Longstaff v. Hurd

Tobbahce, J. On the 16th of August, 1894, George W. Longstaff of Bridgeport in this State, presented his application to one of the judges of the Superior Court, under the statute, alleging that he and Frank W. Hurd also of Bridgeport, were formerly partners in business in the county of Fairfield; that the partnership had been dissolved; that the partners could not agree upon the disposition of the partnership effects and the settlement of its affairs; and asking said judge to forthwith appoint a receiver to take charge of the partnership property and to dispose of, manage and apply the same, as the Superior Court or any judge thereof might direct. Hurd waived service of the application upon himself, and both parties agreed that the hearing upon it might be had forthwith. The hearing was had that same day, and as the result of it, the judge found the allegations of the application to be true, and that the interests of the partners and their creditors required the immediate appointment of a receiver ; and thereupon, some time before noon, a receiver was duly appointed. The receiver accepted the appointment, and duly qualified. At about five o’clock of the afternoon of the same day (August 16th, 1894), the H. W. Johns Manufacturing Company, a New Jersey corporation, being a creditor of the said copartnership of Longstaff and Hurd, attached certain real estate of said copartnership in Bridgeport in this State, in a suit brought by it against the copartners ; and at the same time, Patterson Brothers, a New York corporation, also a creditor of said copartnership, attached real estate of the co-partnership in said Bridgeport, in a suit brought by it against said copartners. Subsequently, in October, 1894, both of said corporations recovered judgment by default in their respective suits aforesaid, and certificates of judgment lien upon the land attached in each suit were duly signed and recorded. On the 17th of October, 1894, both of said cor — 356 — porations filed applications in the Superior Court to be made parties in the cause of Longstaff v. Hurd, and subsequently each was duly admitted as a party. In the applications made by these creditors to be made parties, they each alleged in substance the matters already stated, and in addition thereto the following: “ No notice of the pendency of said suit for the appointment of a receiver for said copartnership and of its partnership property, at the time of said application, nor since then, has ever been recorded in the land records of said Bridgeport. At the time of said attachment neither said company nor its attorney, nor the magistrate issuing said writ, nor the officers serving the same, knew of the pendency of said application, nor of the making of said order; and said company and its attorneys acted in good faith in making said attachment.” It was further alleged in each of said applications, that said corporations and the attorney acting for them, after being informed of the facts relative to the appointment of the receiver, about the first of September, 1894, believed and still believe that said attachments were valid as against the title of the receiver; and further, that about September 1st, 1894, the attorneys for said companies were requested by the receiver to remove said attachments, but had refused to do so for the reasons set up in the applications. The corporations, also, in said applications, each prayed that the order appointing a receiver for said copartnership and vesting title in him to the real estate attached by them as aforesaid, together with all subsequent orders, might be rescinded or modified, and that all proceedings based upon said application and orders might be ordered to be discontinued ; or, if the above prayer was denied, they prayed that the orders might he so modified that the attachment and judgment liens of said corporations should be prior liens on the real estate attached, and the title of the receiver be held subordinate thereto ; and further prayed for leave to make the receiver a defendant in suits to foreclose said judgment liens, if any should be brought. To each of these applications the receiver demurred, and — 357 — all questions raised by the demurrers were reserved for the advice of this court. The relief sought by the creditors in each of these applications, is asked for upon two grounds: first, that the appointment of the receiver was void, because it was made forthwith and not at the end of at least six days from the service of an order of notice; second, that the attachments made by these two creditors are superior to the title of the receiver, because no notice of the proceeding for the appointment of a receiver was filed under § 947 of the General Statutes, and the creditors, at the time said attachments were made, had no notice or knowledge of the appointment or of the pendency of said proceeding. We think the first point is not well taken. Section 1313 of the General Statutes provides that the court or judge, to whom an application for the appointment of a receiver is made, “ shall forthwith appoint a day for the hearing upon the' same, and shall make such order relative to notice of such application and hearing to the other partners as may be deemed proper; said hearing to be at least six days from the service of such order of notice.” The claim of these creditors is, that under this section a forthwith appointment of a receiver can never be made under any circumstances; that the judge must in every case direct notice to be given, and then wait at least six days from the service of such notice, before making the appointment. Such a construction of the statute is clearly untenable. In an application under this statute, the only adverse