Sands v. E.S. Greeley & Co., 120.

• Decision Date: 24 June 1898
• Docket Number: 120.
• Citation: 88 F. 130
• Court: U.S. Court of Appeals — Second Circuit
• Parties: SANDS v. E. S. GREELEY & CO.

88 F. 130

SANDS v. E. S. GREELEY & CO.

No. 120.

United States Court of Appeals, Second Circuit.

June 24, 1898

F. G Dow, for receiver.

H. B Twombly, for appellant.

E. C Perkins, for appellee

Before WALLACE and SHIPMAN, Circuit Judges.

WALLACE Circuit Judge.

E. S Greeley & Co., a corporation organized under the laws of the state of Connecticut, became insolvent, and on the 6th day of October, 1896, receivers of all its property and assets were appointed by the decree of one of the courts of that state, with authority to collect and possess themselves of all the property of the corporation and all the usual powers of receivers of insolvent corporations. The corporation had a place of business in the city of New York, transacted its principal business there, and substantially all of its assets consisted of property there. Upon a bill filed in the circuit court of the United States for the Southern district of New York, alleging the insolvency of the corporation, the existence of assets within the jurisdiction of the court, and the appointment of receivers by the Connecticut court, and praying that receivers be appointed of such assets, ancillary to the Connecticut receivers, the circuit court of the United States for the Southern district of New York by its decree appointed as ancillary receivers the same persons who had been appointed by the Connecticut court, and enjoined all persons from interfering with the assets, for the collection of debts or otherwise. By an interlocutory order in the cause, the ancillary receivers were directed to advertise for claims of the resident creditors of the corporation, and, after collecting the assets, to dispose of them as the court should instruct; and the question of the disposal of any surplus remaining after payment of all resident creditors was reserved by the court. Various resident creditors proved claims against the corporation for debts contracted by it at the city of New York, among them the New York Insulated Wire Company. The New York Insulated Wire Company has appealed from an order made in the cause, transferring the fund in the hands of the ancillary receivers to the Connecticut receivers, and adjudging that such fund should not be appropriated to the resident creditors before turning over the surplus to the Connecticut receivers.

The appeal is based upon the contention that the Connecticut receivers have no title or power to collect the assets of the corporation outside of that state, and that in the state of New York the assets are primarily subject to the claims of its citizens, and will not be surrendered until they are satisfied. There are expressions in the text-books which sanction this contention. Thus, it is stated in Beach on Receivers (section 254) that 'a foreign receiver will not be permitted, as against the claims of creditors resident in another state, to remove from that state the assets of the debtor, it being the policy of every sovereignty to retain in its own hands the property of the debtor until the claims of its citizens have been satisfied.'

Similar expressions may be found in some of the opinions of the courts, but an examination of the adjudications will show that the broad proposition has never been ruled, and what has been actually decided is that, when a foreign receiver is obliged to invoke the aid of the court of another state in asserting his title to assets within its jurisdiction, such court will not, in the exercise of comity, recognize his title to the prejudice of the citizens of its own state, who have fairly acquired title to the assets, either by purchase, attachment, or other legal process, or whose claims are entitled to priority as equitable liens. Patterson v. Lynde, 112 Ill. 207; Hoyt v. Thompson's Ex'r, 19 N.Y. 207; Willitts v. Waite, 25 N.Y. 577; in re Waite, 99 N.Y. 433, 12 N.E. 440; Kidder v. Tufts, 48 N.H. 121; Paine v. Lester, 44 Conn. 196; Fawcett v. Supreme Council, 23 A. 614; Eddy v. Winchester, 60 N.H. 63; Askew v. Bank, 83 Mo. 366; Pinckney v. Lanaham, 62 Md. 447; Insurance Co. v. Wright, 55 Vt. 526; Baldwin v. Hosmer (Mich.) 59 N.W. 432; Hunt v. Insurance Co., 55 Me. 290; Taylor v. Insurance Co., 96 Mass. 353; Bagby v. Railroad, 86 Pa.St. 291.

A receiver appointed in one state for an insolvent corporation has no title as such to property located in another state and not actually in his possession. Whart. Confl. Laws, Sec. 390. This is because he is appointed by a court which derives its jurisdiction from state laws which have ex proprio vigore no extraterritorial force, and the effect of which in other states depends wholly on the comity of the state in which their application is invoked. But by the comity...