CASE OF THE NORTH AMERICAN GUTTA-PERCHA COMPANY

CASE OF THE NORTH AMERICAN GUTTA-PERCHA COMPANY. Supreme Court, First District; General Term, May, 1859. Receiver.—Sheriff.—Motion to Enforce Levy. Although a receiver who takes possession of goods upon which the sheriff holds a levy under execution, is bound to account to the sheriff for the proceeds thereof, yet it is for the sheriff to enforce the levy, and the execution-creditor has no right to interfere against the receiver. The execution-creditor moved, without the sheriff joining in the application, that the receiver be compelled to pay over the proceeds. Held, that the motion was properly denied without prejudice to the rights of the sheriff. Appeal from an order denying a petition that the receiver of the North American Gutta-Percha Company pay out of the proceeds of certain property the amount of the petitioner’s executions against the company. The petitioners having recovered certain judgments against the North American Gutta-Percha Company, issued executions thereon on the 6th of September, 1858, which executions the sheriff levied, or assumed to levy, on property of the company. In the following month, and before any sale by the sheriff, the company was dissolved and a receiver appointed at the instance of other judgment-creditors. The receiver took possession of the property, sold the same to an amount more than sufficient to pay the executions issued by the petitioners. They then applied at special term, on notice to the receiver, for an order that he pay the executions out of the proceeds. The receiver disputed the validity of the levy, and impeached the judgments as fraudulent. The motion was denied, and the petitioners appealed to the general term/ Nelson Smith, for the appellant. I. The levy gave the petitioners a vested right in the property levied upon, which could not be defeated or prejudiced by the appointment of the receiver. A receiver is the officer of the court (Edwards on Receivers, 3), appointed to receive and hold the thing in controversy for whoever can make out a title to it. (Postman a. Mills, 8 L.J. (N. S.) Ch., 161; Delaney a. Mansfield, 1 Hogan, 234.) He represents the interests of all concerned (Iddings a. Bruen, 4 Sandf. Ch., 417), and is in no case regarded as a purchaser for a valuable consid eration. (Receivers a. Patterson Gas-Light Company, 3 Zabr., 283; Matter of Hopper, 5 Paige, 489.) He takes the property (in some respects like a general assignee), subject to all existing equities and liens. (Corning a.White, 2 Paige, 567; Leger a. Bannoffe, 2 Barb., 475; Addison and others a. Buckmyer and others, 4 Sandf. Ch., 498.) But his possession, being the possession of the ooivrt itself, will not be permitted to be disturbed without special leave. (Brooks a. Greathead, 1 Jac. & Walker, 178; Angel a. Smith, 9 Ves., 335.) Not even by a person having a superior right. (Noe a. Gobson, 7 Paige, 513.) II. The proper course for a third party claiming a right to property in the possession of a receiver, is to apply to the court (Angel a. Smith, 9 Ves., 335), when the court will examine and decide the matter, or refer it to a referee to hear and report thereon. The latter course is the more usual. (Noe a. Gibson, 7 Paige, 513, 515; Vincent a. Parker, 7 Paige, 65; Dixon a. Smith, 1 Swans, 475 ; Angel a. Smith, 9 Ves., 335; Aston a. Heron, 2 Myl. & K., 390, 397; Matter of Heller, 3 Paige, 199.) III. The proceeds of the property in the hands of the receiver is a trust fund standing in the place of the property. (2 Story Eq. Jur., § 1210; Taylor a. Plumer, 3 M. & Selw., 562, 574.) IV. This was an application invoking the equitable powers of the court, for relief in respect to property held by its own officer, and was properly made by the petitioners, without the presence of the sheriff. 1. The petitioners are the real parties in interest. 2. The sheriff has no direct interest in the object of the application. His fees on the executions do not give him an interest; they are a mere incident: he could not sell the judgment-debtor’s property for them alone (Jackson a. Anderson, 4 Wend., 479), but might look to the party or attorney. The only interest he had, if any, is merely auxiliary to that of the petitioners. It is true that at law (Code, % 113), he would be the proper party (first obtaining the leave of the court) to bring an action against the receiver to recover for the property levied upon, hut upon a recovery being had, it would result to the benefit of the petitioners, and the receiver would be allowed to pay the amount out of the identical funds in his hands, sought to be reached herein. Again, the petitioners may work out their right to the relief they ask in this wise: the sheriff was bound to obey their instructions, and may be treated as their agent in making the levy (Callon a. Camp, 1 Wend., 368; Jackson a. Anderson, 4 Wend., 479,480; Willard's Eq. Jur., 604, 605, and cases cited), and the levy may be treated as a security held by the sheriff in trust, for their benefit, thereby letting in the doctrine that the creditor is entitled in equity to all securities held for his benefit or in aid of his claim. (Pratt a. Adams, 7 Paige, 627; Curtis a. Tyler, 9 Paige, 435.) Albert Cardozo for the respondents. I. The court ought not at the instigation of the petitioners to decide a question which can only properly arise between the sheriff and the respondent. II. The remedy of the petitioners, if any, is against the sheriff. If the sheriff made and maintained a valid levy and is entitled to the proceeds, the petitioners have their claim against him. [MAJORITY — By the Court.—Davies, J.] By the Court.—Davies, J. A motion was made at the special term for an order upon the receiver, appointed on the dissolution of the above-named corporation to pay to the petitioners, Noble, Hammet, and Packer, two judgments recovered by them against the corporation. It appears from this petition that such judgments were recovered and executions issued; and as they allege, levies made before the appointment of the receiver. They also allege that the receiver has taken possession of the property levied on and sold the same, and has the proceeds in his hands. This application was made by the plaintiff in the judgments, without the sheriff joining therein, and .on the denial of the receiver that any such levy had been made, and an averment that the judgment had been collusively obtained, the judge of special term denied the motion without prejudice to the right'of the sheriff to make any motion he may be advised. From this order an appeal has been taken. There can be no doubt that the receiver took the property subject to all existing equities and liens. Whatever liens were acquired on the property at the time of his appointment may be enforced, and no suit or proceeding can be instituted against the receiver but by the permission of the court. (Noe a. Gibson, 7 Paige, 513.) If the sheriff had made a levy on the property which subsequently came into the hands of the receiver, it is for him to enforce that levy. He is entitled to collect the money, and apply it on the execution, if the levy was made. It is his duty to do so. If the officer of this court has taken possession of the property thus levied on, and sold the same, he is bound to account to the sheriff for the same. As the order appealed from is made without prejudice to the rights of the sheriff to make such application to this court as he may be advised, we see no reason for disturbing it. The sheriff is the party entitled to the possession of the goods levied on by him, and if by order of this court, and through its officer, these goods have been converted into money, it follows that the sheriff is entitled to such proceeds. The order appealed from is affirmed with costs.