Halpin v. Mutual Brewing Co.

PRATT, J. (dissenting).

This action is brought under sections 1781 and 1782 of the Code, and the appointment of a receiver was therefore within the power of the court. Section 1810. Under section 1806, the court had power to restrain the creditors from maintaining actions which may lead to inequitable results; and, under section 1807, it may require the creditors to present their claims for adjustment, and may distribute the assets of the corporation. That the action is not brought to dissolve the corporation does not determine that its property may not be sold, and the proceeds distributed. Code, §§ 178A-1793. See, also, People v. Ballard, 134 N. Y. 269, 32 N. E. 54; Osgood v. Maguire, 61 N. Y. 524. As the court has the power to distribute the corporation property equitably, and has already interfered by injunction to prevent its appropriation by certain of its execution creditors, we think it should continue that course, and restrain the other execution creditors. As the orders now stand, certain creditors who recovered judgments and executions in due course of law are restrained from enforcing their claims. Other creditors, no more meritorious, and whose judgments are subsequent, have been allowed to issue and levy executions on the property in the receiver’s hands. We do not think this orderly or equitable. In effect, it works a preference, and probable full payment, of certain creditors, while others, equally meritorious, are in effect postponed, and incur the risk of remaining entirely unpaid. Property in the hands of a receiver is in the custody of the law, and it is not easy to see why another officer of the court should be called in to dispose cf it. A question somewhat similar is discussed in White v. Frankel, 33 N. Y. Supp. 1, and a conclusion reached that the possession of the receiver should be maintained. The reasoning of the case is applicable here. We think that, so far as the orders appealed from sanction the levy of executions upon property in the hands of the receiver, they should be modified. Whether the foreclosure of such part of the chattel mortgage as was found valid shall be allowed to proceed is a different question, and, after some hesitation, we think that, so far as the orders appealed from allow its enforcement, they may be affirmed.