Decided April 7, 1931.
The summary power of a court over a receiver of an insolvent corporation as an officer of the court does not extend to his personal rights as a creditor against the property held under the receivership; and as to such claims a receiver has the same right to be heard as any other creditor. Hence upon a petition of a receiver to reopen a commission for the presentation of his personal claim, an order of the court made without hearing and denying the motion because of the receiver's bad faith in his administration was set aside.
PETITION, by William C. Staples and others, to reopen the report of a commissioner appointed to allow claims against the Dix Staples Company, Inc., a Vermont corporation, in receivership.
Staples was appointed receiver on April 13, 1925, to take charge of, administer and distribute the New Hampshire property of the company. The occasion for the receivership was the insolvency of the company, and its purpose was to preserve the expected revenue under a building contract by staying the enforcement of liens during completion. Staples was the treasurer and the alleged largest creditor of the company and had already been named as receiver in Vermont. His appointment here was on his own petition, with the concurrence of the president. He qualified, and, on May 11 filed a statement of assets and liabilities. A commissioner to allow claims was appointed Dec. 14. Notice was given of hearings, the last of which was set for April 12, 1926, following which, report was duly made of the allowance of the claims presented.
The petition to reopen the commission was in behalf of William C. Staples personally and three others. It was filed May 13, and was supported by affidavit tending to show that failure to seasonably present the petitioners' claims was due to excusable accident and mistake. No question was made as to the form and sufficiency of such proof. The matter was held open for a long time; no formal hearing was had; and there is no record of any discussion of court, counsel and receiver. The court ordered the report to be reopened for the presentation of the three other claims which were small, and denied the petition as to the larger claim of Staples. The ground given for such denial was "because of his conduct" as disclosed by "the following facts which came within the knowledge of the Court" to wit:
"The completion of the storehouse . . . and the expected revenue from that source, afforded the principal basis for appointing a receiver. The application for a receiver would have been denied but for that. After the building was completed, for the first time the receiver informed the court, in the presence of his counsel, that the benefit of the contract for that building had been assigned to creditors in Vermont before the application was made in New Hampshire for the appointment of a receiver. Upon inquiry of his counsel the court learned that the receiver had not informed him of such assignment when the petition was presented in New Hampshire. His attorney had no knowledge of it, and the court did not know of it. The court regarded such concealment as a fraud upon the court and the New Hampshire creditors who could have made attachments of property here, but for the receivership.
"During his administration the court urged the receiver to find customers for a substantial portion of the tools and assets. As to some of the more important assets, the receiver made no reasonable effort, and the court employed a Mr. Densmore . . . to find a customer or customers. One of the larger assets was a steam shovel, for the sale of which the receiver never made any reasonable effort, but a customer was secured by Mr. Densmore and the receiver was requested by the court to . . . exhibit it to the prospective purchaser, which he did with his counsel. At this view the Receiver made no effort to assist, but endeavored to discourage the customer from buying it. The receiver's counsel did what he could to assist. The sale was made by Mr. Densmore, and the money ordered paid into the hands of the clerk of court after the bill of sale was executed and given by counsel for the receiver. The receiver's conduct exhibited bad faith in his administration so far as it involved the sale of this shovel, which brought $3,250."
Transferred by Sawyer, C. J., on the exception of William C. Staples to the refusal of the court to allow the reopening of the commission for his benefit.
Roy M. Pickard, for William C. Staples.
Scott Sloane, for other creditors.
The ground of the claimant's exception, as disclosed in his formal statement thereof made a part of the record, is that the findings, on which the court's refusal to reopen the commission in his behalf were based, were made ex parte, were supported by no evidence and are contrary to the fact. The exception is in substance, to the refusal of the court to grant the claimant a hearing on his motion.
The appointment of a receiver does not determine the property rights of the persons interested in the subject-matter of the receivership. Its purpose is to secure and conserve the property for their benefit. Eastman v. Bank, 58 N.H. 421, 422. Such summary power the court may have over the receiver as an officer of the court does not extend to his personal rights in the res. As respects his individual claims upon the property in the custody of the court, the receiver has the same right to be heard as any other litigant. In so far as his conduct may have affected his right to equitable relief, it is evidence to be weighed like other proofs. In its ascertainment and application, the rules applicable in ordinary judicial proceedings are to be observed. See Holman v. Manning, 65 N.H. 228, 229. The concealment, negligence and bad faith, made the basis of the order here, involved facts of which the court could not take judicial notice without proof. "The court must try a case, as a jury would be sworn to try it, by the law and the evidence . . . The primary principles . . . of the law forbid the court to act judicially upon any knowledge of the parties except that furnished by the evidence." Fisher v. Railroad, 50 N.H. 200, 209.
As it appears that no hearing has been had upon the issue presented by the motion to reopen the commission, and that the denim thereof, as respects Staples' claim, was based upon purported "facts" which otherwise came to the attention of the court, the order denying the motion is set aside, and the case is returned for hearing on the motion.
Order set aside.