Bicknell v. Lloyd-Smith
Decision Date | 11 September 1939 |
Docket Number | No. 7688.,7688. |
Citation | 29 F. Supp. 929 |
Parties | BICKNELL et al. v. LLOYD-SMITH. |
Court | U.S. District Court — Eastern District of New York |
Wright, Gordon, Zachry & Parlin, of New York City (J. A. Fowler, Jr., and F. J. Knauer, both of New York City, of counsel), for the motion.
Cuthell, Appleby, Osterhout & Mills, of New York City (Howard Osterhout and John B. Coman, both of New York City, of counsel), opposed.
This is a motion on the pleadings.
Two plaintiffs join in this action, each stating separately a cause of action.
This motion relates only to the first cause of action relating to $36,000 principal amount of bonds, the plaintiff being "Donald Bicknell, Receiver of the Bank of Saginaw, Michigan", and does not relate to the second cause of action relating to $5,000 principal amount of bonds where the plaintiff is Edward Schust, who sues individually in his own right.
The alleged ground for the making of this motion is that on the face of the second amended complaint, Donald Bicknell, as receiver, appointed in Michigan, was not vested with title to the alleged cause of action, and there was no ancillary receiver appointed in New York State.
As appears on the face of the second amended complaint, the cause of action in question was based upon a guaranty agreement, which related to certain bonds which the Bank of Saginaw, Michigan, bought in 1927, said bonds being defaulted in 1932 and the principal amount thereof having matured in 1933.
In 1936, Donald Bicknell was appointed receiver of the bank of Saginaw by order signed by the Banking Commissioner of Michigan and approved by the Governor. This order did not transfer to the receiver title to the assets of the Bank.
The Bank of Saginaw, Michigan, has not been dissolved but still exists and is operating under receivership.
The complaint in this suit was filed on August 8th, 1938, and no steps were taken for the appointment of an ancillary receiver in New York.
It is the practice of the Federal Courts to require the appointment of an ancillary receiver before permitting a receiver to maintain suit in a foreign jurisdiction, unless title to the cause of action is vested in the Receiver. Booth v. Clark, 17 How. 322, 15 L.Ed. 164; Great Western Mining & Manufacturing Company v. Harris, 198 U.S. 561, 25 S.Ct. 770, 49 L.Ed. 1163; Fowler v. Osgood, 8 Cir., 141 F. 20, 4 L.R. A.,N.S., 824; McCandless v. Furlaud, 293 U.S. 67, 55 S.Ct. 42, 79 L.Ed. 202.
The practice in the courts of New York State is somewhat different. While the courts of New York State, as well as the Federal Courts, recognize that the foreign receiver has no right to sue in this jurisdiction, the State Courts will permit such a suit, as a matter of comity, unless it should appear that there are local creditors.
The original complaint, in this suit, was verified by the Michigan receiver, and filed in the office of the Clerk of this Court on August 8th, 1938, therefore, the question here presented is presumably to be determined as of that date, but in any event it seems to me that the practice in receivership matters was not changed by the adoption of the new Rules of Civil Procedure for the District Courts of the United States, 28 U.S.C.A. following section 723c.
It is true that Rule 17(b) provides as follows: but that does not seem to me to be controlling.
Rule 66, which reads as follows: seems to me to be controlling.
As appears from the second amended complaint, the Michigan Bank "has not been dissolved but is operating under receivership".
The plaintiff receiver was appointed by the Commissioner of the State Banking Department of the State of Michigan, with the approval of the Governor, and I can find nothing in the order of appointment which vests him with title to the cause of action, which is being asserted.
The appointment of the receiver, did not involve the transfer of title of the assets. Taylor v. Adams, 279 Mich. 433, 272 N.W. 733.
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