
    Simon Strauss et al., Plaintiffs, v. The Casey Machine and Supply Company et al., Defendants.
    (Supreme Court, New York Special Term,
    July, 1910.)
    Receivers — Foreign and ancillary receivers — Liability of ancillary receiver— Accounting and discharge — Foreign accounting.
    The failure of an ancillary receiver of the assets of a foreign corporation in this State to obtain an order of the court authorizing him as ancillary receiver to turn over the funds which came into his hands under his appointment by the court in this State to himself as receiver under the appointment of the court in the foreign State cannot be permitted to result in a surcharge of his accounts, where he shows that he has in fact disbursed the moneys properly and without prejudice to citizens of this State.
    In such a case, the order of the court in the foreign State approving his account which he rendered there for the assets which came into his hands in both jurisdictions will protect him in this State.
    Motion to confirm referee’s reports and to discharge receiver.
    Pierre M. Brown, for receiver and motion.
    Edward R. O’Malley, Attorney-General (Robert P. Beyer, Deputy Attorney-General, of counsel), opposed.
    George P. Breckenridge, for creditors, opposed.
    Jeremiah Casey, in person, for the defendant corporation, opposed.
   Giegerich, J.

The defendant corporation was adjudged insolvent by the Court of Chancery of Hew Jersey on December 15, 1890, and a receiver was appointed. Thereafter, and on the 20th day of December, 1890, the same person was appointed by this court as ancillary receiver of the assets in this State. The receiver took possession of certain assets in Hew Jersey and of certain other assets in this State. He later sold the assets in this State upon the strength of an order of the Hew Jersey court and without application to this court. He thereafter accounted in Hew Jersey for the assets which came into his hands in both jurisdictions and his accounts were passed and he was discharged. Hpon the application of certain of the stockholders he was thereafter ordered to account to this court, and the matter was referred to á referee, before whom the accounting was had and who reported in favor of the receiver’s discharge. I heretofore sent the report back to the referee to take further evidence upon the alleged loss of hooks and vouchers and his supplemental report on that point has now come in. He finds that these books and vouchers, with some unimportant exceptions, were destroyed hy fire while in the office of John Garrick, Master in Chancery in Hew Jersey, and I am satisfied with his conclusion on that point. It is urged hy the Attorney-General in opposition to the motion to confirm the report of the referee that the receiver has failed to comply with most of the provisions of article II of the General Corporation Law, regulating the duties of receivers of corporations; that he has disbursed the assets coming into his hands under his appointment by this court without the authorization of the court; that such disbursements were not justified in fact and that his accounts should be largely surcharged. The provisions of article II of the General Corporation Law, however, are intended to regulate the conduct of receiver-ships of our own corporations and not of the corporations of other States (§§ 100, 106, 170, 191, 230); and, although the receiver might perhaps with greater propriety have sought the instructions of this court in the course of his administration, his accounts will not be surcharged for failure to do so where, except for such omission, his conduct has been prudent and proper. It is claimed on - behalf of the objecting creditors that the receiver is chargeable with neglect in failing to collect- from stockholders the amounts due upon unpaid subscriptions to the capital stock of the defendant corporation; but the referee has expressly found to the contrary, and his finding in this respect is warranted by the evidence. Considering the accounts upon their merits I think the conclusion of the referee that they should be passed and .the receiver discharged is justified. The receiver has accounted here, as he did in Hew Jersey, for all the assets coming into his hands in both jurisdictions, and which the referee in effect finds were all the assets that could with reasonable diligence be collected, and for all his expenditures from the whole fund. The fact that- he did not obtain an order of this court authorizing him as ancillary receiver to turn over the funds which came into his hands under his appointment by this court to himself as receiver under the appointment of the Hew Jersey court cannot be permitted to result in a surcharge of his accounts, if he shows that he has in fact disbursed the moneys properly and without prejudice to citizens of our own State. This, I think, sufficiently appears. As the court said in People v. Granite State Provident Assn., 161 N. Y. 492, 495 : “ The general assets of a corporation are to be administered and distributed at the home of the corporation; but in order to accomplish that result, ancillary trustees or assignees "must frequently be appointed in other jurisdictions, subject to the control and direction of the local courts. All creditors of a corporation, wherever residing, are entitled, in case of insolvency, to have the general assets distributed among them upon principles of perfect equality. The courts of one sta.te have no right to favor domestic creditors in the distribution, but it must be made upon the principle that equality is equity. (Blake v. McClung, 172 U. S. 239.)” In the case just quoted-from, the court directed the ancillary receiver appointed in this State to turn over the funds received by him to the assignee in Hew Hampshire upon the latter giving a bond conditioned that domestic creditors and shareholders should be entitled to the same dividend as other creditors and shareholders throughout the country, without any deduction on account of a special fund deposited in the State for their benefit. In approving such course the court, among other things, said (p. 496): “We think that the court below, in directing the transmission of the fund to another jurisdiction, had the power to impose, such conditions as are just and reasonable, with a view to the protection of domestic creditors, and that was the only purpose for which the bond or undertaking was required.” The order of the Court of Chancery of Hew Jersey approving the account of the receiver protects him here. In the recent case of People v. Republic Sav. & Loan Assn., 119 App. Div. 502, the order appealed from allowed inquiry as to the acts and transactions of the receivers and their attorneys in ancillary jurisdictions in so far as relates to the nature, kind and value of the services rendered and performed, the value thereof and the amounts received. In affirming the order the court said: “We should not disturb the order. If the receivers have heretofore accounted in other jurisdictions the order would not preclude the receivers’ from reading decrees therein settling such accounts, which, if valid, would protect them herein and would halt any investigation in transactions validated by such decrees.” The- motion to confirm the referee’s reports and to discharge the receiver is, therefore, granted.

Motion granted.  