Price v. Horrigan Contracting Company

• Court: Court of Chancery of Delaware
• Writing for the Court: THE CHANCELLOR
• Citation: Price v. Horrigan Contracting Company, 95 A. 345, 11 Del.Ch. 54 (Del. Ch. 1915)
• Decision Date: 18 September 1915
• Parties: CALEB N. PRICE, v. HORRIGAN CONTRACTING COMPANY

95 A. 345

11 Del.Ch. 54

CALEB N. PRICE, v. HORRIGAN CONTRACTING COMPANY

Court of Chancery of Delaware, New Castle

September 18, 1915

STATEMENT OF THE CASE. The receivers of the Horrigan Contracting Company filed a petition setting forth that at the time of their appointment the Levy Court of New Castle County held $ 3,710.85 pursuant to five contracts under which the company had built certain County roads, and by which contracts five per cent. of the contract price was withheld to cover any repairs which were required to be made within a year from the completion of the road. This period of one year had expired as to four of the contracts at the time of the appointment of the receivers, and as to the fifth contract about seven months thereafter. On December 29, 1914, the Levy Court of New Castle County passed a resolution directing payment to the Farmers' Bank, assignee of the Horrigan Contracting Company, of $ 3,000 part of the sum of $ 3,710.85 "due and owing to the said Horrigan Contracting Company as retained percentages on the several roads constructed by the said company," and applied the balance of the sum, $ 710.85, to defray the cost of repairs to the roads. Pursuant to this resolution the sum of $ 3,000 was afterwards paid to the Farmers' Bank, thereby, it was averred, depriving the receivers of possession and control of an asset belonging to the insolvent company and which should have been paid to the receivers. As prayed for, a rule was granted on June 22 1915, requiring the Farmers' Bank to appear on September 10, 1915, and show cause, if any there be, why it should not be directed to pay the money received by it to the receivers.

At the hearing of this rule the solicitor for the bank filed a motion to dismiss the petition for the reasons that the receivers had not suffered any injury, or sustained any damages, or been deprived of the possession or control of any asset by or through any act of the bank, and also that as there was a plain and adequate remedy at law a court of equity had not jurisdiction.

Motion to dismiss the petition and discharge the rule denied, and the rule will be set down for hearing at an early date.

Marvel Marvel & Wolcott, for the petitioners.

Henry Ridgely, for the Farmers' Bank.

OPINION

THE CHANCELLOR

In support of the motion to dismiss the petition the solicitor for the bank cited authorities for the motion, urging chiefly that the receivers had been deprived of no tangible property and that as the payment by the Levy Court was officious, the receivers still had a remedy against that body and so there had been no interference with the possession of the receiver of any asset of the company.

An examination of the cases does not satisfy me that the contention of the bank is tenable. The case most relied on was that of Receiver of State Bank v. First National Bank of Plainfield, 34 N.J.Eq. 450. But there the main reason for denying relief to the receiver by a rule to show cause based on a petition was that by the practice in New Jersey a bill was proper in such cases, and not a petition. The other cases cited do not apply, and it is not necessary to cite authority for the principle that a rule to show cause should not be substituted for an action at law by the receivers to collect a debt due the corporation at the time of the appointment of the receivers.

The solicitors for the receivers cited authorities to show that this was clearly an illustration of the well determined and fundamental principle, that the court appointing a receiver of an insolvent corporation will assist the receiver in gaining possession and retaining control of all the assets of the insolvent company for the...