Fallon v. Egberts Woolen-Mills Co.

SMITH, J. It seems now to be settled law that where a receiver takes property that belongs to a third party, although he may do so innocently, in the belief that the property belonged to his trust, he is liable for trespass, and may be sued as of right by the person whose property he has converted. Beach, Rec. (Alderson’s Ed.) § 663; Hills v. Parker, 111 Mass. 508; Barton v. Barbour, 104 U. S. 126, 26 L. Ed. 672; Kinney v. 'Crocker, 18 Wis. 74. Under these authorities, after the demand by the appellants, and a refusal by the [349] temporary receiver to deliver the moneys so received, an action against him personally might have been brought without the permission of the court. To this action the receiver would have been compelled to respond. He could not have shielded himself therefrom by the arm of the court. Thereafter, upon an accounting of the temporary receiver, these appellants made themselves parties thereto, and demanded this money. In that proceeding the court ordered the moneys to be retained by the permanent receiver. It is claimed that this order is without effect, on the ground that, where a temporary receiver thereafter becomes permanent receiver, an accounting by him as temporary receiver is not binding upon creditors not noticed. This rule is without application in the case at bar, because these creditors had made themselves parties to the proceeding. Whether or not by this order these appellants have become estopped in any other proceeding, the property is now held by the receiver under the direction of the court, without authority to dispose of the same except by its permission. Where property comes into the hands of a court officer by an order or decree of the court, the court will protect its officer from actions at law. In Parker v. Browning, 8 Paige, 388, it is held: “If a receiver takes possession of goods under the express directions of the court, or where the master has decided that the goods are in the possession or under the control of the defendant, and has directed the defendant to deliver the possession to the receiver, the court will assume the exclusive jurisdiction of the subject, and will not suffer the receiver to be sued at law for taking such goods.” In 2 Story, Eq. Jur. § 833a, it is said: “In the next place, when such a receiver is in possession under the process - or authority of the court in execution of a decree or decretal order, his possession is not to be disturbed, even by an ejectment under an adverse title, without the leave of the court; for his possession is deemed the possession of the court, and the court will not permit itself to be made a suitor in a court of law. The proper and usual mode adopted under such circumstances is for the party claiming an adverse interest to apply to the court to be permitted to come in and be examined pro interesse suo.” In section 891 it is said: “Courts of equity will not only grant an injunction restraining suits at law between, parties upon equitable circumstances, but they will exercise the same jurisdiction to protect their own officers who execute their processes against any suits brought against them for acts done under or in virtue of such processes. * * * The same principle is applied to protect sequestrators in possession under a decree in a court of equity against suits brought against them: for the court will not permit itself to be made a suitor at law, but it will examine for itself the nature of any adverse title upon the application of the party. The same principle is also applied, as we have already seen, to the case of receivers.” Inasmuch, then, as the receiver now holds this property under an order of the court, made in a proceeding to which these appellants were parties, he is entitled to the protection of the court, and cannot be attacked without permission. The order should therefore be affirmed. Order affirmed, with $10 costs and disbursements. All concur.