The People of the State of New York, Plaintiff, v. Commercial Bank, Defendant. In the Matter of the Application of William N. Dykman, as Receiver, etc., for Instruction Concerning Liability of Shareholders and Directors. William N. Dykman, as Receiver, etc., Respondent; Seth L. Keeney, and Others, Appellants

The People of the State of New York, Plaintiff, v. Commercial Bank, Defendant. In the Matter of the Application of William N. Dykman, as Receiver, etc., for Instruction Concerning Liability of Shareholders and Directors. William N. Dykman, as Receiver, etc., Respondent; Seth L. Keeney, and Others, Appellants. Receivers — order directing an action against certain directors of a bank—not set aside on an appeal by such directors. Where a receiver of a bank applies to the court for instructions as to whether he shall bring an action against certain directors of the bank, and the court directs the receiver to bring the action, and neither the receiver nor the creditors or stockholders appeal from such order, the appellate court will not reverse the action of the court below upon an appeal by the directors against whom the receiver asks leave to bring the suit, although they are also stockholders of the bank. 'Their appeal will be deemed to have been taken by them, not as stockholders, but as directors and as defendants in the suit directed to be brought, and the court will not determine in advance the question of their liability where it is apparent that the suit to be instituted is to be brought in good faith. .Semble, that in a wholly frivolous proceeding, dishonestly brought by the receiver, the appellate court would interfere. Appeal by Seth L. Keeney and others from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 7th day of May, 1896, confirming the report of a referee appointed to take testimony and report to the court, and' directing William R. Dykman, as receiver of the Commercial Bank, to bring suit against certain directors of the said bank. Jesse Johnson, George F. Binns and Henry M. Dater, for the appellants. Robert Stewart and Ira Leo Bamberger, for the respondent. [MAJORITY — Per Curiam :] Per Curiam : While the appellants are stockholders of the bank and, therefore, interested in the conservation of its assets and to prevent their waste in fruitless or unfounded litigation, still it is apparent that it is not in that relation that they either resisted the application at the Special Term or now appeal from the order there made, but in their position as directors and as defendants in the suit directed to be brought. Had they objected from their position as stockholders, it may well be that the court at Special Term would have provided for their indemnity against any share of the expens'e of the suit which might otherwise fall on them. In their relations as proposed defendants to the action to be brought, we are clear that they have no standing to maintain this appeal. They were not necessary parties to the application. The receiver might bring the action without application to the court. That application was merely to obtain the instruction of the court, so as to protect the receiver not as against the parties to be proceeded against, but as between him and his eestuis que trust, the creditors and stockholders. Neither the receiver nor the.creditors or stockholders have appealed from the order of the Special Term, and they in law are the only parties in interest. We have not examined nor shall we pass upon the question of the liability of the defendants in the proposed action. It is not proper that we should foreclose ourselves from determining, untrammelled, that question when, it arises in the action. It may be that in a wholly frivolous proceeding, brought by a receiver dishonestly for the purpose -of harassing the parties proceeded against, we would intervene even .at the instance of such parties alone.. While we appreciate the very considerable sacrifices that, on the record before us, it appears that the directors of the bank made to sustain its credit, and^solvency, still it is apparent that the suit to be instituted is not brought in bad faith. The question of the liability of the appellants must, therefore, be left to the trial of the action against them. The appeal should be dismissed, with -ten dollars' costs and disbursements. - All concurred, except Pratt, J., not voting. Appeal dismissed, with ten -dollars costs and disbursements. .