Art. CORPORATIONS, RECEIVERS OF. (Fiero, Spec. Pro., 3rd Ed., pp. 926-1000.) I. Statutory provisions as to receiver generally considered. IV. Receiver's title to corporate property. VI. Powers of receivers of corporation. VII. Duties of receivers. VIII. Suits by and against receivers. IX. Distribution of funds; preferences. X. Control of, and final accounting, by receiver. ARTICLE I. STATUTORY PROVISIONS AS TO RECEIVERS GENERALLY CONSIDERED. (Fiero, Spec. Pro., 3rd Ed., pp. 929-932.) The provisions of the General Corporation Law defining the powers, duties and liabilities of receivers of corporations govern and apply to receivers of moneyed corporations, except in so far as they are modified by the specific provisions of article 8 of the same law, relating to the receivers of moneyed corporations. People v. German Bank (1912), 136 N. Y. Supp. 311. ARTICLE II. WHEN AND IN WHAT MANNER RECEIVER APPOINTED. GEN. CORP. LAW, § 191. Permanent receiver. Gen. Corp. Law, § 191. Permanent receiver. Upon an application for a final order, if it appear to the court in a case specified in section one hundred and seventy of this chapter that the corporation is insolvent, or, in a case specified either in that section, or in sections one hundred and seventy-one and one hundred and seventy-two of this chapter, that for any reason a dissolution of the corporation will be beneficial to the interests of the stockholders and not injurious to the public interests, the court must make a final order dissolving the corporation, and appointing one or more receivers of its property. But in the case of a solvent corporation, the court may, if there is no objection by creditors, dispense with a receiver and provide in the final order for the distribution of the assets. The order shall be entered in the office of the clerk of the county in which the principal business office, or the principal place of business of the corporation is located, and a certified copy thereof, if a banking corporation, shall be filed in the office of the superintendent of banks; if an insurance corporation, in the office of the superintendent of insurance; and if a business, transportation, railroad or membership corporation, in the office of the secretary of state. Upon the entry of the order and the filing of a certified copy thereof as herein provided, the corporation is dissolved. A receiver appointed under this section shall have all the powers, duties and liabilities of receivers under article eleven of this chapter. Amended by L. 1916, ch. 53. (B., C. & G. Consol. L., 2nd Ed., p. 3172.) A case must be brought within the statutory provisions for the appointment of receiver, and general equity powers of the court will not be exercised where no waste or mismanagement are shown. Brewster v. Brewster Co. (1911), 145 App. Div. 812, 130 N. Y. Supp. 654, mod., 204 N. Y. 687. Although since the amendment of section 2463 of the Code of Civil Procedure by L. 1908, ch. 278, supplementary proceedings may be maintained against domestic corporations by judgment creditors, such right does not authorize the appointment of a receiver. Boucker Contracting Co. v. Callahan Contracting Co. (1916), 218 N. Y. 321, affg., 172 App. Div. 609, 156 N. Y. Supp. 1116. A receiver of the property of an insolvent foreign corporation situated in this State may be appointed to preserve the property pendente lite for the protection of the interests of New York creditors. Horton v. McNally Co. (1913), 155 App. Div. 322, 140 N. Y. Supp. 357. ARTICLE IV. RECEIVER'S TITLE TO CORPORATE PROPERTY. (Fiero, Spec. Pro., 3rd Ed., pp. 936-940.) GEN. CORP. LAW, § 232. Receiver's title to property. Gen. Corp. Law, § 232. Receiver's title to property. Such receivers shall, from the time of their having filed the security required by law, be vested with all the property, real or personal vested or contingent, of the corporation. Amended by L. 1913, ch. 766. (B., C. & G. Consol. L., 2nd Ed., ARTICLE VI. p. 3186.) POWERS OF RECEIVERS OF CORPORATIONS. (Fiero, Spec. Pro., 3rd Ed., pp. 941-959.) SUBD. 1. General powers. GEN. CORP. LAW, § 239. General powers of receivers. Subd. 1. General Powers. (Fiero, Spec. Pro., 3rd Ed., pp. 941-949.) Gen. Corp. Law, § 239 (in part). General powers of receivers. The said receivers shall have power: 1. To sue in their own names or otherwise, and recover all the property, debts and things in action, belonging or due or to become due to such corporation, whether accruing or maturing before or after the dissolution thereof and whether vested or contingent at the time of such dissolution in the same manner and with the like effect as such corporation might or could have done if no receivers had been appointed; and no set-off shall be allowed in any such suit, for any debt, unless it was owing to such creditor by such corporation before the appointment of the receiver of such corporation, or unless it shall have been duly contracted by such receiver subsequent to his appointment; notwithstanding