Pontiac Trust Co. v. Newell

• Decision Date: 03 April 1934
• Docket Number: No. 35.,35.
• Citation: 266 Mich. 490,254 N.W. 178
• Parties: PONTIAC TRUST CO. et al. v. NEWELL et al.
• Court: Michigan Supreme Court

266 Mich. 490

254 N.W. 178

PONTIAC TRUST CO. et al.

v.NEWELL et al.

No. 35.

Supreme Court of Michigan.

April 3, 1934.

Appeal from Circuit Court, Oakland County, in Chancery; Frank L. Doty, Judge.

Suit by the Pontiac Trust Company, as receiver of the Michigan Refining Works, Inc., a Delaware corporation, and Charles A. Nisbett, against Jesse S. Newell and the Michigan Refining Works, Inc., a Michigan corporation, wherein the defendants filed answer in the nature of a cross-bill. From a decree dismissing the bill of complaint and granting affirmative relief on the answer in the nature of a cross-bill, Charles A. Nisbett appeals.

Decree reversed, and cause remanded, with directions.

Argued before the Entire Bench.

C. M. Van Benschoten, of Flint, for appellant.

R. M. Connor, of Detroit, for appellees.

POTTER, Justice.

Pontiac Trust Company, as receiver, and Charles A. Nisbett, plaintiffs, filed a bill of complaint against Jesse S. Newell and the Michigan Refining Works, Inc., a Michigan corporation, to restrain them from interfering with or molesting the property or business or customers of plaintiff Nisbett or of the Pontiac Trust Company, receiver of the Michigan Refining Works, Inc., a Delaware corporation, or from diverting from the post office or the express office in Pontiac, Mich., the mail or express addressed to the Michigan Refining Works, Inc., or from collecting or receiving any of the moneys or property of that company; and from using the name of Michigan Refining Works, Inc., the mailing list or trade-name or advertising of the Michigan Refining Works, Inc., a Delaware corporation.

Defendant filed answer in the nature of a cross-bill denying all material allegations in plaintiffs' bill of complaint. Defendant Jesse S. Newell admits he went to Pontiac, February 15, 1932; says plaintiff Charles A. Nisbett was too sick to operate the plant of the Michigan Refining Works, Inc., a Delaware corporation, and that he (Newell) took charge of running the plant and continued therein until January 25, 1933. He alleges the Michigan Refining Works, Inc., a Delaware corporation, has been dissolved by an order of the Delaware court; the three-year period set forth in the General Corporation Law of Delaware, for winding up the affairs of dissolved corporations has expired; the Delaware corporation is entirely wound up, finished, done, and wholly out of the picture; there never was any pretense at reorganization or reincorporation of the business of the Michigan Refining Works, Inc., a Delaware corporation; the business of such corporation was abandoned both under the laws of Delaware and under the laws of Michigan; the conduct of such business by the plaintiff Nisbett, after the expiration of the three-year period allowed for winding up the affairs of the corporation under the Delaware law, was in defiance of the Delaware court, and Nisbett was guilty of the breach of the laws of Michigan in conducting the business for the reason he never filed any fictitious or assumed name certificate, as required by the laws of Michigan; and defendant Newell thereupon caused the Michigan Refining Works, Inc., a Michigan corporation, to be organized and created under the laws of Michigan; and it is entitled to such name and is also entitled to an injunction against the plaintiffs to restrain unfair competition with its business.

An answer to defendants' cross-bill was filed. Defendants moved to dissolve the injunction issued upon the filing of the bill of complaint. The case was brought on for hearing on the motion to dissolve the injunction and for hearing on the merits.

