Ellicott v. United States Insurance

7 Gill 307

• Court: Court of Appeals of Maryland
• Decided: December 15, 1848
• Status: Published

Opinion

Dorsey, C. J.,

delivered the opinion of this court.

The only object of the court below in the appointment of receivers, so far as it is unfolded upon the face of the decree itself, was to provide for the safe keeping of the property and effects of the United States Insurance Company. And the design of the injunction, awarded by the decree, was to restrain the president and directors of the company from making any fraudulent and inequitable disposition of the funds and effects of the company amongst themselves or its creditors. No other, or ulterior intent, is declared by the action of the court, anterior to the date of the judgment, rendered in the county court in favor of the appellant. The injunction gave no intimation of a design to impose restrictions upon creditors, in the prosecution of their claims against the company, either in courts of law or of equity. And to infer the existence of such restrictions, in the absence of the annunciation of any ulterior intention of the court, would work injustice to the creditors, by exposing their claims to the plea of limitations interposed, not only by the company, but by the creditors, inter se, in subsequent proceedings for the recovery thereof, or involving the distribution of the effects of the company.

The principle of equity, applicable to the case before us, is correctly stated in 2, Phillips’ Cases, 22, Rankin vs. Harwood. “The court will not restrain a creditor from prosecuting his legal remedy against the personal representatives of his debtor, unless there is a decree, under which the creditor has a present right to go in and prove his debt.” The decree in this case was passed by the consent of parties; and was far short of that which the county court, doubtless, would have passed, had it been left uncontrolled by any such assent. The proper decree for the occasion, under the circumstances of the case, should have stated the ulterior object of the court, in placing the effects of the company in charge of receivers, to have been, that it might make an equitable distribution thereof amongst the creditors of the company: and the decree should have directed the receivers to give notice to the creditors, (in the usual mode,) to fde their claims with the clerk of the court. Had such a decree been made, any creditor who should institute, or continue the prosecution of a suit at law, for the recovery of a judgment on his claim against the company, would, on application to the county court, have been enjoined from so doing. And if no such preventive interposition were invoked, and a judgment were obtained,- the court would regard it as an unwarrantable interference with the jurisdiction it had assumed, and reject it as a lien on the property in the hands of the receiver.

“The appointment of a receiver does not involve the determination of any right, or affect the title of either party, in any manner whatever.” 1 Blands, Ch. R., 213, Hannah K. Chase’s case.

“A receiver is an officer of the court. He is truly and properly the hand of the court; but his appointment determines no right, nor does it affect the title of the property in any way; it will not prevent the running of the statute of limitations. The holding of the receiver, is the holding of the court for him from whom the possession was taken.” 1 Blands, Ch. R., 431, Williamson vs. Wilson.

“A receiver appointed by this court,, (a court of equity,) is appointed on behalf of all parties, and not of the plaintiff or of one deiendant only; therefore, if any loss arises from deficiency-in his accounts, the estate must bear it. The effect of the appointment, however, is not to oust any party of his right to the possession of the property, but merely to retain it for the benefit of the party who may ultimately appear to be entitled to it; and when the party entitled to the estate has been ascertained, the receiver will be considered as his receiver.” See 5, Lib. of Law and Eq., 435, and the cases therein referred to.

No proceedings of the county court, requiring creditors to bring in their claims for the purpose of receiving their distributive proportions of the property of the company in the hands of the receivers, adopted after the rendition of the judgment, can operate retroactively to impair the validity of its lien. Itis not pretended that any fraud or collusion was practised in obtaining the appellant’s judgment against the United States Insurance Company. The circumstances attending it repel any such inference. The suit was instituted before any application had been made to Baltimore county court, as a court of equity, for the appointment of receivers to take charge of the property and effects of the company; and the judgment subsesequently was duly obtained. It follows, from what has been hereinbefore stated, that the appellant’s judgment is as much a lieu on the real estate of the company, as if the appointment of receivers had never taken place. But in equity, it is only a lien on such interest in the real estate, as the company had therein at the time the receivers were appointed. To extend the lien to the increased value of the property, resulting from the payments of purchase money made thereon by the receivers, under the order of the county court, would be against all equity and conscience.

This court will sign a decree, reversing, with costs, the order of Baltimore county court, passed on the 7th of April, 1847, dismissing the petition of the appellant, and remanding the cause to that court, that such further proceedings may be had therein, as are consistent with the aforegoing opinion, and as the nature of the case may require.

DECREE REVERSED AND CAUSE REMANDED.