the notice to creditors the receivers may sue for and recover any property or effects of the corporation and any debts due to it, at any time, before the day appointed for the delivery or payment thereof. Subd. 1. Amended by L. 1913, ch. 766. (B., C. & G. Consol. L., 2nd Ed., p. 3188.) ARTICLE VII. DUTIES OF RECEIVERS. (Fiero, Spec. Pro., 3rd Ed., pp. 959-967.) It is not the absolute duty of a receiver, under section 52 of the Banking Law, to sue stockholders to enforce their statutory liability. Hence, although a permanent receiver failed to bring a statutory action against a solvent stockholder within the time. limited by the statute, his account should not be surcharged with the amount which he might have recovered. People v. Bank of Staten Island (1911), 146 App Div. 378, 131 N. Y. Supp. 53. Stockholders have a quasi-lien upon their distributive share of assets and are entitled to have a sale of assets for cash or its equivalent, and they cannot be compelled to exchange such lien for a lien upon other securities. Smith v. Westchester, etc., Co. (1912), 78 Misc. 75, 137 N. Y. Supp. 690, affd., 156 App. Div. 920, 141 N. Y. Supp. 1147. ARTICLE VIII. SUITS BY AND AGAINST RECEIVERS. (Fiero, Spec. Pro., 3rd Ed., pp. 967-973.) SUBD. 1. Right of receiver to maintain action. GEN. CORP. LAW, § 239. General powers of receivers. 2. Actions against receivers. Subd. 1. Right of Receiver to Maintain Action. (Fiero, Spec. Pro., 3rd Ed., pp. 967-971.) § 239. General powers of receivers. (See ante, under Article 6.) Legal right of action against directors for negligence vests in a receiver upon his appointment. Kelly v. Dolan (1916), 233 Fed. 635, 638. Subd. 2. Actions Against Receiver. (Fiero, Spec. Pro., 3rd Ed., pp. 971-973.) Upon the appointment of a permanent receiver in voluntary dissolution proceedings the court has implied power to authorize or direct its receiver to appear in litigation pending in this or another State against the corporation. Matter of People's Surety Co. (1913), 82 Misc. 518, 144 N. Y. Supp. 131, revd. on other grounds, 172 App. Div. 969, 156 N. Y. Supp. 1140. ARTICLE IX. DISTRIBUTION OF FUNDS; PREFERENCES. (Fiero, Spec. Pro., 3rd Ed., pp. 973-980.) Contingent claims cannot share in the distribution. Claims must be valued and determined and their status fixed as of the date of the commencement of the action for corporate dissolution. People v. Metropolitan Surety Co. (1912), 205 N. Y. 135; People v. Metropolitan Surety Co. (1913), 158 App. Div. 651, 144 N. Y. Supp. 235. If a creditor, after due notice, fails to assert his rights as a creditor, he waives his claim, and forfeits his right to share in the distribution, and the funds set aside for dividends on unproven claims will be distributed among the creditors who have presented and established their claims. People v. German Bank (1912), 136 N. Y. Supp. 311. Where dividends are set aside for creditors who have proven their claims, but have failed to claim their dividends for more than one year, and no notice has been given the creditors of prior dividends, such dividends must be paid into court and notice given to such creditors by publication in a newspaper in the county once a week for three weeks and also by notice mailed to the creditor at his last known place of address. People v. German Bank (1912), 136 N. Y. Supp. 311. ARTICLE X. CONTROL OF, AND FINAL ACCOUNTING, BY RECEIVER. (Fiero, Spec. Pro., 3rd Ed., pp. 980-983.) A receiver, whose allowance has been reduced and who is directed to return the excess, will be allowed a credit to the extent of moneys advanced by him in good faith to protect the corporate property. People v. Brooklyn Bank (1913), 157 App. Div. 171, 142 N. Y. Supp. 75. In no event should the accounts of a receiver be surcharged with the amount which he might have recovered from a stockholder where the legal steps to be taken were necessarily left to his attorney at law whose appointment he did not control and whom the court refused to discharge on his motion, for the negligence to prosecute the stockholder was that of the attorney. People v. Bank of Staten Island (1911), 146 App. Div. 378, 131 N. Y. Supp. 53. ARTICLE XI. COMMISSION AND EXPENSES OF RECEIVER. (Fiero, Spec. Pro., 3rd Ed., pp. 983-989.) A receiver acquires no vested rights to compensation under the statute as it exists at the time of his appointment. He is only entitled to compensation at the rates allowed by the statutes as amended at the time when the services were rendered. People v. Bank of Staten Island (1911), 146 App. Div. 378, 131 N. Y. Supp. 53. A receiver of the property of an insolvent corporation is entitled to be paid from its assets after payment of the costs of realization, and even in priority to persons advancing money under an order of the court on the terms that repayment is to be made a first charge on the assets. Horton v. McNally Co. (1915), 89 Misc. 165, 151 N. Y. Supp. 674, mod., 168 App. Div. 248, 153 N. Y. Supp. 429. |