section 100 of the same law expressly provides for sequestration actions by judgment creditors and a distribution “in the order and in the proportions prescribed by law, in case of the voluntary dissolution of a corporation” (section 112).

In view of these provisions of the law, I think that no fair inference can possibly be drawn that the Legislature, in repealing an express limitation applicable to article 1 of title 12 of the C-ode, intended also to change the general policy of the law, and remove all limitations imposed by such policy upon the power to appoint receivers as provided in article 2 of the same title. See, also, Matter of Meyer v. Consolidated Ice Co., 132 App. Div. 265 , 116 N. Y. Supp. 906 , affirmed on other grounds 196 N. Y. 471 , 90 N. E. 54 .

Order should therefore be reversed, with $10 costs, and motion to vacate granted, with $10 costs.

BIJUR, J., concurs.

I concur. I think the policy of the state in reference to preferences by a corporation is strongly indicated by section 66 of the Stock Corporation Law (Consol. Laws, c. 59).