parties are ordinarily, as in this case, the other partners who are not applicants; and the statute provides only for the giving of notice to such “other partners.” The provisions as to notice and the time of hearing, are made solely for the benefit of such “ other partners ; ” and this being so, we see no good reason why they may not waive the benefit of them, and, as was done in this case, ask the judge to have the hearing forthwith. The construction contended for would require the judge to direct notice to be given when all the — 358 — parties were already before him, and then to wait six days after service before making an appointment, although all parties in interest asked for an immediate hearing, and the exigencies of the case clearly demanded _ immediate action. Such a construction, leading to such a useless and unnecessary sacrifice of substance to form, is clearly not warranted, either by the letter or the spirit of the section in question, and we cannot adopt it. We think the appointment was a valid one. Under the second point, the claim is made that because no notice of the application for the appointment of a receiver was filed under § 947 of the General Statutes, and the creditors had no actual notice or knowledge of its pendency, the attachments are good as against the receiver. Section 947 provides, among other things, that the plaintiff in any action, at the time the action is commenced or afterwards, “ if the same be intended to affect real estate, may cause to be recorded in the office of the town clerk of each town in which the property is situated, a notice of the pendency of the action,” which is to contain certain enumerated matters; and then provides further as follows: “ from the time of recording only, shall the pendency of the action be notice to a purchaser or encumbrancer of the property.” Under this statute notice is required to be filed only in “ actions intended- to affect real estate ”; and we do not think the application for the appointment of a receiver, in cases like the present, is an action intended to affect real estate, within the meaning of the statute. The action contemplated by the statute is one whose object and purpose is to determine the title or the rights of the parties in, to, or over some particular real estate, which is the subject-matter of the action. It probably includes all actions which involve and determine, as between the parties, the title to a specific tract of land, or which are brought to establish any estate, interest, or right of the parties in, to, or over the real estate described in the complaint, or to enforce any lien, charge, or incumbrance upon said real estate. The application in question was clearly not an action of — 359 — this kind. Its subject-matter was not any specific real estate, concerning their title to which, or their rights in which, the copartners were in dispute ; it did not ask the court to determine any such title or rights; and in deciding the matters involved in the application, the judge did not, nor could he, decide or in any way determine any such right, title, or interest of the parties to the application. The mere fact that the statute (§ 1815) “ vests ” the property of the copartnership, both real and personal, in the receiver on his appointment, does not alter the nature and character of the application'; that still remains a proceeding having for its main purpose and object the appointment of a -receiver, and not the determination of the rights of the co-partners to the property of the copartnership; and when that appointment is either made or refused, the application has substantially performed its office. For these reasons we think the statute (§ 947) is inapplicable in cases of this kind, and that neither the applicant nor the receiver were required to file a notice thereunder. In the ease at bar the attachments were not made until after the receiver was appointed and the property had vested in him, and we think no attachment lien upon that property, valid as against him, could then be acquired. After the law vested in him the property of the copartnership, for the object and purpose contemplated by the statute, it will not permit any party, with or without knowledge that the property has so vested, to incumber it to the prejudice of the receiver, or so as to defeat or thwart the objects and purposes for which he holds it. “ The right of a creditor to sequester a portion of the debtor’s property by attachment, and thereby gain priority over other creditors, is suspended by the appointment of a receiver. That officer, as the agent of the law, takes from the debtor’s possession all his property for division among all creditors in equal proportions. The rights of all creditors are in him as their representative. It is quite unimportant whether the law effects this purpose by the agency of a trustee appointed by the Court of Probate or by a receiver appointed by a court of law. Equally in — 360 — either mode, whatever right any creditor could have enforced for his sole advantage, the law will enforce for him and all others in equal proportions.” New Haven Wire Co. Cases, 57 Conn., 352-387. As against the receiver, therefore, the attachment liens are invalid and should be removed forthwith by the creditors. Upon the record as it now stands we deem it unnecessary and inexpedient to pass upon the question whether these creditors, upon the facts admitted, were or were not guilty of contempt of court. The Superior Court is advised that the demurrers filed by the receiver should be sustained; that the appointment of the receiver was a valid one; and that the attachments are invalid as against him, and should be removed forthwith. In this opinion the other judges concurred.