New York & Western Union Telegraph Co. v. Jewett — 6 N.Y. St. Rep. 656

Majority

p. 656

In the Matter of The New York and Western Union Telegraph Co , App’lt, v. Hugh J. Jewett, Receiver of the Erie Railroad Co., Resp’t.

(Supreme Court, General Term, First Department,

Filed March 8, 1887.)

Headnote

1, Receiver—Summary jurisdiction—Summary proceedings—Discharge. It is because a receiver is Hie servant of the court, and because the funds

p. 657

in his hands and property in his custody are in the possession of the court, that the summary jurisdiction can be exercised. The moment that the receiver is discharged and relieved from the obligation of his office, ail right in the court to proceed against him upon the application of any claimant summarily ceases, and he is no longer subject to their jurisdiction, except such as is acquired in the ordinary methods available to all suitors.

2. Same—Claim barred by statute of limitations.

If a proper reason is shown, the court may vacate the order discharging the receiver, and thus reinstate parties whose action is barred by the statute of limitations to the position which they occupied prior to his discharge.

Appeal from an order and judgment of the special term overruling exceptions to the report of the referee in this matter.

IraD. Warren, for app’lt; W. W. MacFarland, for resp’t.

I entirely fail to see how the court has now any power to enter judgment in this (supposed to be) summary proceeding against thé receiver who has been discharged from his office by the court.

• It is because a receiver is the servant of the court, and because the funds in his hands and property in his custody are in the possession of the court, that the summary jurisdiction can be exercised.

The moment that the receiver is discharged and released from the obligations of his office, all right upon the court to proceed against him upon the application of any claimant summarily ceases, and he is no longer subject to their jurisdiction, except such jurisdiction is acquired in the ordinary methods available to all suitors.

It is urged that such a rule, if applicable to the case at bar, would work a great hardship, because the petitioner had no notice of the application for the discharge of the receiver, and that they cannot now bring an action, because the statute of limitations has attached to their claim.

This objection is not by any means insuperable, because if a proper reason is shown, the courts may vacate the order discharging the receiver, and thus reinstate the petitioners to the position which they occupied prior to his discharge.

The case of Woodruff v. Jewett ( 37 Hun, 205 ) is no authority opposed to this view.

In that case an action had been commenced against a receiver, and before the entry of the judgment the receiver had been discharged. The court held that as a judgment could only bind funds held by the defendant as receiver, a judgment entered could not do any harm, as no claim could be made against him individually thereon.

The court had acquired jurisdiction by action, and such

p. 658

jurisdiction did not at all depend upon the fact of his being receiver—an officer of the court, as in the case at bar. Without a vacation of the order discharging the receiver, there seems to be no way in which the petitioners herein can enforce by these proceedings any claim they may have.

The learned counsel speaks of getting a judgment in these proceedings, but we have not been referred to any authority or practice which will authorize the entry of a judgment upon proceedings of this description.

No relief could be obtained enforceable by an execution as upon a judgment. The only relief would be an order directing the receiver to payout of the funds in his hands— the authority to make which seems to depend entirely upon the fact that the receiver is but the servant of the court, acting in its stead, and that all the funds and property in the hands of the receiver are in the custody of the court, and the court is administering a trust which has devolved upon it.

For those reasons, I think that the order appealed from must be affirmed, with costs.

Potter and Lawrence, JJ., concur.