Summary
In Matter of Lenox Corporation (57 App. Div. 515; affd., 167 N.Y. 623) the court was declared to have the power to make an order nunc pro tunc, when the order did not recite that insolvency had been satisfactorily shown.
Summary of this case from Matter of BaumannOpinion
January Term, 1901.
J. McC. Mitchell, for the appellant.
William L. Marcy, for the respondent.
The first point urged by appellant is that the order appointing the temporary receiver and enjoining creditors from prosecuting claims is absolutely void. If so, doubtless it must be vacated, notwithstanding petitioner's laches in making the motion is so great under the circumstances as to warrant, if not require, the denial of the motion if addressed to the discretion of the court. The grounds upon which it is claimed that the order is void are, (1) that neither the petition nor affidavits contain an allegation of insolvency; (2) that the schedules show solvency, and (3) that the order fails to recite that insolvency has been shown to the satisfaction of the court. There seems to be no authority for appointing a temporary receiver and granting such an injunction at the commencement of a proceeding for the voluntary dissolution of a corporation excepting that conferred by section 2423 of the Code of Civil Procedure, and if, therefore, the statutory authority be not followed strictly, the order will be void. ( Matter of Dolgeville Electric Light Power Co., 160 N.Y. 500; Matter of Hamilton Park Co., 1 App. Div. 375, 379; Chamberlain v. Rochester S.P.V. Co., 7 Hun, 557.) Although the order may have been improvidently granted and might be set aside on motion timely made for that purpose, yet, if there be any evidence tending to show the requisite facts, it would give the court jurisdiction to act, and its order was not a nullity. ( Fischer v. Langbein, 103 N.Y. 84; People ex rel. Cauffman v. Van Buren, 136 id. 252; Fischer v. Blank, 81 Hun, 579; affd., 144 N.Y. 700.)
We agree with the contention of the learned counsel for appellant that the insolvency specified in sections 2423 and 2429 of the Code of Civil Procedure is limited and defined by section 2419. For the purpose of a proceeding of this character, therefore, a corporation is insolvent when the "stock, effects and other property thereof are not sufficient to pay all just demands for which it is liable or to afford a reasonable security to those who may deal with it." (Code Civ. Proc. § 2419.) With overdue claims against the corporation, exceeding in the aggregate $30,000, arising on its express contract obligations, and upon which actions or suits, to which it had no defense, had been brought and were pending, and matured and maturing obligations of other creditors upon which they were threatening litigation, and the company's assets amounting to only a few thousand dollars exclusive of its apartment house which was so heavily mortgaged — insolvency, even in the broadest sense, if not upon this corporation, was imminent. We do not think it can be successfully maintained that the court had before it no evidence that the property of the Lenox Corporation would not afford reasonable security to those who might deal with it or of its insolvency, within the intent and meaning of that word as used in the title of the Code of Civil Procedure relating to this subject. ( Sterrett v. Third Nat. Bank of Buffalo, 46 Hun, 22; Brouwer v. Harbeck, 9 N.Y. 589; Baker v. Emerson, 4 App. Div. 348; French v. Andrews, 81 Hun, 272; Denike v. New York Rosendale Lime Cement Co., 80 N.Y. 599; National Broadway Bank v. Wessell Metal Co., 59 Hun, 470.) The court having acquired jurisdiction could make the order nunc pro tunc correcting the formal defects in its order reciting that insolvency had been satisfactorily shown. ( Matter of Christian Jensen Co., 128 N.Y. 550.)
Upon the filing of the receiver's bond his right related back to the time the order was granted and entered, from which time the property is deemed custodia legis, and appellant acquired no lien thereon by virtue of its execution delivered to the sheriff after he had been enjoined from enforcing the claims of creditors. ( Matter of Christian Jensen Co., supra.) Appellant also contends that it has been misled to its prejudice by the misrepresentations of an officer of its judgment debtor, in consequence of which it deferred entering judgment for three days. A controverted question of fact is presented by the denial that any misrepresentation was made or that the company was guilty of bad faith. We refrain from reviewing the decision of the Special Term on this question of fact, if the Special Term did decide it, which is doubtful, for two reasons, (1) appellant should have moved promptly and within the life of its execution, and (2) it appears that other creditors whose claims exceeded the personal property of the judgment debtor were prepared to enter judgment before appellant was entitled so to do, and that they were induced to refrain from so doing upon the understanding that they would not thereby lose their priority, and it would, therefore, be inequitable to allow appellant a preference over them.
The order appealed from should be affirmed, with costs.
All concurred.
Order affirmed, with ten dollars costs and disbursements.