
    People of the State of New York, App’lts, v. The Knickerbocker Life Insurance Company, Claim of Pleasant H. Pendelton et al., Resp’ts.
    
    
      (Court of Appeals,
    
    
      Filed October 4, 1887.)
    
    Judgment—Only parties thereto estopped thereby.
    Prior to the Knickerbocker Life Insurance Company being dissolved. by a decree of the supreme court of this state, a judgment had been rendered against the company by the circuit court of the United States for the western district of Tennessee in favor of the claimants herein, upon a policy of insurance theretofore issued by it. The company sued out of the supreme court of the United States a writ of error for its review, and in that proceeding gave a bond, with sureties. The receiver appointed on the dissolution of the company having ascertained that the company had given these sureties a mortgage upon certain portions of its property in the state of New York, and an assignment of a mortgage covering other property, by way of indemnity against liability on the bond, reported these facts to the court whose officer he was, and, under its direction employed counsel to argue the cause upon the hearing of the writ of error. A decision was afterwards made reversing the judgment and awarding a new trial. The receiver was never made a party to the record in either court; nor did he take part in the conduct of the defense, nor control or direct it. Subsequently the plaintiffs in the action took judgment by default against the company, and presented that judgment as the sole basis of a right to share in the funds of the dissolved corporation in the custody of the receiver. Held, that the receiver never became a party to the suit in Tennessee; that said court at no time acquired jurisdiction over him nor over the funds sought to be reached; that the trial subsequent to the decision of the writ of error and the judgment obtained had nothing to do with the writ of error; that the receiver was not estopped by the said judgment; that the reversal on the writ of error destroyed the effect of the original judgment, and the original cause of action was no longer merged, hut let loose and the parties litigant were restored to the same position in regard to it in which they were prior to its rendition. Castle v. Noyes, 14 -N. Y., 339, and Ja/y v. Ne Gfroot, 3 Hun, 205, distinguished.
    Appeal from an order of the supreme court, general term, first department, reversing an order of the New York county special term confirming a report of a referee. The facts appear in the" opinion.
    
      Leslie W. Russell, for app’lts; A. Walker Otis, for resp’ts.
    
      
       Reversing 7 N. Y. State Rep., 287.
    
   Danforth, J.

—The Knickerbocker Life Insurance Company was dissolved in December, 1882, by a decree of the supreme court of this state, and the appellant appointed receiver of its property Prior to that time a judgment had been rendered against the company by the circuit court of the United States for the western district of Tennessee in favor of Pleasant H. Pendleton and others, upon a policy of insurance theretofore issued by it. The company sued out of the supreme court of the United States a writ of error for its review, and in that proceeding gave a bond with sureties. The receiver, having ascertained that the company had given these sureties a mortgage upon certain portions of its property in the state of New York, and an assignment of a mortgage covering other property, by way of indemnity against liability on the bond, reported these facts to the court, whose officer he was, and, under its direction, employed counsel to argue the cause upon the hearing of the writ of error. A decision was afterwards made reversing the judgment and awarding a new trial. But before the mandate was sent down it was discovered that the citation had been irregularly issued, inasmuch as it had been addressed to only one of the four parties who were plaintiffs below, and the supreme court, of its own motion, made an order requiring the parties to the writ of error to show cause why the decision should not, for that reason, be vacated and set aside and the writ of error dismissed. Whereupon the receiver, by petition, stating to the court his ignorance until that time of the proceedings in question, asked that by amendment the irregularity might be cured, so that the decision should stand and the mandate of the court issue. As a reason for his interference he stated in his petition that “upon taking charge of the property of the company,” he found it incumbered by the mortgages and assignment above referred to, “ and that all of said property remained incumbered thereby, awaiting the issuance of the mandate of the court.”

The request was granted, and after reargument, the mandate of the court was issued pursuant to the original decision. The receiver was never made a party to the record in either court, nor did he in any way take part in the conduct of the defense, nor control or direct it in any way. Subsequently, and on the 25th of January, 1886, the plaintiffs in the action took judgment by default against the company for $17,560.12 damages, besides costs, and presented that judgment as the sole, but, as they claim, conclusive basis of a right to share in the funds of the dissolved corporation in the custody of the receiver.

