Battery Park Bank v. Western Carolina Bank

Clark, J.

On October l'J, 1897, the defendant bank became insolvent, closed its doors, and executed an assignment for the benefit of all its creditors. On the morning of October 12th,the plaintiffs sued out a summons in a creditors’ bill to wind up its affairs, and filed an affidavit for the appointment of a receiver. On said October 12th a temporary receiver was appointed by Judge Ewart, of the Circuit Court of Buncombe, etc., who was by him made permanent receiver on the next day. At night on October 13 th the same person was appointed a temporary receiver by Judge Norwood, the Judge of the Superior Court, holding the courts of that district. On October 12th and 13 th, after the summons in this creditors’ bill was sued out, and after the order of Judge Ewart appointing a temporary receiver, each of the petitioning creditors sued the defendant bank before a Justice of the Peace, obtained judgments aggregating $5,000, and had transcripts docketed in the Superior Court of Buncombe before any action was taken by Judge Norwood upon the application for appointment of a receiver. These judgment creditors, at March Term, 1898, filed petitions in this cause, claiming *434 liens on tbe real estate of defendant bank in Buncombe County, superior to tbe rights of tbe general creditors. They have not become parties to this action otherwise than by filing said petition asking for payment in full of their judgments.

The deed of assignment is void as to petitioners by virtue of Code, sec. 685;

Duke v. Markham, 105 N. C., 138; Lang ston v. Improvement Co., 120 N. C., 133 ;

Wilson Cotton Mills v. C. C. Randleman Cotton Mills, 115 N. C., 485 . The appointment of receiver by Judge Ewart was a nullity.

Rhyne v. Lipscombe, 122 N. C., 660. The title of the receiver’ appointed by Judge Norwood relates only to- the time of his appointment (Worth v. Bank, 122 N. C., 397 ;

Pelletier v. Lumber Co., 123 N. C., 596 , and valid liens existing at the time of his appointment are not divested thereby (Wilson Cotton Mills v. C. C. Randleman Cotton Mills, 116 N. C., 648 ). This narrows the controversy to the single inquiry,, does the issuance of summons in a proceeding in the nature of a creditors’ bill, and filing an affidavit for a receiver therein, confer any lien upon the property of the defendant ? The law, we think, is correctly stated as follows: The lien obtained by the commencement of an action in the nature of a creditors’ bill creates a lien upon the choses in action and equitable assets of the debtor, but not upon his tangible personal property. If the latter is levied upon by execution or attachment prior to the appointment of a receiver, at which time the property first passes in custodia legis, it passes to the receiver subject to the lien of the levy.

Davenport v. Kelly, 42 N. Y., 193 ;

Knower v. Bank, 124 N. Y., 552 . The docketing of the petitioners’ judgments conferred the same lien upon the realty as a levy upon the personalty would; hence the realty of defendant passed to the receiver subject thereto. There are authorities cited in Smith, Eq. Bern.

*435 Cred., sec. 222, that tbe lien by virtue of tbe commencement of tbe creditors’ bill does not extend to cboses in action, but only to equitable assets. Upon tbe reasoning, we are inclined to tbink tbe other authorities above cited are correct, and that no liens are acquired as against a receiver, except by levy upon personalty and upon realty (in tbis State), by docketing a judgment. But that question (wbicb seems to be tbe only conflict in tbe authorities) whether a lien is acquired as to tbe cboses in action from tbe commencement of tbe creditors’ bill it is not necessary for us to decide in tbis instance. Tbe judgment of tbe Court below directing tbe payment of tbe petitioners’ judgments out of tbe proceeds of tbe realty as preferred liens thereon is affirmed. But we fail to see why tbe receiver appealed from tbe judgment. He is in no wise concerned, nor is tbe interest of tbe defendant bank affected, as tbe indebtedness is admittedly valid. Tbe method of application of tbis fund concerned only the plaintiffs, and an appeal should have been taken by such of them as are dissatisfied; and at their own costs, not at tbe cost of tbe fund. Tbe receiver is tbe agent of tbe Court. Its judgment is full protection to him, and it is a rare case that be can be justified in appealing, and certainly be is not when, as in tbis instance, tbe question is merely between two sets of creditors as to the distribution of tbe fund.

No error.