Pelletier v. Greenville Lumber Co.
| Decision Date | 23 December 1898 |
| Citation | 31 S.E. 855,123 N.C. 596 |
| Parties | PELLETIER v. GREENVILLE LUMBER CO. et al. |
| Court | North Carolina Supreme Court |
Appeal from superior court, Craven county; Bryan, Judge.
Proceedings by P. H. Pelletier against the Greenville Lumber Company and others to place said company in the hands of a receiver as an insolvent. From an order refusing to continue an injunction against the sale of the company's land under a judgment for Mrs. Callie Langston, plaintiff appeals. Affirmed.
A court may grant leave to sell land under a judgment, though the land is in the hands of a receiver of one holding title subject to the judgment lien.
Clark & Guion, for appellant.
Jones & Boykin, for defendant Joyner.
This case comes before us on an appeal from the refusal of the court below to continue an injunction against the sale of real estate of the defendant corporation under a judgment in favor of Mrs. Callie Langston, now Callie Joyner. There is no question that this land is subject to execution under this judgment, as held in Langston v. Improvement Co., 120 N.C. 132, 26 S.E. 644. That judgment is superior, not only to the claims of all the other judgment creditors in this case, but even to the original title of the insolvent corporation itself. The only question is whether the land can be levied upon and sold under that judgment while in the hands of a receiver. In other words, can land belonging to an insolvent corporation be sold after the appointment and possession of a receiver upon a valid judgment obtained before such appointment? We think, that, as a matter of right, the land cannot be sold without leave of the court. Property in the actual or constructive possession of the receiver is in custodia legis, as the possession of the receiver is that of the court,--he being merely the land of the court. This exclusive possession of the receiver does not interfere with or disturb any pre-existing liens preferences, or priorities, but simply prevents their execution, by holding the property intact until the relative rights of all parties can be determined. Another essential object sought to be obtained by the appointment of a receiver for an insolvent corporation is to prevent the sacrifice of its assets by a multiplicity of suits and petty executions. Both these objects would be destroyed by permitting any one no matter what may be his title or claim, to interfere with property in custodia legis without leave of the court by which such custody is held. 1 Freem. Ex'ns, § 129; Beach Rec.§§ 207, 213, 738; High, Rec. § 163; 20 Am. & Eng. Enc. Law, 138. Under the old equity practice, when a person holding a prior or paramount claim or title was prejudiced by having a receiver put in his way, the course was either to give him leave to bring an ejectment, or to permit him to be examined pro interesse suo. The same result can now be accomplished by a petition and motion in the cause. In the case of Wiswall v. Sampson, 14 How. 52, 66, where this question is fully and ably treated, the court says, "A party, therefore, holding a judgment which is a prior lien upon the property, the same as a mortgagee, if desirous of enforcing it against the estate after it has been taken into the care and custody of the court, to abide the final determination of the litigation, and pending that litigation, must first obtain leave of the court for this purpose." We cannot assent to the doctrine laid down by Chancellor Walworth in Bank v. Schermerhorn, 9 Paige, 372, 378, that real estate in the custody of a receiver can be levied upon and sold under execution, provided only that the actual possession of the receiver is not interfered with. Its practical effect would be either to permit outside parties to stop all further proceedings of a court of equity by disposing of the subject--matter in controversy, or else to put that court in the position of holding simply the naked possession of property, and gravely proceeding to determine who would have been entitled to the property if it had not been sold. This doctrine is distinctly denied in Wiswall v. Sampson, supra, where it is said that the court must administer the property "independently of any rights acquired by third persons pending the litigation; otherwise the whole fund may have passed out of its hands before the final decree, and the litigation become fruitless." The case of Skinner v. Maxwell, 68 N.C. 400, although dealing with personal property, lays down the same general rule.
As it is well settled that the property...
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