In re Stonebridge

Bartlett, J. The warrant against the appellant was issued at the instance of George H. Stonebridge, Jr., receiver of the New York Book Company, assuming to act under certain provisions of the Revised Statutes relating to trustees of insolvent debtors, which provisions are bylaw made applicable to receivers of corporations. 4 Rev. St. (Banks’ 8th Ed.) pp. 2524-2534, and p. 2682, § 72. No notice of the application for the warrant was given to the attorney general. This is the first point made in the-brief of the appellant, and it is fatal. The precise question has been determined by the court of appeals in a case where an application was made to me for a warrant of this kind, at the Kings county special term, in November, 1889. The application was denied on the sole ground thafno notice thereof had been given to the attorney general, as prescribed by the Haggerty act. Laws 1883, c. 378. The order refusing the warrant was affirmed by the general term, on this and other grounds; and was sustained in the court of appeals on the ground alone that the attorney general should have had notice of the application, without considering the other questions discussed by the general term. In re Vanamee, 23 N. E. Rep. 1149. The decision mentioned is conclusive against the position of the respondent, and renders it necessary to reverse the order appealed from, without discussing the other interesting points presented by the appeal. Van Brunt, P. J. The respondent in this action, on the 12th of February, 1889, was appointed receiver of the New York Book Company, in proceedings taken to procure the sequestration of the property of said corporation for the purpose of paying the debts thereof. The said receiver duly qualified, and published a notice.requiring all persons indebted to the said corporation, or having the property of said corporation in their possession, to pay such debts or sums of money, or to deliver the same to him at bis office. This notice was not signed by the receiver, nor did it contain the name of the receiver in any part thereof, and it was impossible to determine from the notice who had issued the same. It being claimed upon the part of the receiver that the ap [728] pellant, Alden, had certain property of the corporation in question in his possession, an application setting up these facts was made to the court for a warrant against the said appellant, that he might be brought before the court for the purpose of being examined pursuant to the statute in such case made and provided. This warrant was granted, and, a motion having been made to set the same aside upon various grounds, that motion was denied, and from the order denying the same this appeal is taken. In the foregoing statement of facts it has not been deemed necessary to state all the proceedings which have been taken in reference to the appointment of the receiver, nor to make particular reference to the papers upon which the warrant in question was granted, except so far as it sets forth the point upon which this appeal may be determined. By the provisions of the Revised Statutes under which the proceedings in question were initiated, (section 70, 2 Rev. St. p. 469,) it is provided that the receivers, immediately on their appointment, shall give notice thereof, which shall contain the same matters required by law in notices of trustees of insolvent debtors. By section 72 it is provided that, after the first publication of the notice of the appointment of receivers, every person having possession of any property belonging to such corporation, and every person indebted to such corporation, shall account and answer for the amount of such debt, and the value of such property, to the said receiver. The section further provides that all the provisions of law in respect to trustees of insolvent debtors, the collection and preservation of the property of said debtor, the concealment and discovery thereof, and the enforcement of such discovery, shall be applicable to the receivers so appointed, and to the property of such corporation. It will be seen by the provisions of this section-that it is not until after the first publication of the notice of the appointment of the receiver, as provided by section 70, that it becomes obligatory upon the person indebted to the corporation to account and answer for the amount of such debt, and the value of such property, to the receiver. In the case at bar, although an attempt to publish the notice required by section 70 is made, yet it contains no notice as to who has been appointed receiver, nor to whom the property is to be delivered. Therefore the obligation created by section 72 did not spring into existence, as it is only after the publication of the notice of the appointment of the receiver, as already stated, that the duty to account and answer for debts due to the corporation, and property belonging to the corporation, arises. It is urged upon the part of the respondent that the publication of the statutory notice to creditors and debtors of the corporation was not a condition precedent to the receiver’s application for the warrant, because personal demand had been made upon Alden for the delivery of the property of the company before the application vzas made. It may be said, in answer to these suggestions, that where the statute provides one proceeding for putting a party in default, and provides for a particular way of giving notice, a notice given in another way, although equally effectual, cannot establish such default. As already seen, the language of section 72 is explicit. After the first publication of the notice of the appointment of the receiver, then the duty to deliver the property shall arise, and there is no provision whatever that it shall arise before. It is true that section 12, (2 Rev. St. p. 43,) relating to the, powers, duties, and obligations of trustees and assignees, provides that whenever the trustees shall show by their own oath, or other competent proof, that there is good reason to believe that - the debtor, his wife, or any other person has concealed or embezzled any part of the estate of such debtor vested in said trustees, or that any person can testify concerning the concealment and embezzlement thereof, a warrant may be issued commanding the sheriff to cause such person to be brought before the court for the purpose of being examined. But this provision is to be read in connection with the provisions of section 72, upon which it is ingrafted by the latter part of this section. It certainly [729] was not intended that before the duty of delivering over the debts and property of the company, by reason of the publication of the notice, this provision in regard to examination should go into effect, because, under that very provision of the statute, until that notice was given, the alleged debtor was not in default. We think, therefore, that the necessary preliminary to the initiation of these proceedings was the putting of the debtor in default by the publication of the proper notice of the appointment of the receiver in order that the debtor might deliver over the property. It appears clearly from the record in this case that no such notice was given. The appellant was not put in default by the demand, because that was not the method provided by the statute for putting him in default, and, not being in default in respect to delivery of this property, it is difficult to see how the court was justified in issuing the warrant for his examination. The other points raised upon this appeal it does not appear to be necessary to consider, as the one suggested seems to be fatal. The order should be reversed, with $10 costs and disbursements.