Mabon v. Ongley Elec. Co.

• Citation: 50 N.E. 805,156 N.Y. 196
• Parties: MABON v. ONGLEY ELECTRIC CO.
• Decision Date: 07 June 1898
• Court: New York Court of Appeals

156 N.Y. 196

50 N.E. 805

MABON

v.ONGLEY ELECTRIC CO.

Court of Appeals of New York.

June 7, 1898.

Appeal from supreme court, appellate division, First department.

Action by John S. Mabon, as receiver of the Ongley Electric Company, against the Ongley Electric Company. From a judgment of the appellate court (48 N. Y. Supp. 967) reversing an interlocutory judgment sustaining a demurrer to the complaint, defendant appeals. Reversed.

Rufus W. Peckham, Jr., for appellant.

Theodore L. Frothingham, for respondent.

VANN, J.

According to the allegations of the complaint, the defendant was incorporated under the laws of the state of New Jersey, where it had a factory and an office, but its principal office was in the city of New York, and its principal business, other than manufacturing, was transacted within the state of New York. On the 8th of January, 1895, the plaintiff was appointed receiver of the defendant, as an insolvent corporation, by the decree of a court of competent jurisdiction in the state of New Jersey, ‘with full power to demand, sue for, collect, and receive, and take into his possession all the property, effects, and choses in action of said defendant, and enjoining and restraining the officers and agents of the said defendant from thereafter dealing or interfering with the same.’ After duly qualifying, the plaintiff took possession of all the property and assets of the defendant in the state of New Jersey, but he has not been able to obtain certain of its books and papers which are in the possession of its directors in this state, although he does not allege what, if any, efforts he had made in order to obtain them. Among the assets in this state are several promissory notes, amounting to $37,500, covered by an attachment issued against the property of the defendant in an action in the supreme court wherein judgment has lately been recovered for the sum of $13,773.39, upon which execution is liable to be issued; but, as it is alleged, if said notes should be collected in full, ‘there will be a surplus therefrom after the satisfaction of said judgment, which will belong to the defendant herein.’ The plaintiff states that, as he is advised and believes, ‘it will be impracticable for him properly to perform his duties as receiver, and to ascertain, collect, and take possession of the property of the defendant unless a receiver shall be appointed within the state of New York in aid of the plaintiff, to collect and receive the property and assets of the defendant within the state of New York, and to hold the same until the rights thereto of all the parties in suit shall be determined, * * * and the disposition thereof directed by order or judgment of’ the court. These are substantially all the facts alleged in the complaint, and the demand for judgment is that the defendant turn over to the plaintiff all its property and assets; that pending the determination of the action a receiver be appointed with the usual powers; and that the customary restraining order be issued against the defendant, its officers, agents, and servants.

To this complaint the defendant demurred upon the grounds: (1) That the court has no jurisdiction of the person of the defendant; (2) that the court has no jurisdiction of the subject of the action; (3) that the complaint does not state facts sufficient to constitute a cause of action. The demurrer was sustained by the special term, but was overruled, upon a divided vote, by the appellate division, which allowed an appeal to this court, and certified the following question of law for decision: ‘Can a receiver of an insolvent New Jersey corporation, appointed by the court of that state, and resident therein, having full jurisdiction in a suit for the winding up of the affairs of said corporation, with power, so far as could be conferred by such appointment, to demand, sue for, collect, receive, and take into his possession all the property, effects, and choses in action of said corporation, maintain an action in the supreme court of this state against said corporation as sole defendant for the purpose of procuring the appointment in this state of an ancillary receiver?’

This question, when read in connection with the complaint, means, can such an action be maintained against the corporation, as sole defendant, for the sole purpose of procuring an ancillary receiver? The question involves the sufficiency of the complaint, but, unless that pleading shows some useful purpose to be attained by the exercise of jurisdiction, it is obvious that the court should not entertain jurisdiction. Although the plaintiff alleges that he is advised and believes that he cannot perform his duties as receiver without the aid of an ancillary receiver, he confines himself to the mere assertion of necessity, without alleging any fact to support it. He points to nothing that an ancillary receiver could do that he cannot do himself. So far as appears, he has all the power that his auxiliary would have, if appointed. While the laws of a foreign state have no force, as such, in this state, still our courts uphold the title of a foreign assignee or receiver upon the principle of comity. If the title is by virtue of a voluntary conveyance or transfer, it is sustained as against all, including even domestic creditors; but, if it depends on a foreign statute or judgment, it is sustained against all except domestic creditors. Subject to their superior rights, the plaintiff can reduce to possession all the property of the defendant in this state, and can bring replevin for that purpose, or trover to recover damages for conversion. Notes and accounts may be collected by the usual proceedings in our courts, which regard a foreign receiver as representing the original owner, and open their doors to him as they do to a domestic receiver. Barth v. Backus, 140 N. Y. 230, 35 N. E. 425;Vanderpoel v. Gorman, 140 N. Y. 563, 35 N. E. 932;Toronto General Trust Co. v. Chicago, B. & Q. R. Co., 123 N. N. 37, 25 N. E. 198;In re Waite, 99 N. Y. 433;Ockerman v. Cross, 54 N. Y. 29;Petersen v. Bank, 32 N. Y. 21;Willitts v. Waite, 25 N. Y. 577;Hoyt v. Thompson's Ex'r, 19 N. Y. 207;Hoyt v. Thompson, 5 N. Y. 320;Bank v. Thorp, 6 Cow. 47;Runk v. St. John, 29 Barb. 585;Pugh v. Hurtt, 52 How. Prac. 22; Middlebrook v. Bank, *42 N. Y. 135; Smith v. Tiffany, 16 Hun, 552; Story, Confl. Laws, § 413; Gluck & B. Rec. § 52. Every remedy to gather in the assets is afforded, unless it would interfere with the policy of the state or impair the rights of its own citizens. A state that does not discriminate between its own citizens and those of a foreign state discharges all the obligations required by the rule of courtesy. We are now asked to sustain an action which a domestic receiver could not bring here, and a foreign receiver could not bring in his own state. If the plaintiff should succeed, he would have called into being a receiver whose rights would supplant his own in this state with no compensating advantage, but with the disadvantage of reducing the fund going to creditors and stockholders, owing to the extra expense of an additional receiver. Why...