Field v. Jones ( 1852 )

By the Court.

Nisbet, J.

delivering the opinion.

[1.] The bill, by virtue of which Mr. Schley was appointed receiver and came into the possession of this fund, was dismissed upon demurrer — the legal consequence of which was, to dispense with the functions of the receiver as a depository of the parties litigant. His duties ceased with the termination of the litigation between the parties to the bill, and that ceased when it went out of Court upon the demurrer. But his relations to the Court of Chancery from which he received his appointment did not determine — his amenability to that Court as receiver, continued. That is to say, he was still an officer of the Court. His possession of the fund was the possession of the Court. Both he and it, were subject to the order of the Court. Upon the determination of the litigation for the purposes of which he was appointed, the money which he had received by natural equity, and according to the course of Chancery jurisdiction, belonged to the party, Fields, as whose moneyit had been seized and impounded. The decision on the demurrer, determining that the complainants in the bill had no equity, determined also, that the fund in question had been wrongfully placed in the custody of the receiver. This being so, it was the duty of the Chancellor to order it to be paid to Fields or his assignees, without conditions, unless withheld from so doing by the claim of other persons, rightfully and according to the forms of Chancery proceedings, brought to his cognizance. In accordance with these views, it seems that the assignees of Fields, Messrs. Iverson, Dougherty & Hargrave, exhibiting their title as such, moved the Court that the money in the hands of the receiver, Mr. Schley, be paid to them. Messrs. Jones & Schley, who are judgment creditors of The Southern Life Insurance & Trust Company, and also the receiver himself, resisted this motion, showing for cause against it, that summons of garnishment had issued in their favor and had been served upon the receiver, since the dismissal of the bill; and claimingtbat the money which had come into Schley’s hands as receiver, should not be paid over to Iverson, Dougherty $• Hargrave, but remain subject to their recovery on the garnishment. Was the service of garnishment on the receiver, sufficient to justify the Chancellor in denying the motion of the assignees of Fields ? Was this such an exbibition'of a claim upon the fund as would defeat the equitable right of Fields, and prevent the return of the money to him or his assignees ? The presiding Judge ruled, that the money be paid to them, upon their giving bond and security to the receiver, conditioned to refund the same, in the event that he should be made liable upon the garnishment. The Judge erred in annexing the condition of the bond to refund.

[2.] That a claimant upon a fund so situated shall be heard, and that the Chancellor will protect the equitable rights of such claimant, there can be no question. According to the English practice, when a party is interested in a fund, or in property in the possession of a receiver, he can be heard before the Master, upon á proper application, pro interesse suo, and he will protect the rights of such party by such order as may comport with the rights of all parties, subject to the review of the Chancellor. Story’s Eq. Ju. §§833, 891. 9 Vesey R. 338. 1 Keene’s R. 749. The Chancellor here will do the same.

[3.] But he will not regard the pendency of a process of garnishment against the receiver, as such an exhibition of an interest in the fund as will justify him in passing an order to hold the fund up to await the result of that process. The receiver is-not subject to garnishment. The process against him is a nullity, and the Chancellor must so regard it. If it be a nullity,, then there is nothing before him which evidences a claim upon the fund ; nothing to prevent the fund from taking that course which the principles of Equity give to it — that is, nothing to prevent its going back to the original owner. When there are adverse claimants upon a fund put into the possession of a receiver, whilst for the purposes of controlling the fund, the possession of the receiver is the possession of the Court; yet when the litigation is determined, the right to the possession is in him who finally prevails. Story’s Eq. Ju. §833. 3 P. Williams’ R. 379.

Upon this principle it is, that when the bill was dismissed which deposited this money in the hands of Mr. Schley, it became, he prevailing, the right of Fields to have it paid over to him. There being then, I repeat, nothing before the Chancellor which would authorize any farther retention of it, he had no alternative but to order it to be paid to him or his assignees, unconditionally. The receiver is not at liberty to bring'or defend actions without special leave of the Court. He is but the agent of the Court and cannot involve it in litigation. He could not defend this garnishment but by leave of the Court. It such leave were granted, it would be. a descent of the Court of Chancery into a Court of Lawq there to become a litigant about a fund qver which it has itself jurisdiction. For the Court of Chancery, and not the receiver, would be the party. It is true, that where the question to be tried is pure matter of title to property in possession of a receiver, the Court wúll generally, from motives of justice and convenience, authorize a suit to be brought, taking care, however, to give such directions as will protect the possession. Story’s Eq. Ju. §833. 9 Vesey, 338. 1 Jac. & Walk. 178. 1 Coxe’s R. 422.

But where the question is as to the appropriation of a fund, it is not to be credited that a Court of Chancery will yield its own unquestioned jurisdiction, and take its place at the bar of a Court of Law as a party. The possession of the receiver is deemed the possession of the Court, and the Court will not permit itself to be made a suitor in a Court of Law. Story’s Eq. Ju. §§833, 891.

Another very obvious reason why a receiver is not subject to garnishment is, that such liability would defeat the ends for which receivers are appointed. His duties as receiver would be defeated by judgments at Law on garnishment, and the beneficial jurisdiction of Chancery, in this regard, divested.

So we think the Court erred in requiring the bond to be given, and reverse the judgment,