In re Premier Cycle Manufacturing Co.

Baldwin, J. A receiver, under our statutes, is subject to removal at any time, at the pleasure of the court. General Statutes, § 1319. When it is not actually in session, any judge of the Superior Court, should the exigencies of the case require it, may also remove him, after due notice given. Public Acts of 1895, p. 499, Chap. 108. Due notice was given to the appellant of a petition for his removal. Five days was ample time for the preparation of his defense. It is assigned for error that the order did not direct notice to be given to the parties to the action. This should have been directed as to both the plaintiffs and the defendant; but as they in fact received actual notice before the hearing, interposed no objection for want of formal service, and have taken no appeal, the defect constitutes no ground of reversal, upon this proceeding. Notice to every one of the creditors who had proved their claims was not necessary. The order of notice was for a hearing upon a certain petition, a copy of which was to be served on the receiver. That petition contained no specific averments of negligence or misconduct other than those as to his failure to pay the bills which he had been directed to pay by the order of July 6th. Without asking for any more particular specifica [479] tion of what it was intended to pnt in evidence, the receiver answered at length, denying the charge of negligence, setting forth the whole history of Ms management from the beginnmg, and affirming that he had “never Mtentionally done any act or omitted any act, the doMg or omission of which was prejudicial to the interests committed to Ms charge; and that M particular he has never disregarded any of the orders of the court; that he has done no important act without seeMng the authority of the court M advance.” To this answer the reply was a general denial. Upon this state of the pleadings, the trial judge was not confined to the question whether the order of July 6th had been disobeyed. The answer had opened the door to the investigation of all the doings of the receiver, from his original appomtment to the time of the hearing, and of whatever might bear on Ms fitness to discharge the duties of Ms position. The appellant therefore had due notice of the petition for his removal and of the grounds upon which an order of removal might be based. Jurisdiction to make the order having been thus acquired, the receiver could not, either as such or Mdividually, appeal from it, on the claim that these grounds were insufficient. He had no vested right of office. If any mterests were prejudiced by Ms removal, they were those of the parties to the action or intervening creditors, none of whom have taken any exception to it. In re Colvin, 3 Md. Ch. 278, 302. In many matters, a receiver may be treated as representing those entitled to the fruits of the action m wMch he is appointed, even for purposes of appeal from final orders in mterlocutory proceedings. Guarantee, etc., Co. v. Philadelphia, etc., R. Co., 69 Conn. 709. But it would be an madmissible extension of tMs doctrine to allow him to except, in Ms representative capacity and at the expense of the estate, to Ms removal from office. Conner v. Belden, 8 Daly, 257. The judgment appealed from does not set forth any finding of facts for its support. Hone was required. The Superior Court, of wMch the appellant was an officer, could remove [480] him at pleasure. The authority of a judge of that court, acting when it is not in session, is the judicial authority of that court exercised at chambers. Norwalk Street Ry. Co.s Appeal, 69 Conn. 576, 602. On this proceeding, the judge was bound to give due notice, before talcing action, to the parties interested; but when this was done, and they were fairly heard, he had the same power of removal at pleasure, in view of whatever this hearing might bring out, as if he had been holding court at a regular term. A special finding of facts was afterwards made at the appellant’s request, on which to predicate his appeal. In this paper, and in a memorandum of decision, to which it refers, there are expressions which he claims may be construed to import that he is personally liable for the bills referred to in the order of July 6th, and for any loss to the estate in consequence of his continuing the business of the company beyond the time when, in the opinion of the trial judge, it should have been closed up. No adjudication on these points was made by the order of removal, and none of a final nature could be made in the finding of facts. A receiver may appeal in his individual capacity from an order which determines that after his discharge from office he will be personally liable for obligations which he contracted officially. Hinckley v. Gilman, etc., R. Co., 94 U. S. 467; Payne v. Dejean, 32 La. Ann. 889. But even if the finding could be held to bear the meaning apprehended, the appellant could not be aggrieved by it. The evidential facts and conclusions which it set forth spent their force when the ultimate conclusion was reached by the trier, that there ought to be a change of receivers; and they could not be used against him upon any subsequent accounting, or in any other suit. Kashman v. Parsons, 70 Conn. 295. These considerations are also decisive against the right of appeal claimed on the ground that the finding of facts states that he mismanaged the property in various particulars, and in this way may be damaging to his business reputation. He sought the finding, and if he has caused to be spread upon the record conclusions of the trier which would [481] not otherwise have heen disclosed, cannot make it a reason for reversing a judgment of which they formed no part, which they were not needed to support, and upon which no estoppel in respect to them could ever he predicated. During the hearing on the petition for his removal, the receiver applied to the trial judge for an order authorizing him to sell certain property of the estate at auction, and from the proceeds to pay the debts which he had contracted in the management of the business. This was denied, and the denial is made a ground of appeal. It was a matter resting in the sound discretion of the trial judge, and nothing is shown to indicate that that discretion was abused. There are numerous exceptions to the finding, and to the refusal to incorporate in it certain matters which the appellant claims to have been established by incontrovertible evidence, upon which we have no occasion to pass. For reasons already stated, the finding, even were it corrected as he desires, could not support the appeal. One of these exceptions may merit a word further. It is that taken to the statement that shortly before Ms appointment, and when the company was hopelessly insolvent, the appellant, being the vice-president and manager, combined with his associates in office, they beMg with Mm liable as indorsers on company notes held by a bank, to give a preferential mortgage to secure the bank, and thus themselves; and that this transaction was not stated to the judge from whom his appointment proceeded. This, it is claimed, was irrelevant to the question whether the appellant had properly administered the affairs of the receivership. It was plainly relevant to the question whether he was a fit person to hold a position from wMch, if at all, that mortgage could be or could have been attacked in the interest of the general creditors; and therefore came witlffn the proper field of inquiry. It is only under exceptional circumstances that the principal manager of an insolvent company can with propriety be made its receiver; and such an appointment should never be made where Ms personal interests may conflict with those of creditors. [482] It may be added that, were there ground for any exception, it should have been taken, not to the statement of these facts in the finding, but (as by other reasons of appeal it virtually was) to the admission of the evidence in respect to them at the hearing, or to their use as a basis for the judgment of removal. During the argument before this court objection was made, in behalf of the appellant, to the appearance against him here of counsel for his successor in the receivership who had been his own counsel while he was receiver. Had the objection come earlier, it would have been sustained; but it was not interposed until the second term, and after the same counsel had been heard at length upon a preliminary motion. The relation of counsel and client is one of so great confidence that, though the client may occupy such an official position as to represent the court, his successor in office, without his free consent, ought not to be permitted, even with the sanction of the court (which, we are informed, was here given), to avail himself of the services of the same counsel in any inquiry as to whether the previous administration was properly conducted. Particularly is tins true where, as in this case, the counsel for the first receiver had before been counsel for him personally, and brought, as such, the action in which a receivership was sought. There is no error. In this opinion the other judges concurred.