People v. American Steam-Boiler Ins.

The corporation above mentioned has been dissolved in voluntary proceedings instituted for that purpose, and a permanent receiver has been appointed. The Southern National Bank, claiming that the corporation was indebted to it, made a demand for payment upon the receiver, who rejected the claim, whereupon the following consent or agreement was entered into by the Southern National Bank and the receiver:

“Whereas, on the 11th day of April, 1894, the Southern National Bank of New York filed with Henry S. Ward, Esq., receiver of the American Steam-Boiler Insurance Company, a claim against the said American Steam-Boiler Insurance Company for the sum of five thousand one hundred and seventy-six ($5,176.60) 60-100 dollars; and whereas the said Henry S. Ward, Esq., receiver, has rejected said claim, and whereas the said Southern National Bank of New York insists thereon: Now, therefore, pursuant to the statute in such cases made and provided, it is hereby consented that the controversy between the said receiver and the said Southern National Bank of New York be referred to Charles W. Dayton, Esq., counselor at law, of the city of New York, as sole referee to hear and determine the same.”

TMs stipulation or agreement is dated January 3, 1895, and on the following day an order was made at special term, before Mr. Justice Andrews, entitled as above, which, after reciting the reading and filing of the consent above mentioned, ordered, on motion of the attorney for the receiver, “that the controversy between Henry S. Ward, as receiver of the American Steam-Boiler Insurance Company, and the Southern National Bank of New York, concerning the claim of the said Southern National Bank of New York against the said American Steam-Boiler Insurance Company, be, and the same is

Section 8 of chapter 378, Laws 1883, entitled “An act in relation to receivers of corporations,” provides that:

“A copy of all motions and all motion papers, and a copy of any other application to the court, together with a copy of the order or judgment to be proposed thereon to the court, in every action or proceeding now pending for the dissolution of a corporation or a distribution of its assets, or which shall hereafter be commenced for such purposes shall, in all cases, be-served on the attorney general, in the same manner as provided by law for the service of papers on attorneys who have appeared in actions, whether the applications but for this law would be ex parte or upon notice, and no-order or judgment granted shall vary in any material respect from the relief specified.in such copy or order, unless the attorney general shall appear upon the return day and have been heard in relation thereto; and any order or judgment granted in any action or proceeding aforesaid, without, such service of such papers upon the attorney general, shall be void, and no receiver of any such corporation shall pay to any person any money directed to be paid by any order or judgment made in any such action or proceeding, until the expiration of eight days after a certified copy of such-order or judgment shall have been served as aforesaid upon the attorney general.”

This statutory provision is .still in full force, and, if applicable to the particular proceeding before me, the contention on the part of the counsel for the stockholders must be sustained. In determining this question, it becomes necessary to consider the particular authority on which the reference in question is founded. The receiver herein was appointed under section 2429 of the Code of Civil Procedure. By that section, sections 66-89, Rev. St. (8th Ed.), relative to receivers and their powers, are made applicable to receivers appointed under the section in question. Section 68, Rev. St., provides as follows:

“Such receivers shall have all the power and authority conferred by law upon trustees to whom an assignment of the estate of insolvent debtor» may be made, pursuant to the provisions of the 5th chapter, second part, Revised Statutes.”

Section 73 provides that:

“Such receivers shall have the same power to settle any controversy that shall arise between them and any debtors or creditors of such corporation

by a reference as is given by law to trustees of insolvent debtors; and the same proceedings for that purpose shall be had and with like effect; and applications for the appointment of referees may be made to any officer authorized to appoint such referees on the application of the trustees of insolvent debtors, who shall proceed therein in the same manner, and the referees shall proceed in like manner and file their report with like effect in all respects.”

The provisions of the Revised Statutes so referred to, relative to the powers and duties of trustees of insolvent debtors, are as follows: Section 19, art. 8, pt. 2, c. 5, tit. 1, 2 Rev. St., states:

“If any controversy shall arise between the trustees and any other person in the settlement of any demand against such debtor or of debts due to his estate, the same may be referred to one or more indifferent persons who may be agreed upon by the trustees and the party with whom such controversy shall exist, by a writing to that effect, signed by them.”

By section 20 it is provided that if the referee or referees are not so selected, then the trustees, or any other party to the controversy, may serve a notice of an intention to apply to the officer who appointed the trustees, or to any judge of the supreme court, at chambers, for such appointment, which notice must be served 10 days before the time specified in the notice for the application. By section 21 the officer to whom such application is made is required thereupon to select such referees. By section 23 it is provided that:

“The officer before whom they shall be selected shall certify such selection in writing. Such certificate or the written agreement of the parties shall be filed by the trustees in the office of a clerk of the supreme court when the trustees were appointed under the first article of this title; and in the said office or in that of the clerk of the court of common pleas of the county when the trustees were appointed under any other article of this title: and a rule shall thereupon be entered by such clerk in vacation or in term appointing the persons so selected to determine the controversy.”

Section 24 provides that such referees shall have the powers, and be subject to the duties, and receive the same compensation, as referees appointed in the supreme court in personal actions pending therein; and by section 25 it is declared that:

“The report of the referee shall be filed in the same office where the rule for their appointment was entered, and shall be conclusive upon the rights sf the parties, if not set aside by the court.”

Under this situation of the law upon the subject, it is claimed in support of the reference in question that there was no motion for the appointment of referees within the meaning of the act of 1883, and that no order of the nature contemplated thereby was made; that the act of 1883 referred only to a motion in an action or proceeding in which a receiver was appointed, and not to a collateral proceeding in the nature of an action instituted by the receiver; that the reference existed solely by force of the agreement entered into between the receiver and the claimant under statutory authority expressly conferred upon them so to agree, and that the provision for the entry of an order of reference in no sense depended upon any action by the court, or upon any application to the court for that purpose, but was a purely executive act on the part of the clerk, to be performed by him by virtue of a statutory mandate without further action or interference on the part of either the receiver or the

The only question, then, which remains for consideration is whether there was an application to, the court, and the entry of an order in this proceeding, within the meaning of the act of 1883. It may be conceded that this statute should receive a liberal construction, in view of its remedial character. But the construction must be reasonable, and should not seek to extend the act beyond its plain meaning, or to include within it cases to which it can have no rational application. Within these principles, I do not think that the case before me comes within the statutory requirement under consideration. The provision authorizing the receiver to agree with a creditor upon a reference of a disputed claim was intended to afford a speedy and an economical method of determining the question at issue without the delay and expense attending an action at law. The object was to keep the contending parties out of court, and tb free them, as far as possible, from the forms of legal procedure. Hence we find the statute providing for a reference of a claim by written agreement designating the referee or referees to whose arbitrament the matter in dispute is to be submitted. The sanction of the court to this agreement is not required, and the selection of the referee is not. only free from any judicial supervision or review, but even the direction of a judge, by whom the powers of the court are usually set in motion, is dispensed with in the formal order which the statute directs the clerk to enter upon the filing of the agreement. In a certain sense this order (or “rule,” as the statute describes it) proceeds from the court through the action of its clerk, but the act is purely ministerial on the part of the latter, and quite similar in that respect to the entry of judgment by him in cases where no application to the court for judgment is required. The vital principle of the whole proceeding is found in the agreement for the reference, and when the receiver has filed this, no motion on his part is necessary to perfect the proceedings, or to secure to the referee the endowment of authority to proceed, for the statute makes it mandatory upon the clerk ex proprio motu to enter the order appointing the person so selected to determine the controversy, and it is the statute which declares that such referee shall be subject to the responsibilities and possess the powers which affect and qualify referees “appointed by the supreme court in personal actions pending