R. H. Battle v. . S.W. Davis , 66 N.C. 252 ( 1872 )

The complaint alleges: That the North Carolina Mutual Life Insurance Company was a corporation created, organized and existing under the laws of North Carolina.

That the defendant Davis, made his promissory note to said corporation, by which he promised to pay the sum of $450.80, in the currency of the United States.

That in a certain suit, in the Circuit Court of the United States, for the District of North Carolina, in which Sansom and others were complainants and the N.C. M. L. I. Co. were defendants, a certain decree was made, and among other things is the following, viz: "It is therefore ordered, adjudged and decreed, that R. H. Battle, Sr., be appointed receiver of the assets of the North Carolina Mutual Life Insurance Company, and that upon his executing bond, c., c., the assets of the said Company shall be placed in his possession, and he shall proceed to collect the choses in action which may come to his hands, and for such purposes he is authorized to commence and prosecute suits in the Courts of the State of North Carolina." The complaint further alleges that the plaintiff complied with the orders of the Court, gave bond, c., and that as such receiver he is vested with, and possessed, of and entitled to the promisory note made by the defendant as aforesaid. Demands judgment, c.

To this the defendant demurred:

I. That complaint does not state facts sufficient to constitute a cause of action.

II. That the plaintiff, according to the facts stated in his complaint, has no right to bring this action in this Court.

Upon argument the demurrer was sustained and the suit dismissed.

Plaintiff appealed to the Supreme Court. A Court of Equity has the power of appointing a receiver for the purpose of protecting and securing property which is the subject of litigation. A receiver is an officer of the Court, and his possession of property is the possession of the Court. The Court has control over the parties to a suit and can order them to deliver property in controversy to its officer, and it they fail or refuse to obey such order they may be proceeded against by process of contempt.

If the property in controversy is in the possession of a third person who claims the right of possession, the plaintiff may make him a party to the suit and thus render him subject to an order of the Court in regard to delivering such property to the receiver. Parker v. Browning, 8 Paige; 388.

The order appointing a receiver and giving him possession does not in any manner affect the title of the property but he holds it as a mere custodian until the rightful claimant is ascertained by the Court, and then he holds for such claimant. 4 Maryl R., 80; 3 Maryl, Ch., 280.

A receiver cannot commence any action for the recovery of outstanding property without an order of the Court and when such order is made the action must be brought in the name of the legal owner and he will be compelled to allow the use of his name upon being properly indemnified out of the estate and effects, under the control of the Court. 3 Dan'l Ch. Pr., 1977, 1991.

The practice of the Court of Chancery in England on this subject, is well settled by many authorities, has long been the course and practice of our courts, and has not been materially changed by the Code.

Our attention has been called to the practice in New York, in matters of this kind, and we find upon investigation that the common law powers of receivers have been greatly enlarged by Statute, and they may bring an action in their own name for the recovery of property which they have been directed by an order of the Court to reduce into possession. Dan'l Ch. Pr., 1988, note 2. 2 Paige, 452. 4 Paige, 224. 1 Tif, and Smi. Pr., 160. VorhiesCode, 432.

The case of Hoyt v. Thompson, 1 Selden, 320, commented upon by plaintiff's counsel does not sustain their position. The plaintiff in that case, was the assignee of a receiver appointed by a Court of Chancery in New Jersey, under a Statute of that State expressly authorizing such Court in certain cases to appoint receivers, "with full power and authority to demand, sue for, collect and recover, c., and sell, convey and assign all the said real and personal estate, c."

The power of a receiver in this State to bring an action, is regulated by the rules in a Court of Chancery, and if the order under which this plaintiff has acted, had been made by one of our Courts, he could not maintain this action; and certainly an order made by the U.S. Circuit Court cannot confer greater powers and privileges upon a suitor in our Courts. It is therefore unnecessary for us to consider the question of comity between the State and Federal Courts, which was urged on the argument.

We take pleasure, however, in saying, that upon all proper occasions such comity will be extended, as in accordance with judicial usage, and the laws of the land. We concur in the opinion of His Honor, and the judgment must be affirmed.

PER CURIAM. Judgment affirmed.