The claim so made was sent by order of the court to a referee to determine as to its validity and he upon the facts above stated reported (1) that the judgment was without jurisdiction so far as the assets under the control of the court were concerned; (2) that the claim was not a valid charge nor entitled to a distributive share of them His report was confirmed by the special term, but its order to that effect was reversed by the general term of the supreme court and an order made that the receiver allow the claim as valid against the assets of the company and pay the same in the due course of the administration of his trust. From this order the receiver appeals, and, we think, properly.

As for the defendant of record, its dissolution put an end to the action and at the time of the rendition of the judgment it had neither legal existence, capacity to be sued, nor any property against which a judgment could be in-forced,_ while the receiver, who by authority of law had taken its effects, had not been made a party to the action in which the judgment was recovered. It is, therefore, plain that the funds in his hands should not be affected by it, unless by interference or otherwise, under the direction of the court appointing him, he has made himself responsible for the final result of the litigation between the parties. McCulloch v. Norwood, 58 N. Y., 563. His authority to do the acts relied upon by the respondents was derived from the court from whom he received his appointment, and its exercise was necessary for the protection of property which had come to his hands. He was directed to argue for the plaintiff in error the case as it was presented to the appellate court and he was allowed to intervene for the mere purpose of protecting such interest as he might have and for the purpose of being heard on the argument. He had nothing to do with any proceeding in the action, nor with the cause of action. He was confined to the record of those proceedings and could only submit the judgment of the inferior tribunal to re-examination. He was required to do this because of his interest in the property held by the sureties and his duty to protect it as increasing if their lien was discharged, the assets in his hands. He would also, it may be assumed, have been bound by the judgment rendered by the, supreme court had it been adverse to the plaintiff in error. But the writ of error asserted no claim or demand in behalf of the plaintiff in error. It could not in any way act upon the parties; it acted only upon the record, and because, as the result shows the receiver successfully pointed to errors in the record which required the reversal of the judgment, it is now claimed that he is bound by a judgment upon the merits rendered upon a trial in which he did not participate in an action to-which he was not a party, and over which he neither exercised nor assumed control. There is no equity in such a result, and it is not required by the cases cited by the respondent, viz.: Castle v. Noyes (14 N. Y., 329), and Jay v. De Groot (2 Hun, 205).

In the first case the master, in person, was a party in one action and in the other his servant, but the master conducted the proceeding, as was his duty, and the decision was put upon the familiar doctrine that the judgment of a court of competent jurisdiction upon a question directly involved in the suit, is conclusive in a second suit between the same parties, depending on the same question. It can have no application here, where the question is whether the appellant was a party in fact. In the second there was a motion in a foreclosure case to enter judgment for deficiency. It had been once made and denied. The appealing party, although not a party to the record, was a party in interest and had been then heard both by affidavit and counsel, and for that reason was held to have been an actual party to the motion and subject to the rule that a motion once decided is final, unless leave is given to renew, if the appellant were asking to reargue the questions disposed of on the writ of error the general rule thus stated might apply, he having been once heard. Such, however, is not the object of the present proceeding. The reversal destroyed the effect of the judgment and the original cause of action was no longer merged, but let loose, and the parties litigant were restored to the same condition in regard to it in which they were prior to its rendition. The subsequent trial and judgment concerned that and had nothing to do with the writ of error.

As to the cause of action the receiver has not only not been heard but he had no right nor opportunity to be heard respecting it. The sole object and reason of Ms intervention on the hearing of the writ of error was to protect the property in his hands from an incumbrance which had no connection with the subject matter of litigation in the original suit, but which grew out of a distinct and collateral act of the company after judgment in that suit and in aid of its endeavor to avoid it. With those proceedings the court in Tennessee had nothing to do. The receiver committed no act within its jurisdiction, nor was the property which he sought to release ever under its control. It had at no time acquired jurisdiction, over Mm nor over the funds now sought to be reached by force of its adjudication and we are unable to find any ground upon which the case before us can be made an exception to the general rule that a person is not estopped by a judgment to which he is not a party.

The order appealed from should therefore be reversed and the order of the special term affirmed, with costs of the appellants in all courts to be paid by the respondents.

All concur.  