Colorado National Bank v. Scott , 19 Abb. N. Cas. 348 ( 1887 )

Patterson, J.

The plaintiff’s began a suit in this court in November, 1886, to have the defendant Scott declared a trustee of so much of a mortgage as might be sufficient to pay the plaintiff’s demands against the Summit County Mining and Smelting Company. The mortgage was given by one Ward to Scott, and was for the purchase price of property which Scott had acquired from the company while he was a director and trustee, and, as is alleged, in fraud of , the creditors of the company.

It is stated in a petition now presented that the company was inadvertently omitted from the summons as a party defendant. Meanwhile,, and on February 14, 1S87, in an action brought by The People of the State of New York to dissolve the corporation, a receiver was appointed of that corporation, with the usual powers in such cases. The plaintiffs notv ask that the company and its receiver be made parties to their creditors’ bill. On February 18, 1887, the receiver was authorized by an order of this court to bring actions to protect the property of the corporation, and he has brought actions to set aside transfers of the real estate of the company mentioned in the complaint in this action.

. It ‘ appears from this statement that the receiver has sued to recover the land, and the plaintiffs by their creditors’ bill seek to reach part of the proceeds of the sale of the land. The receiver chooses to disaffirm the whole transaction and set it aside. Had the plaintiffs not inadvertently omitted to make the corporation a defendant the appointment of a receiver would have caused the action against the corporation to abate (McCulloch v. Norwood, 58 N. Y. 562). All the rights of the corporation are in the receiver, and he has the authority to enforce these rights, by action under the order of this court. He cannot therefore be compelled to defend a suit in which he as receiver may have interest, nor to submit his rights as receiver to . judgment in an action which may be in conflict with the one which he has,instituted by authority of the court.

Motion denied, without costs.