Charles A. Nisbett was engaged in the operation of a gold and silver refining plant in Pontiac for more than 50 years. About 1920, the business was incorporated under the name of Michigan Refining Works, Inc., under the laws of Delaware, having its principal office and place of business of Pontiac, Mich. In 1930, it seemed advisable the Delaware corporation be dissolved. An application was made to the Delaware court for its dissolution, and a certificate of dissolution was issued by the secretary of state, November 1, 1929. In September, 1930, an application was made for the appointment of a receiver, and October 3, 1930, William S. Potter of Wilmington, Del., and the Pontiac Trust Company of Pontiac, Mich., were appointed receivers of the Michigan Refining Works, Inc. The Pontiac Trust Company accepted the trust, gave a bond in the sum of $60,000, qualified as receiver, and entered into the discharge of its duties, and it claims a right to maintain this bill. Defendants made a motion to dissolve the injunction. There was no hearing on the merits. No proof was taken upon the trial. The hearing consisted of conversations between counsel for the respective parties and an attempt upon the part of the trial court to settle the controversy, after which a decree was entered in favor of defendants on the cross-bill. Plaintiffs appeal. The case must be disposed of upon the record. The bill of complaint states a cause of action. Its allegations are denied. The court dismissed the bill of complaint and granted affirmative relief on the answer in the nature of a cross-bill to defendants which went to the merits of the case.

1. Defendants claim the Pontiac Trust Company, not having been appointed ancillary receiver by the Michigan court, is not a proper party plaintiff. It was appointed by the court of Delaware, and is an officer of the court appointing it. A receiver is regarded as the arm of the court, and ordinarily has no authority beyond the territorial jurisdiction of the court by which it was appointed. Though a receiver appointed by the court of a foreign jurisdiction has no legal right, as a matter of law, in the absence of statute granting such authority, to sue in any jurisdiction other than that of appointment, by the great weight of authority, such receiver, as a matter of comity, may do so. 8 Thompson on Corp. (3d Ed.) par. 6379. 16 Fletcher's Ency. of Corp. Law, par. 7845. 34 Cyc. 486. 53 C. J. 393, 394. 23 R. C. L. pp. 142, 143. Beach on Receivers, § 685. High on Receivers (3d Ed.) § 241. Note to Converse v. Hamilton, 224 U. S. 243, 32 S. Ct. 415, 56 L. Ed. 749, in Ann. Cas. 1913D, page 1292. Note to Gilman v. (Hudson River Boot & Shoe Mfg. Co.), Ketcham, 84 Wis. 60, 54 N. W. 395, in 23 L. R. A. 52, 36 Am. St. Rep. 899. Note to Fowler v. Osgood (C. C. A.) 141 F. 20, in 4 L. R. A. (N. S.) 824.Choctaw C. & M. Co. v. Williams-Echols D. G. Co., 75 Ark. 365, 87 S. W. 632,5 Ann. Cas. 569.

‘It seems a churlish and ungracious course, if not an example of improvident judgment, to hold out against the generous comity of the many states which recognize the rule of interstate courtesy upon this subject.’ Newsum v. Hoffman, 124 Tenn. 369, 137 S. W. 490, 492.

‘The weight of authority is to the effect that the privilege may be granted as a courtesy, not as an obligation-by way of comity, and then only when it will not work a detriment to the citizen of the state in which the jurisdiction is sought.’ Van Kempen v. Latham, 195 N. C. 389, 142 S. E. 322, 324.

The rule in New York is thus stated: ‘The laws and proceedings of other sovereignties have not, indeed, such absolute and inherent vigor as to be efficacious here under all circumstances. But, in most instances, they are recognized by the courtesy of the courts of this state; and the right of foreign assignees or receivers to collect, sue for, and recover the property of the individuals or corporations they represent, has never been denied, except where their claim came in conflict with the rights of creditors in this state. All that has been settled by the decisions, to which we have been referred on this subject, is, that our courts will not sustain the lien of foreign assignees or receivers in opposition to a lien created by attachment under our own laws.’ Runk et al. v. St. John et al., 29 Barb. 585.

We have no statute regulating the right of foreign receivers to sue in our courts, nor do we have any statute which prevents their suing.

The authorities above cited fairly represent the rule in Michigan. Graydon v. Church, 7 Mich. 36;Baldwin v. Hosmer, Circuit Judge, 101 Mich. 119, 59 N. W. 432,25 L. R. A. 739;Wheeler v. Dime Svgs. Bank, 116 Mich. 271, 74 N. W. 496,72 Am. St. Rep. 521.

‘It is a principle now generally...