Maguire v. Mortgage Co. of America

• Decision Date: 17 February 1913
• Docket Number: 143.
• Citation: 203 F. 858
• Parties: MAGUIRE v. MORTGAGE CO. OF AMERICA et al.
• Court: U.S. Court of Appeals — Second Circuit

203 F. 858

MAGUIRE v. MORTGAGE CO. OF AMERICA et al.

No. 143.

United States Court of Appeals, Second Circuit.

February 17, 1913

Cardozo & Nathan, of New York City (M. H. Cardozo, Jr., of New York City, of counsel), for appellant.

L. J Obermeier, of New York City, for appellee.

Before LACOMBE, WARD, and NOYES, Circuit Judges.

NOYES Circuit Judge.

The power of courts of chancery to appoint receivers of corporations is examined at length in the recent opinion of this court in the Express Company's Appeal (Pennsylvania Steel Co. v. New York City R. Co. (C.C.A.) 198 F. 736). It is there shown that the general rule is that such courts have no inherent power to appoint such receivers but that an exception has grown up in the case of creditors' suits against insolvent corporations. But it is also pointed out that there is no departure from the rule that, in the absence of statutory authority, a court of equity has no right to appoint a receiver of a corporation at the instance of a stockholder for the purpose of winding it up and distributing its assets. Statutes of many states and acts of Parliament in England, however, do provide for the liquidation of the affairs of corporations through receivers and when such statutes exist, the courts within the appropriate jurisdictions may enforce them.

The present suit is by a minority stockholder charging that the assets of the defendant corporation are within the jurisdiction; that only its president has qualified as an officer and that lawsuits are threatened, and praying for the appointment of a receiver and 'that the assets of the company after the payment of its just debts be applied to the payment of such proportion which the stock of the plaintiff and other shareholders similarly situated are justly entitled to. ' There is no averment of insolvency. The order involved in this appeal appoints a 'temporary receiver' but confers upon him the general powers of receivers.

It is apparent that this is a stockholder's suit for the winding up through a receiver of the affairs of the defendant corporation and if it were a domestic corporation, we should look for a statute of New York authorizing the action prayed for. If we found such a statute and if it were broad enough to create a right in the complainant which could be enforced in the District Court as a court of equity by reason of diverse citizenship, we should say that that court had jurisdiction. Otherwise there would be no warrant for its...